Florida Life Insurance

Published January 12th, 2023 by Timothy McGuire

A life insurance policy in Florida allows you to set aside money to provide financial security for your loved ones upon your demise. With this policy, you will be able to:

Replace lost income
Fund retirement plans
Pay for college tuition
Provide dependency income for your family members
Indemnify a loan in the event of premature death
Protect future insurability
Fund business or partnership buyouts at the demise of one of the business owners
Insure your life
Have free estate taxes for beneficiaries.

Life insurance policies in Florida typically come in two types: term and permanent life insurance. Term life insurance provides financial protection for a specific period, mostly 10 to 30 years, while permanent life insurance provides lifelong coverage. In addition, some permanent life insurance policies have a cash value component that allows insureds to build cash on a tax-deferred basis. Hence, federal income tax does not apply to the cash value. Generally term life insurance policies always come at lower rates than permanent insurance policies.

A death benefit is usually paid out to policy beneficiaries at the insured's demise. The policyholder decides whom to list as policy beneficiaries, but minors and pets are excluded from the list. The policyholder can designate a trusted adult that will be responsible for the children. The insurer immediately pays out the death benefit when the necessary documents are submitted after the insured’s death. Death benefits can cover daily expenses, mortgage, funeral expenses, and medical expenses. Insureds with living benefit riders can access their death benefits while still alive if they are eligible. They can add living benefit riders to their term or permanent life insurance policies, including whole life, universal life, and final expense insurance. Discuss with a Florida-licensed life insurance agent that can help you compare life insurance policies from multiple insurers to ensure you settle for an affordable option. Generally, insurance agents deal with individuals on a case by case basis, so you can be assured that your particular life insurance needs will be met with the best life insurance option.

How Does Life Insurance Work in Florida?

Life insurance is a good way to financially plan ahead for the future by ensuring your loved ones are financially stable after your death. In Florida, life insurance is a contract between an insurer and the insured that involves paying out a death benefit to policy beneficiaries when the insured dies. Policy beneficiaries are the people or entities you designate to receive the policy's death benefits. These beneficiaries can be your spouse, siblings, parents, adult children, charity organizations, business partners, or a trust. College tuition fees, funeral expenses, daily expenses, and payment for outstanding debts can be covered with the death benefit obtained from the policy.

Asides from death benefits, you can also take advantage of living benefits. With living benefit riders, you will be able to access the money set aside as your death benefit while still alive. For instance, if the insured has a terminal illness rider and develops cancer during the policy term, they will be eligible to take out the death benefit to treat it. However, the amount will be deducted from the final death benefit that would be paid to the policy beneficiary after the insured's demise.

After a life insurance policy is purchased in Florida, the insured is expected to pay premiums to ensure the policy remains active. Insurers use many factors like age, gender, medical conditions, type of policy, occupation, and coverage amount to determine premium rates. Generally, when purchasing life insurance options, it is important to consider the following:

The amount of death benefit you need
Which type of policy to purchase (term life or permanent life policy)
Premium cost
The type of riders to add to your life insurance policy
The difference between life insurance quotes for each available policy

Insurers do not just automatically pay out death benefits. They are paid when the insured dies, after which the policy beneficiaries are required to file a claim with the insurance company. They would have to provide a copy of the policy, proof of identity, and a certified copy of the death certificate along with the claims form. There is usually no deadline for filing a life insurance claim in Florida, but it is always better to do it as soon as the insured dies. Before their demise, insureds can decide how the death benefit will be distributed to their beneficiaries (that is, what percentage of the benefit goes to who). They can instruct that the insurer pays it as a lump-sum payment after their death or in installments throughout the beneficiary's lifetime or a specified number of years.

What Are The Main Types Of Life Insurance in Florida?

