The children cannot contest a valid life insurance policy naming you as beneficiary. Usually the agent or broker writing the policy witnesses the signature. A power of attorney would do you no good and will in any event terminate upon death of your friend. He can writer a will but proceeds from a life policy pass outside the will unless the beneficiary is the decedent's estate.
The life insurance policy with a beneficiary and is not controlled by the will or trust.
The power of attorney is void upon death but would be a good document to help your
friend at time of need.
A will or trust is a must for everyone.
The children might try to contest the insurance policy if the suspect incompetence or undue influence.
The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.
The Power of attorney would be useful during your friends incompetence but would not help with regard to the life insurance policy. Neither would a will or a trust. Those documents may help with your friends other assets, but not the life insurance policy. Life insurance is a contract so it does not fall under probate or trust administration. However, if your friends family make an allegation that the only reason your friend named you as beneficiary under the life insurance policy is because you unduly influenced him then they could challenge you. There is a presumption in the law that a gift to a caregiver is because of undue influence. I would recommend you have your friend see an attorney, without you. Have your friend take a cab, or arrange for the attorney to come to your home when you are not there. If the attorney is a good estate planning or better, and elder law attorney then he will understand the issues and will prepare something often referred to as a certificate of independent review. This will be valuable if your ever questioned latter.
Every situation is different, it is important to discuss your legal issue with a knowledgeable attorney in your jurisdiction. To schedule an appointment with me please contact me at 800 220-4205 or www.MartyBurbankLaw.com
Insurance is a contract; as long as your friend was decisional when he took out the policy generally it can't be contested, and normally passes outside of the decedent's estate except possible for estate tax purposes if he retained ownership of it during his lifetime and there is cash value. So a POA and/or will really isn't the answer. If anything, your friend may want to consult with an attorney about the possibility of an insurance "trust" so that if he becomes unable to fund the premiums there is a "reserve" or trust fund set up to do so, so that the policy doesn't lapse. But without knowing much more about the kind of insurance it is, it is impossible to really be of help.