Who Is The Custodian Of An Insurance Policy? 5 Important Factors You Should Take Note!

The question is: who is the custodian of an insurance policy? Remember that it is a huge responsibility to select a custodian. Understanding the role of a custodian in an insurance policy is very important especially when you have young children. That is because it relates to the death benefits that you want your dependent survivors to receive from your policy.

If your children are still young, designating a custodian for your insurance policy should be a part of the plan in case of any unexpected circumstances to occur.

Your custodian will be the one to manage the distribution of the proceeds from your life insurance for your minor beneficiaries. With that being said, it is your utmost responsibility to have a custodian if your beneficiaries are minors. Likewise, you should know the role of a custodian and how are you going to select one.


Life Insurance Custodian

Who is the custodian of an insurance policy? As per its name, a custodian is the one responsible to look after something. In terms of life insurance, this person is the one who will be managing the financial asset distribution that comes from the payout of a life insurance policy.

Take note the custodian and legal guardian are not the same, custodians do not have legal custody of the minor but legal guardians have. The custodian will merely handle the financial asset and will not function as the surrogate parent.

Custodians exist because the life insurance provider is not legally allowed to pay the death benefits directly to the minor dependents. A child should be more than 18 or 21 years old for him or her to be able to receive the death benefits.

But this will depend according to the state laws. The majority of the parents are leaving a legacy to their children so that they will be provided coverage for their funeral costs as well as to continue attending school which is why custodian is important as they will help the child in accessing the benefits quickly.


5 Factors To Consider In Knowing Who Is The Custodian Of An Insurance Policy

Just like in naming beneficiaries, some important factors must be kept in mind if you were to select a custodian for your minor beneficiaries. We will discuss them below.


#1. Trust

Since the custodian will be playing an important role in your child’s life and the insurance process, the person should be someone you can trust in handling the distribution of the finances. Trust is important since you will be working with them through the entire life insurance process.


#2. Financial knowledge

It can be confusing to read the financial details, so it is best to choose a good custodian who is knowledgeable about finances. It should be someone who can make the right financial decision on behalf of the beneficiaries.


#3. Someone who wants the responsibility

Just like acquiring an insurance policy for another person, you must not surprise just anyone with a custodianship responsibility for life insurance. Bear in mind that this is a big responsibility so you should ensure that the potential custodian is prepared and willing to take this.


#4. Caring for your children

Just like in the previous factor, you should not select just any custodian, but it should be someone that will think about the best interest of your dependent beneficiaries at heart.


#5. Time

Make sure to choose someone that has enough time that he can devote to this particular responsibility. The process of acquiring a complete payout for a life insurance policy can take too much time. But this will depend on the type of death benefit that you will be getting as well as on the age of the child.

Although it is morbid to think this way, you should consider the likelihood of the custodian passing away before you do or before your beneficiary reaches the right age and benefits are paid. Regardless, you might want to learn the different types of policy to determine what fits you.



here are some frequently asked questions that we answered for you:


#1. Who is the custodian of an auto insurance policy?

If you do not know, a custodian is who people entrust their possession of the property to with a bailment contract. Don’t worry because the custodian is required to return everything to the bailor.  In case of an accident, the custodian of the vehicle will be the one to be charged or is the one liable.


#2. Can a custodian be a beneficiary at the same time?

If the minor beneficiary already reached the legal age, the control for the account will automatically transfer to the beneficiaries. They will acquire full control of the funds.


It’s A Wrap!

Now that you have reached the end of this post, hopefully, you already know who is the custodian of an insurance policy. To recap, this is someone who holds the responsibility in the distribution of the financial assets from your death benefits to your dependents.

Before you find a custodian for your child, ensure to seek a complete understanding of the responsibilities and requirements of this role and communicate to the potential custodian thoroughly.

In case you need more information, the life insurance agent would be willing to discuss the details with you along with your chosen custodian. Do not take this part for granted when acquiring a life insurance plan since your child’s future will be affected by this. To add up to your knowledge, you’d want to read about how you should clean water dispenser tubes.

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