There are two basic types of life insurance options in Florida:

Term life insurance: Provides insurance for a specified period, such as 10 to 30 years, at a reduced cost. The death benefit of term insurance policies can be used to cover college tuition fees, mortgage, or end-of-life financial obligations like burial expenses and funeral costs.
Permanent life insurance: Provides lifelong coverage to individuals. A typical example of permanent life insurance is a final expense. Other permanent life insurance variations, including universal life, indexed universal life (IUL), and whole life insurance, typically come with a cash value component.

CASH VALUE LIFE Insurance

Cash-value life insurance offers lifelong financial coverage and a cash value (CV) savings component, which does just that - it builds cash overtime, similar to an investment account. Most permanent life insurance policies fall into this category. Cash-value life insurance usually has higher premiums than term life insurance because of the cash value component. A part of the premium paid by insureds is allocated to the insurance cost, and the remaining is deposited into a cash-value account. In addition, insureds earn tax-deferred interest on their cash value account that they can access via withdrawals, loans, or surrendering the policy. The common cash value insurance policies available in Florida are:

Whole life insurance: This type of life insurance plan provides financial protection throughout the insured's lifetime. The premiums paid by the insured do not change, and a death benefit is paid to the policy beneficiaries at the demise of the insured, provided the policy was still active when the insured died. In addition to paying a death benefit, whole life insurance also has a cash savings component where interest is earned at a fixed rate. Whole life insurers sometimes offer whole life graded benefit policies to reduce cost for unhealthy individuals.
Universal life insurance: This type of permanent life insurance comes with an investment savings element plus low premiums. One major advantage of universal life insurance is that it is very flexible. After accumulating a lot of money in your cash-value account, you can increase or decrease your death benefit and premium amounts to meet your changing needs. Be aware that altering your premiums may affect the value of the death benefit.
Final expense (FE) insurance: This is a type of whole life insurance policy with a cash value component that helps senior citizens cover end-of-life expenses like a funeral, burial, and medical expenses. Final expense insurance policies usually have affordable rates and are guaranteed because it has a small death benefit and does not require medical underwriting. This type of insurance is good for retirees who no longer benefit from employer-sponsored life insurance policies and do not have an individual life insurance policy. Seniors with health issues who want to help their families cover the expenses of their funeral costs can opt for final expense insurance.

While Whole life and Universal life are primarily designed for daily healthy individuals, Final Expense is considered the go-to life insurance for seniors in Texas, who likely have a pre existing condition or two, and are unlikely to qualify for more affordable options due to medical history or age.

TERM LIFE Insurance

In Florida, term life insurance provides financial protection for a temporary period ranging from 10 to 30 years. Death benefits are paid only if the insured dies during the policy’s term. Most term life insurance policies do not accrue cash value. Initial premiums for term life insurance are usually more affordable than permanent life insurance plans. An initial premium is an amount an insured pays at the inception of an insurance contract. Term life policy is good for parents of young children and individuals with large financial obligations because they can get reasonable death benefits at a reduced cost. Also, policy beneficiaries can get significant death benefits for income replacement.

Term life insurance coverage typically ends after the policy term. Insureds can renew their policies, but their premiums will increase with age because the older they get, the higher the chances for their insurers to pay out on their policies. Additionally, insureds can convert their term life insurance policies for permanent policies like whole life policies. Doing this will attract higher premiums, but the premiums will remain the same throughout the insured's life.

What Type of Life Insurance Does Not Require a Medical Exam?

Life insurance companies in Florida often require individuals to take medical exams to assess the risks they might incur by insuring them. This examination determines whether the individual is medically fit or has a terminal illness. Insurers are not obligated to provide coverage for high-risk individuals like tobacco users and people who engage in risky hobbies like skydiving, those who have a dangerous occupation, or those who have underlying health conditions. Hence, such individuals can opt for life insurance policies that do not require medical exams, such as:

Final expense: A medical exam is not required to be eligible for final expense, but you might be required to provide answers to questions about your health.
Group life insurance: This type of policy is mainly purchased by employers or organizations for their employees or members. Group life insurance in Florida does not require filling out a medical questionnaire or taking a medical exam. However, it may be required if the employees or members of the organizations want additional coverage.
Simplified issue life insurance: This type of insurance does not require a medical exam, but individuals might just have to provide answers to basic health questions.
Guaranteed issue life insurance: No medical exams or health questionnaire is required.

