Opinions re Gerber Life Insurance?"

[westamp]

Does anyone have an opinion re Gerber Life Insurance? Ever since my son was born, I've been bombarded w/ solicitation re this insurance. My parents bought me some type of life insurance (not Gerber) when I was a baby and I was wondering if this is worth it to get for my son? Or should I just sock away money in a money market fund or bank account (rather than buy the insurance).

Did anyone here purchase life insurance for their baby?

[lukkykatt]

From an insurance perspective, it makes no sense to purchase insurance on a child. Economically, a child is a liability, not an asset.

I think it is a terrible thing that Gerber even markets this product to parents. If you want to save money for your child, there are much better ways to do it.

[Saartje]

The only cases in which life insurance on a child is helpful is when the child is a primary source of income for the family (child actor, etc.), or if the child becomes uninsurable at some future date before they acquire insurance on their own in adulthood. Not very likely; I'd suggest putting the money you would have spent on the insurance into a 529 plan instead.

[icunurse]

We have a *very* inexpensive policy through my former place of work (it's like 38 cents/month for $10,000.00). We have it simply for the purpose of funeral expenses if God-forbid we should ever need it. We looked into Gerber and decided against it. Though I do have one friend who wants to get it,as besides being cheap, it offers some minimal lifetime coverage for the child (her son has a disease which may make getting coverage as an adult difficult or at the very least VERY costly).
Traci
~Connor's Mom 02/2004~
Agency paperwork completed - waiting for #2!

[bostonsmama]

Andrea,

You're right on the money! Life insurance for children is such a waste of money. Suze Orman, a financial genius who has a money/investing talk show on MSNBC lists this as one of the top 10 Worst Financial Decisions. Life insurance on a spouse or yourself is a much better bet, but still, get Term Life Insurance, not whole life, for an earning adult.

My parents starting savings accounts for us when we were 4 years old. By the time I was 10, I had almost $800. I eventually rolled it over to mutual funds when I was 13 and with regular contributions took over $7,000 with me to college. Not to be morbid, but if you wanted the life insurance to cover funeral costs for your child, you could use the savings for that purpose...but Andrea's right...children only take away "cost" when they leave this earth, not the other way around (like if you or your spouse died, leaving your DC with lots of debts and a loss of income).

Larissa
who is still trying to give birth so she can have more to say

[Momof3Labs]

I agree that Gerber is crap. But IMO there is a time and place for life insurance on children. I deal with the life insurance industry for a living (from a pricing and risk perspective) and finally found a reason that appealled to me.

We purchased a very inexpensive policy for Colin earlier this year. I think that it provides $50k of current coverage. But we didn't buy it for the current coverage. It also provides very generous automatic purchase options each time he gets married or has a child, plus when he hits certain ages (e.g. 27, 32, etc.). The purchase options allow him to buy another $50k each time at the best rate offered by the company at the time of purchase. So, basically, we've guaranteed his insurability to at least a moderate amount ($500k total, I think) through his young adult life. There is some cash value build-up, but I chose the policy with the least amount of cash value because I prefer to invest myself rather than PAY the insurance company to do it for me.

Gerber is crap because it does not provide for future insurability. Yeah, there is a low, low benefit that remains through adulthood (as long as premiums are paid), but c'mon, how much will $25k be worth in 20 years? I bet that when we were kids, our parents were buying $5k policies on us, and that doesn't seem like anything special now, does it?

Now, I should say that my opinion is partially colored by personal experience. While we had no problem getting an inexpensive policy on me, it was much more difficult for DH, who is a leukemia/bone marrow transplant survivor. On our first attempt, we could only get half as much coverage as we wanted at a ridiculous rate. On our second attempt, we found a company willing to give as much as we wanted at - get this - LESS premium than the first company. If DH's parents had purchased insurance with an eye to guaranteeing his insurability in the future, we would not have had such a hard time (or spent so much money on it).

So, my opinion is either buy a policy that offers generous future insurability benefits or don't buy anything at all, and just invest the money.

[HannaAddict]

Profit center for Gerber. I think there should be a limit to absolute minimum (burial expenses) or ban on most life insurance for children.

Kimberly
DS 3/18/04

[goodnightmoon]

I'm debating whether or not to post this, because I may not be able to explain my thoughts well enough. I thought that life insurance on children was to help the parents financially as they grieve and attempt to somehow get through the worst pain they'll ever know. I don't know how anyone would be able to work immediately after a tragedy like the death of their child. If the parents don't have money saved up, how do they get by? The mortgage and bills still have to be paid.

I don't mean this to sound callous so I hope it doesn't come out that way. We don't have life insurance on our baby and I have a hard time even thinking about anyone losing their child, much less me losing mine, but I wonder if it is a reason why some people choose to get the insurance. Not to profit at a time of terrible loss, but to allow them to grieve however they need to.

I don't know. It's just too terrible to think about.

Laura
mommy to Eva Marie 2/16/05

[Moneypenny]

Lori,
Can I PM you about this? My DH also has a couple chronic health conditions and we're having trouble finding life insurance for him. I'd love to hear which company you're going with for your DH. Thanks!

