CONSUMER SERVICES HELPLINE
LIFE INSURANCE: COVERAGE CAN SECURE YOUR
Association of Insurance Commissioners (NAIC) suggests that
you review your life insurance policies to determine if your
coverage is still appropriate for your situation.
Life insurance helps secure your family’s financial future
in the event of the death of you and/or your spouse. It also helps
ensure that the estate that you’ve worked to build
will be allocated to the beneficiaries you have chosen.
When purchasing life insurance, consider the financial
responsibilities that your family will immediately inherit
such as a mortgage or car loan. In addition, you’ll want to
consider long-term goals such as your spouse’s retirement or
your children’s education. If you decide that you need more
coverage, determine whether you need term life insurance or
a cash value policy.
Term insurance generally has lower premiums in the early
years, but does not build up a cash value you can access.
Cash value policies come in the form of whole life,
universal life or variable life insurance. It’s important to
know which type of policy you own, and how the benefits are
paid if something happens to you and/or your spouse.
If you have questions about your current coverage, or about
the type of policy to best fit your situation, contact your
life insurance agent or the Florida Department of Financial
Stop. Call. Confirm.
Before consulting an agent or purchasing a life insurance
policy, make sure the agent and company are licensed to sell
insurance in your state. To check, call your the Florida
Department of Financial Services 1-877-MY-FL-CFO
(877-693-5236) or visit
What to Review
As your life situation changes through the years, so do your
insurance needs. A regular review of your life insurance
coverage is important.
To begin your review, read your policy carefully. Look for
answers to these questions:
· Do premiums or benefits vary from year to year?
· How much do the benefits build up in the policy?
· What part of the premiums or benefits is not guaranteed?
· What is the effect of interest on money paid and received
at different times on the policy?
· In what situations and through what procedures can cash
values be accessed?
· Can the policy be converted into another form of insurance
When reviewing your policy, make sure the benefit covers
your current needs. Changes — such as a birth, divorce,
remarriage or even a new mortgage or job — are indicators
that you might need to make changes to your life insurance
In the case of the birth of a child or a new marriage, you
might want to increase your death benefit. Check with your
agent to see if your insurance company requires a physical
exam before increasing your coverage levels.
Alternatively, your life changes might allow you to lower
your life insurance coverage and premiums. The mortgage
might be paid, you might have retired or your children might
have completed college. At this stage of life, your life
insurance company might be able to offer “conversion
privileges” from your current term life insurance policy to
a new whole life insurance policy. You might also be able to
expand your death benefits so they can be used while you are
still living. Ask your insurance agent or company about
One of the most important decisions to make regarding life
insurance is to whom to leave your benefits. That’s why it’s
important to review your beneficiaries every few years.
There are two types of beneficiaries for your life insurance
policy. Primary beneficiaries receive a portion or the whole
policy benefit if they outlive you. Contingent beneficiaries
(also referred to as secondary beneficiaries) receive
proceeds if a primary beneficiary dies before you. If you
name more than one beneficiary in either category, you
should include the percentages of the death benefit proceeds
that you would like each individual to receive, or stipulate
“equal shares” to each.
You can name your spouse, domestic partner, children,
grandchildren, relatives, friends, charities, businesses,
trusts or your estate as your beneficiary. Naming
individuals rather than an estate allows those individuals
to receive the proceeds immediately and, generally, without
taxation. As part of your estate, however, proceeds
typically will go through probate with the rest of your
assets and might be subject to estate taxes. Your will does
not affect the distribution of your life insurance proceeds
unless the sum goes to your estate to be divided according
to the will. Check with your insurance agent, tax advisor or
family lawyer if you have questions about how the life
insurance benefit will be paid following your death.
Tips for naming beneficiaries:
· Spouse: You should use the individual’s legal name, as in
“John Wayne Johnson,” rather than “husband.” In case of a
second marriage, “husband” could be interpreted either as
the husband when you bought the policy or the current
husband. When reviewing your policy, think about who will be
in the best position to make financial and other important
family decisions upon your death.
· Children: You should qualify a specific class of
individuals, such as “my children,” by the use of either
“per stirpes” (according to the family tree or branch) or
“per capita” (per head). A designation of “my children per
stirpes” means that if your two sons have two children each,
and your oldest son dies before you do, his children will
each receive his share of your benefits. A designation of
“my children per capita” means that the living son, in the
case above, would receive the full amount and your oldest
son’s family would receive none of the benefit.
· Minor Children: Most insurance companies will not pay life
insurance proceeds to minors. If any of your children are
minors, one of your options is to designate a trust as the
beneficiary, with an individual or institution to use the
funds for the welfare of your children. You will need to set
up your trust(s) carefully, with your family attorney or tax
advisor’s assistance. Another option is to designate two
individuals whom you trust as beneficiaries, who will make
joint decisions about the care and welfare of your children.
As your children mature, you should update your
If you are the owner of your life insurance policy, in most
cases you can change beneficiaries at any time by completing
a formal, written notification to your insurance company.
During a regular review of your life insurance policy, take
into consideration changes in your life, relationships and
family — such as births, adoptions, marriages, remarriages,
divorces and deaths — when updating your beneficiaries. Your
family attorney, tax advisor or insurance agent can help you
use specific wording to avoid unintended consequences.
Locating the Company that Services Your Life Insurance
It’s possible the company that issued your life insurance
policy has changed its name, merged with another company or
sold your policy to another insurance company. You should
have been notified of this change at the time it happened.
For this reason, it’s important to make sure your mailing
address is always current on your policy. However, if you
did not receive an updated policy, you will need to locate
the life insurer that services and pays claims on your
You will need this information to search for the new company
· Make sure you have the entire legal name of the insurance
company. This should be listed on the policy or binder.
· Check to see if there is a mailing address and phone
number on the policy or binder.
· Determine in what state the policy was purchased and when
the policy was purchased.
Once you have this information, contact the state insurance
department in which the insurance company was located at the
time the policy was issued. Many times, the state insurance
department will be able to track name changes and/or mergers
that impacted the insurance company.
To find contact information for your state insurance
You can also use the Life Insurance Company Location System,
https://external-apps.naic.org/orphanedpolicy/. Using the
information you have gathered, answer five questions and the
system will provide a list of suggested state insurance
department contacts that might be able to assist with your
To learn more about your insurance needs throughout your
life, go to www.InsureUonline.org.
Get more information about life insurance by downloading the
NAIC’s free “Life Insurance Buyer’s Guide” at www.naic.org/consumer_home.htm.