Devoted to the Insurance industry and all thing related

Tasty and sufficiently mushy, Gerber baby food is a well-established brand that has dominated the market for decades.  Started in 1928 Gerber doesn’t just sell strained baby food but also life insurance since 1967.  The AccuQuote blog posted an entry about Gerber Whole Life Insurance and an explanation of how the policy works.

“That's right. You can buy a life insurance for your little one and lock into the same fixed rate for the life of the policy. The policy remains in your name while the kid grows up - and while you're still making the payments. Should your child reach the age of twenty one, Gerber's policy automatically doubles in value - kind of a graduation present, I guess - and continues on at the same low, low rate as before.”

I’d be hard pressed to find another life insurance company that doubles their permanent insurance policies when an insured reaches the age of 21.  Understand that what Gerber doubles is the face amount not the cash value.  Of course the rub for Gerber whole life insurance (The GROW-UP Plan®) is that the death benefit maximum is only $30,000.  This plan is available for kids between the ages of 14 days (the youngest a child can be for any life insurance policy) and 12 years.  

 

Another fun little bit of information about the policy is that “After 20 years, the cash value is equal to or greater than 100% of premiums paid.”  What interest rate do you think Gerber is crediting to the cash value?  It depends on the return of the investments by Gerber Life Insurance Company but lets just day its not very high.

Now, I’m not bashing Gerber life insurance but just pointing out some of the potential drawbacks of owning a whole life insurance policy.  I’ll leave another post to discuss the intricacies of whole life and how it compares to other types of life insurance.  The cost of a Gerber whole life policy varies but doing a quick quote online for a male child under 1 in California I got the following monthly premium prices.  
 
$30,000 - $20.46
$25,000 - $17.05
$20,000 - $13.64
$15,000 - $10.23
$10,000 - $6.82
$5,000 - $3.41

If this policy were for a $30,000 face amount in 20 years the cash value would be at least $4,910.40 or more depending on the annual interest credited to the general account.  If all you can afford is around $20 a month and you want life insurance coverage for your child plus savings then this policy might work for you.