How Does Life Insurance Work in Florida?

If you are the owner or a beneficiary of a life insurance policy issued in the State of Florida, this guide will provide you with important information about how life insurance works there. While there are some federal laws governing life insurance nationwide, every state has its own unique laws regarding life insurance policies issued there and Florida is no different.

The Boonswang Law firm has assisted life insurance beneficiaries to obtain the benefits they are owed for over two decades. If you have questions about life insurance and you are a  Florida resident, contact us today to speak with an attorney who concentrates in this area of law.

Who Can Be a Life Insurance Beneficiary in Florida?

People, organizations, businesses, your estate… all of these can be designated a life insurance beneficiary in Florida. Minor children cannot be beneficiaries, and if they are named as beneficiaries, the court will appoint a guardian to receive and manage the funds in their name until they reach the age of majority.

An insured wishing minor children to receive life insurance proceeds might instead create a trust for their benefit and name the trust as beneficiary, or name an adult custodian of the funds as beneficiary.

How Life Insurance Pays Death Benefits in Florida

In Florida, the insurance company will first try to locate and pay the named beneficiary on the policy. 

If the named beneficiary has died or the designation is invalid for any reason, the insurance company will try to locate the alternate beneficiary. The alternate beneficiary is also known as a “contingent beneficiary,” with the contingency being the death of the named beneficiary.

If neither the named beneficiary nor the alternate beneficiary is available, the insurance company can pay the death benefits to the estate of the insured if this is provided for in the policy itself. The proceeds are then distributed according to the instructions in the will of the insured. 

If the insured did not have a will, he or she is said to have died “intestate.” In this case, the insured’s estate, including the death benefit, will be distributed to the insured’s heirs according to Florida’s intestate succession laws, which can be found here.

Will a Life Insurance Beneficiary Designation Naming a Spouse be Changed by Divorce in Florida?

YES. This is extremely important. After divorce the designation of an ex-spouse as beneficiary of a life insurance policy is automatically invalid by operation of Florida state law. 

If the parties divorcing wish to retain the beneficiary designation, the insured must reaffirm the designation of the ex-spouse as beneficiary following the divorce. This often happens when the insured is paying spousal support or child support and the court orders the insured to maintain life insurance to guarantee that income stream.  

ERISA Life Insurance Beneficiary Designation Rules and Ex-Spouse

If a life insurance policy is acquired as a benefit of employment, it is likely governed by the Employee Retirement Income Security Act of 1974, a federal law commonly referred to as “ERISA.”  In a life insurance claim dispute governed by ERISA, federal law will supersede Florida state law.

Under ERISA, the life insurance beneficiary designation is strictly observed. So despite Florida law invalidating an ex-spouse’s beneficiary designation, if an insured fails to change the named beneficiary after divorce, the ex-spouse will receive the death benefit under ERISA. If an insured has a policy governed by ERISA and does not want his or her ex-spouse to receive the death benefit, he or she must change the beneficiary designation before they die.

Can You Contest a Life Insurance Beneficiary in Florida?

YES. Here are two of the most common reasons why there are life insurance beneficiary disputes:

INEFFECTIVE BENEFICIARY CHANGE BY THE INSURED

If the insured attempted to change the beneficiary but did not do so correctly, a Florida court will look at extrinsic evidence to determine what the intent of the insured was at the time that she made efforts to change the beneficiary designation.

BENEFICIARY FRAUD 

If a formerly-named beneficiary alleges that the insured was coerced to change a beneficiary designation, a Florida court will look at evidence and testimony about the insured’s health, state of mind, and the role of the new beneficiary in the life of the insured at the time the beneficiary change took place.

What Happens when the Insured Designates Someone as Beneficiary on the Policy, and Names Someone Else as Beneficiary in his WIll?

If the will of the insured designates one party as beneficiary of his life insurance policy, but the policy itself names another party as beneficiary, the policy will control. You cannot override a beneficiary designation with contrary instructions in your will in Florida.

I am the beneficiary of a Florida life insurance policy and someone is contesting the beneficiary designation, what do I do?

Unfortunately, disputes do arise over who is the rightful beneficiary of a life insurance policy in Florida. You should defend, and you will need an experienced life insurance beneficiary attorney to fight back. Contact a life insurance expert to evaluate your case.