Gerber Class Action Lawsuit Says Savings Plans Have ‘Zero Value’

A class action lawsuit claims that Gerber Life Insurance Company’s savings plans such as the Gerber Life College Plan and the Grow Up Plan provide “no meaningful savings benefits.”

The Gerber savings plan class action lawsuit was filed by Beulah Prewitt, who argues that Gerber misrepresents life insurance policies as savings plans.

Prewitt says that she signed up for the Grow-Up Plan for all three of her grandchildren and made this decision based on Gerber’s advertisements that the plans would provide cash value when each child turns 18.

Instead, she allegedly found out that the cash value accrued for one of her grandchildren’s plans would be less than 55 percent of the value she paid.

The Gerber insurance class action lawsuit explains that Gerber, a trusted band that sells popular baby foods, also operates a Gerber Life Insurance Policy. Allegedly, the company offers plans like the “Grow-Up Plan” and a “College Plan” as savings plans through which a parent or grandparent can start a nest egg for a child. 

Prewitt argues that Gerber misrepresents the nature of the savings plans beginning with their names, and continuing with the advertisements associated with them. Allegedly, the savings plans do not perform as advertised and “lock consumers into a guaranteed loss at best and a total loss of their investment at worst.”

She argues that specifically the College Plan is a less fruitful college savings vehicle than other options. She also claims that the Grow-Up Plan does not have a net value if the child grows up and only has a net value if the child dies. 

According to Prewitt, Gerber knowingly misrepresents the plans. She says that the marketing material around the plans leads consumers into incorrect understandings of the products and actively misrepresents the function of the products. Allegedly, Gerber effectively tricks many family members into putting savings in at-risk plans. 

Prewitt argues that Gerber preys upon parents and grandparents who are well-meaning but not well-versed in finance, especially those who may not have much money. 

According to the Gerber class action, Gerber falsely represents the plans as savings plans, when they are really life insurance policies. Despite advertisements that these plans offer a way to create a nest egg for a child, they allegedly only offer meager payouts with the rest of the money paid into premiums. 

For example, the Gerber Grow-Up plan reportedly provides zero cash value until the four year of premiums are paid. Allegedly, the “nest egg” at this point would only be $27 despite the customer paying $259.92 in premiums, representing a “massive net loss.”

Prewitt cites AboveBoard Financial, which reports that the cash value of the Grow Up plan is less than the premium payments for up to 40 years.

The Gerber life insurance class action lawsuit says that the College Plan functions similarly, pays out on the death of the insured, and does not have any unique characteristics that let it function as a college savings plan.

How do you save for your children and grandchildren? Share your experiences in the comment section below.

Prewitt is represented by David O’Brien Suetholz and J. Gerard Stranch IV of Branstetter, Stranch & Jennings PLLC; Jeffrey D. Kaliel of Kaliel PLLC; and Lynn A. Toops of Cohen & Malad LLP.

The Gerber Life Insurance False Advertising Class Action Lawsuit is Beulah Prewitt v. Gerber Life Insurance Company, Case No. 6:20-cv-00027-REW-HAI, in the U.S. District Court for the Eastern District of Kentucky.

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