Florida life insurance is a contract between an insurance policyholder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policyholder).
Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policyholder typically pays a premium, either regularly or as one lump sum. Other expenses, such as funeral expenses, can also be included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Modern life insurance bears some similarity to the asset management industry and life insurers have diversified their products into retirement products such as annuities.
Life-based contracts tend to fall into two major categories:
Protection policies: designed to provide a benefit, typically a lump sum payment, in the event of a specified occurrence. A common form—more common in years past—of a protection policy design is term insurance.
Investment policies: the main objective of these policies is to facilitate the growth of capital by regular or single premiums.
Types of Florida Life Insurance
- Florida term life insurance guarantees payment of a stated death benefit during a specified term. Once the term expires, the policyholder may either renew it for another term or allow the policy to terminate. The policyholder may be able to convert the policy to permanent coverage. Term life insurance is also known as pure life insurance.
- Whole life insurance is a type of permanent life insurance, meaning the insured person is covered for the duration of their life as long as premiums are paid on time. As with most permanent life insurance policies, whole life also offers a savings component called cash value.
- Universal life insurance has a cash value, just like a whole policy. Your premiums go toward both the cash value and the death benefit. However, the policyholders of universal life policies can change the premium and death benefit amounts without getting a new policy. There is a minimum premium to keep the policy in force, and the cash value may be used to pay the premium.
- Variable life insurance has a cash value component that works more like an investment account than a savings account as with whole life policies. They include a series of mutual fund-like sub-accounts where the cash value is more or less placed in the stock market. Fees may be lower with a variable life insurance policy than a whole life policy, but the product is riskier. This makes a variable life insurance policy a limited investment option and a limited life insurance option.
- Simplified issue life insurance gets you life insurance without the health exam. A health questionnaire must be completed answering questions like if you smoke, have been diagnosed with serious illnesses, etc. Because there is no medical exam with simplified issue life insurance, the policies tend to be more expensive than term policies.
- Guaranteed issue life insurance not only foregoes the health exam, questions about health are not even asked! As long as the premium is paid, the insurer will provide coverage, needing only the applicant’s age, sex, and state of residence.
- Florida Final expense insurance covers the cost of anything associated with your death, whether its medical costs, a funeral, or cremation – whatever your literal final expense is. It’s usually only issued to people of a certain age and the policy is valid up to a certain age. Usually issued for small amounts, from $5,000 to $25,000, to cover those expenses.