Can You Buy Life Insurance on Your Own? A Florida Guide

Can I get life insurance on my own? Yes, most adults can apply for a policy on their own life. You can be both the applicant and the insured, and the insurer decides whether to issue the policy and on what terms. Buying coverage on someone else’s life is a different question, with stricter rules. This guide explains both in plain words.

Yes, adults can generally apply for life insurance on their own life

Yes. Florida law says any individual of legal capacity may buy an insurance contract on his or her own life for the benefit of any person (Fla. Stat. § 627.404). Fla. Stat. § 627.404 reads: “Any individual of legal capacity may procure or effect an insurance contract on his or her own life or body for the benefit of any person, but no person shall procure or cause to be procured or effected an insurance contract on the life or body of another individual unless the benefits under such contract are payable to the individual insured or his or her personal representatives, or to any person having, at the time such contract was made, an insurable interest in the individual insured.” The insured is the person whose life is covered. The owner is the person who controls the policy, can change beneficiaries, and makes decisions under the contract. Often one person holds both roles. Your age, health, and finances all shape the offer. The insurer’s underwriting decides whether a policy is issued and at what rate. Term and whole life are the two main types, and each fits a different goal. The rest of this page covers the difference between owning coverage on yourself and buying it on someone else.

Buying coverage on someone else: what insurable interest means

Insurable interest is a term you may hear when a policy is bought on another person’s life. Florida law bars procuring a policy on someone else’s life unless the benefits are payable to that person, his or her personal representatives, or someone with an insurable interest when the contract was made (Fla. Stat. § 627.404). The statute measures interest by money, not only by family ties. An insurable interest exists when you expect a substantial financial advantage from the other person’s continued life, health, and safety, and would suffer a consequent substantial financial loss by reason of that person’s death, injury, or disability. It also exists when you have an expectation of a substantial pecuniary advantage through that person’s continued life, health, and safety, and would suffer a consequent substantial pecuniary loss if that person died, was injured, or became disabled. The interest must exist when the contract is made. It does not need to last after coverage starts. The insured, having legal capacity to contract, must also apply for the contract or consent to it in writing, on or before it is entered into, except for prepaid funeral, group life, and group or blanket accident, health, or disability policies and, for a minor younger than 15, a policy obtained by a person with an insurable interest in that minor’s life or by any person upon whom that minor is dependent for support and maintenance. Businesses face a separate rule. A business may insure its owners, directors, officers, partners, and managers, or key employees or key persons, including those of any affiliate or subsidiary, only with their written consent, obtained before the purchase. It may not retaliate against someone who says no. If a family member’s diagnosis or a partner’s buy-sell deadline is on your mind, check who must sign before anyone applies.

How underwriting works when you apply for your own policy

Underwriting decides whether an application becomes a policy. Applications ask health questions, and issue may depend on insurability. Underwriters may review medical history, prescription records, height and weight, tobacco use, and age. Answer every question completely and accurately, because the insurer relies on what you report. A wrong age can change the payout. Florida law says that if the age or sex of the insured, or of any other individual considered in determining the premium or benefit, was misstated, the amount payable is what the premium would have bought at the correct age or sex, based on the insurer’s rate at issue (Fla. Stat. § 627.456). Florida law also requires every life policy to become incontestable after it has been in force during the insured’s lifetime for 2 years from its issue date. Exceptions include nonpayment of premiums and certain stated benefits (Fla. Stat. § 627.455). Whole life policies may pay dividends. Dividends are not guaranteed.

Choosing the right type of coverage as an individual buyer

For most individual buyers, the first choice is term or whole life. Term life insurance covers a set period. Whole life insurance is permanent coverage that can build cash value. The NAIC Life Insurance Buyer’s Guide explains the difference between term and permanent coverage, how much coverage to consider, and what to ask before buying. Some buyers need other coverage. Key person insurance protects a business that depends on one person’s skills or role. Buy-sell agreement insurance can help fund an agreed ownership transfer when an owner dies. Estate planning life insurance is used when a family plans how assets will pass. NRI life insurance is for applicants with ties across borders. Each type has its own terms. Compare the policy form, its costs, and its changes, not only the headline number.

What happens after you apply, and what you can change later

After issue, the owner and beneficiary designations decide who controls the policy and who receives proceeds. These should match your estate and business plan. Changes usually go through the insurer’s own forms, so ask how a change is made before you apply. Ownership also matters for federal estate tax. 26 U.S.C. § 2042 brings into the gross estate the amount the executor receives as insurance on the decedent’s life. It also brings in the amount all other beneficiaries receive under policies on the decedent’s life, to the extent of that amount, if at death the decedent held any of the incidents of ownership, alone or with another person. A reversionary interest counts as an incident of ownership only if its value exceeded 5 percent of the policy’s value immediately before death. Certain transfers made within three years of death can still be counted in the gross estate (26 U.S.C. § 2035). For income tax, death benefits are generally excluded from gross income. Interest paid on proceeds left with the insurer is taxable (IRS life insurance proceeds guidance). Whole life policies may allow loans against cash value. Florida law requires a policy loan value at least equal to the cash surrender value at the end of the current policy year, after stated deductions (Fla. Stat. § 627.458). Fla. Stat. § 627.458 reads: “The loan value of the policy shall be at least equal to the cash surrender value at the end of the then-current policy year, except that the insurer may deduct, either from such loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year.” That loan rule does not apply to term policies or term riders.

Quick answers

Talk with a licensed agent about your situation

A coverage review is the first meeting with NR CPAs & Business Advisors. Nischay Rawal is a licensed insurance agent. Insurance is offered by the licensed agent, separately from the accounting practice of NR CPAs & Business Advisors. The firm serves clients across Florida, including Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa, and Jacksonville. You may be asking this because a parent’s health has changed, or because a business partner needs coverage before a buy-sell deadline. In a coverage review, we walk through who would own the policy, who would be insured, and what the family or business needs. Bring the names of the insured and the owner, and any business or buy-sell documents you already have. Our team can explain the options in plain words. Approval and pricing depend on underwriting. When you’re ready, schedule a coverage review.