Gerber Life Insurance?

[jojo2324]

Does anyone have any experience with this? I have read the fine print on the flyers (and there are a TON it seems), and there doesn't seem to be a catch. Just wondering what your thoughts were on the subject. TIA!

[Momof3Labs]

Joanne,

This is sorta-kinda my specialty. I'm an actuary, so I have experience pricing products like this. I personally think that it is silly to buy life insurance on a child. Yes, if something should happen to them, you will have funeral expenses, but the chances are slim. And, yes, they guarantee insurability as an adult but for how much - $25,000? - that ain't much, especially 25 years from now.

Personally, I feel that insurance should be purchased to cover financially catastrophic events. That includes your death, death of your DH/DP/SO, disability of any wage earners in the family, loss of your home, car accidents, catastrophic illness in the family, etc. I wouldn't put loss of your child in this category. Of course, it is emotionally catastrophic (and devastating), but $10,000 of life insurance is not really going to fix anything.

And, as an actuary, I can tell you that these products are priced with a lot of profit to the insurance company. Yeah, there is a cash value, yada, yada, yada, but the insurance company gets its piece, trust me.

That said, it's not the worst thing that you can spend your money on (there's another insurance product out there that I've seen very recently and is MUCH MUCH worse). It's not that expensive, so if you would feel better doing it, then go right ahead. But don't feel bad for not doing it, either!

[jojo2324]

Thanks for the info! Here is a link to what I was looking at.

http://www.gerberlife.com/guide_products/growup/index.html

I am in agreement that insurance should be purchased to cover catastrophic events. But at the same time if this is able to be cashed in at the age of 28 for $50K that doesn't seem like a big risk to me. And for a relatively small price per month (certainly less than DH's life insurance policy!), it is not a huge investment.

I am thinking along the lines of this being a future chunk of money to go towards a home purchase, or a global expedition. I know that if I were to receive $50K in five years I wouldn't be unhappy with it.

Maybe I am going about this the wrong way. But thanks again for your help! :)

[mharling]

Lori -
Just curious, what's the 'other' insurance product that is much much worse?

Mary
EDD 4/5/03

[flagger]

I have never been a fan personally of whole life policies and would always stick with term. A policy like this is meant to help defray the cost of burial of a child in the God-forbid event something should happen. You are not replacing income for a child.

A funeral is an expensive thing to undertake, no pun intended. (don't get me started about how I feel about that industry). As was posted before, it is not that expensive to pay for, but realise exactly what it is you are covering. Don't beat yourself up if you don't partake of it.

[Momof3Labs]

Mary,

Heh, heh, heh...

If anyone ever calls and tries to get you to sign up for something called "Sign & Drive" or "DriveSecure", coverage if you are in an automobile accident (disability, some medical, some hospitalization coverage, etc) for $9.95 a month (with the first two months free!), direct billed to your credit card - hang up. Only 20 cents on the dollar goes to pay claims, the rest goes to pay expenses and into the insurance company's pocket. That's bad, trust me.

Not that I deny insurance companies the right to make money, but it irks me when they skirt the law and sell products that aren't technically legal (I am referring to DriveSecure, NOT to the Gerber plan)...

[Momof3Labs]

Joanne,

You could also invest that money (even in a conservative savings vehicle, like a money market fund or savings account) and Gannon would end up with a lot more money than if you purchased this insurance!

This is from the site: "The plan accumulates cash value and will continue to do so as long as premiums are paid. After 20 years, the cash value is equal to or greater than 100% of premiums paid."

Well, here's an example - if you put away $100 per year for Gannon for the next 20 years, and earned 5% per year on average, you would have somewhere around $3,300. If you used that $100 to buy this insurance, you would have "at least" $2,000. (Where did you see a cash value of $50,000? I only saw insurance of $50,000 available at age 28 - that's a lot different than a cash value!)

[egoldber]

Lori, how odd! Not only do you live around the corner from my brother and his wife, but they are also actuaries!

We have no life insurance for Sarah. But, we did just triple our life insurance on DH and took out a hefty policy on me. This way, heaven forbid, if something should happen to him, I could pay off our home and still not have to work for at least a year. And, heaven forbid, if something should happen to me (!!!), DH could take significant time off from work before having to find full-time child care for Sarah.

We were able to get insurance pretty inexpensively though a professional association that DH belongs to. They sent a nurse to our home and we had to pass a drug screening and an incredibly basic health exam.

HTH,

[jojo2324]

Aaah, the novice in me emerges! That's what it is...

We are going to call our insurance agent tomorrow to see what sort of plans he recommends for Gannon's assets. I am also interested in getting term life insurance, just so that in the event something did happen, Shawn would have some cushion to fall back on to cover expenses.

Thanks again for educating me!