The Grow-Up® Plan: Be Their Hero
Did you know you have the power to give your children or grandchildren a valuable gift today which they may thank you for years from now? At Gerber Life, we make it easy for you to give kids protection for their future while building cash value. The Gerber Life Grow-Up® Plan gives parents and grandparents a way to provide the gift of guaranteed1 life insurance protection to children from 14 days to 14 years old while helping to build a strong financial foundation. Premiums are designed to be budget-friendly. And, unlike many other competitors, coverage doubles in value during age 18 without any increase in premiums. Help protect a child’s future and financially strengthen it at the same time with the Gerber Life Grow-Up® Plan.
A "gift" of whole life insurance coverage that automatically doubles during age 18 at no extra cost.
Should I save for college in my name or my child’s name?
Saving for your child’s college education represents an investment in your child’s future. After all, the average cost of a college education has been rising steadily for decades – about 7% per year according to Forbes business magazine. That trend is expected to continue indefinitely.
Similarly, a study by the National Center for Public Policy and Higher Education has found that low- to middle-income families spend about 27% of their annual income on post-secondary education costs. That figure has increased from just 13% of income in 1980 and continues to rise.
Federal Financial Aid Formulas
It’s essential to save for your child or grandchild’s education. This imperative has led some parents and grandparents to ask, “Should I save for college in my name or in my child’s name?”
Here are some considerations: When students apply for Federal financial aid, they must contribute at least 20% of their assets toward college costs. In contrast, parents must contribute 5.6% of their assets toward college costs.
For example, a child has a save-for-college account in his or her name with $10,000 in assets, he or she would have an expected contribution of $2,000 toward college costs. If the account were in his or her parents’ name, however, the expected contribution would equal only $560. Basically, a save-for college account in a child’s name lessens the amount of aid available by 20% of the account’s assets, while an account in a parent’s name lessens the available aid by 5.6% of the account’s assets.
Kiddie Tax
It once made financial sense to open savings accounts under children’s names. When children were taxed at their own rate, they generally paid much less than did their parents. However, tax laws change. The passage of the “kiddie tax” a few years ago closed this loophole.
Today, if children have investment income over a certain amount – currently $1,900 – some of it is taxed at the parent’s rate, which is usually much higher. The “kiddie tax” applies to children under age 18, as well as to those 19 to 23 years old who are registered as full-time students and have earned income that’s less than half of their support. The impact of the “kiddie tax” is mitigated when the account’s annual income is less than $1,900.
Keeping it Under Control
When a parent opens a custodial savings account for their child, it’s just that – custodial. Depending on the state, control over that money will transfer to the child when the child reaches the age of majority. Many 18 to 21-year-olds are capable of using that money wisely, such as for college tuition and related costs Other young adults might not yet have that self-control.
Accounts in children’s and or parents’ names each offer benefits. Only you can decide what’s best for your family.
In addition, it’s important to consider not only in whose name to open a save-for-college account, but also to research the save-for-college options. One option is the Gerber Life Insurance College Plan, which doubles as a life insurance policy for the parent or grandparent during the term of the policy.
Whatever you decide, a college education will open doors for your child’s future.
Sources:
1) http://www.finaid.org/savings/accountownership.phtml
2) http://money.msn.com/college-savings/3-college-myths-that-will-cost-you-weston.aspx
3) http://www.irs.gov/taxtopics/tc553.html
4) http://money.usnews.com/money/blogs/On-Retirement/2011/12/22/should-i-save-for-retirement-or-college
Three great reasons to get whole life insurance for your child.
Our kids grow up fast, don’t they? They morph from babies to toddlers in the blink of an eye. A few years more and they’re out the door before we can catch them!
Protecting our little ones is an instinctive urge. Not only do we want to provide a safe and loving environment for them, we want to safeguard them financially. One great way to jump-start your child’s financial security is with a Gerber Life Insurance Grow-Up® Plan.
The Grow-Up® Plan is a whole life insurance policy for your child. In addition to providing a life insurance benefit of up to $50,000, the policy builds cash value over time.
So let’s take a closer look at the advantages of the Grow-Up® Plan.
Affordability
In this tough economy, people are focused on spending wisely. Consider that you can buy a $10,000 policy for a child under 1 year old for as little as $1.50 a week. Talk about affordability and wanting to spend wisely!
The whole life insurance policy’s low childhood premium rates are based on your child’s age when you apply. Life insurance premiums increase with age, so rates for babies and children are particularly easy on the wallet. It follows that obtaining life insurance for your child at the earliest possible age can make financial sense.
Also, consider that the Grow-Up® Plan premium rate that you start with never increases during the life of the policy. That’s right: The premium is locked-in at that low childhood rate.
With the Grow-Up® Plan, you can buy a wide range of coverage for your child, from $5,000 to $50,000. So if your budget is tight, you can buy a smaller whole life insurance policy and add more coverage later on.
Parents, grandparents and permanent legal guardians can purchase a Grow-Up® Plan for a child 14 days to 14 years old.
Growth
Another benefit of the Grow-Up® Plan is the cash value that you can build for your child, since, as a whole life insurance policy, it accumulates cash value over the years, as long as the premiums are paid. The adult remains the policy owner until the child reaches age 21, at which time the child becomes the policy owner. He or she will then have a choice of keeping the policy, taking a loan against the cash value if needed*, or requesting a payout. If a need arises while you are still the policy owner, you can do the same.
An additional benefit of buying this whole life insurance policy for your child is that his or her coverage automatically doubles in value during the year he or she is 18 – with no increase in premium. For example, a $10,000 policy doubles to a $20,000 policy, a $15,000 policy to a $30,000 policy, and so on. Double the insurance coverage at the same low childhood premium rate locked in for the life of the policy. Does it get any better?
When you purchase a Grow-Up® Plan for your child, you are essentially enabling him or her to have affordable life insurance for up to a lifetime. Often a young person can be priced out of having life insurance or unable to obtain it if he or she develops a serious illness or has a job or hobby that an insurance company considers dangerous or risky. However, none of these factors affect coverage for an adult child who has a Gerber Life Grow-Up® Plan – future coverage is guaranteed.
Flexibility
After turning age 21, your child also will have several opportunities to buy additional coverage – up to 10 times the original amount. So, for example, if your child had a $25,000 policy to start, he or she could purchase up to $250,000 in coverage as an adult, at Gerber Life’s standard rate for your child’s age at the time.
There’s also an intangible benefit to the Grow-Up® Plan: knowing that you’re giving your child or grandchild a gift of protection that can last for up to a lifetime. For more information, read about how the Grow-Up® Plan works.
* Policy loan interest rate is 8%. Loans may impact cash value and death benefit.
If you want more information, send us a message, and we will contact you.