Wht can I do if my daughter was left life insurance by her father but she is a minor they are holding funds?

You must file a petition for guardian ad litem to be appointed and obtain a court order appointing you as the guardian ad litem, with letters appointing you. The life insurance company will require certified copies of the orders and will want to know if a blocked  savings account has been set up with a insured lending institution within which to deposit funds; then you will have to do file a receipt from the bank showing deposit of the funds with the court. My suggestion is you obtain the services of a probate lawyer who specializes in guardianship proceedings, as the process can be exacting, and will require follow up accountings on an annual basis.