Additionally, in Florida, term life policies come with a convertibility feature that can allow you to exchange your policy for permanent life insurance without taking a medical exam. Also, no medical exam is required when you need to extend your term life insurance policy upon its expiration.

What Can you Do with Life Insurance?

In Florida, there are many things you can do with life insurance policies, depending on the type of life insurance option you purchase. Some common things you can use your life insurance for are:

Paying final costs: Life insurance policies like final expenses can help reduce the stress your loved ones might face after your demise by paying for end-of-life expenses. Such expenses may include medical bills of the insured, cover funeral expenses, such as funeral service, burial or cremation, or other immediate expenses after death.
Minimize your taxes in retirement: Life insurance can be used as a pension/retirement savings tool where you can have an ongoing stream of tax-free money in retirement. If you purchased a life insurance policy with a cash value component, you could borrow against it to pay for expenses during your retirement years.
Paying off debts: Leaving large debts behind without making provisions for how they will be paid can make your loved ones suffer financially after your demise. However, having life insurance will help your loved ones receive death benefits that can be used to pay off any outstanding debts.
Providing financial support for your loved ones after your demise: With the death benefit from life insurance policies, your loved ones would not have to worry about their living expenses after your demise. This is because the amount received from the insurer would be able to cover daily expenses, college tuition fees, and mortgages.

The common idea shared between all life insurance coverage options is that you need to figure out how much life insurance is enough coverage to match your needs. Discuss your specifics with a state-licensed life insurance agent.

What is a Premium in Life Insurance?

Premium in life insurance is the amount you pay an insurer to provide life insurance coverage. In Florida, you can pay your premiums in installments or upfront using any of the following payment options:

Regular premium payment: This requires you to pay periodically or regularly, which could be monthly, quarterly, or yearly based on your agreement with your insurer.
Single premium payment: With this option, you will have to make a one-time full, upfront premium payment
Limited premium payment: You are expected to pay your premiums for the entire policy term within a specific period, such as 20 years, while the policy provides a lifelong coverage

Insurers use several factors like age, gender, tobacco usage, pre-existing conditions, claims history, and occupation to determine monthly premium life insurance rates. For instance, the younger you are, the lower your premiums. Conversely, the older you get, the higher your premiums.

What is a Death Benefit in Life Insurance?

A death benefit in life insurance is the amount of money an insurer pays out to the policy beneficiaries after the insured's demise. The insured can decide how the money will be shared before dying. Insurers are obligated to pay a death benefit only if the policy was active before the insured's death. A typical death benefit in Florida is usually tax-free.

When is Death Benefit Payable?

A death benefit is payable in Florida after the demise of the insured. Insureds should share life insurance policy information with beneficiaries after buying it to make it easier to receive death benefits. This is because there is no national insurance database or other central location that provides policy information. This might make it very difficult for policy beneficiaries to file a claim after the insured’s demise because they are not even aware that the life policy even exists in the first place.

After the insured's death, the policy beneficiary is required to file a claim with the insured’s life insurance company. The policy beneficiaries will need to fill out death claim forms stating the insured's name, policy number, Social Security number, and date of death. After filling out the form, the beneficiary will have to submit the death claim form with a certified copy of the death certificate. If the insured named multiple beneficiaries in their policy, all of them would have to complete a death claim form to receive the death benefit that accrues to them.

What is a Living Benefit in Life Insurance?

