Conference moira::parenting

    Leslie,
    
    The Gerber Plan is actually a life insurance policy.  You can purchase
    it in the amounts of $5k, 10K and 20k, at the age of 21 the policy
    doubles or triples (depends on what you buy) and then they have the
    option of purchasing more insurance at reduced rates and then more
    again at the age of 28.  If they choose to cash in the policy at 18
    they will get at minimum the total amount of premium that you paid in
    up to that point.
    
    This is from their literature and from a phone conversation with one of
    their reps.
    
    Susan

re: "Double or Triple your money"

I'm sure that the same amount of money, put in an investment plan at periodic
intervals (as insurance premiums would be paid), prudently invested would
double or triple in the same period of time.

Life insurance for children is one of those topics I have a strong opinion
on, so excuse me if I get heated or if I offend anyone.

Life insurance is for ensuring financial, not emotional factors.  The death
of a child is, emotionally, one of the worst conceivable events.  But the
death of a child typically does not have a negative financial impact on the
family.

We insure the life of the "breadwinner" so that if the income earning
capacity of the "breadwinner" is lost due to death, the dependents will be
financially provided for.  Many families insure the life of a non-working
spouse (I recommend it), so that if the non-working spouse should die, the
family can afford child care, assistance with house cleaning, and the like. 
I can't see any valid reason for insuring the life of a child (unless they're
a TV star, supporting their family).

I could see the possibility of a life insurance program on a PARENT that
accumulated cash value in, say, 20 years, because then the financial
responsibilities of the parent become less when the child reaches adulthood. 
The parent could then use the cash value to, for example, fund the child's
education.  But I still think that alternatives, such as periodic savings
plans, or even 401k (SAVE program) type programs are better alternatives.

Periodic savings plans are great.  Putting away $x every month is a great
idea.  But imo, ALL of the money should go to savings.  Not one penny should
go to insuring the life of a child.

Clay      

    I was talking to a friend of Kat's the other day.  When he was 15,
    he was diagnosed with diabetes and is now on insulin and diet, the
    whole ball of wax.  
    
    He says that if his grandmother had not given him one of these
    policies as a baby gift, he wouldn't be able to get life insurance
    now, because of the chronic severe health problem that will
    probably shorten his lifespan.  Apparently the policy has some
    kind of conversion principle that allowed him to renew it in his
    own name when he turned 18.
    
    This was not an issue I had ever thought of in relation to
    childhood insurance.  
    
    --bonnie

    We have a 10K policy on each child, that in the event of death, we
    would be able to pay for a funeral, (casket, cemetery plot, etc)
    because with my husbands business, we never know what our financial 
    position will be.  Where we live, funerals run 5K-7K currently.
    
    Angie

    I have looked into this myself a few years back and decided that
    there were several factors in chosing the type of savings plan ...
    I looked at the University scholarships type plan, insurance and
    dedicated savings plan and decided on an insurance based plan as
    *in the long term* representing reasonable value for money.
    
    The things an insurance based plan gives you are; -
    
    1.  final expenses  ... if a child should die you will need several
        thousand for a funeral.  Also, if the child was ill prior to death
        you could be potentially out several thousand in medical expenses
        or medical related expenses (like hospital parking charges and so
        on ... they soon add up to big money!)  So a small insurance policy
        of under $10,000 is not a waste of insurance dollars ... I know I'd
        be hard strapped to find that kind of cash in a hurry so I don't
        resent the few dollars a month in insurance premiums.
    
    2.  savings for education / marriage.  Most people are very quick to
        discontinue a voluntary savings plan for one reason or another.
        When it is tied to an insurance policy, it is far less likely
    	to be discontinued.  The savings plans do tend to show poor
    	performance in the early years because the policy admin and
    	commission costs are essentially paid for during the first 5 years.
    	Thereafter the savings performance is generally quite good and
    	often better than the insurance company's often conservative
    	projections.
    
    3.	Guaranteed insurability.  As mentioned above, a child can develop
    	some health problem which would make him / her uninsurable later
    	in life, and therefore the guaranteed insurability option provided
    	by these policies can be a real boon when the child ventures out
    	on his / her own.
    
