Case Study Report 5

 Funding a 1417Power Program versus funding a life insurance policy for a child



The purpose of this report is to summarize the results of an analysis of gifting your 2-year old child the 1417Power Program versus gifting an equivalent contribution to your child's Life Insurance program.


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.


Assumptions & Limitations


Study Assumptions:

  • An 11.5% annual rate of return is used for the 1417Power, Roth IRA Investment Account value calculation
  • The individual starts 1417Power Program paid work activity after turning age 14
  • The individual will have no other taxable income for their ages 14, and 15
  • The 1417Power Program is funded by a non-taxable gift to the participant because the annual cost never exceeds the single person gift limit
  • The Life Insurance premium is paid monthly starting at age 2 until death (780 months at age 67)
  • The 1417Power program fee is paid monthly starting at age 2 through the completion of the child’s 24 months working in the 1417Power Student Employment Program (204 months total)

The Study Limitations:

  • The life insurance age 18 surrender value is an estimate, but believed to be within + / - 3%


Analysis Methodology

Both the 1417Power funding and the insurance policy payments start at age 2. The cost is based on the 1417Power prepayment discount rate. The analysis is based on 2 consecutive years of 1417Power paid working participation at the $325 level starting after turning age 14. Versus the almost equivalent monthly premium amount for the child's Grow-up Plan insurance to age 18, followed by the guaranteed level premium being paid monthly until death at age 67 (Policy is double the death benefit after age 18). The 1417Power prepayment program is a total of 204 monthly payments versus the total Gerber Grow-up Insurance premiums paid being 384 monthly payments at age 18 and 780 monthly payments at age 67.


The table below provides a summary of the cost and total Roth IRA account value of the 1417Power Program versus Gerber Grow-up Plan Life Insurance surrender value at age 18 and death benefit at age 67. At age 67 the Roth IRA value is tax exempt.



Value at age 18

Value at age 67




$920,618* to


Gerber Grow-up Life Insurance




Gerber Grow-up Life Insurance




* Roth IRA value is based on a mathematical calculation using 11.5% annualized rate of return. 11.5% is the 50-year average S&P500 Index annual rate of return, it is not a forecast or prediction. Past performance of any investment program is not a predictor of future performance.

** 1417Power offers referral and revenue share credits that increase the participants level and or duration up to a maximum of a 30% increase in participation. This results in approximately a 30% increase in the Roth IRA contribution amount.

*** Death benefit. Surrender value would be less and the amount in excess of the total premium would be subject to income tax.


Conclusion & Recommendation

The 1417Power Program versus a child's insurance program results in a 921% to 1,217% larger tax exempt Roth IRA account value at age 67* versus the non-taxed value of the insurance policy death benefit. There is less than a 1.6% probability of collecting any insurance benefit prior to the 1417Power Roth IRA account value exceeding the maximum insurance policy death benefit.

The analysis strongly recommends the 1417Power Program versus life insurance because the 1417Power program has higher valuation.