This study will compare a Gerber Insurance Company policy issued at age 2 versus a 1417Power Prepayment Program starting funding at age 2 with the child starting paid work after turning age 14 for 24 months, with the resulting Roth IRA funded from payroll deductions from the child's earnings.
One purpose of life insurance is to provide a death benefit payout. The US Social Security Administration's "Actuarial Life Table" shows that total deaths from age 2 through age 18 as a 0.47% probability. This probability is less for healthy two year olds. The Gerber Insurance Company will write Grow-up Plan life insurance ONLY for healthy children. Additionally, the policy has death from war, and identified high risk activities exclusions. This same data indicates a 2-year old has a 74.3% probability of living past age 67. This analysis will be based on the policy surrender value at age 18 and death value at age 67. The 1417Power Program Roth IRA value does not exceed the death benefit until age 27 years 9 months. Only the reader can make the judgement call as to the value of the potential death payout before the break even age.
The Gerber Company will not provide a surrender value until a policy is actually written, therefore this analysis uses a Gerber Life Insurance Agent's estimate of $3,500.00 surrender value at age 18 for a $50,000 face value policy. The actual value could be different.