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Do I Get My Money Back When Cancelling a Gerber Life Insurance Policy?

Like some other providers of whole life insurance, the Gerber Life Insurance Company offers a novel form of insurance that's tailored to the needs of small children. These products are marketed as savings plans for young children. When you purchase a Gerber Life policy, you begin making monthly contributions known as "premiums." Initially, you'll be able to recover these premiums only under certain circumstances. Unfortunately, these circumstances typically involve the accidental or natural death of your child.

Over time, your policy will slowly accumulate a "cash value" that can be used for various purposes. In most cases, policyholders simply allow their policies' cash values to grow over many years. However, policyholders who find themselves in desperate need of cash and lack adequate savings reserves may tap their policies' cash values for loan funds. In most cases, the entirety of a given policy's cash value is available for use as a loan. Since they accrue interest at an annual rate of at least 8 percent, these loans are best used as short-term credit facilities. If you take out such a loan, be sure to pay it back as soon as possible.

The cash value of a given Gerber Life policy is equal to its "surrender value." If you become unable to afford your policy's premiums and wish to cancel it, you'll be entitled to receive its full surrender value upon cancellation. To determine the current surrender value of your policy, look at your most recent statement. This figure will be noted near the bottom of the document. To determine the rate at which your policy's surrender value is growing, look at your past six statements and calculate the rate of increase. In most cases, this should be expressed as a percentage of your total monthly premiums.

Unfortunately, Gerber Life imposes strict conditions on policyholders who wish to cancel their policies. If you scan your policy's documents, you'll notice some "fine print" that discusses the rate at which your policy accumulates its surrender value. You'll probably be disappointed to learn that your surrender value will be nonexistent for the first several years during which your policy is effective. After this initial probationary period, it will grow at an accelerating rate. Once your policy has been in effect for 25 years, it will be equal to the total value of the premiums that you've paid over the policy's life. In other words, you'll lose money by canceling your child's policy before his or her 25th birthday.

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