Most people have heard of the Gerber name. After all, the “Gerber baby” is famous the world over. But not as many people are aware that the Gerber brand extends beyond baby food. Gerber also sells life insurance and college savings products. But are they a good life insurance company to consider?
Our Gerber Life Insurance Review
Their best-known products in this area are the Gerber Grow-Up Plan and the College Life Plan. Gerber also offers some other insurance products, too. We have a complete description of all the insurance products available below.
We’ll also take a look into the overall quality of the Gerber insurance products. Are the products a good buy? How well do the Gerber insurance plans hold up in the long-term? Are they a secure investment to make for your child’s future? We took an in-depth look at the reputation of Gerber and the value of their insurance products. Our complete review of Gerber Life Insurance is below:
Juvenile Life Explained
The world of juvenile life insurance is often understood. Part savings plan and part insurance policy, juvenile life insurance is often a great way to lock in a low premium for your child as well as help secure your family’s financial future. Here’s a rundown:
A juvenile policy works in the same basic manner as any standard whole life insurance policy. The difference is the policy is paid for and owned by the parent or guardian until the child turns 21. At that point, the ownership of the policy transfers to the child, who is now an adult.
The 21-year-old can continue the policy for as long as they wish to pay premiums. Additional coverage can also be purchased.
Premiums stay the same for the duration of the policy. You can lock in a great rate for your child, and he or she can hold onto that price for their entire life, so the policy can conceivably even help your grandchildren.
Each policy includes a cash accumulation account. After 25 years, Gerber promises that the cash value of the policy will be at least equal or greater than the total amount of premiums paid up until that point. This cash accumulation can be based against with interest.
History of Gerber Life Insurance
Today Gerber is known around the world for their baby food, but the company actually had a rather small start. Gerber was founded back in 1927 by Daniel Frank Gerber, a businessman who owned a canning company. He lived in Fremont, Michigan, with his wife. She made homemade baby food.
One day Gerber began canning and selling the baby food. The public quickly responded positively, both to the quality of the food and the convenience of the packaging. By 1928, the Gerber baby food business was starting to sweep the country. Today, they’re one of the top suppliers of baby food throughout the world.
In 1967, Gerber got into the insurance business. They created the Gerber Life Insurance Company, which is a subsidiary of the main Gerber Products Company. They originally sold direct-marketing life insurance. They had two policies: one for children and another for adults.
In 2007, the entire Gerber company was acquired by Nestle. This was a multi-billion business integration. Gerber Insurance operates under their own name, but they are backed by the financial strength of one of the largest food companies in the world.
The two most popular policies sold by Gerber Life are their Grow-Up Plan and College Life plan.
- The College Life Plan is a low-risk, college saving plan marketed to parents with newborns and young children.
- The Grow-Up Plan in a whole life insurance policy paid for by the parent up until when the child reaches the age of 21, at which point the policy is transferred over.
Gerber is not a full-service life insurance company, in the sense that they offer a series of products aimed to a wide demographic. Instead, their insurance products are focused on the financial future of children.
Each plan is geared towards parents, even expecting and young parents, who want to prepare for either both or one of the following:
- The child’s college education
- The child’s financial future in the event of the untimely death of a parent
Their Grow-Up Plan, College Life Plans and all other plans for both children and parents are available within all 50 U.S. states, Canada and Puerto Rico.
The Gerber Life Insurance Company is headquartered in Fremont, Michigan. Their Canadian headquarters is in Toronto, Ontario.
Grow-Up Plan: An In-Depth Look
Gerber is known primarily for their baby food, but the Gerber Grow-Up plan is a close second in terms of popularity.
History of the Plan
The plan makes a lot of sense. At the time the insurance policies were created, Gerber was probably the most trusted name in baby food. If you trust a company to provide food for your baby, the reasoning went, you’d also likely trust that same company to help protect your baby’s financial future.
The policies were also popular at the beginning because they were rather unique. They were among the very policies on the market aimed at the very young. As your child grew up with Gerber baby food, it seemed natural to also let them grow up with Gerber life insurance.
When Nestle purchased the larger Gerber company, their financial footing became even more secure. So there are really no special concerns we have with the Gerber company; they’re as financially secure and established as any of the other major life insurance providers.
Specifics of the Plan
This is whole life insurance. Parents purchase a policy for their child, and the child will then have lifelong coverage. One of the major incentives is that the basic premium will never go higher (although you can pay to add additional riders to the policy over time).
Another major incentive is that, by purchasing early, the premiums will stay low even if the child eventually develops any major medical conditions. If a medical conditions develops in a child, they’ll likely have to pay higher premiums for life insurance. But if they already have the Gerber Grow-Up Plan, their premiums will remain unaffected – throughout their entire life!
