Elements of a Life Insurance Contract in Florida
Life insurance contracts are governed and regulated by the Florida Insurance Code. These contracts must have certain provisions in them as required by Florida law. The standard provisions of a life insurance policy contract will include the following:
- Entire Contract Clause. This clause generally says that the insurance policy and the application submitted by the insured to procure the insurance constitute the entirety of the insurance policy.
- Grace Period. This clause in the life policy gives the insured a period of at least 30 days to pay the premium due (sometimes more) from the due date. The time period given to pay the premium is called the “grace period.”
- Incontestable Clause. In simple terms, this clause means that the insurer cannot contest the policy after it has been in force for at least two years while the insured is alive. In essence, the incontestability clause limits the time in which the insurance company can seek to void the policy (two years) based upon claims involving misrepresentation, fraud, concealment and the like. Accordingly, even if the insured committed a misrepresentation on the application, if the policy was in force for more than two years while the insured was alive there can be no contest by the insurer against the policy.
- Secondary Notice. The requirement of secondary notice specifically applies to policy holders in Florida who are 64 years of age or older. In short, for any life insurance policy which has been in effect for at least one year covering a person who is at least 64, the carrier is required to send notice of an impending lapse of the policy at least 21 days before the effective date of lapse of the policy. In addition, the carrier must send a copy of the notice to a secondary addressee if such person has been designated in writing by name and address by the policy owner.
- Misstatement of Age or Sex. This provision of the policy provides that if the age or sex of the applicant for life insurance is found to be misstated, the amount payable under the policy may be “adjusted” by the carrier to reflect the amount which the premium payment would have purchased according to the real age or sex of the applicant. In other words, this provision allows the policy to be corrected rather than completely voided by the carrier if there turns out to be a misstatement of the applicant’s age or sex.
- Policy Loan. Some life insurance policies allow the insured to borrow funds against the cash value of the policy. Typically, loans paid to the insured will reduce the cash value of the policy. If there is not a sufficient amount of funds in the policy’s cash account to cover the premium costs, the policy could lapse.
- Reinstatement. If a life insurance policy lapses due to nonpayment of premium, the law requires the insurer to permit the insured to “reinstate” within a specific period of time. However, all back premiums will have to be paid and the insured may have to go through a new underwriting process to get approval.
- Interest Payable on Death Claims. The law requires interest to be paid by the insurer on death claims at an interest rate prescribed by law.
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If you need the services of a life insurance lawyer in the Hollywood or Fort Lauderdale area, or in any other part of Broward County, please contact our Law Firm for a free and thorough consultation. Our Fort Lauderdale life insurance attorney specializes in denied life insurance claims.
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