Gerber Life Insurance

[CHUBROCK]

Am I just wasting my money paying life insurance on my perfectly healthy children? It is one of those Gerber Life cash value policies. I have been paying these things for about 8 years now and I am beginning to think that I should have taken the $18 month ($9 per policy) and simply put it in a money market or other investment vehicle. I am thinking of cashing out early and investing. What are the thoughts out there?

[Ima saver]

Yes, that is what you should be doing, put it in savings until you get enough to open a mutual fund. Children do not need life insurance. I would cancel right now. You have about $1728 already paid in. Let's see what you get out of it?

[jeffrey]

Extremely emotional debate - I think this is the one subject where I have actually received hate mail when I gave my opinion. Purely from a financial perspective (disregarding the emotional issues), a loss of a child will actually relieve you of a costly financial commitment. Again, speaking purely financially, it cost less if you don't have a child than if you have one.

Life insurance is meant to replace an income that is lost when one dies, and a child rarely has an income. Unless your child is the main source of income for your family and you have means to cover the costs of a child's funeral, then from a financial perspective there is no need to have life insurance for him or her.

I'll leave it at that and see if my email fills with hate mail again

[sweeps]

Cancelling whole/cash-value life insurance is usually a good idea. BUT -- read the rules about cancellation before doing it. Sometimes it may benefit you to wait a period of time to cancel.

Here is a contrived example:
Say you have a whole life insurance policy in which you're paying $100/month to. For the first 5 years there is a cancellation fee of $1000; after the 5 years there is no cancellation fee. The 5-year anniversary of the policy is 2 months away. Obviously you will come out ahead if you pay into the policy 2 more months.

[disneysteve]

Originally Posted by CHUBROCK

Am I just wasting my money paying life insurance on my perfectly healthy children?

Absolutely!

The purpose of life insurance is to replace lost income if a person dies. If I were to die, my wife and daughter would need insurance money to replace my income. If my wife were to die, I would need some extra money to handle child care until my daughter is independent.

If my daughter were to die, we would need nothing other than a few thousand for funeral expenses. I don't need an insurance policy for that, just some savings.

Insuring children is one of the biggest rip-offs in the insurance industry IMO. It totally plays on the heartstrings to make parents think they are being bad parents if they don't do so.

[Ima saver]

I agree with disneysteve!! Jeff, you will get no hate mail from me!! It is a rip off, IMHO.

[Saving in So Cal]

I agree with everyone else.

[Jacklad]

Originally Posted by Saving in So Cal

I agree with everyone else.

It's not that simple, however. My three kids are insured, not to provide money should they die (although funeral costs can be a killer), but to make sure they can always get life insurance.

Heart disease and diabetes run in my family; several extended family members cannot get life insurance and will leave a real mess should they die while their families are young. By insuring my kids as infants, what I was really insuring was their ability to be insured and to get more insurance when they need it.

Jackie

[CHUBROCK]

Thanks for all of the opinions. The first step will be to read the policies to see what is involved in closing them out. Hopefully I will be able to get back most of the money that I put in. Jacklad has a great point. Although many of us see these insurances as a waste of money, there are some who acutally need it and use it for great causes. I would never have thought about insuring my children just to be sure that they would have insurance in the future. Being able to get insurance is an assumption that most of us make. You know what happens when you assume...

[disneysteve]

Originally Posted by CHUBROCK

I would never have thought about insuring my children just to be sure that they would have insurance in the future.

Nor should you think about it. It isn't reasonable, IMO, to pay for insurance you don't need for decades just in case of the incredibly small chance that one of your kids might not be insurable when they are in their 30s or 40s.

[sweeps]

Another thing to consider is the stability of the insurance company. Is Gerber Life Insurance company going to be financially viable for the next 100 years? I'm not sure I'd rely on a baby food company to protect the future of my family.

