When it comes to setting up financial tools for your children, Fabric by Gerber Life offers a suite of options aimed at protection, investing, and giving them a headstart. From life insurance to investment accounts and retirement tools, Fabric provides digital tools to make things more simple and accessible.
UGMA Accounts (Uniform Gifts to Minors Act) with Fabric
A UGMA (or under certain jurisdictions, UTMA) account is a custodial investment account that lets you invest on behalf of a child. The account is managed by an adult (custodian) until the child reaches the age of majority (often 18 or 21, varying by state). Once that happens, the child takes control of the assets.
Key features of Fabric’s UGMA offering
- Flexibility in use: Unlike 529 college savings plans, which have restrictions on what the funds can be used for (mainly qualified education expenses), funds in UGMA accounts can be used for anything that benefits the child. That might mean education, but also travel, first car, wedding, etc.
- Low fees: The account costs $3/month for a single UGMA custodial account. If you open more than one account, it’s $5/month flat.
- Tax treatment:
- The first portion of earnings is tax-free (for many children) up to a certain amount.
- There’s a “kiddie tax” structure: small earnings taxed at the child’s rate, larger ones taxed at the parent’s rate.
- Professionally managed portfolios and SIPC protection up to $500,000.
Pros & “Watch-outs”
Advantages:
- Great flexibility. The child can use the funds for just about any purpose once they have legal control.
- Tax advantages for smaller earnings.
- Helps build financial literacy and ownership for kids.
Things to consider:
- Once funds are gifted into the UGMA, they irrevocably belong to the child—your control is only as custodian, not owner.
- When the child reaches the age of majority, they can use the money as they see fit—even if you disagree.
- Contributions are not tax deductible, and tax on gains beyond thresholds can apply.
Term Life Insurance Cost at Fabric
One of Fabric’s core offerings is term life insurance — affordable, digital, and designed for families. Here’s what you need to know.
What Fabric offers
- Term lengths generally range from 10 to 30 years.
- Coverage amounts: Fabric offers policies from $100,000 up to $5,000,000.
- Application is digital, often fast (they talk about a quick quiz, etc.).
Cost examples
- Fabric advertises prices “from about $7.86/month” for certain policies.
- In the “How Much Life Insurance Costs in Real-World Terms” post, they show sample quotes for $500,000 coverage over 15 years, non-tobacco users in excellent health. The exact cost depends heavily on age, sex, health, state, and other underwriting variables.
- Another example: “$1/day” coverage offers for certain small policies. For a 30-year-old non-smoker female, excellent health, in Texas, 10-year term, Fabric shows a competitive price.
What affects your rate
- Health status (non-smoker vs smoker, medical history)
- Age (younger is generally cheaper)
- Term length (longer term = higher total cost, though maybe slightly more per month)
- Amount of coverage
- State of residence and local legal/regulatory factors
Good approach
If you’re considering a term life policy, a smart move is:
- Estimate your liabilities (mortgage, debts, future education costs, income replacement) to decide how much you need. Fabric has helpful content on “How Much Term Life Insurance Do I Need?”
- Decide how long you want coverage (how many years until dependents are self-sufficient, until debts are paid, etc.).
- Get quotes—Fabric allows you to do that quickly online.
Custodial Roth IRA
Fabric also covers the idea of a Custodial Roth IRA—basically a Roth IRA opened for a minor, managed by a parent or guardian until the child is old enough. This can give a major head start on retirement savings.
Rules & Mechanics
- Earned income requirement: The child must have some form of earned income (i.e. working for pay). Gifts or allowances won’t count.
- Contribution limits: For 2025, up to $7,000 or the amount of the child’s earned income, whichever is less.
- No minimum age to open, so long as the income requirement is satisfied.
Benefits
- Tax-free growth: Once you satisfy the rules (contributing with after-tax dollars, holding to qualifying distribution age, etc.), earnings can grow tax free.
- Flexibility for certain withdrawals: While the general idea is retirement, some withdrawals of contributions can be taken out without penalty. Also, some early withdrawal of earnings is permitted under exceptions (education, first home, etc.) under certain circumstances.
- Starting early gives decades of compounding which can make a big difference.
Downsides / Things to Watch
- If the child doesn’t have earned income, you can’t open this type of account.
- Contribution limit is relatively low. Even if many people want to contribute, you can’t exceed the child’s earned income.
- Withdrawals of earnings before age 59½ (unless qualified) may incur taxes and/or penalties.
UGMA vs Custodial Roth IRA vs Term Life Insurance: How They Play Together
To put this together:
- Term life insurance is about protection—making sure your family is not financially devastated if you (or another insured) pass away prematurely. This is not an investment; it’s protection.
- UGMA is an investment/custodial account. It provides flexibility, moderate tax benefits, and allows you to build up assets for the child, even if they are using them before retirement.
- Custodial Roth IRA is also an investment/retirement tool, but with stricter requirements (earned income) and with limits on how/when earnings can be accessed without penalties.
A smart plan might include all three: get appropriate life insurance coverage to protect against risk, use a UGMA to build flexible savings/investments, and a Custodial Roth IRA if the child has earned income, to maximize long-term tax-efficient growth.
Summary & Final Thoughts
Fabric by Gerber Life (via meetfabric.com) offers a compelling set of tools for parents wanting both protection and investment for their children. The UGMA custodial investment account is a flexible, low-cost way to start putting money aside early. Term life insurance is priced competitively, with online tools for quotes and policy setup, catering especially to young families. And the Custodial Roth IRA gives children with earned income a chance to start retirement savings early—tax advantages included.
As always, your situation (income, state laws, the child’s work status, your other financial protections) will affect what’s best. It may also be worth consulting a financial planner or tax advisor to make sure you’re using these tools in the most effective way.