In Florida, living benefits insurance is a type of rider that an insured can add to their life insurance policies to access some of the money set aside as their death benefit while they are still alive. The amount paid to the insured would be deducted from the final death benefit that the beneficiaries are meant to receive after the insured's demise. Common living benefit riders in Florida are:

Accidental death rider
Terminal illness rider
Critical illness rider
Long-term care rider

The percentage that insurers permit insureds to access from their policies’ death benefits as a living benefit varies depending on the type of policy. For instance, insureds can use up to 20% of their death benefit for end-of-life medical care, and those with critical care or chronic care riders can get up to 35% of their death benefit. Insureds with tax-free retirement as a living benefit can borrow against nearly all cash value, as long as the policy remains paid and active once they turn 65 years old. The more insureds borrow, the less their death benefits become (since the death benefit will be used to pay off the loans at death). Insureds may be required to provide proof of life expectancy from a medical provider before access to death benefits can be granted.

What is MEC in Life insurance policy?

MEC is the acronym for a modified endowment contract. In the 1970s, insurers took great advantage of the tax-free growth of cash value policies by offering life insurance products with substantial cash value growth features. Such that insureds could borrow from their cash value tax-free. This way, they could minimize their tax obligation, and the government responded to these limitless benefits by introducing MEC.

MEC is an overfunded life insurance policy that has exceeded legal tax limits. When your life insurance policy is relabelled as a MEC by the Internal Revenue Service (IRS), you won't be able to withdraw from your cash value tax-free because the money is treated as ordinary income. Your life insurance policy will change into a MEC if it was purchased on or after June 20, 1988, or if it fails the "seven-pay" test. The IRS uses the seven-pay test to determine whether your life insurance policy is overfunded.

A comparison is usually made between the total premiums you paid in the first seven years of the policy with what you would need to pay in full. If your payments exceed what is needed, your life insurance policy will be designated a MEC. However, life insurance policies purchased before June 20, 1988, are not subject to these premium limits except if the policy needs to be renewed after its initial policy term and the renewal took place before June 20, 1988. Therefore, policies that are renewed after June 20, 1988, might face the seven-pay test.

What is a Rider in Life Insurance?

Life insurance riders in Florida are optional add ons that insureds add to their life insurance policies. Some riders allow insureds to access their death benefits while still alive. It typically covers life events that a basic life insurance policy does not cover and often comes with additional costs. There are many kinds of life insurance riders available in Florida, and they vary by insurer. Some of the most common are:

Accidental death rider
Guaranteed insurability rider
Family income rider
Waiver of premium rider
Accelerated death benefit rider
Long-term care (LTC) rider
Return of premium rider
Child term rider

Why are Riders Important in Life Insurance?

Riders are important in life insurance because they help you enhance your coverage by allowing you to tailor your insurance policy to meet your specific needs and access benefits that your basic life policy doesn’t offer. You can add riders to a life insurance policy at any time, during purchase or post-purchase. Riders also help you save costs because they are cheaper than buying individual insurance policies to cover specific insurance needs. For instance, adding a $10,000 child rider to your term life policy can cost $4 to $4.20 per month, while a stand-alone child life insurance policy might cost $40 to $50 per month.

There are different types of riders available in Florida, and each rider offers specific benefits. Hence, before purchasing a rider, ensure you consult with a Florida-licensed life insurance agent. They can recommend good riders that will meet your unique needs.

What are the Top 8 Most Important Life Insurance Riders?

The top 8 most important life insurance riders in Florida are:

