Florida law requires life insurance companies to act in good faith and deal fairly with policyholders and beneficiaries. When an insurer improperly delays payment, offers less than the policy provides, or denies a legitimate life insurance claim, it may be exposed to liability for bad faith under Florida Statute § 624.155. In addition, Florida Statute § 627.455 establishes a two-year incontestability period, which generally prevents insurers from canceling or rescinding a policy based on alleged misstatements after the policy has been in force for that period.
What Is Life Insurance?
Life insurance is a legally binding agreement between an individual and an insurance company that is intended to protect loved ones financially after a death. In exchange for ongoing premium payments, the insurer promises to pay a tax-free death benefit to the named beneficiary upon the insured's death.
These benefits are commonly used to:
- Cover funeral and burial expenses
- Replace lost household income
- Pay outstanding debts or a home mortgage
- Help fund a child’s education
- Provide long-term financial stability for surviving family members
Florida policyholders typically rely on two main categories of life insurance:
- Term life insurance provides coverage for a set timeframe—often 10, 20, or 30 years
- If the insured dies during the policy term, the full death benefit is paid
- Coverage generally ends when the term expires unless the policy is renewed or converted
Permanent life insurance, including whole life and universal life policies, is designed to remain in force for the insured’s lifetime. These policies often build cash value over time, which may be accessed through loans or used to help pay premiums, combining insurance protection with a long-term financial component.
After a policyholder’s death, beneficiaries must submit a claim along with required documentation, such as a certified death certificate. Under Florida law—including Fla. Stat. §§ 627.4615 and 626.9541—insurance companies are obligated to handle claims fairly, investigate them in good faith, and issue payment on valid claims without unnecessary delay.
Most life insurance policies also include a two-year contestability period. During this time, an insurer may review the application for inaccuracies. Once that period ends, the policy generally cannot be contested unless the insurer can establish intentional misrepresentation or fraud.
