To cash out a Gerber Life Insurance policy, you surrender it back to the company in exchange for its accumulated cash value, which permanently ends your coverage. Only Gerber’s whole life policies build cash value, so the first thing to confirm is that yours qualifies. From there, you contact Gerber, complete and sign a surrender form, and wait for a check or deposit after loans, unpaid premiums, surrender charges, and taxes come out of the total.
Confirm Your Policy Has Cash Value
Term policies cannot be cashed out. They pay a death benefit if the insured dies during the term and nothing otherwise. If that’s what you have, there is no cash value to collect.
Gerber currently offers two whole life products that do accumulate cash value:
- The Grow-Up Plan, a children’s whole life policy purchased by a parent or grandparent, whose coverage amount automatically doubles when the child turns 18.1Gerber Life Insurance. Guaranteed Purchase Option Life Insurance Rider
- The Family Plan Whole Life policy, available to applicants ages 18 through 80, with coverage from $50,000 to $1,000,000 and a locked-in monthly rate.2Gerber Life Insurance. Family Plan Whole Life Insurance
Both build cash value because a portion of each premium is set aside and grows over time.3Gerber Life Insurance. Whole Life Insurance Cash Value If you’re not sure which type you own, the declarations page of your policy or a call to Gerber at 1-800-704-2180 will tell you.4Gerber Life Insurance. Customer Service
Make Sure You’re the Person Who Can Surrender It
Only the policyowner can surrender a Gerber policy, and the owner is not always the insured. On a Grow-Up Plan, the parent or grandparent who bought the policy owns it until the child turns 21, at which point ownership transfers automatically to the child.5Gerber Life Insurance. Grow-Up Plan Questions After that, only the now-adult child can request the surrender. Family Plan policies stay with whoever applied unless ownership was formally transferred.
Two situations can block a surrender even when you are the owner. If you named an irrevocable beneficiary, that person’s written consent is generally required, because the designation gives them a legal interest in the proceeds. If the policy has been assigned to a lender as collateral, that lender must release the assignment before Gerber will process anything.
Think Twice About the Grow-Up Plan
If the policy you’re considering is a Grow-Up Plan, pause before you cash it out. The coverage doubles at age 18 at no extra cost, and at age 21 the insured gains access to a Guaranteed Purchase Option that lets them buy additional coverage without a medical exam at several life milestones.1Gerber Life Insurance. Guaranteed Purchase Option Life Insurance Rider That guaranteed insurability matters most if health changes later make new coverage expensive or unavailable. In the early years, cash value is often modest, so the trade is a small payout for a permanent loss of those options.
Request the Surrender Paperwork
Gerber does not currently offer an online surrender option. You have to contact the company to get the form:
- Rapid Response Line at 1-800-285-7706, available 24/7. The automated system lets you check your current cash value and request forms to be mailed.6Gerber Life Insurance Company. Rapid Response Line
- Customer service at 1-800-704-2180, Monday through Friday, 8 a.m. to 7 p.m. ET, if you want to speak with a representative.4Gerber Life Insurance. Customer Service
Check your cash value before you call. Knowing the number gives you a starting figure and lets you decide whether surrender makes sense once deductions and taxes are factored in.
Fill Out and Return the Form
Complete every field on the surrender request form and sign it. Blank fields or inconsistencies will bounce it back and add weeks. You’ll also need to send a government-issued photo ID such as a driver’s license or passport.
Policies held in a trust or by a business require more. A trust typically needs the trust agreement and a trustee certification; a corporate-owned policy usually requires a board resolution authorizing the surrender. If the policy was pledged as collateral, include the lender’s written release.
Lost the original policy document? That doesn’t stop the process. Call customer service and ask about the lost-policy procedure, which is usually a signed affidavit confirming the loss.
What Gets Deducted From Your Payout
The amount you receive will be less than the cash value on your statement. Three deductions come off the top.
Outstanding policy loans. If you borrowed against the policy, the remaining balance plus accrued interest is subtracted first. Gerber charges up to 8% on policy loans, so a loan sitting unpaid for years can be larger than you remember.7Gerber Life Insurance. Family Plan Whole Life Insurance Questions Any outstanding debt against the policy is deducted before the cash value is paid out.8Gerber Life Insurance. Cash Value – A Benefit of Whole Life Insurance
Unpaid premiums. Any premium that is past due at surrender comes out of the payout, including amounts owed during a grace period.
Surrender charges. Whole life policies often carry surrender charges in their early years, highest at the start and decreasing on a schedule until they reach zero. A long-standing policy may have no surrender charge left. Ask Gerber for a surrender value estimate, which shows the net amount after all deductions, before you commit.
Taxes on the Surrender
You don’t owe tax on the return of your own premiums. You owe tax only on the portion of the cash value that exceeds your cost basis. The IRS defines cost basis as total premiums paid minus any amounts previously received tax-free, such as dividends or unrepaid loans.9Internal Revenue Service. For Senior Taxpayers 1
That last part surprises people. A $5,000 policy loan you never paid back reduces your cost basis by $5,000, which pushes more of your surrender proceeds into the taxable column. The gain is taxed as ordinary income, so it stacks on top of your other earnings for the year.
Gerber will send you a Form 1099-R after the surrender, reporting the gross distribution and the taxable portion in Box 2a.10Internal Revenue Service. Form 1099-R – Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. You report those figures on lines 5a and 5b of Form 1040.9Internal Revenue Service. For Senior Taxpayers 1
One warning. If your policy was heavily funded in the early years and failed the IRS seven-pay test, it may be a modified endowment contract.11Office of the Law Revision Counsel. 26 US Code 7702A – Modified Endowment Contract Defined MECs are taxed differently: gains come out first instead of premiums, and surrenders before age 59½ get hit with an additional 10% penalty on top of ordinary income tax. Most standard Gerber policies are not MECs, but if yours was front-loaded with large premiums, verify before you surrender.
Alternatives to Full Surrender
Surrender is permanent. Once the policy is cashed out, you cannot restore it, and replacement coverage will cost more because you’ll be older and possibly in different health. A few options preserve the policy or defer the tax hit:
Borrow against the cash value. A policy loan gives you cash without ending coverage. There’s no fixed repayment schedule, though Gerber charges up to 8% interest and any unpaid balance reduces the death benefit your beneficiaries would receive.7Gerber Life Insurance. Family Plan Whole Life Insurance Questions
1035 exchange. Federal law lets you transfer the cash value directly into another life insurance policy, an annuity, or a qualified long-term care insurance contract without recognizing any gain.12Office of the Law Revision Counsel. 26 US Code 1035 – Certain Exchanges of Insurance Policies The transfer has to go directly between insurers; you cannot take the cash and reinvest it yourself. This is worth considering when the taxable gain on an outright surrender would be large.
Reduced paid-up insurance. Some whole life policies include a nonforfeiture option that lets you stop paying premiums while keeping a smaller, fully paid-up death benefit. You give up future cash value growth but keep some coverage with no further payments. Check your contract or ask Gerber whether this is available on your plan.
After the Surrender Is Processed
Once Gerber processes the surrender, coverage ends immediately and the policy cannot be reinstated.13orca.life. How to Cash Out Gerber Life Insurance – Steps and Key Considerations You receive the net surrender value as a lump sum, usually by check or direct deposit, within a few weeks of approval. State insurance rules generally require payment within a set timeframe, though the exact deadline varies.
Keep every document from the surrender with your tax records, including the confirmation letter and the 1099-R. If the amount deposited doesn’t match what Gerber quoted, call customer service right away. Discrepancies are easier to resolve while the file is still open than after it’s closed.