Accidental Death Rider: This rider is also called a double indemnity rider. If an insured with an accidental death rider dies during an accident, an additional amount of death benefit will be paid out to policy beneficiaries. The additional amount is usually equivalent to the death benefit of the policy, which makes the policy beneficiaries get twice the amount of the policy. This type of rider is good for individuals who are the sole providers of their families because the double benefits will take care of the needs of their loved ones.
Guaranteed Insurability Rider: Purchasing this rider with your life insurance policy allows you to have extra insurance coverage without the need for further medical examination, even if your health declines with age. You would not also need to do medical checkups when you have to renew your policy after it expires. A guaranteed insurability rider is good for individuals with medical histories.
Family Income Rider: This rider provides a regular monthly payment of income to insureds' family members at their demise. This amount is usually equivalent to the insured's monthly income. At the point of purchase, insureds must state the number of years their families will receive the benefits. This type of rider is beneficial to individuals who are the breadwinners of their families.
Waiver of Premium Rider: This rider allows your insurer to waive all future premiums if the insured loses their income source due to an injury or illness or becomes permanently disabled before a specified age. This waiver is usually in force until the insured can work again. The waiver of premium rider is good for individuals who are the sole breadwinners of their homes.
Accelerated Death Benefit Rider: Insureds with terminal illnesses that will shorten their lifespan can get this rider so they can have access to their death benefits while still alive. The amount received by the insured would be subtracted from the death benefit the insurer will pay to the policy beneficiaries at the demise of the insured. Many insureds who choose this type of rider have less than two years to live and use the money for medical expenses, drugs, and other expenses. Accelerated death benefit rider is good for individuals with chronic diseases, terminal illnesses, or individuals who need long-term care.
Long-Term Care (LTC) Rider: With this rider, insureds can receive a portion of their death benefits monthly to pay for long-term care costs. LTC is beneficial for individuals with stroke, rheumatoid arthritis, Parkinson's disease, cancer, and Alzheimer's disease who have to stay at a nursing home or receive home care. To be eligible for an LTC rider, a medical professional will have to attest that the insured is:
- Unable to engage in a minimum of two activities of daily living; or
- Is cognitively impaired and would need a lot of supervision to protect their health and safety
Return of Premium Rider: Insureds who have this rider and outlive their life insurance policies are reimbursed all or some of their paid premiums over the years. However, full premiums are paid to policy beneficiaries if the insured dies during the policy term. A return of premium rider is good for anyone, especially those in good health and those who have the tendency to outlive their policy.
Child Term Rider: This rider is a term plan which parents can add to their life insurance policies for their children. They can convert it to permanent insurance without medical examination when their children mature, which is often by age 25 but may vary by insurer. However, if their children die before the specified age, a death benefit will be paid to them (parents). Child term rider is good for married individuals with children and single parents with children. Generally, individuals who have dependents should consider getting this rider.

Is There a Deductible in Life Insurance?

No, there are no deductibles in life insurance policies because they are considered personal expenses.

How Do Life Insurance Companies Operate?

Life insurance companies allow people to transfer risks to them in return for paying premiums. As a result, high-risk individuals like people with health conditions or construction workers are charged higher premiums. Life insurance companies’ business model is designed to assume and diversify risks by pooling risks from insureds and redistributing them across a more extensive portfolio. When a claim is filed, the insurer is expected to pay out claims to the beneficiaries as soon as possible if the necessary documents are complete.

Mutual vs. Stock Insurance Companies

The goal of every insurance company is to sell insurance policies to customers, but they differ based on ownership structure. For example, some insurance companies in Florida are mutuals, while others operate as stock companies. Mutual insurance companies are owned by their policyholders, while stock insurance companies are owned by their shareholders, which can be either publicly traded or privately held.

The main goal of mutual insurance companies is to maintain enough capital to meet policyholders’ needs continuously. Therefore, policyholders of mutual companies are considered co-owners of the company and can have a say in the company. In contrast, stock insurance companies seek to maximize profits for their shareholders. Hence, policyholders have no control over a stock company’s management unless they are investors as well.

If there are surplus profits, stock insurance companies can use the money to invest, pay outstanding debts, or distribute it to shareholders in dividends. They can also issue shares of stock to generate more income. On the other hand, mutual insurance companies can keep surplus profits in exchange for discounts on premiums or distribute them to policyholders in dividends. Mutual insurers cannot issue shares of stock to generate income like stock insurers. They might have to increase premiums or take loans if they need extra income.

How Can Life Insurance Companies Afford to Pay Out the Claims?

