If you’re a parent or guardian, you may be wondering if you can name a minor as the beneficiary of your life insurance policy. The short answer is yes, you can name a minor as your beneficiary, but it may not be the best option for your family. Let’s take a closer look at what you need to know.
First, it’s important to understand that minors cannot directly receive life insurance proceeds. If you were to name a minor as your beneficiary, the insurance company would not pay the proceeds directly to the child. Instead, the money would go into a trust, which would be managed by a trustee until the child reaches the age of majority.
There are some potential drawbacks to naming a minor as your beneficiary. For example, if you were to name your child as the beneficiary and then pass away, the money in the trust would be available to pay for the child’s needs. However, the trustee would have complete control over how the money is used, and there is no guarantee that the money would be used for the child’s benefit.
Additionally, once the child reaches the age of majority, they would have full control over the money in the trust. Depending on the amount of money involved and the child’s level of financial maturity, this could be a good thing or a bad thing.
So, what’s the alternative? One option is to name a trusted adult as the beneficiary of your life insurance policy and then make arrangements for them to use the money for the benefit of your child. For example, you could create a trust and name the trusted adult as the trustee. The trustee would then be responsible for managing the money in the trust and using it for the benefit of your child.
Another option is to name a custodian under the Uniform Transfers to Minors Act (UTMA) as the beneficiary of your life insurance policy. This allows you to transfer the money directly to the child when they reach the age of majority, without the need for a trustee or court approval.
In summary, while it is possible to name a minor as your life insurance beneficiary, it may not be the best option for your family. Consider working with a financial advisor or estate planning attorney to determine the best way to provide for your child’s financial future.
If you’re interested in learning more about life insurance and estate planning, visit Every Health Group’s website at www.everyhealthgroup.com/selfenrollment. We offer a range of affordable life insurance policies to fit your needs, and our team of experts can help you create a plan to protect your family’s financial future. Enroll now for $0 and get the peace of mind that comes with knowing your loved ones will be taken care of.