Hellobee Boards

I saw this commercial numerous times over the weekend also. I'm curious to see what the responses are!

I was debating on whether to purchase the Gerber plan or the 529 plan, and here is what my friend (he is a financial planner) said:

"I do think 529 plans are the best option for parents to save for a child's college because it's tax-free during both the accumulation and distribution phase (if you use it for college, of course). It also offers the widest investment options to maximize growth.

I have heard a lot of clients ask about the Gerber Life Insurance programs so I looked into it some time ago. They offer two programs, one is a pure life insurance policy for the child, and the other one is a modified life insurance policy called "endowment contract". The life insurance policy is easy to understand, but the 'endowment contract' can be a bit confusing.

The biggest difference is that with an "endowment contract" the policy holder can cash out at age 18, where as one cannot access the full face value of a pure life insurance policy unless one dies, or takes out a 'loan'.

The Gerber Life Insurance program is great if you want to buy a life insurance policy for your son, and have it mostly paid up by the time he is 18. He can then take over the policy himself and basically have an insurance policy already paid for.

However, I would stay away from the endowment contract for couple reasons. One, the "guaranteed" return is only 3.4% according to their own calculation. You can do much better in a 529 plan even with a conservative bond fund. Second, the earnings is not tax free. You will have to pay taxes along the way."

Hope this helps!

Also, Mrs. High Heels wrote a post about 529 plans.