Knowing Your Options: 529 Plan vs Gerber Life Insurance College Plan

With the rising cost of higher education, it’s important to prepare for your child’s future now and have a plan for college or other schooling. Two popular ways to do so are the 529 Plans and the Gerber Life Insurance College Plan. Let’s see how these two college plans compare.

What Is a 529 Plan?

A 529 plan is a tax-free college savings account.

What Is the Gerber Life Insurance College Plan?

The Gerber Life Insurance College Plan is an individual endowment life insurance policy that matures in 10 to 20 years (you choose the duration), pays a lump-sum upon maturity, and provides adult life insurance protection.

Which plan is right for you? What about risk?

Money put into a 529 Plan can be used only for qualifying educational expenses, which include tuition, fees, books, and room and board at accredited schools. The Gerber Life Insurance College Plan provides flexibility by letting the student use the payout funds for college or technical school or anything else, without limitation.

In terms of risk, the rate of return on 529 Plans is tied to the stock market. This offers the possibility of greater returns than the Gerber Life Insurance College Plan, but also means greater risk if the stock market goes down. The Gerber Life Insurance College Plan offers guaranteed cash value growth that isn’t impacted by the stock market. You know exactly how much money you’ll have at maturity, assuming that all premiums are paid.

What if something happens to me before my child starts college?

With a 529 Plan, if the unexpected happens to you before you’ve finished your planned contributions, your child is at risk for not getting all of the money to fulfill the planned goal. With the Gerber Life Insurance College Plan, if something happens to you before your policy reaches maturity, your child as beneficiary would receive the payout in full, regardless of how much you’ve actually put in. 

If you’d like to discuss kids’ college funds and whether a Gerber Life Insurance College Plan could be right for you and your family, we’re here to help. Just call us at 1-800-704-2180.