There are many types of life insurance products available in Florida. A brief description of the most common are:
Credit Life: Credit life insurance is a type of decreasing term insurance associated with loan indebtedness. If an insured dies before the loan is repaid, the credit life policy will pay the balance of the loan. Prior to October 1, 2008, the
maximum amount of credit life insurance could not exceed $50,000 with any one creditor. The maximum term a credit life policy could be issued was for 10 years. After October 1, 2008, the maximum amount of credit life insurance could not exceed the
amount and the duration of the indebtedness. Credit life is not available for those debtors over 70 years of age, and existing credit life policies will terminate on the loan anniversary date at age 71. The borrower is not required to purchase credit
life insurance. He or she may assign any other life policy or policies they own for the purpose of covering the loan.
Endowments: Endowment policies provide for the payment of the face of the policy upon the death of the insured during a fixed term of years, but also the payment of the full face amount at the end of said term if the insured is still living.
While not often thought of in this respect, a whole life policy is actually an endowment at age 100. If the insured is living at age 100, the policy will mature for its full face value. As with the whole life policy, endowment policies provide insurance
protection against the economic loss of a premature death. Common endowment terms are five, ten, and twenty years, or to a stated age, such as 65. If the insured is living at the end of the endowment term, the insurance company will pay the face amount
of the policy.
Whole Life: Provides financial protection the entire lifetime of the insured, or to age 100. Premiums remain the same for the life of the insured or as long as premiums are paid. During the early years of the insurance policy the premiums
are greater than the amount necessary to pay policy costs. The excess accumulates cash value in the policy to offset increased insurance costs as the insured ages, or to fund the non-forfeiture provisions of the contract.
Variable Whole Life: A whole life product that incorporates investment features, designed to enhance the cash value portion of an ordinary life policy. The product was created to take advantage of investment performances that were more favorable
than those of a conventional whole life policy.
Modified Life: a whole life product that incorporates investment features, designed to enhance the cash value portion of an ordinary life policy. The product was created to take advantage of investment performances that were more favorable
than those of a conventional whole life policy.
Universal Life: an annual term life insurance policy with a side fund that accrues interest. As the cost of the term insurance increases each year, the side fund is used to offset the cost. Properly funded, this allows out-of-pocket premiums
to remain level.
The side fund grows based on current interest rates. When rates are high, the side funds do well, when rates are low, the side fund does not grow much.
Eventually, the cost of the term insurance can grow to an amount higher than the premium and money is withdrawn from the side fund to help pay the increased cost of the term insurance. If interest remains low, the side fund may be depleted and the insured
will have to increase premiums accordingly or reduce the face amount of the policy.
Variable Universal Life: made up of three interlocking parts with the following exceptions:
Accumulation Account: Variable life insurance companies offer a variety of available investment funds. The policy contains provisions for transferring between funds, so that the policy owner may engage in some personal investment management.
Although the funds react to investment market changes more slowly than individual stocks or bonds, the fund accumulation is tied directly to the investment experience of the underlying portfolio of investments.
Life Insurance Amount: The insurance amount is the specified sum to be paid upon the death of the insured.
Policy Fees: The cost of life insurance is usually based on a company's favorable yearly renewable term premium, or monthly renewable term premiums. The premiums are deducted monthly from the policy account, or from direct customer
payment, if the account balance is insufficient to support the monthly amount. Policy expense fees applied to a policy must be disclosed in a product prospectus.
Industrial Life: a form of life insurance, usually whole life, in which the premiums are payable on a monthly or weekly basis. Premiums are usually collected by an agent of the company. The policies usually have a face amount less than $5,000.
Beginning July 1, 2021, these types of policies can no longer be sold in Florida.
Term Life: provide financial protection for a temporary period of time and may or may not be renewable. They are normally written for individuals who need large amounts of coverage for specific periods of time. Most term life does not accrue
cash value. Initial premiums are usually much less than permanent plans of insurance, but may increase each year or remain level for a specified period, depending on the type of term insurance.