Why I Bought a Gerber Life Insurance Policy for My Children

In 14 years as a teacher, I saw many families suffer the horrendous tragedy with the death of a child. Few things are more sad and few things can I imagine that would be harder to move forward from. Recalling the pain, gofundme’s and spaghetti feed fundraisers to help pay for funeral expenses got my wife and I thinking about our own children and their future.

As an insurance advisor geared toward asset protection plans (Disability and Term Life), it’s very rewarding to make sure that families are protected in the event their one of the parents couldn’t work, or worse, died. Securing coverage for my children didn’t seem necessary, we would miss them, not their income. But doctors I’ve worked with have seen enough sad health events that after several of them asked me about it, I did a lot of research and found the Gerber Grow Up plan.

It’s helpful to understand the approach my wife and I took to this. First, I’m fairly risk tolerant, which is remarkable considering my profession. Our insurance plans protect us from catastrophic events beyond just maintaining our current lifestyles. Second, I don’t have any whole life insurance policies. I think everyone with a family should have their own term insurance policy. Using insurance as insurance and investments as investments utilizes the power of both better than blending them together. Third, we are in good shape with health and finances as a family.

So what is the policy?

The Gerber Life Grow-up plan offers guaranteed insurance to a child. Guaranteed – That’s the reason we purchased it. Check out actual numbers that are outlined below.

The Gerber Life Grow-up plan will provide life insurance for children ages 14 days to 14 years with one or two knock out health questions. With this policy, they can have protection for the rest of their life and even increase the coverage without any more medical underwriting.

Gerber Life has college savings funds, cash value policies, accident plans for parents and more. There are additional features you can add to this policy but we went with no add-ons on the Grow-Up plan for one simple reason: We wanted to protect their insurability.

Here are a couple assumptions I make for people considering this:

You have your own policy. If something happened to you, there’s term insurance that would replace your income for ~15 years. That would pay for debts, consistent lifestyle, college and a little more. You also should have disability insurance to pay for the bills if you couldn’t work.
You don’t need this policy to pay for a child’s funeral. If that were your fear or motivation for this, you can add a child rider onto your own life insurance policy.
You have a college savings plan.

Protecting their insurability

This is really the biggest risk we saw and one we felt worth trading dollars to solve. Discovered heart conditions, auto-immune disorders, neurological problems or more could arise. No matter what happens to our children, there will now be a life insurance policy allowing them to protect their own families some day. The policy automatically doubles in coverage when they’re 18 for no extra premium and they’re allowed to buy more 4 times until their 40. Buying a $50,000 policy now opens them up to the ability to insure themselves with $500k someday.

Cash Value, College funds, other Investment Vehicles

Your social media feed probably has hip agents leading you to believe Indexed Universal Life (IULs) and rental properties are the most no-brainer way to fund your child’s future. That works for some people. Referring back to my principles in the third paragraph, our goal was the most cost-effective method for managing risk. We didn’t do any add-ons on the Gerber-Life Grow Up policy. We have college savings, we have our own life and disability policies, and our kids use greenlight to learn about money.

Below are sample premiums and math I did to keep insurance as insurance and use this policy for what we wanted it to be, protecting their insurability.

Say we spend $50/mo for our 7 year old to have $50K in life insurance. Again, we don’t need the death benefit should something happen to him! When he turns 22 we will likely know if this policy is needed or if he could buy a term policy someday to protect his own family.

We spent $600/yr x 15 years = $9K dollars on this policy.

Cash Value:

The Surrender Value at the end of the policy comes in the documents. You can read more about it on their cash value page but from the GrowUp sample policy:

Again, we did not buy this policy for the cash value but we’ll have about 50% of the premiums spent available to us in cash value when our son is done with college. ~$4500. We can gift this or save it and continue coverage (doubtful – at least we hope so!).