Life insurance can be a great way to provide a safety net for your family. For parents, ensuring their children are cared for once they are gone is an important consideration.
Why do parents want to leave life insurance to their children?
Children have many expenses, whether for their basic needs, education goals, or other reasons. Parents want their children to be taken care of no matter what happens. Naming your child as a life insurance beneficiary can be a way to ensure their financial needs are met.
Can a life insurance beneficiary be a minor?
A minor child can be named as your life insurance beneficiary. However, there are legal implications of doing this. Life insurance companies cannot directly release funds to a minor child. They must be of age to receive the death benefits. This could cause the payout to be delayed because the court must appoint a custodian to manage the funds since the child is not of age.
How can I leave my life insurance to a minor?
You can leave your life insurance to your children in two ways. The first and often most straightforward solution is to name an adult custodian as the beneficiary. This person would control the funds until your children are 18 or 21 (depending on what state you live in). This way, you avoid holding up the payout process because the court will not have to appoint a custodian for you. The second option is to set up a life insurance trust. A life insurance trust is created when you transfer your life insurance policy to a trust. The trust owns the insurance policy, and a trustee manages its benefits. You can choose a trustee to manage the funds until your child comes of age.
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Finding the right life insurance policy can be difficult. Make it easy by contacting one of our experienced Avery Hall agents today at 302-316-6565 for Selbyville, 410-822-7300 for Easton, and 410-742-5111 for our Salisbury office.