gerber life insurance?

[spu]

Has anyone looked into this for DS/DDs? Is it legit or any good? We keep getting offers in the mail and it sounds interesting. Any thoughts?

susan

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[Momof3Labs]

I'm an actuary and have worked on pricing life insurance in the past. The Gerber plan is garbage. If you really want life insurance on your kids (the only valid reason IMO is to provide/protect a modest level of future insurability), Northwestern Mutual has a decent product called Adjustable CompLife.

ETA why I think it is garbage: The price just isn't very good considering the limit benefits that it offers, and the face amount is too low to be of much value in 20+ years (when future insurability would be an issue). Again, there are much better products out there that actually offer useful benefits in the area of future guaranteed purchase options (which is where the future insurability protection comes in).

[saschalicks]

We have it for both boys.

[bcky2]

we also have it for both our boys too.

[SnuggleBuggles]

I have heard financial experts (like Michelle Singeltary from the Washington Post's "Color of Money" articles) say that you shouldn't buy life insurance for someone whose income you don't need. As most kids do not contribute financially they really don't need life insurance. I think that the bottom line was that were better ways to save/ invest for their futures and other ways to possibly handle finances if they die unexpectedly.

I am sure it is legit, btw. Necessary? No. Talk to a financial planner if you want to invest for them when they are older- that's what I would probably do.

I can't remember the name of the guy who replies to the Baby Center financial message board but he has addressed this before so you may want to read/ post there to if you want to get a "pros" opinion.

Beth

[HannaAddict]

It is a profit center for Gerber and terrible deal for parents. Don't waste your money.

[kransden]

I have it and here is why. It's a grand total of 38 dollars or so a year. It's easy to set up and auto renew if you wish. Some jobs have dependent life insurance and some don't. I never have to worry about that. If something happens to dd I have the expenses covered. If your child has/had a serious illness they can keep the life insurance going. Also I knew families that had seriously ill children and the money would have been a blessing to them for the unpaid medical bills etc. after their child died.

Is it a waste of money, or are there better products? Maybe, but I look at it as the cost of a dinner out for one night. It gives me peace of mind for the entire year, and the Gerber company isn't going anywhere.

Karin and Katie 10/24/02

[Radosti]

I bought 25000 in life insurance for DS through State Farm.

[tarabenet]

Exactly. So well put. (Are you sure you are an actuary? LOL! You speak real-people English so well!) I don't think may people understand this. I worked in insurance regulation for years, and it still really upsets me to see how many companies play on fear to push people into such poor financial decisions.

The point of insurance is to provide a safety net in case of insurmountable finacial damage. "Insure" and "ensure" are not the same thing. Sadly, we can't Ensure that those we love will always be here. But that is what these companies want us to think! We can only Insure against the financial part of the hardships that their death would cause us.

Life insurance on a child is either to cover the costs of burial and final illness, or, as you mentioned, simply to secure his/her ability to buy life insurance when there is an actual need for it. These companies advertise that it is for the child's sake that we should buy life insurance on the child. Like that is going to somehow keep the child safe! That is such fear-mongering and so illogical, it really should be illegal! (Believe me, we tried!) It makes me so mad! And then, after building up this very false idea that life insurance will somehow protect your child's life, that not buying it means you don't love your child, they charge far more than the coverage itself actually costs -- meaning that even if they were right about the need, they are cheating people like crazy on the "solution" to the problem.

The folks at Gerber should be ashamed of themselves. Their advertising of this product is flat-out immoral, and the value of the product itself is extremely overpriced.

Off my soapbox.

[spu]

the big question we have is what happens if one of the children come down with Type 1 diabetes? (runs in the family)... Most insurance places we talked to won't insure a type 1 adult, so aside from life insurance with their future jobs, they won't be eligible to purchase additional life insurance on their own if they have type 1... so would it be worth getting something now while they are healthy, just in case? or should we just invest the money into something else, like mutual funds?



susan

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nursed for 3 years!
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charlotte + else
+ cashew!

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[Momof3Labs]

That's the future insurability thing that I talked about - check out Northwestern Mutual's product that I mentioned above. It addresses your concerns by offering high enough benefits to be worthwhile in 20+ years, and offers the option to purchase additional amounts several times throughout adult life at preferred rates. Gerber's policy doesn't address this concern that you have.

[DrSally]

"The Gerber plan is garbage"

These were my thoughts when I got it in the mail (repeatedly). There are better ways to invest for your child.

[o_mom]

I don't know about the Gerber plan in particular, but here is our experience.

My dad bought whole life policies for my sister and I when we were little. Paid alot of money into them with the thought that he would guarantee our insurability, pay funeral expenses, medical bills and all that. Problem is inflation. He bought a $5000 policy with options to buy in $5000 increments at certain years. I'm sure that sounded like alot of money to him back then. At this point, however, that isn't even worth buying the extra. He turned the policy over to me at some point after I was an adult/married/not his problem and we have continued to pay the original policy, but could find much better deals on term insurance at levels that would be much better than that.

From the guaranteeing insurability standpoint, unless you get a very large policy, you will be very limited later in the amount you can increase it and it will likely not be nearly what is needed 20-30 years in the future. The odds that a child will be uninsurable at all are very low and most employers offer group rates with no proof of insurability. May not cover every single situation, but I think most people will never benefit from it.

For our kids, we have small policies through DH's work. Enough for a funeral, certainly. (We also have provisions on our personal life insurance that will cover a child for the first 30 days so that a child that died at birth would be covered.) We have medical insurance and a stop loss limit that is reasonable for our income and savings. While large medical bills from a prolonged illness would be a setback, it would probably not be devistating to our finances or require bankruptcy.

[Momof3Labs]

>From the guaranteeing insurability standpoint, unless you get
>a very large policy, you will be very limited later in the
>amount you can increase it and it will likely not be nearly
>what is needed 20-30 years in the future. The odds that a
>child will be uninsurable at all are very low and most
>employers offer group rates with no proof of insurability.
>May not cover every single situation, but I think most people
>will never benefit from it.

Exactly why the Gerber is a really bad choice for future insurability. The Northwestern Mutual product that I mention above is about $400/year for $100,000 in initial face amount, and each future purchase option is equal to the initial face. You can purchase higher face amounts than $100k, it's just the premium number I have handy.

And as for future insurability not being an issue for most people, I wish that were true. Most employers do not offer more than a nominal amount of insurance on a guaranteed basis. We've had a very hard time getting a reasonably priced policy for my DH who is a cancer survivor (15 years, so it has been a long time), and as medicine advances, more and more people will enter young adulthood with medical histories such as this.

I'm not suggesting that everyone needs to buy insurance for their kids, but I think that there are valid reasons for some families. Certainly for those with medical histories such as ours and the OP's, it may be worth the small price to sleep better at night.

[o_mom]

That does sound like a better deal than the Gerber. Is the premium amount also fixed or do you pay 'market rates' later? I found with the policy I had that the premiums for purchasing even the small amount was not reasonable compared to what I could qualify for. They basically set them at the highest premium rates - as though you were not insurable otherwise. Unless I was completely uninsurable (not just at high rates), it was not a good deal as it was as much or more than even the highest rates out there. This was through a major national insurer, too. That's why we have stayed away from any major life insurance for the kids it just hasn't seemed at all worth it.

I guess we have just had good employers - they usually offer 4-5x annual salary and it is portable later if you leave.

[Momof3Labs]

The premium amount is not fixed, but you purchase the additions at the best rate class at the time they are offered.

4-5x annual salary with no underwriting (guaranteed insurability) is highly unusual in most industries, and definitely not something to count on for the kids.