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Can a Minor Be a Life Insurance Beneficiary?

Choosing beneficiaries for your life insurance policy is an important decision. After all, they’re the ones that will receive money from your policy’s death benefit upon your passing. Therefore, it’s important to explore all your options and be selective about who you choose.

You may be thinking about naming your spouse or child as a life insurance beneficiary. Keep reading to find out how life insurance beneficiaries work, if your beneficiary can be a minor, and some alternatives, such as establishing a life insurance trust.

How life insurance beneficiaries work

Put simply, a life insurance beneficiary is the person or entity you assign to receive your policy’s death benefit when you pass away. You may choose one beneficiary or multiple beneficiaries, depending on the policy. It’s your personal decision. Some examples of common life insurance beneficiaries you might want to consider include a partner or spouse, child, or charity.1

Can a minor be a life insurance beneficiary?

If you’re a parent, you should know that it’s possible to name a minor as your primary beneficiary, depending on your insurance company. But there may be some legal implications. Typically, an insurer won’t simply give your minor child the death benefit when you pass away. Instead, the court will likely need to appoint an adult custodian to manage the funds until the child becomes an adult. Unfortunately, this can be an expensive, time-consuming process. It might also mean that less money will be available to your child.2

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Pros and cons of designating a minor child as a beneficiary

Before you decide to name your minor child as a life insurance beneficiary, it’s a good idea to consider the benefits and drawbacks. If you do go this route, your child will eventually be able to use the death benefit as they need to. Once the funds are transferred to them, they can use it to help pay for health insurance, college, or everyday expenses. This can give them the financial help they need once they become a young adult.

The main disadvantage, however, is that your child won’t have access to the money until they turn 18 or 21, depending on your state. Keep in mind that the transfer process does not come cheap and can reduce the funds available to them. In addition, you lose control over who handles the funds, as the court will appoint this individual.2

Alternatives to naming your child as your beneficiary

If you determine it doesn’t make sense to name your child as a beneficiary, consider these alternative options:

Establish a life insurance trust

With a life insurance trust, you’ll have more control because you’ll be able to specify how you’d like your death benefit to be distributed.3 For instance, you may state that a portion of the funds be distributed for your child’s college when they turn 18, and then at age 25, they can receive the remaining amount to use in any way they wish.

Designate your partner or spouse as a life insurance beneficiary

If you can, consider assigning your spouse or partner as the primary beneficiary. This way, they can continue to handle your household finances and save money for your child’s future. If both you and your partner or spouse pass away, the life insurance trust can kick in.3

Create a UTMA account

The Uniform Transfers to Minors Act (UTMA) requires you to name a custodian to manage your child’s assets until they become an adult.2 Then, the assets will be transferred to your adult child, who may use the funds in any way they choose.

Learn more about life insurance

While you can appoint a minor child as a life insurance beneficiary, doing so isn’t always the best option. Luckily, there are several alternatives to consider, such as establishing a life insurance trust or creating a UTMA account.

Aflac offers a variety of life insurance policies that can financially help protect your children and other loved ones. You can customize your coverage to your needs, with premiums that can fit your budget. Start chatting with an agent to learn more about the plans we offer and get a quote today!

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