    4.  Even if the cash value isn't realized at the start of education,
    	because of the savings performance (it may be better to leave the
    	investment alone because it is outperforming other investments)
    	the policy can be used as collateral for loans or a policy loan
    	taken prior to maturity to pay for education.
    
    The hitch comes in the early years when performance is poor due to
    the admin charges ... life policies look like a very poor deal.
    Yes, investments made outside the plans can often be more flexible
    and yield better returns ... but this may require attention and inter-
    vention.  This is a lazy way of doing it ... sign up and pay up but
    it is effective.  Many policices do allow for larger savings elements
    which do improve the savings performance.  Many policies do have
    what are in essence "quality bonuses" attached where the return on
    the policy does improve with the longevity of the policy.
    
    So, this kind of plan fills basically two needs in one package ...
    if you don't feel that you need insurance coverage for your children
    then so be it ... this kind of plan is not for you.
    
    I do believe in savings and protection being separate entities but
    after shopping around, I found policies that met both needs but
    couldn't find separate plans that reallly achieved what I wanted.
    
    Stuart

 re -.5

 My mother had a life insurance policy for me when I was little, expecting it
to pay for my wedding.  It was only $5/month, but sometimes that was a lot for
her.  When the time came for the wedding it was worth a whole $350!!  
Needless to say it didn't pay for the wedding, but it was used for most of the
wedding dress.  That was soooo special for me.  Expecially knowing how hard
those lean times were, and still she saved for me.

    The previous example is typical of many of the older style policies
    for both children's savings and regular policies.  Most companies today
    have responded with much better products that produce a far higher
    return on the investment.
    
    Stuart

re: .4, .5

Ok, so I exaggerated :^).  There are some valid reasons.  I think that there
are some better ways of providing what you've talked about, but there
definitely is a short term financial impact from the death of a child.  Just
make sure that you explore all other alternatives.  My strong opinion is that
there are other, better, ways of accomplishing most of these.

.5>    I do believe in savings and protection being separate entities but 
.5>    after shopping around, I found policies that met both needs but
.5>    couldn't find separate plans that reallly achieved what I wanted.   
 
The first sentence is very important.  10K of (just) insurance on a child
should be quite inexpensive.  It is the savings side in which it is important
to look for alternative ways of doing the same thing.

re: .6, .7

Your mother sounds something like my father.  To be honest with you, that's
one of the reasons I feel so strongly on this issue.  I'm not critical of
your mother, or my father.  It just makes me mad that a life insurance
company, imo, ripped her off.  If she paid $5 per month for 18 years, or even
15, that the policy should be worth only $350 is unconcionable.  $5 per month
for 18 years is $1080 in premiums.  There is simply no way that life
insurance should cost that much.  If instead of "saving" through life
insurance, she had bought U.S. Savings Bonds, cashed them when they matured,
and put the funds in a passbook savings account, that $350 would have been
well over $1200, AND each four months for the next seven years you could have
cashed in a $25 savings bond.  

I know that the appreciation you have for your mother is for those $5
contributions, not the $350; I feel the same way about my dad.  But it's too
bad that so much of her hard earned money went to the insurance company, and
not where your mother intended it.

Clay

>Ok, so I exaggerated :^).  There are some valid reasons.  I think that there
>are some better ways of providing what you've talked about, but there
>definitely is a short term financial impact from the death of a child.  Just
>make sure that you explore all other alternatives.  My strong opinion is that
>there are other, better, ways of accomplishing most of these.

Oh indeed, for example it is often possible to get some nominal amount of
insurance for your children as a rider on a parent's policy and the premium
today is typically $5 per month for an unlimited number of children.  These
riders typically give the right to the child to buy an some nominal amount of
insurance in their own name without proving insurability ... but this is
only a miminal amount.  What a lot of the child insurance plans do is
provide guaranteed insurability up to some not so nominal amount.  Ours
for example provides for I believe up to 1/4 million.  Also many of the
modern policies are now written with a nominal protection amount.

