Florida is known for strong asset protection laws, and life insurance is one of the biggest beneficiaries. For families in Orlando, Oviedo, and throughout Central Florida, these rules can make life insurance a powerful planning tool when it’s set up correctly.
Are death benefits protected?
Generally, yes. Under Florida Statute 222.13, life insurance proceeds paid to a named beneficiary are generally protected from the creditors of the person who died. Your family can receive the death benefit without the insured person’s debts coming out of it first.
What about the cash value in my policy?
Under Florida Statute 222.14, the cash surrender value of life insurance policies and the proceeds of annuity contracts issued to Florida residents are generally exempt from the owner’s creditors. That’s why permanent life insurance and annuities often come up in asset protection planning for business owners and professionals.
The mistake that can undo the protection
Don’t name your estate as the beneficiary, and don’t leave the beneficiary blank. If proceeds go to your estate, they can become subject to probate in Orange or Seminole County and may be reachable by your creditors. Naming specific people, or a properly drafted trust, keeps the money moving directly to your family.
Are there limits?
- Once the money is paid to your beneficiary, their creditors may be able to reach it. A trust can help if that’s a concern.
- Protections can be challenged if a policy was bought or funded to defraud creditors.
- Some federal claims, such as certain IRS debts, may not be subject to state exemptions.
Does Florida tax life insurance?
Florida has no state estate tax and no inheritance tax, and life insurance death benefits are generally not subject to federal income tax for the beneficiary. Very large estates may still need to plan around the federal estate tax.
Next steps
- Review your beneficiary designations on every policy, especially after marriage, divorce, or a new child.
- Add contingent beneficiaries.
- For larger estates or business owners, coordinate with a Florida estate planning attorney.
Want us to review your beneficiaries and coverage? It takes about 15 minutes and costs nothing.
This article is not legal advice. Consult a licensed Florida attorney about asset protection for your situation.
This article is for general educational purposes only. Coverage, eligibility, discounts and pricing vary by carrier and policy. Talk with a licensed Florida insurance agent about your specific situation.
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