[Hypersion]

Originally Posted by Jacklad

It's not that simple, however. My three kids are insured, not to provide money should they die (although funeral costs can be a killer), but to make sure they can always get life insurance.

Heart disease and diabetes run in my family; several extended family members cannot get life insurance and will leave a real mess should they die while their families are young. By insuring my kids as infants, what I was really insuring was their ability to be insured and to get more insurance when they need it.

Jackie

How much extra insurance could your children get if later on they had diabetes/heart disease?

[Jacklad]

Originally Posted by disneysteve

Nor should you think about it. It isn't reasonable, IMO, to pay for insurance you don't need for decades just in case of the incredibly small chance that one of your kids might not be insurable when they are in their 30s or 40s.

Not normally, no - but my kids have cousins deemed uninsurable in their early twenties, and a strong family history that made it much more of a possibility.
And I don't recommend whole life policies for kids - if you shop around you can find *very* cheap renewable term that more than fits the bill. Start with your own insurer; you may be able to add the kids as a rider to your own insurance.

Jackie

[getforfree]

Doesn't the Gerber insurance has an option of cashing out the money when the child is 25? I am not sure, but I had an adverising like that mailed to me. Just see if the total of all your payments is higher than that payoff at the end.

[Jacklad]

Originally Posted by Hypersion

How much extra insurance could your children get if later on they had diabetes/heart disease?

In the case of my kids, up to twenty times the death benefit I chose for them without needing a medical. We went for a cheap, renewable term with a payout of fifty thousand. My oldest is now 22 and hasn't needed to increase the payout; it still costs him under $15 per month.

Jackie

[greedy4chips]

Jacklad,

Is that what they mean by insuring one's insurability? I thought you were supposed to buy a policy that states you will always be able to buy an insurance policy if you choose. Bruce Williams always use to talk about it on his show years ago.

[Jacklad]

Originally Posted by greedy4chips

Jacklad,

Is that what they mean by insuring one's insurability? I thought you were supposed to buy a policy that states you will always be able to buy an insurance policy if you choose. Bruce Williams always use to talk about it on his show years ago.

That's exactly what they are talking about. For most people, it will never be an issue - but if there's a family history of conditions making people uninsurable, it can be a wise precaution. Being Canadian, this was only a concern for us with life insurance, but one of my nephews who is American has had problems with both life and medical insurance. He is paying a small fortune for private medical coverage because he was denied by his company's carrier due to "pre-existing" conditions, and turned down flat for life insurance.

Jackie

[katwoman]

Kudos to you, Jackie! You are one of the wise ones.

My own agent (sold me health insurance, not my life policies or the LTC policy I bought a couple of months ago) is forever uninsurable due to a heart condition he developed in his early 30's. BTW, he was running marathons when this condition came up so being unfit was not a factor. He beat the odds and is alive but no one will touch him.

Luckily, he married a gal with great health ins. thru her employer so he was added on to that group policy.

Update: Some of you may remember that my brother's life premiums were high due to his increased weight. He has since made a decision to work out and I'm happy to say he's dropped 30 lbs and still going!

[lrjohnson]

Originally Posted by Sweepsplayer

Is Gerber Life Insurance company going to be financially viable for the next 100 years?

I'm not pro-whole life or pro-insuring children, but Gerber's been insuring for almost 40 years. Seems like it's around to stay.

[RedPondRanch]

As a mother who lost an infant, I'd like to say that, at the time, I wish I HAD had insurance for the child. The funeral bills wouldn't have been such a terrible burden at a terrible time back then.

That being said, there are alternatives. Gerber Life might be OK until parents had time to build a savings account for any emergencies relating to the child. Then the policy could be cancelled.

Alternatively, if your workplace offers life insurance for their employees, often they will allow you to purchase a rider for your children's life insurance at a very, very low cost. This would more than likely be preferable to Gerber.

Children's life insurance policies do have their place, but I would not recommend buying a very large policy. Just enough to cover funeral expenses, God forbid.