Florida Life Insurance Laws: Attorney Explains the Rules Policy Beneficiaries Should Know About

Life insurance laws differ from state to state. While some states have minimum safeguards, others have a wide range of rules against wrongful life insurance claim denials. Florida offers many protections for life insurance beneficiaries whose claims have been delayed or denied for various reasons. Florida life insurance laws protect policyholders 64 and older against inadvertent life insurance lapse.

Florida Life Insurance Beneficiary Rules

A life insurance beneficiary in Florida is a person or an entity who is named in a life insurance contract (policy) as the recipient of the policy proceeds upon the insured person’s death. Sometimes, Florida life insurance policies do not name a beneficiary, and the death benefit will then be distributed either to the insured’s estate or to the next of kin. If a Florida life insurance beneficiary is a former spouse of the insured person, such designation may be revoked under certain circumstances. Proving entitlement to the proceeds in automatic revocation upon divorce cases may create beneficiary disputes.

A life insurance policy in Florida may only be issued if the insured person applies for such a policy or if the insured person consents in writing to the contract and its terms. If a person obtains a life insurance policy on someone else without having their written consent, such policy may be deemed invalid under Florida laws.

What Happens if a Minor Is the Beneficiary of a Life Insurance Policy?

In Florida, a minor is a person who is under the age of 18. If a minor is a beneficiary on a life insurance contract, the insurance company cannot make a payout until the minor reaches maturity. The insurer may keep the life insurance proceeds in a special account for the minor beneficiary and distribute it to them when they turn 18 years of age.

Life Insurance and Divorce Settlements: What Rights Do Ex-spouses Have?

Divorce may have a major effect on life insurance designations in Florida. Florida has an automatic revocation statute that automatically removes a former spouse as a beneficiary on a life insurance policy. This statute has exceptions for those who were re-designated as beneficiaries after the divorce and for those policyholders who signed an agreement with their former spouses confirming that they wish to maintain them as beneficiaries despite the divorce.

Some beneficiaries may understand this law to mean that divorce simply terminates their right to life insurance proceeds in Florida, but the law is more complex than this. If the policyowner is the former spouse who is also the beneficiary, they may collect the benefit after the death of the insured former spouse. The Florida statute affecting life insurance designations after divorce protects ex-spouses from inadvertently forgetting to remove their former spouses and is based on the premise that an ex-spouse would not want their ex-spouse to benefit from their death after the divorce. Any denial involving a post-divorce revocation must be reviewed by a life insurance attorney who can explain the former spouse’s rights.

florida life insurance law

Couples going through a divorce may be required to list their assets as part of a financial disclosure. Since a life insurance policy may be considered a financial asset in Florida, it is best to discuss this issue with their divorce attorneys. If a couple decides to cancel their life insurance policy in the middle of a divorce in Florida, they need to disclose their intent and follow the steps required for effective cancellation. In some cases, courts may restrict parties from canceling their existing life insurance policies if there is an obligation for child support or alimony. 

ERISA can also govern some group life insurance policies issued in Florida. ERISA is a federal law that trumps state laws that conflict with it. Under ERISA, the beneficiary listed on the plan documents should be able to collect life insurance proceeds even if such beneficiary is revoked under the Florida revocation statute. This conflict may result in a lot of confusion and subsequent litigation. Getting advice from a life insurance attorney before filing a claim is always prudent.

Florida Life Insurance Law for Policies With No Beneficiary Listed

When there is no beneficiary on a Florida life insurance policy, the proceeds will be distributed according to the policy provisions in the contract itself. Usually, the death benefit goes to the decedent’s estate or the decedent’s next of kin. In this case, one of the most common questions is who collects life insurance payouts if the beneficiary dies. If the beneficiary predeceased the insured person, the proceeds get distributed to the contingent beneficiary or as if no beneficiary was listed.

When a beneficiary dies in Florida, it is important to know whether the beneficiary died before or after the insured. If the beneficiary died after the insured person but before claiming the benefit, the beneficiary’s estate or their next of kin may claim the benefit.

Can a Relative Sue for Life Insurance Benefits if They Are Not the Beneficiary?