Life insurance companies in Florida can afford to pay out claims because they benefit from premiums paid by the insured. While profiting directly from premiums, insurers can also make more money by investing those premiums in bonds or stable blue-chip stocks. Insurance companies benefit from lapsed policies and expired term policies (permanent or term life policies lapse when the insured stops paying premiums). This is because they are not obligated to pay out death benefits in such situations. However, it can also lead to lost revenue because premiums will no longer be paid, and cash value can not be invested in the case of permanent life insurance policies.

How Do Life Insurance Companies Make Money if Everyone Dies?

Life insurance companies will still make money even if everyone dies. The business model of life insurance companies is all about risk prediction and diversification. This model allows individuals to provide financial protection for their loved ones in exchange for a fixed amount, commonly known as a premium. The most common ways insurers generate revenue is through premium payments and reinvesting those premiums. For instance, if an insurer receives $1 million in premiums and looks for safe, low-risk, short-term assets to invest it in, it can generate extra interest revenue for the company while it waits for possible payouts. Insurers also make money from investing premiums paid by the insured in bonds or stable blue-chip stocks. For instance, in 2020, life/annuity insurance companies made about $186 billion of revenue from premium investments after collecting about $143.1 billion for insurance premiums.

What Does Life Insurance Cover in Florida?

Life insurance coverage in Florida fall under two categories:

The cause of death: Almost all deaths are covered under life insurance policies with a few exclusions. Insurers will pay out a death benefit if the death of the insured is caused by:

Natural causes such as old age or illnesses known to the insurer
Accident
Suicide (if it occurs within two years after purchasing the policy)
Homicide (except the policy beneficiary is involved in the murder)

Death benefit expenses: Policy beneficiaries can spend their death benefit on anything they want, including daily expenses, outstanding debts, funeral expenses, or children's tuition fees.

Who Needs Life Insurance in Florida

Everyone needs life insurance in Florida, especially:

Parents with young children: The arrival of a baby should spur you to get a life insurance policy, especially if you are the sole provider in the home. This will cater for expenses like food bills, mortgage, and daycare at your demise. If your children are older, you can get a term life policy that can cover their college fees
Adults with private student loans: You don't have to be married with children before you get life insurance policies. Singles who have private student loans can also consider getting it. They can consider getting a term life insurance policy that can last the duration of the loan repayment
Spouses who provide most of the income: If your spouse would not be able to handle household and day-to-day expenses after your demise, then get a life insurance policy to provide a safety net for them after your demise. This helps to enhance their financial stability. Consider getting a policy with a large death benefit if you know your spouse is financially vulnerable
Parents who have dependents with functional needs: About 4,967,863 adults in Florida have a disability which is equal to 28% or 1 in 4 adults in 2021. If you have children of adults with disabilities and require specific care, your life insurance death benefit could ensure they continue to receive that care after your demise
Older adults without enough savings: The estimated population of Florida residents in 2021 is 21,781,128, with about 20.9% of them age 65 or older. Retirement-age adults without a large amount of savings to draw on can get final expense insurance to pay for funeral or cremation expenses when they die
Business owners: If you own a small business, you can get a life insurance policy that you can use as part of a buy and sell agreement among your business associates. Your business partners can take out a policy on each co-owner and use the death benefit to purchase the deceased owner's share of the business

Who Should Buy Life Insurance?

Consider buying life insurance if you have people who depend on your income and might suffer financially if anything happens to you. With life insurance coverage, you will be able to financially protect your loved ones in the event of your demise. There are different life insurance products you can choose from in Florida, depending on your needs. For instance, you can purchase term life insurance if you need coverage for a specified number of years. However, permanent life insurance will be a better option if you want lifelong coverage with a cash value component. If you are an older adult and you are ready to make an end-of-life plan, you can get final expense insurance to cover your funeral costs. Generally, you should consider buying life insurance if:

You are a parent with dependents
You are a business owner
Your funeral will be a burden
Your spouse relies on your income
You have debts that your family will have to pay at your demise
You want to meet your financial goals

Who Can you Buy Life Insurance on?

