I wrote a check made out to cash, but the bank said that the check needed to be made out to an individual for them to cash it. Is this correct?
Actually, no. A check payable to cash is payable to whoever has the check, assuming that it hasn't been endorsed in such a way as to make it payable to a particular person.
Your bank is correctly concerned with protecting the funds in your account. When it sees a check payable to cash, it often cannot tell if the individual presenting the check for payment came by the check honestly. While the bank could not be faulted for paying such a check, even to someone who found it or stole it, unless you had stopped payment, that would be little comfort to you if your money was paid out to someone you didn't mean to receive the funds.
Making a check payable to cash, while legal and technically permitted, isn't something banks recommend, both because it can cause problems like the one you've described and because there is increased risk of the check -- and the funds -- getting into the wrong hands.
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Actually, no. A check payable to cash is payable to whoever has the check, assuming that it hasn't been 