Yes. A relative can sue for life insurance benefits even if they are not the beneficiary, provided they have a valid legal basis for their lawsuit. These cases usually involve a divorced couple. If there is a child support court order or a divorce decree that obligates the policyholder to name a specific person to collect the life insurance proceeds, that person may sue to recover the benefit if the policyholder failed to comply with the court order and did not name them as the beneficiary. Similarly, beneficiary changes may be challenged in court by relatives who are not listed as beneficiaries but have a valid claim to the proceeds.

Laws on Wills and Life Insurance Policies in Florida

Florida has different laws governing wills, estates, and life insurance contracts. Generally, a life insurance contract is not a probate asset. A life insurance policy is exempt from probate because it is a contract between an insurance company and a policyholder governed by contract laws rather than probate laws. However, a life insurance policy can become part of probate if the beneficiary on the policy is the decedent’s estate. If the decedent named different people as beneficiaries on their life insurance policy in the will and the life insurance contract itself, litigation and probate may be necessary to sort it out.

Do Beneficiaries Have to Have an Insurable Interest in a Life Insurance Policy?

A beneficiary can be any person or entity chosen by the policyholder. Provided the designation was made according to the insurance company’s contract provisions for naming a beneficiary, the beneficiary will be able to collect the death benefit. The policyowner, on the other hand, must have an insurable interest in the insured when they apply and obtain a life insurance policy on the insured person’s life. In Florida, if the policyowner obtains a policy on someone else, the insured person must consent in writing for the policy to be valid. 

Are Life Insurance Death Benefits Taxable?

According to the IRS, life insurance proceeds you receive as a beneficiary due to the death of the insured person are not includable in gross income, and you do not have to report them. However, any interest you receive is taxable, and you should report it as interest received.

Life Insurance Claims in Florida

florida law on life insurance beneficiaries

How Long Do You Have to Collect Life Insurance?

If the beneficiary knows of the insured person’s death and can obtain a copy of the death certificate, they can file a claim as soon as possible. However, if there is a delay in filing a claim, problems may arise. The insurer may archive the file or fail to locate the policy at all. Depending on how many years/months have passed after the insured’s death and the reasons behind the failure to file a claim, beneficiaries may have difficulties recovering their death claims and applicable interest.

What Happens to Unclaimed Life Insurance Money?

Insurance companies turn over the unclaimed proceeds to the state if they are unable to locate the beneficiary. Beneficiaries can then file a request to release the unclaimed property with Florida’s Department of Financial Services’ Bureau of Unclaimed Property. 

How Long Does It Take To Get the Life Insurance Payout?

In Florida, as in most states, the beneficiary must have all the required documents ready before filing a claim after someone’s death. To get a life insurance payout in Florida, the beneficiary must present a copy of the death certificate and all supporting documents required in the claim file. A life insurance company must usually respond to a claim within 30 days. While most life insurance reviews take 30-60 days in Florida, many claims may get delayed for several months or even years. Insurance companies holding death benefits for more than 30 days are required to pay interest.

What Is a Life Insurance Contestability Period?

In Florida, most life insurance policies have a contestability period of two years. It means that if the insured person dies within the first two years after the policy issue date, the insurance company will contest the policy.

What Is the Grace Period for Life Insurance Payments?

Florida law requires insurance companies to provide insureds a grace period of not less than 30 days within which payment of premium may be made and during which the policy stays in effect.

Common Reasons for Life Insurance Claim Denials

  • Failure to pay premiums. A lapse in a life insurance policy in Florida occurs when the policyowner fails to make premiums and the grace period expires. Florida law requires secondary notices to be sent to policyowners who are 64 and older. Secondary notices advise policyowners of their right to designate a third party to receive notices of pending lapse to prevent inadvertent lapse. 
  • Suicide. Many life insurance policies do not cover suicide during the first two years of the policy issue date. 
  • Material misrepresentation. Denials due to material misrepresentation occur during contestability checks when the insurance company discovers misrepresentations or omissions on the application for life insurance.

If your claim has been delayed, denied, or challenged, have a consultation with an attorney to understand your rights. 

Our life insurance attorneys have successfully handled cases involving all of the above reasons and more. If you find yourself in one of the situations described or you simply need advice, a free consultation to help you assess your case will always be available to you at our law firm. Call us at (888) 510-2212 to consult with one of our lawyers.

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About the author

Attorney Tatiana Kadetskaya has over 10 years of experience in life insurance law representing beneficiaries and policy owners. She is best known for successfully collecting denied and delayed claims and settling complex beneficiary disputes and interpleader lawsuits.

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