>The first sentence is very important.  10K of (just) insurance on a child
>should be quite inexpensive.  It is the savings side in which it is important
>to look for alternative ways of doing the same thing.

Yes $10K of insurance on a child should be inexpensive ... but I think you
will find that you'll hit minimum premiums, thus making such a nominal sum
of insurance relatively expensive in a single policy.  You could probably
get over $100K insurance for a child at minimum premiums which are typically
$20 per month.  This is where the child protection rider described
above is useful if you aren't interested in the guaranteed insurability
options.

>your mother, or my father.  It just makes me mad that a life insurance
>company, imo, ripped her off.  If she paid $5 per month for 18 years, or even
>15, that the policy should be worth only $350 is unconcionable.  $5 per month
>for 18 years is $1080 in premiums.  There is simply no way that life

What is unconscionable here Clay, is probably that this was sold as a savings
plan.  If you think about it, the insurance cost for the 18 years was
a little less than $5 per month, given the return, but that is really not
very expensive insurance, given the overheads of maintaining the policy,
paying commissions and so on.  When you are dealing with low face values
for insurance, premiums do seem unfairly high.  And this is why the return
was especially low as well.

Modern policies are definitely better on this score.  They have recognized
that the unfairness of policies like this one exsited and have aimed to
get a better balance between savings and protection.  One thing to note is
that a policy with a higher savings element is actually proportionally
cheaper.  This is not to say that policies like this horrible example
aren't still being sold ... unfortunately they are ... but they more rare.

I have no vested interests in insurance.  I needed to provide some
nominal protection, and provide some long term savings plan and I found
two different policies for two of my children which did what I wanted
without the hassles of worrying about the investment.  Both plans pay
poorly if the polciy is terminated within 5 years ... reasonable after
10 years and excellent between 18 and 20 years based on conservative
predictions.  In both cases, the returns have exceeded predictions, which is
rather important especially considering interest rates have been tumbling.
So, I see both policies probably outperforming the conservative savings
options I had been considering as alternatives.

So, look at a number of policies ... not just one ... and don't let an
insurance salesman force you to buy at first sight ... compare them and
other savings and protection plans and go from there.

Stuart

    Does anyone know if the Globe life and accident insurance company
    policies are worth it?  I feel a bit strange not having any insurance on
    my kids [iknow, it's depressing to think about].  One of their 'flyers'
    came in the mail last week, offering $5000/6 months of insurance for
    $1, with the next 6 months only $10, then after the second year it
    becomes $20/yr till age 26, then $75/yr forever.  Sounds almost too good 
    to be true, but it might be something worthwhile just in case some
    health condition pops its ugly head up in the meantime.  I've not
    gotten any of the insurance the schools sell, and it bothers me, since
    they need to ride school buses.  I had to convince my husband that I,
    myself, needed insurancee [when I went to part-time I lost my Digital
    eligibility,and after a friend was seriously injured in a car accident
    I even managed to find some disability insurance], so I know he won't
    look kindly on getting some for the kids.  But pessimist that I am....
    
    Of course, the policy doesn't spell out coverage, but for $1 I can
    almost afford to be a shooter, and then look at it and compare things
    with my insurance carrier.  The kids are 6 and 10 now, and we live in
    Mass.
    
    Thanks.
    
    Sandy

I think life insurance for children has been discussed in another notesfile,
perhaps CONSUMER or MARKET_INVESTING.

I recently got some junk mail from an outfit trying to sell it, and I gave
it a cursory glance before trashing it.  The only point that made any
impression is that your kid may end up with some medical condition that
makes him uninsurable when he really needs insurance.

Nobody really needs life insurance until somebody else depends on his
income.  If the plan you mention gives your kid a $5000 insurance policy,
it's useless.  If it guarantees that a significant amount of insurance will
be available at reasonable cost (which $75 for $5000 insurance isn't), it
may be worth looking at.  Outfits that give you a low starting rate figure
that you'll probably continue to pay as long as the rate is below the pain
threshold, even if it's a rip-off.