When using a minor as your life insurance beneficiary, there are some things that you have to consider first. One important thing to understand is if the policy is paid off to the beneficiary, and the beneficiary is under 18, then the money cannot be given directly to a minor. In some cases, the money will be help by the insurance company at interest, until the minor reaches 18. So as far as your life insurance serving its purpose to the beneficiary, no benefits will be given until that person reaches 18.
In other cases if the policy is ready to be paid out, but the beneficiary is a minor, then the court can appoint it to a guardian. Also, the court can take the money and put it in a bank account, but it will probably be at a lower interest rate than if the insurance company kept the money. All of the different options have a lot to do with how much money is being dealt with. In a lot of cases where there are significant amounts of money, a lawyer could create a trust for the minor, then have the proceeds payable to the trustee.
In the case of creating a trust, the trustee would have access to the money, but the trustee probably couldn’t be the trustee. In that specific case, there are so many different terms to the trust that you would really have to talk with a lawyer to find out all the details on a trust. When making a minor the beneficiary to a life insurance policy, it is important to think about all of these things. Especially if you are comfortable having a minor as your beneficiary, and you are comfortable with the minor not being able to benefit from the money until he or she is 18.
