Gerber Life Insurance: Calculating Your Cash Value

Gerber Life Insurance offers a range of whole life insurance policies that include a cash value component, which is an amount that increases over time. This feature provides financial flexibility to the policyholder, allowing them to borrow against the accumulated cash value or use it to pay premiums. The cash value is calculated by Gerber Life Insurance setting aside a small portion of the premium payments made after the initial policy years. This amount grows over time, and the longer the policy is held, the larger the cash value becomes. It is important to note that the cash value of a policy can be impacted by loans and accrued interest, which may reduce the eventual payout.

How cash value works

Cash value is a feature of whole life insurance. The cash value of your policy is the accumulated amount of money that Gerber Life sets aside each time you pay your premium after the initial policy years. The longer you hold your policy, the longer the cash value builds. The cash value of your policy, as well as the policy itself, never expires as long as the premiums are paid.

The cash value of life insurance earns interest, and taxes are deferred on the accumulated earnings. While premiums are paid and interest accrues, the cash value builds over time. As the life insurance cash value increases, the insurance company's risk decreases because the accumulated cash value offsets part of the insurer's liability.

You can borrow against the cash value of your policy. If you ever decide to turn in your policy, you would receive the accumulated cash value that has been building over time, less any outstanding debt against the policy.

The cash value of a whole life policy can be used in several ways and could help during life's ups and downs. For example, if something unexpected came up, you could turn in the policy and receive the cash value, or you could borrow against the cash value and still keep your policy. In some cases, you might be able to apply the available cash value to pay your policy's monthly premium. If you decide to take out a loan against the cash value, you could choose to pay back the loan with interest, or, upon your death, to have the amount of the debt deducted from the payout money that your beneficiary would receive.

If you withdraw more than the amount you've paid into the cash value, that portion will be taxed as ordinary income.

Borrowing against cash value

Borrowing against the cash value of your Gerber life insurance policy can be a quick and easy way to get cash in hand when you need it. However, it's important to understand the risks and implications before making any decisions.

Firstly, it's important to note that only permanent life insurance policies, such as whole life and universal life insurance, have a cash value component. Term life insurance, which is generally cheaper and more suitable for many people, does not have a cash value. Therefore, you can only borrow against the cash value of a whole life insurance policy or a universal life insurance policy.

When you borrow against the cash value of your Gerber life insurance policy, you are essentially taking out a loan from the insurance company, with the cash value of your policy serving as collateral. There is usually no formal approval process or credit check required, and you can use the money for anything you want. The interest rates on these loans are typically lower than those for personal loans or credit cards, and there is no strict repayment schedule. However, it is in your best interest to pay back the loan as soon as possible to minimise the interest you will owe.

It's important to keep in mind that if you don't make regular payments on the loan, your policy could lapse, especially if the amount owed exceeds the policy's cash value. Additionally, if you pass away with an outstanding loan on your policy, the insurer will deduct the amount owed, including any interest, from the death benefit paid to your beneficiaries. This means that your beneficiaries will receive a reduced payout.

Before taking out a loan against the cash value of your Gerber life insurance policy, be sure to carefully consider the pros and cons in the context of your specific situation. Consult a financial advisor or tax professional to understand the potential tax implications, as you may owe taxes on the amount borrowed if the policy lapses or is not repaid.

Cancelling a policy

Cancelling a Gerber Life Insurance Policy

Gerber Life Insurance offers a range of insurance products, including whole life insurance, term life insurance, and accident protection insurance. While Gerber Life Insurance can be a valuable financial tool, there may be circumstances under which you need to cancel your policy. Here's a step-by-step guide on how to cancel your Gerber Life Insurance policy:

