@Chevda Bravo for pointing out the most important point and one that as many as 70% never get around to do…get a will…like yesterday. Most people assume things will work out but they haven’t the experience or seen things that would make you cringe. A will removes that for the custody of your kids. Can’t think of anything more important.
Life companies and your state generally won’t let you leave insurance proceeds “outright” to minors. They can still be the benes and there will be no issues once they’re 18 (21 in some states I guess). A trustee can be assigned to manage and distribute funds should you pass prior to them reaching the age of majority.
If your wishes and intentions are to leave the kids the money, I would never set your parents as beneficiaries. A beneficiary is a legal contract. Regardless of what anyone wants, thinks, etc. the beneficiary will get the proceeds and has zero obligation to use them according to your wishes. At that point it’s just money for them to do as they please. We all think M&D will do what’s right (and they most likely will the vast majority of the time), but what if something happens and they need the money for nursing home or they decide they want to control your kids actions and hold the money over their heads.
I know this all sounds crazy. I’ve been in the life insurance business for 30+ years and have seen sooo many scenarios that “would never happen”. They actually happen a lot, especially with today’s blended families. The easy way to avoid any of that is to eliminate by setting your kids up as beneficiaries or setting up a trust as the beneficiary and your kids are beneficiaries of the trust.
But please, go get a will. it won’t have anything to do with the insurance proceeds but it could decide who raises your kids. Seriously!