For the greatest college savings, skip this insurance plan
Photo: mueritz
I don’t know about you, but when I see a company use words
like “guaranteed return” and “risk free” to refer to an investment product, red
flags go up. The only investment I can think of that meets
these criteria is an FDIC-insured certificate of deposit.
The Gerber Life College Fund makes these claims. That made me wonder if they were misleading consumers with promises that were too good to be true.
If the claims were true, I wondered, can the Gerber Life College Fund help you save enough to pay for
your child to go to college, and will it provide enough life insurance coverage
if you die unexpectedly?The Gerber Life College Fund makes these claims. That made me wonder if they were misleading consumers with promises that were too good to be true.
See what I found out in my Interest.com article, For the greatest college savings, skip this insurance plan.
I also learned something about options for college savings.
A major advantage of the Gerber Life College Plan over other college savings plans is that the money in this plan isn’t considered in calculating a student’s college financial need. Better-known college savings plans like 529 plans count against a student’s financial aid eligibility. But that doesn't make them an inferior option. In fact, they're better even after the financial aid eligibility hit.
A major advantage of the Gerber Life College Plan over other college savings plans is that the money in this plan isn’t considered in calculating a student’s college financial need. Better-known college savings plans like 529 plans count against a student’s financial aid eligibility. But that doesn't make them an inferior option. In fact, they're better even after the financial aid eligibility hit.
Andrew Schrage, co-owner of the Money Crashers Personal Finance website, says 529 plans are the best college savings plan. He suggests Illinois’ Bright Start College Savings Plan and Utah’s 529 plans for their low fees, Ohio’s plan for “stellar investment options,” and Michigan’s program if you’re risk-averse.
That being said, you can use the money from the Gerber Life College Fund for anything; a downside of 529 plans is that the money must go toward college expenses.
“This can pose an issue if, for some reason, your beneficiary doesn't want or need to attend college,” Schrage says.
However, the 529 account can be transferred to another family member, or you can withdraw the money and pay a 10% penalty on the account’s earnings. Personally, I would take the chance and put my money in a 529 plan.
Comments