Once you are exempt from asset reporting, the FAFSA will not ask for your or your child’s assets. The fields are ‘grayed out’ and the skip logic will just take you to the next section.
One of my daughters had some savings toward the end of college, and some of it was from student loans that wouldn’t have been included so I had separated all the amounts from her income, but it never asked for any assets or income for her.
Usually the check from an insurance company will be good for 90 or 180 days. They would not give him a check and immediately require it to be cash before his birthday in Nov or forfeited. Once the insurance company accepts the claim, it is no longer their money. If he never cashed the check, the company would have to attempt to pay him or the money would escheat to the state. It’s no longer the insurance company’s money.