Which type of contract typically requires a guardian for a minor beneficiary?

Life insurance typically requires a guardian for a minor beneficiary because minors lack the legal capacity to enter into contracts or to receive proceeds directly. When a policyholder designates a minor as a beneficiary, the insurance company must ensure that the funds are managed appropriately until the minor reaches adulthood. This often involves appointing a guardian or custodian who will manage the benefits on behalf of the minor.

In other types of insurance, such as health, property, or accidental death insurance, the dynamics of beneficiary designation and payout may differ significantly. While it is possible for minors to be included in these policies, the need for a guardian is not as pronounced, particularly because benefits in these cases may be used for ongoing needs (like medical care or repairs) rather than a lump sum payout that the minor would receive directly. Thus, life insurance stands out in this context due to the nature of the paid-out benefits and the legal protections surrounding minors.