What is required when naming a minor as a beneficiary on a life insurance policy?

When naming a minor as a beneficiary on a life insurance policy, it is crucial to have a guardian or trustee designated to handle the proceeds. This requirement is in place because minors are not legally able to manage their own finances. In the event of the insured's death, the life insurance payout is intended for the minor's benefit. A guardian or trustee can ensure that the funds are managed responsibly and used for the minor’s needs, such as education, healthcare, or general living expenses.

The involvement of a guardian or trustee provides legal oversight, which helps in safeguarding the welfare of the minor. This structure also prevents potential misuse of funds and ensures that the money is allocated according to the best interests of the child. Hence, naming a guardian or trustee is essential when a life insurance policy designates a minor as a beneficiary.