The Gerber Grow-Up Plan is a whole life insurance policy for young children, ranging from newborns and infants to 14-year-olds. Since life insurance costs are based on age, a Gerber Grow-Up plan lets a young family get covered at a very affordable price that does not increase. These policies also build cash value, which you or the child could tap into.

Gerber markets this plan to parents and grandparents as a way to give young family members lifetime insurance protection while helping them save for college and other future expenses However, a Gerber Grow-Up plan doesn't offer the same growth potential as a 529 plan. If you're considering a Gerber Grow-Up plan, here's how to decide whether it's worth it for your family member.

Who Needs Life Insurance?

The primary purpose of life insurance is to protect the insured's family and dependents from financial calamity if they die prematurely and their income is cut off. For example, two partners each earn $50,000 per year and have two young children they hope to send to college. One spouse dies in a car accident during a severe thunderstorm, and the family income is cut in half. Now the surviving spouse has to pay for the house, car, food, clothing, and other necessities on their own, and find a way to continue saving for their children's education.

The parents in the above scenario need life insurance. Why? Because the family depends on each parent's income, so the loss creates a severe financial hardship. Children are different. While they contribute many things to their families, money is rarely one of them.

With that being said, if a child passes away, the family still needs to cover their final expenses and outstanding medical bills, which can add up to thousands. Life insurance for children could cover these costs. Buying life insurance for a child also gets them set up for adulthood. They have coverage ready to go in case a future illness makes it impossible to buy a policy. While children may have less need for life insurance than their parents, there are still reasons to buy it if you can afford the premiums. Th𝐆e Gerber Grow-Up plan is one way to do so.

Life Insurance as an Investment

Whole life insurance provides more than a death benefit. Each month when you pay the premium, a port🍸ion of that money goes into a cash fund, and that fund grows with interest. Down the road, if you decide you no longer need the death benefit, you can instead elect to receive the current cash value of your policy. This is a big selling point of the Gerber Grow-Up Plan: It doubles as a college savings vehicle, wi♎th its cash value serving as a de facto college fund.

This line of thinking also presents a problem. Historically, cash value life insurance grows at an low rate versus the stock market. Your child's 澳洲幸运5官方开奖结果体彩网:college fund stands to become much more robust if you invest it in mutual funds.

Advantage𒁃s and Disadvantages of a Gerber Grow-Up Pla🌠n

Advantages

The Gerber Grow-Up Plan can provide life insurance coverage for children if the worst happens while they're growing up. It's a 澳洲幸运5官方开奖结果体彩网:whole life insurance policy that your child could keep for the rest of their lives in adulthood, so long as they pay 🥀the premiums. The cost will not incre🎶ase over time.

When your child turns 18, Gerber will double the death benefit up to $100,000 maximum. For example, if you bought a $40,000 policy, it would then double to $80,000. As an adult, your child will have opportunities to buy more life insurance with no medical exam, increasing the death benefit up to 10 times the original amount. Gerber allows your child to buy more coverage after major life events, like buying a home or having a child themselves.

Finally, the Gerber Grow-Up plan builds 澳洲幸运5官方开奖结果体彩网:cash value. You or your adult children can borrow from the account's cash value or cancel the policy to cash everything out. This gives them extra money for college, buying a home, and other goals.

Disadvantages

The Gerber Grow-Up Plan charges an ongoing premium. If you stop paying, your child loses the insurance protection and you stop building up cash value. These policies have a maximum 澳洲幸运5官方开奖结果体彩网:death benefit of $100,000. That is more than enough insurance for a child, but not for an adu🅰lt with dependent children. Your child will need to buy more lif💎e insurance when they grow up, either through Gerber or from another company.

While the plan's cash value aspect may sound enticing for college savings, historically, the returns are low compared to mutual funds and other stock market investments. You may be better off investing in a 529 plan instead.

When the child turns 21, they get control over the policy and the cash value. They could spend the money on a new car or vacation rather than college like you might have been hoping.Finally, if you are buying life insurance for yourself, you may be able to add a rider to cover your young children at a lower cost than the Gerber Grow-Up plan.

FAQs

The Bottom Line

The Gerber Grow-Up Plan does offer several tangible benefits, such🌊 as lifetime insurance protection for your child plus cash value savings. But th🌃is plan may not be the panacea the company makes it out to be. The biggest argument against purchasing life insurance for children is that it is not urgently needed and creates another expense.

The combination of a child rider for life insurance and a mutual fund for college savings may present the most promising alternative to the Gerber Grow-Up Plan. Mutual funds offer a much stronger track record than cash value life insurance for 澳洲幸运5官方开奖结果体彩网:college savings. If you cannot afford to invest in a mutual fund or take out permanent life insurance, saving a little each month in a bank account for your child or children is also a good idea.