Gerber Grow Up Plan Review

Written on July 22, 2016 by Kaizen Retirement Wealth

Gerber Grow Up Plan Review

Warning about the Gerber Grow Up Plan Review: This is a long post about Gerber Life Grow Up Plan and contains a very detailed (being edited )XX-minute video from a life insurance agent with kids. If you have zero interest in Children’s Life Insurance, how they work, or if they make sense at all then this post isn’t for you. But if you’ve been pitched a Grow UP Plan by a cute baby marketing add or agent and want a detailed review– then you’re in the right place!
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Why this Gerber Grow Up Plan Review will Help You

I often get asked what are the Best Life Insurance Options for Children questions from blog readers and clients.  I think the main reason is that I am a new dad and it has become a big topic of conversation.  I think the main reasons Children Insurance have become such a hot topic as of late, are the following:

  1. Google and Facebook marketing
  2. New parents want plan for their children’s future
  3. Affordable alternate to a savings program

What information is in this reviewed in this post

In this review of the Gerber Life Grow Up Plan, I will be reviewing the following:

  • Sales and marketing
  • Rates and monthly expense
  • Cash value accumulation
  • Realistic investment expectations
  • How it is effectively used
  • How it is most poorly used

What you will discover

After vetting the policy, it does exactly what the company suggest.  When you study the fine print and actually read the material, the policy provides death protection for your child and builds up a cash value.  The Grow Up plan is a Whole Life Insurance policies and like most Whole Life Insurance there are not a lot of surprises, just smokescreens.  Moreover, the Gerber Life Insurance Company does a great job of marketing to their ideal client, humble and happy new parents.  It is easy to confuse statements like, “a Gift that Doubles”, “Builds Cash Value”,   It is not the best savings plan as your child grows up, but it does have its merits.  At the end of the day, I want you to know and fully understand what this product does well and what it does poorly before making a decision to purchase, so that you can feel confidence in your quest for a solid financial plan.  

Lets Dig In

The Gerber Grow Up Plan is a Whole life policy.  It builds up cash value and is sold as a dual benefit policy.  It is Life Insurance and it is a form of savings.  The challenge when you blend two great things anything together, it ends up being not so great.  

Things are just a little bit different (pulp fiction reference) Royale with Cheese

Much like your local McDonald’s, where the well marketed Quarter Pounder with Cheese Hamburger on the commercials is a fraction of what it is when you unravel the actual meal, the Grow UP Plan is staged to be “Awesome”.  It looks great on TV.  Yet, in real time it is much less to be desired (just like a bouquet of last week’s fresh flowers) much like a wilted Quarter Pounder With Cheese.20160720_112932

Sales And Marketing

You already know, Gerber does a fantastic job of marketing their Gerber Grow Up Plan.  When it comes to promoting Life insurance options for Children, they are the undisputed champion.  As a parent, when it comes to baby food, I am less of a fan.

There are many financial experts who trash Gerber Life and the Grow Up plan.  Talking Heads like Dave Ramsey say, “There is no need to buy a life insurance policy for your children, even one like Gerber life insurance, which is a whole life policy that claims to help you save for college.”   Is he right? Or is he just selling books?  I think the later.

The Grow UP Plan is not marketed as a college savings plan, Rather there is a specific product for that within Gerber called the Gerber Life College Plan.  There is a significant difference in both price and coverage.  For example, the Grow Up plan is actual insurance on the child and should be compared to the (best options for life Insurance) as an insurance plan.  The Gerber Life College plan is adult life insurance that promises cash value or death benefit in time for college.  

Rates and Monthly Expenses

Jump on line on their website and get free quotes without an email.  They ask just 3 questions and in (under 60 seconds), you have quotes for the Grow Up Plan.  They want to know the state, age of the child, and gender.  That is all you need to enter.  Your email is optional or a required field like most search tools.

I compared a $25,000 policy which doubles at age 18 to $50,000 with a monthly baseline cost of 16.30.  For an additional $2.50 I could add the Payment Protection plan but it’s not worth it in my view as it does not provide any benefit.  

The Grow Up Plan also has a Guaranteed Purchase Option.  The Child at age 21,25,30,35, and 40 can choose to increase the coverage (and payment) without medical review.  This is also available if they have a life changing event like marriage, birth or adoption.   The ceiling for the increase is maxed out at $250,000.

Furthermore,For a Simple $10,000 in coverage on the Grow Up Plan you can expect to pay between 6.30 to $10.38.  The quick calculations that I entered was for age 1 and age 14.  The policy insures children up to 14.  The maximum cost for a $50,000 policy will run $49.97 monthly.  At the end of the day, it is a costly policy to purchase, but the cash value may make some parents feel good about their purchase.

Cash Value

For a detailed report of the actual cash value, you would need to complete an application.  Most Cash Value policies that I have reviewed do not start accumulating any significant cash value in the first 10 years.  Normally, years 1-3 there is zero cash value.  

I was able to conference in with a gerber life agent (I will share my personal experience later in this post) and find out that the cash value at age 21 is guaranteed to be $2495 and then at age 26 $3,555.  

Cash Value can be borrowed for any reason and it was suggested that an additional $10 would be needed to keep the policy inforce and prevent a lapse in coverage.  This is possible with Cash Value policies as the cash value is accumulation to keep premiums level to a certain age.  With the Grow Up Plan, the policy is designed to reach age 121.  

Baking out the Dollars

With a twenty year cost of $3,912 (16.30 x 12 x 20) in my 1 year old quote, at age 21 the difference would be cost less cash value ($3912 – 2495) of $1,417.  This is without regards to inflation adjustment, Time Value of money, and the like.  

