What is typically required when a minor is named as a beneficiary in a life insurance policy?

When a minor is named as a beneficiary in a life insurance policy, a guardian appointment is typically required. The reason for this requirement is that minors do not have the legal capacity to receive insurance proceeds directly. At the age of majority, which varies by state, individuals gain the legal rights to manage their affairs, including receiving funds from life insurance policies.

When a life insurance benefit is payable to a minor, the proceeds need to be managed by a responsible adult who acts in the best interests of the minor until they reach the legal age. This is often accomplished through the appointment of a guardian, who can be designated in the policy or through a court process. The guardian is legally responsible for managing the funds and ensuring that they are used for the minor's benefit.

Other options, while they may be relevant in certain contexts, do not necessarily address the specific legal requirement posed by naming a minor as a beneficiary. For example, parental consent might be required in some situations, but it does not establish the legal framework necessary for managing the minor’s benefit. Setting up a trust can also serve as a means of managing those funds, but it is not a universal requirement. Legal counsel may be involved in the process, but the critical need for a guardian is