• Understanding the Cash Value: Before cancelling your policy, it's important to understand the cash value that has been building over time. With Gerber's whole life insurance, the company sets aside a small portion of your premium payments after the initial policy years, which accumulates as the cash value of your policy. This cash value can be accessed in different ways, such as borrowing against it or surrendering the policy to receive the accumulated cash value.
• Review Your Policy: Before initiating the cancellation process, carefully review your policy documents. Familiarize yourself with the terms and conditions, including any penalties or fees that may apply upon cancellation. Additionally, check if there is a specific procedure outlined in your policy for cancelling the policy.
• Contact Gerber Life Insurance: You can initiate the cancellation process by contacting Gerber Life Insurance. They can be reached through their customer service phone number, 1-800-704-2180. Their phone lines are open Monday through Friday from 8 a.m. to 7 p.m. Eastern Time (ET). Alternatively, you can log in to your Gerber eService account online and message a customer representative about your cancellation request.
• Provide Necessary Information: When contacting Gerber Life Insurance, have your policy and personal information ready. This information is required to verify your identity and ensure that the cancellation is authorized by the policyholder.
• Confirm Cancellation: After submitting your cancellation request, it's important to confirm that your policy has been successfully cancelled. Check your email for a confirmation message from Gerber Life Insurance. If you don't receive an email, check your junk mail folder or contact Gerber Life Insurance again. Additionally, if you have set up automatic payments, verify that no further charges are being made to your bank account.
• Understand Common Reasons for Cancellation: While you are not obligated to provide a reason for cancellation, it may be helpful to understand the common reasons why people choose to cancel their Gerber Life Insurance policies. These reasons can include finding a better policy with another company, changing financial circumstances, or no longer needing the coverage.
• Be Aware of the 30-Day Trial Period: Gerber life insurance policies typically offer a 30-day trial period during which customers can cancel their policy at any time and receive a full refund. However, if you cancel after this trial period, you may be charged a small penalty fee, and you may not receive the full value of your policy.

Remember, cancelling your life insurance policy is a significant decision that can impact your financial protection and that of your loved ones. Carefully consider your options and explore alternative solutions before proceeding with the cancellation.

Using cash value to pay premiums

The cash value of a whole life insurance policy can be used in several ways, including paying your premiums. After the initial policy years, each time you pay the monthly premium, Gerber Life sets aside a small amount, which grows over time into the policy's "cash value". The longer you own the policy, the larger the cash value.

In some cases, you might be able to apply the available cash value to pay your policy's monthly premium. It is best to rebuild the cash value as soon as possible to keep your policy's coverage amount whole.

The Gerber Life Grow-Up® Plan is a children's whole life policy with a cash value component that could be useful when your child becomes the policy owner at age 21. Your child could borrow against the cash value while keeping the policy in force (as long as premiums are paid).

The Gerber Life Guaranteed Life Plan, designed for adults 50+ years old, builds cash value that you could borrow against to help pay for medical bills or other immediate needs.

The important thing to remember is to pay back any policy loan and the interest due, or else when you surrender the policy, you won't get back as much money. If you die, your beneficiaries will receive a reduced payout.

Accumulating cash value

The Gerber Life Grow-Up® Plan is a children's whole life insurance policy that provides financial protection for you and your child and helps build a small nest egg for your child. The cash value of your policy is the accumulated amount of money that Gerber Life sets aside each time you pay your premium after the initial policy years. That means that the longer you hold your policy, the longer the cash value builds. The cash value of your policy, as well as the policy, never expires as long as premiums are paid.

How does it work? Like adult whole life insurance, a great benefit of the Grow-Up® Plan is its "cash value". Each time you make a monthly premium payment for your Grow-Up® Plan after the initial policy years, Gerber Life sets aside a small amount of money. Over time, this becomes the cash value of your policy. It represents how much your policy is worth at any given point in time. You can watch the amount grow, just like your child.

The longer you own the policy and make all the premium payments, the more cash value the policy accumulates. By the time your child is an adult and becomes the policy owner, you will already have helped start a nest egg, which your child can continue to grow.

The cash value of a whole life policy can be used in several ways and could help during life's ups and downs. For example, if something unexpected came up, you could turn in the policy and receive the cash value, or you could borrow against the cash value and still keep your policy. In some cases, you might be able to apply the available cash value to pay your policy's monthly premium. If you decide to take out a loan against the cash value, you could choose to pay back the loan with interest, or, upon your death, have the amount of debt deducted from the payout money that your beneficiary would receive.

The dollar amount your beneficiaries would receive depends mainly on the coverage amount you select when buying the policy. That amount could be reduced if there is any outstanding debt against the policy at the time of your death.

Frequently asked questions