What does life insurance cover in FL

Perhaps one of the most stressful realities in life is that you can’t take it with you, meaning your savings and estate when you pass. But though it may not be possible to distribute your wealth according to your wishes from the afterlife, fortunately there’s a way to get these plans squared away before that time comes. Life insurance allows you and your family to rest easy, and a Florida independent insurance agent can get you set up. First, here’s a guide to life insurance.

What Is Life Insurance?

No matter if you live in Florida or anywhere else, life insurance is basically an agreement between you and an insurance company in which the insurer agrees to deliver a set amount of money, also known as a death benefit, to your designated beneficiary (i.e., the person you choose to inherit your cash) when you die. Life insurance policies are often used to help secure the financial future of any surviving family, but there are many other options for this coverage.

What Does Life Insurance Cover in Florida?

At their core, life insurance policies in Florida are designed to deliver a beneficiary of your choosing a set amount of money after you pass, but there are a couple of different types to choose from. While term, whole, and universal life insurance policies have the same ultimate goal, there are some slight differences in how the policies work.

There are three main types of life insurance coverage available in Florida:

  • Term life insurance: This type of life insurance policy is targeted towards a younger crowd because it’s designed to only provide coverage for a set amount of time — often 10, 20, or 30 years. If the policyholder dies within the dictated coverage period, their chosen death benefit gets paid out to their selected beneficiary.
  • Whole life insurance: This type of life insurance policy is designed to cover the policyholder for the rest of their life. With whole life policies, a savings account is set up to accumulate money paid by the policyholder over time. If the policyholder lives long enough, they may eventually fill that savings account with the same amount of money that would go towards their death benefit, so the insurance company will essentially transfer it back over to the policyholder. Policyholders can also borrow from their savings account if they choose, but must pay it back again to continue having coverage.
  • Universal life insurance: This type of life insurance policy is set up a lot like whole life coverage, but offers interest on the savings account, too. Policyholders also have the option to pay more than the required premium payment to build up the savings account (and its interest) faster. Another benefit specific to universal life coverage is that not only can policyholders borrow from the account, they can also skip payments with no penalties, as long as the account maintains a positive balance.

The two main factors when selecting your life insurance policy are how long you want coverage to last, and how much flexibility you want to have over the payments you’re making towards the death benefit. Working closely with a Florida independent insurance agent is the best way to get set up with a life insurance policy that satisfies your needs and wishes.

What Does Life Insurance Not Cover in Florida?

All types of life insurance policies available in Florida come with two major exclusions. What’s unique about life insurance is that these exclusions are only in effect for a period of two years, after which they expire.

Life insurance policies in Florida come with these two major exclusions:

  • Contestability clause: The first major exclusion under life insurance policies in Florida is the contestability clause, which states that if an applicant lied to the insurance company about a health issue or lifestyle choice that lead to their death, the insurer will not pay out the death benefit. However, the insurance company will refund the cost of the policy. So if someone lied about being a smoker or a skydiver and then died due to one of these activities within two years of purchasing their policy, this clause would be in effect. But after two years, the policyholder can basically get away with the lie.
  • Suicide clause: The second major exclusion under life insurance policies in Florida is what’s known as the suicide clause, which states that if the policyholder commits suicide within two years of purchasing their coverage, the insurance company will refund the cost of the policy, but not pay out the death benefit. Similar to the contestability clause, this exclusion expires after two years.

Regardless of the time limits for life insurance exclusion clauses in Florida, it’s never a good idea to lie to an insurance company when applying for coverage of any kind. Beyond being dishonest, you run the risk of your coverage becoming invalidated, so it’s best to just be truthful up front.

Do I Need Life Insurance in Florida?

While it’s not required by law, it’s a really good idea to get coverage if you want to have control over how your funds are distributed after you pass. Beyond the obvious death benefit payout, life insurance policies in Florida come with several advantages.

Here are a handful of reasons residents in Florida purchase life insurance coverage:

  • To secure a spouse’s financial future: A death benefit payout made to a spouse can provide financial security for their future, including allowing them to take many years off from working in certain cases. This type of benefit comes in handy especially if the remaining spouse would be left alone to take over parenting young children.
  • To pay off outstanding debts: Many people choose to purchase life insurance coverage in order to pay off remaining debts, such as mortgage loans, after they pass away. This benefit allows the deceased’s family to be freed from covering huge outstanding balances.
  • To pay for children’s education: Life insurance death benefits are often allocated into a savings account intended to pay for a child’s college or graduate school education. Death benefits can also be used to help a grown child who has already completed school  pay off any remaining student loan balances.
  • To help a family maintain a standard of living: Families become accustomed to a certain standard of living, and it’s often highly dependent on the income of any supportive parents. Once one of these working parents dies, however, that can create a huge difference in the amount of money being brought into the family. Life insurance death benefits can make up for this gap and allow the family to maintain the same standard of living as before the policyholder passed away.
  • To make a charitable contribution: Policyholders can select a charity of their choice or even their alma mater to be their designated beneficiary. This option is popular among policyholders who will have no surviving next-of-kin or spouses at the time of their death.
  • To cover final expenses: Death is expensive. Average costs associated with death including funerals and burials easily surpass $10,000. Having life insurance coverage can prevent a policyholder’s family from having to pick up their final tab, so to speak.

Your Florida independent insurance agent can help you review your life insurance policy to answer any remaining questions about your coverage. They’ll also be able to help you make sure you’re set up with the right type and amount of coverage.

How Much Does Life Insurance Cost in Florida?

The cost of life insurance policies in Florida depends on many different factors, including your heath and lifestyle choices. Things like age and occupation also factor into premium calculations. Generally speaking, the healthier and safer you are, the lower the cost of your policy since you’re less of a risk to your insurance company. Also, as you age, the cost of life insurance tends to increase.

Someone who has tons of healthy habits, is young, and works at a relatively safe job will generally pay much less than an older danger junkie with a high-stress career. So a fit 30-something personal trainer might only pay around $20 per month, while a 50-something professional bungee jumper with a drinking habit might pay up to $1,000 monthly or even more.

Why Work with a Florida Independent Insurance Agent?

In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your area code? Independent insurance agents act as your own personal insurance shoppers, offering you tons more options than one-policy companies. With just one call, they’ll hook you up with multiple quotes.

Florida independent insurance agents are armed with knowledge on what coverage is needed in your area, and they’ll get you set up with just enough of it — not too little, not too much. They’ll handle all the heavy lifting so you can rest assured you’ll be set up with the right coverage at the right price.

They’re not just there at the beginning either. If disaster strikes, your Florida agent will be there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to. Now that’s thinking ahead.

Article Reviewed by | Paul Martin

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