Does the person who is named beneficiary on a life insurance policy have to share the money if the other two beneficiaries die but have children living?

Possibly yes. That depends on whether a tenancy was also recited. Generally, if the three who were named as beneficiaries were to take as "joint tenants" then the share of any deceased beneficiary would pass to the other beneficiaries. If the document was silent as to a tenancy then generally, the share of a deceased beneficiary would pass to their own heirs.