Early in my wife’s pregnancy she registered on a couple of web sites to get free samples and discount coupons. One thing we get in the mail a lot was information about The GROW-UP Plan® from Gerber Life. Basically, it’s a whole life insurance plan that offers:
According to Gerber Life:
“The GROW-UP Plan® is a whole life insurance policy designed for healthy children ages 14 days through 12 years. As a parent or grandparent, you can ensure the little ones who mean so much to you will enjoy practical insurance benefits that can be a big help to them later in life.”
Before I even begin to show you the math, I personally believe that life insurance is necessary only if someone is dependent on your income; therefore, life insurance for your baby is just a waste of money.
I punched in some information and got the following quote:
$15.90 per month for $25,000 coverage
According to my calculation, paying $15.90 a month for 20 years add up to $3,816 ($15.90 x 12 x 20). Gerber also went on to say that after 20 years, my son could turn in the policy and get all the premiums I paid back (this is the approximate cash value after 20 years).
Not so fast. I made another calculation which assumes 10% return on invested capital. If I invest $191 ($15.90 x 12) a year, and get an average return of 10% per year for the next 20 years, I could have $12,000 by then.
Buy the insurance and get $3,816 cash value after 20 years (with $25,000 death protection), OR invest $191 a year to get $12,000. Personally, I think $12,000 sounds better.
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