What stipulation prevents minor children from being paid life insurance proceeds directly?

The stipulation that prevents minor children from being paid life insurance proceeds directly is primarily based on the fact that minors cannot sign a release. In the context of insurance claims, a release is a legal document that relinquishes any further claims related to a specific issue—in this case, the life insurance proceeds.

Since minors are considered to have limited capacity to enter into contracts and legal agreements, they do not have the ability to sign such releases. This limitation is designed to protect minors from potential exploitation and improper management of their financial affairs, as they may not fully understand the implications of such transactions.

While it’s true that minors have limited financial rights, this limitation primarily stems from their inability to make binding legal agreements, such as signing a release. Therefore, the correct answer highlights the specific legal barrier that applies to situations where minors are supposed to receive life insurance benefits, underscoring the importance of having a guardian or custodian manage these proceeds instead.