You can only buy life insurance with a person's consent and with whom you have an insurable interest. You will need to prove to the insurer that the person will suffer financially at your demise. The beneficiary must be involved in the entire application process, providing details of their medical history, hobbies, signature, and medical exam may be required. You can buy life insurance on your children, spouse, parents, sibling, business partner, and trusted employee.

Who Can you Not Buy Life Insurance on?

You can not buy a life insurance policy on another person without their consent. You also can not buy a life insurance policy on a stranger or even someone you just know casually. According to Florida law, you cannot buy a life insurance policy on your ex-spouse because entering a Judgment of Divorce automatically makes an ex-spouse’s beneficiary designation on insurance policies invalid.

Who is the Owner of a Life Insurance Policy in Florida?

The owner of a life insurance policy in Florida is the person who has full control over the policy while the insured is still alive. Most times, the policyholder is the same person as the insured, while other times, the insured will appoint a different person to be the policyholder. The policyholder can change the policy beneficiary, surrender the policy, sell the policy, or gift it to a relative, child, grandchild, or charity by transferring full ownership of the policy to them.

How to Choose a Beneficiary for Life Insurance?

Some essential parts of owning a life insurance policy in Florida are choosing an appropriate beneficiary(s) and keeping those choices up-to-date. For instance, your initial choice can change due to different factors like the birth or adoption of a child, marriage, or divorce. Hence, it is important to always review your named beneficiaries as life events change. Here is how you can choose your beneficiaries:

Consider the purpose of purchasing the policy and make it the driving force for determining your beneficiaries.
Be specific about whom you choose as your beneficiary, and ensure you state how the death benefits will be distributed in the case of multiple beneficiaries.
Avoid choosing pets and minor children as life insurance policy beneficiaries because children under 18 years lack the legal capacity to manage wealth, and pets do not have account numbers.
State a trusted adult that will be responsible for your minor children and pets when you are gone.

Who is a Beneficiary in Life Insurance?

A life insurance beneficiary is a person or entity you designate to receive your policy's death benefits. Possible beneficiaries include relatives, spouses, children, and charity organizations. Insurers pay the death benefit of insureds who refuse to name a beneficiary to their estates. Life insurers recommend that insureds should have both primary and contingent beneficiaries. The death benefit is paid to the primary beneficiary at the insured's demise. However, if the primary beneficiary is missing, directly involved, or an accomplice to killing the insured, or is dead, the death benefit will be given to the contingent beneficiary. If upon investigation, the insurer discovers that the contingent beneficiary is involved or an accomplice in the death of the primary beneficiary, the death benefit will not be paid out.

Who Chooses the Beneficiary?

Policyholders are responsible for choosing beneficiaries for their life insurance policies.

How to Change a Beneficiary?

Changing a beneficiary is easy, especially if you have a policy with a revocable beneficiary. In such a case, you can change the beneficiary at any time without telling them. In contrast, you need the beneficiary's consent if you have a policy with an irrevocable beneficiary. Follow the following steps to change your policy’s beneficiary:

Reach out to your insurer
Request a change of beneficiary form
Fill out the form
Ensure you accurately spell out the full names of all your beneficiaries and provide their Social Security numbers
State how you want the death benefits to be distributed if you name multiple beneficiaries
Submit the beneficiary form to the insurer

Who Should I Name as my Life Insurance Beneficiary?

Be careful when deciding who will receive your death benefit from your insurer because you will not be around to change your beneficiaries after your demise. You want to ensure that your loved ones are well taken care of when you die. Hence, do your due diligence to list reliable adults as beneficiaries. To leave money behind for your minor children, ensure you name trustworthy trustees and custodians who will cater to them. Also, you can designate a caretaker as one of your policy beneficiaries who you can trust will take care of your pets. Furthermore, you can list a charitable organization as your policy beneficiary.