Susan
mama to my cutie pie, Avery
http://www.gynosaur.com/assets/ribbons/ribbon_amber_9m.gif[/img][/url]

[Momof3Labs]

Susan, yes, feel free to PM or e-mail me!

[Momof3Labs]

This is a little too "big brother" for me. Then why not also limit most direct sale insurance, which isn't a great purchase for most consumers? How about cancer and other dread disease insurance? There are people who buy insurance on their children for various reasons, including the one that I gave above and the one mentioned below, and even if YOU don't agree with these reasons, they are valid to some people.

And given that Gerber is in business to make money, what is wrong with them having an insurance "profit center"? It doesn't mean that it is something that everyone should buy. As far as I'm concerned, they can offer it to their heart's content, and I'll keep on recommending that people not buy it.

This just seems like an extreme statement to make without backing yourself up.

[cara1]

FWIW, I don't think Gerber is unique in that all insurance companies are in the business of making a profit.

[HannaAddict]

Lori,
My statement stands. Sorry you feel it is extreme and needs to be backed up. I thought it was just an opinion on a bulletin board! Here's a quick paragraph: Gerber's marketing plays on fears of parents and the profit they make on this product is grossly in excess of the risk they bear. I think this sort of insurance should be limited since babies don't generally get a paycheck and support the family, hence it isn't "needed." Insuring a baby's life seems mercenary to me and in my state a child was murdered after the father took out a large insurance policy on him. I think the ability and amount of insurance allowed for children should be limited to protect children.

Sorry we haven't seemed to see eye to eye on insurance issues, even my personal experience getting disability insurance while on leave (different post). I do appreciate that you let people know though that you have worked in the insurance industry. I try to let people know where I'm coming from too.

Kimberly
DS 3/18/04

[Momof3Labs]

Actually, Gerber's marketing focuses on this as an investment for the child. I'm not impressed with that angle, personally, but if someone isn't inclined to save at all otherwise, hey, this might work for them. It is sad when someone takes out a policy on another life and then murders them, but it happens with adults as much (or more) than it happens with children.

And about the profit that Gerber makes: can you quote the loss ratio on this business? How do you know that the profits are "excessive"? The state insurance departments closely regulate the pricing of insurance policies, including these, and if profits were so "excessive", everyone and their brother would be selling these things, driving prices way down. In reality, expenses are quite steep for this type of business (I know, I've worked closely with a few companies who sell direct marketing life insurance), and profits are a lot skinnier than you might think. The margins at banks are about triple most insurance companies, yet I don't see banks often attacked for making "excessive" profits.

[HannaAddict]

The post wasn't about banks, it was about what we, BBB members thought of insurance. So, I said what I think. Not what you should think. It seems like you want me to go into a treatise on the cost benefit analysis of insurance. I don't think this is the forum, I actually think it would be pretty boring. I could give you my opinion on banks if you really wanted and their margins, regulation, etc. based in part on my husband's prior life as an FDIC bank examiner and finance guy (now he's an attorney). But that wouldn't be very interesting either I'm afraid. :)

I know it is rare to take out insurance for horrible reasons, but my opinion still stands, my opinion on the profits too. And my opinion on the marketing of baby life insurance. It is a poor investment vehicle as well. I am actually familiar with the industry, with the insurance regs, pricing, etc., legislation, etc. and don't feel I need to explain any further. I'm not sure why my opinion on this or my personal experiences (a different insurance post) seem to bother you. Please email me if you would like to discuss this further.

Thanks.

Kimberly
DS 3/18/04

[kijip]

Cash value insurance sucks as a way to save money for whatever it might be needed for. Rose Friedman (milton's better half) even has a funny story about how silly it is- says she spent hers on a dress and her brother's on a train ticket. I could easily create a $25,000 nest egg for a 25 year old Toby just by stuffing $83/month into my matress each month. With interest that $83 would be A LOT more than $25,000.

A friend of mine cashed out her baby insurance policy from childhood and recieved like $1500. Her parents had paid around $2400 into it over the years. Um, that $2400 could have grown and not shrunk in a bank.

Future insurability is a more compelling reason but only if the policy has adult sized limits that a working professional might need for their family AND only if the insurance company is still in business in 10, 20, 30 or 70 years. Like Lori says, $25,000 is not going to help him much if he needs insurance as an adult and can't get it due to a health condition.

If paying for a funeral would not be affordable, then a small funeral expenses policy might be reasonable. But if you can save even a modest sum each month, you will have the ability to use that money for more pleasant things like a class trip to spain or college or towards a house.

[lukkykatt]

Kimberly, I am in complete agreement with you on this one. I think that Gerber's aggressive marketing to new parents under the guise of their insurance product being an excellent financial vehicle is terrible. It plays on parents' worst fears and I personally believe that their message is confusing to people who do not have a certain level of knowledge about such policies. They are saying that you are giving your child a gift of financial security, but the parents are policy holders for the first 21 years - that is not really a "gift" I want to give my children.

IMHO, if people want to plan financially for their children, some better options include:
*fund a college account
*put money into a savings account to be used for emergencies
*have a life insurance policy for yourself and your spouse (if applicable), where your children are the beneficiaries
*make a will
*fund your own retirement account

For the record, I have 13+ years commercial insurance experience, all of it being in P&C, and not in life and health.