Many parents want their life insurance proceeds to go directly to their children. Naming a minor as a beneficiary can feel like the most direct and caring choice. In practice, however, this decision often creates legal and administrative problems that delay access to funds and place control in the hands of a court.
Children cannot legally receive life insurance proceeds outright. Even if a minor is properly named as beneficiary, the insurance company cannot release the funds directly to the child. Without advance planning, the money is typically frozen until a judge appoints someone to manage it. That process can take months, cost thousands in legal fees, and result in decisions you never intended.
Understanding how beneficiary rules work for minors helps you avoid these outcomes and protect your child more effectively.
Why Parents Name Minor Children as Beneficiaries
Parents usually make this choice with good intentions, often without realizing the legal consequences.
Ensuring the money goes to the child
Some parents want to guarantee that life insurance funds belong to their child and not to an ex-spouse, relative, or other adult.
Example: A mother with a teenage son named him as the sole beneficiary because she wanted the money reserved for college and future living expenses.
Avoiding reliance on other adults
Parents may worry that naming another adult creates opportunities for misuse.
Example: A father named his eight-year-old daughter as beneficiary because he did not trust his former spouse to use the funds responsibly.
While these concerns are understandable, naming a minor directly often produces the opposite result.
What Happens When a Minor Is Named as Beneficiary
The child cannot receive the money
Insurance companies cannot pay life insurance proceeds directly to a minor. When this happens, court involvement becomes mandatory.
Example: A father died with his twelve-year-old son named as beneficiary. Because no trust or custodian was designated, the court had to appoint a conservator. The process took nearly eight months, and attorney fees reduced the benefit.
The court controls who manages the funds
If no guardian or custodian is named in advance, the judge selects someone to manage the money. That person may not be who you would have chosen.
Example: A policy named a seven-year-old child as beneficiary. The court appointed an uncle the deceased had been estranged from for years. He controlled the funds until the child reached adulthood.
The child receives everything at once
When the child reaches the legal age of majority, usually eighteen or twenty-one depending on the state, the entire balance is released in a lump sum.
Example: An eighteen-year-old inherited more than two hundred thousand dollars. Within a year, most of the money was gone, leaving nothing for education or long-term stability.
Better Ways to Protect a Child’s Inheritance
Parents can avoid these problems with simple planning tools that preserve control and reflect their intentions.
Name a trust as beneficiary
A trust allows you to choose who manages the money and how it is spent. You can require funds to be used for education, housing, or healthcare and delay full access until a later age.
Example: A mother created a trust naming her sister as trustee. The trustee paid for the child’s schooling and living expenses and released remaining funds at age twenty-five.
Use a UTMA or UGMA account
Uniform Transfers to Minors Act accounts allow a named custodian to manage funds until the child reaches adulthood. This option avoids court appointment but still releases the full amount at the statutory age.
Example: A father named his brother as custodian. The funds were used for medical care and tuition, exactly as intended.
Name a trusted adult cautiously
Some parents name an adult beneficiary with informal instructions to use the money for the child. This approach carries risk because those instructions are usually unenforceable.
Example: A woman named a close friend as beneficiary with the understanding the funds would support her son. After her death, the friend used a portion for personal expenses. There was no legal remedy.
The Right Approach Depends on Planning
Yes, a minor can be named as a life insurance beneficiary. But doing so without additional planning almost always leads to court involvement, delays, and loss of control.
If your goal is to protect your child, the safest approach is to combine life insurance with a trust or custodial structure that clearly defines who controls the money and how it is used.
If a life insurance payout involving a minor has already been delayed, mismanaged, or disputed, legal guidance may be necessary to protect the child’s interests and recover funds that should be preserved for their future.