It is tax free

The reason this can be consider a tax free return, is that the policy is either returning the premiums paid (you paid more than the actual cost needed and you are not gaining from the policy) or you are borrowing from the cash value of the policy.  While it is still tax free, it is a loan at 8%.  Why borrow your Cash Value at 8%?  

Realistic Investment Expectations

To be fair, this policy is not intended to be an investment.  Thinking that it is an investment would not fair to you or your child.  If you are fond of getting a large return for income taxes, this is much like that but far more extreme.  Rather than waiting till spring to get your overpayment of taxes given back to you, you are waiting till your child is in college to receive your overpayment.

Like most Whole Life Insurance Policies, the Grow Up plan guarantees a certain percentage return on the cash value and compares will with other low yielding options like CD’s.

How this policy is Effectively Used

Purchasing the Grow Up plan as a quick solution for life Insurance of a child is where this policy is effective.  The policy application can easily be completed online in just a few minutes.  In addition, underwriting and acceptance of coverage can be as little as 24 hours.  If you are looking at covering expenses beyond burial of a child such as bereavement, than the additional coverage might be a solution.

The Benefits of the Gerber life Grow Up plan are a fairly low cost option for coverage of a minor.  It is encouraging to the buyer that there is an internal saving component called cash value.  The cash value builds up over time which makes it an effective form of forced savings.  Furthermore, because it is life insurance, the cash value is not counted against you for FASFA considerations like a College Saving 529 plan.  The Grow Up plan is an advocate of promoting life insurance and brings awareness to the need for life insurance.  While it can be considered a tool in the area of tax free savings for a child, it is certainly not the lowest cost or the best option for coverage.  

How the Grow up Plan is poorly used20151129_142658

Purchasing The Grow Up Plan as a college funding plan would be a disappointment.  The policy is designed to provide coverage for the minor.  It is difficult to understand the fees, morality, and expenses that are needed to pay for the life insurance.  Unlike a (Child Rider), the policy does not ensure coverage for the main income earners of the household.  Parents and Grandparents meaning to do well, may overlook the need for a solid Insurance plan for the parents.

Personal experience with Gerber Life

I called Gerber Life and had them run me quotes for my own family’s need.  What I found was that the agent on the line was very helpful, answered all my questions, and had great customer service (nothing like that Damn Insurance agent that can sells sand at the beach).  I was never up sold, and never pushed to a canned sales pitch close.  

I give a Gerber credit for the fantastic job of marketing their Gerber Grow Up Plan.  When it comes to promoting Life insurance options for Children, they are the undisputed champion.  As a parent, when it comes to baby food, I am not a fan.

There are many financial experts who trash Gerber Life and the Grow Up plan.  Talking Heads like Dave Ramsey say, “There is no need to buy a life insurance policy for your children, even one like Gerber life insurance, which is a whole life policy that claims to help you save for college.”   Is he right?

Considerations Before you Buy

Review your entire insurance need and make sure that you are working towards minimizing your insurance cost while covering the actual financial need.  The main reason for Insurance on a child is to cover actual expenses that would place emergency savings at risk.  When calculating actual expenses, consider burial, hospital and medical, emergency and transportation costs, and bereavement expenses which will add up to lost time and income from work.

Bottom Line

Information and education on a solid financial plan includes Life Insurance.  Gerber Grow Up plan is the Marketing leader for promoting insurance for children and an easy option to obtain quality coverage.  While it is not the best or the cheapest, it has provided protection and confidence.

The Gerber Grow Up Plan Review is not an endorsement or recommendation.  Rather, my intentions for writing the Gerber Grow Up Plan Review is to provide detailed information to parents considering their best options for planning and insurance.

If you are a parent needing a low cost insurance solution and coverage for your child, consider a Child Rider or Term Insurance for Kids.   Lastly, You as the parent have a stronger need for coverage than your minor.  Plan wisely.

 

Have Questions – Wonder What Insurance Solution is Best for You?


Feel welcome to reach out. We do our best to respond to questions via email within 24 hours, and while I can’t guarantee we’ll be able to help everyone, we do our best to at least get you the answers you need so you don’t make a long term commitment to a complicated financial product you might later regret. Simply reach out to us or leave us a comment at http://lifeinsurancetoolkit.com/contact/


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Happy planning,

Jose, Hoser, Joe from the show

About Kaizen Retirement Wealth
About Kaizen Retirement Wealth

We work with individuals across the nation to secure the best life insurance rates.

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2 Comments

Kelly

Very informative and interesting review. There are many aspects to consider when choosing the best insurance cover for you, your family and your children. It’s great that you’ve broken it down – there are many things that you mentioned that I wouldn’t even consider. Thanks for sharing.

July 24, 2016 at 11:13 pm
    Kaizen Retirement Wealth

    Kelly,
    I will share more in a blog later this year, but I am a father who is expecting Twins! I am excited and blessed. Equally, my focus is making sure that I have a solid plan that will work for our family. This blog, The Life Insurance Tool Kit, was born out of the idea that we need to be advocates for each other. My own experience, I hope, will relate to other Mothers, Fathers, Grandparents, and advocates! Moreover, Gerber should be viewed as a good company with decent cost options, but certainly not the cheapest solution in most cases. I praise them for bringing attention to the need for life planning. NOT Everyone needs insurance, but most will benefit from knowing their options and having a plan.

    July 25, 2016 at 12:33 am
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