Who you Should Never Name as your Beneficiary?

You should never name the following as your policy beneficiary:

Your estate: Listing your estate as your life insurance beneficiary can prevent your loved ones from getting a full death benefit payout. This is because the amount you leave behind will be subject to probate, where a judge determines your outstanding debts. Your loved ones can only access the death benefit after your creditors have been settled.
Minors: Listing a minor as your policy beneficiary complicates the death benefit payout process because the person is not of legal age. The court might be forced to appoint a guardian to hold on to the funds until the minor turns 18.
Your pets: Your insurers would not have anyone to pay your death benefit to if you list your pets as your policy beneficiaries because they do not have bank accounts and can not manage money. You can name a caretaker as one of your policy beneficiaries that would be responsible for your pets when you pass away.

How Can Life Insurance Work as an Investment in Florida?

Life insurance policies are not investments, but some of them, like whole life insurance and universal life insurance, only have an investment component that allows you to build a tax-deferred wealth. Hence, life insurance policies can be seen as an investment because of their tax-free benefits. Another way life insurance works as an investment is in retirement planning. This involves depositing huge amounts in your cash-value account such that during your retirement years, you can borrow against it as a source of income.

Is Life Insurance an Investment Vehicle?

Generally, life insurance should not be used as an investment tool, but there are several similarities between life insurance and savings accounts. For instance, some life insurance policies have a cash value component. This cash value is an investment account that allows you to build cash over time, and you can borrow against it while you are still alive. The cash value you accumulate on this insurance policy is usually tax-deferred. In addition, some life insurance policies accumulate interests and pay dividends over time like savings accounts.

What is Credit Life Insurance?

Credit life insurance is a type of insurance associated with loan indebtedness such that it helps the insured pay their loans if they die before completing repayments. Prior to October 1, 2008, the maximum amount of credit life insurance in Florida was $50,000 per creditor, and the maximum policy tenure was 10 years. However, after October 1, 2008, the amount and the duration of the indebtedness became the maximum amount of credit life insurance. Florida Seniors over 70 years of age are not eligible for credit life insurance, and existing policies typically end when the insured clocks 71.

When Does Life Insurance Mature?

Maturity dates are based on the insured's age, and it differs depending on when the policy was issued. Typically, the maturity date of all life insurance policies is after the insured's demise. However, it can also be when the insured reaches age 121, depending on which Commissioners Standard Ordinary Mortality (CSO) table was used to determine their probability of dying in a given year. When a life insurance policy matures, the insurer pays out the policy's maturity value, and coverage ends.

Does Life Insurance Cover Suicide in Florida?

Life insurance in Florida covers suicidal death as long as the policy was purchased two years or more before the insured's demise. After that, the insurer will pay death benefits to the policy beneficiaries. However, suppose the insured dies during the first two years of the policy, and the insurer, upon investigation, discovers that the cause of the death was suicide. In that case, it will not pay the death benefit to the policy beneficiaries. Instead of the death benefit, policy beneficiaries will get a refund of any premiums paid, and in the case of a permanent insurance policy, some cash value may be paid.

Cryonics and Life Insurance

You can use life insurance to achieve your cryonics goals by purchasing a sufficient amount of life insurance policy that covers your cryopreservation costs and additional expenses. In addition, ensure you designate any cryonics organization or cryonics trust as the beneficiary. This will enable the cryonics trustee or organization to have access to funds to pay for your suspension and perpetual maintenance at your demise. Therefore, your life insurance must have enough death benefits to cover your cryonics expenses and ensure that your policy does not lapse.

Is Life Insurance a Good Investment?

Permanent life insurance is a good investment because it has a cash value you can use to build cash. Also, the tax benefits that come with it make it a good investment tool.

Always discuss your life insurance needs with a knowledgeable Florida-licensed life insurance agent that works with multiple insurers. They will help analyze your specific needs and recommend the best life insurance options to meet them.

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