Purchasing the Plan
It’s all about the number 14. The Grow-Up Plan is available for children between 14 days and 14 years old. Coverage is available for practically any family budget. The cheapest policy is $5,000 and the largest is $50,000.
But that’s not the entire value of the plan. The amount of coverage actually grows as the child ages. At the age of 18, the coverage automatically doubles. The $5,000 policy becomes a $10,000 policy, and the $50,000 grows to $100,000! All this without an increase in premiums.
At the age of 21, the child (who isn’t really a child anymore) takes over the policy. At this point, the policyholder can keep the policy for as long as they continue to pay premiums. Again, the premiums will not increase from their original amount.
But they can if the policyholder wants additional coverage. At 21, the policyholder can increase coverage in a variety of ways. Additions can include coverage for the policyholder’s spouse or children, savings plans, riders and other features. These additions will increase the premium prices; specifics depend on which features you select.
From day one, The Grow-Up Plan includes a cash accumulation account. This allows extra benefits to grow. Eventually, the amount of cash accumulated should equal the amount paid in premiums. When this occurs, the money can be borrowed against, with interest.
Gerber Life College Plan: An In-Depth Look
Gerber’s other popular life insurance plan is their Life College Plan. This plan is a life insurance policy which is also a college savings plan. This type of plan is also known as an endowment life policy. In the entire insurance industry, there’s actually nothing else quite like this.
The Life College Plan doesn’t actually have to be used for college. There’s no obligation, legal or otherwise, to use the money for tuition. So think of this as a convenient way to pay for college, but also as a general savings fund which will grow with your child.
Parents selects two things: the monthly premium amount and the maturity date.
The monthly premium doesn’t increase over time. The maturity date can be between 10 and 20 years. Plans pay out either on the maturity date or if the policyholder passes away. The amount paid depends on the previous monthly premiums. Policies can be structured to pay between $10,000 and $150,000, depending on premiums and payout conditions.
This type of plan is technically a term policy with a guaranteed payout. Gerber invests the premiums carefully and conservatively, which is how they’re able to guarantee the policy payout.
This policy doubles as an adult life insurance plan. If the policyholder passes away, the child will have some financial security.
What We Don’t Like about Gerber Life Policies
The Gerber Grow-Up policy does have some downsides compared to other life insurance plans.
This plan does not have the same tax benefits as a 529 plan. The payout will be taxed. Premiums are not tax-deductible. Some of the policy payout will be lost to taxes.
For this reason, we can’t recommend the Life College Plan for every situation. In some cases, a life insurance plan alone will pay more money towards your family’s financial security, simply because nothing will be lost to taxes.
Additionally, when the policy transfers ownership to the child at the age of 21, they’ll need to pay for any additions. There is a limit of $150,000. This generally isn’t enough to provide for a family or assets for many people.
Now for a rather grim reality: there are special circumstances involving the death of a child. Generally, life insurance is designed to secure a family’s financial future when the primary “breadwinner” passes away. So the policy covers lost income, lost wages, debts and similar.
But these issues don’t pertain to a child. The insurance payout in the death of the child can help pay for funeral expense and allow the parents some time away from work to grieve.
This isn’t an issue in the sense that parents buy a juvenile insurance policy with the expectation that their child will pass away. Juvenile life insurance is mainly to lock in low premiums so the child can have low-cost life insurance as an adult.
What We Do Like about Gerber Life Insurance
The company is very financially sound. They also have excellent ratings from financial services agencies. All insurance organizations in the U.S. are subject to a variety of insurance rules and regulations, and we found no issues with Gerber in that regard.
They’re also are generally highly rated for customer service. They have an A+ rating with the Better Business Bureau. As with any business of their size, there are occasional complaints on the BBB website. Overall, they’ve had only 70 complaints in the last three years. Of those, more than half have been successfully resolved.
This isn’t a terrible amount for a company of this size. At the same time, it is a bit on the high side for a company which strictly sells life insurance.
Our Final Conclusion
With the taxable payouts and additional riders for ownership transfer, however, the Gerber plans might not always be the best option. Other life insurance plans might offer greater flexibility or a better value.
That said, there are also many appealing features found in the Gerber plans, especially the Gerber Grow-Up Plan. The application process is simple, no medical exam is required and approval is fast. Plus, the Gerber brand, ultimately supported by Nestle, is financial dependable.
While we can’t recommend the Gerber insurance plans for all young families, they do offer a unique type of juvenile life insurance. As long as you properly research the type of plan you’re interested in, and shop around a bit first to make sure you can’t find a better deal elsewhere, there are situations where Gerber is the best option.