Are Annuities and Life Insurance Protected From Creditors in Florida?

A Florida resident facing a lawsuit can keep an annuity and the cash value of a whole life policy away from the creditor. Florida law exempts both from creditor claims, and there is no dollar cap. The exemption has conditions, a four-year look-back for purchases made to avoid a creditor, and a gap at the nursing home that affects more retirees than any lawsuit.

Is the Whole Annuity Protected, or Only the Payments?

Florida law exempts the proceeds of annuity contracts from the claims of the owner’s creditors. The Florida Supreme Court has read the exemption to cover the cash surrender value (the lump sum you could get by cashing in the contract today) as well as the payment stream. A judgment creditor cannot garnish the annuity, and cannot force you to surrender the contract and hand over the cash.

The exemption stays in place after payments begin. Courts applying Florida law have held that the payment stream is the core of an annuity, so receiving your monthly payments does not turn the exempt contract into unprotected money. The practical condition is traceability. Keep the payments in their own account rather than mixing them with other funds, because exempt money you cannot trace is money a creditor can argue is not exempt.

How Does Florida Protect Life Insurance, Before and After Death?

Florida has two separate rules for life insurance. One covers the policy while you are alive, and the other covers the death benefit.

While you are alive, the cash surrender value of a policy on your own life is exempt from your creditors, with no dollar limit. The rule matters for whole life and universal life, because term insurance has no cash value to protect.

When you die, the death benefit is protected from your creditors only if it is payable to a named beneficiary, such as a spouse, a child or a trust. If the policy is payable to your estate, or the beneficiary designation has failed and the estate becomes the default, the proceeds go through probate. Your creditors are paid from the estate first, and your family takes what is left. A beneficiary change form takes about ten minutes, so name a beneficiary, with a backup, and keep it current.

Who Qualifies for the Florida Annuity Exemption?

The exemption has two requirements. The first is that the exemptions protect Florida residents. If you split time between states, your legal residence on the day a creditor acts decides which state’s rules apply, and most states protect far less than Florida does.

The second requirement is a real annuity contract, the kind issued by an insurance company. Florida courts have declined to limit the exemption by type of annuity, but federal courts have refused to protect informal private annuities, where a parent hands assets to a child in exchange for a promise of lifetime payments. If your arrangement is homemade, have it reviewed before you rely on the statute.

Can You Buy an Annuity After a Lawsuit Starts?

Florida’s fraudulent-conversion statute was written for one move, turning non-exempt assets into exempt ones to keep them from a creditor. Buying a $500,000 annuity the month after you are served is the standard example. A court can unwind the purchase and strip the exemption from what you bought, looking back up to four years, and the statute applies whether the claim arose before or after the purchase.

People sometimes hear that the Florida Supreme Court protects money moved into a homestead even with creditors already pursuing the owner, and assume the same rule covers annuities. The homestead rule comes from the Florida Constitution and applies to the homestead alone. Annuities and life insurance are exempt by statute, so the court looks at your intent in full. The same rule runs through all of Florida asset protection. An exemption set up before trouble usually holds, and a court can take away one set up after.

Is an Annuity Protected From Creditors Also Protected From Medicaid?

Creditor protection and Medicaid eligibility are two separate bodies of law. An asset can be fully protected under one and fully countable under the other.

An annuity that no lawsuit can touch is still a countable asset when you apply for nursing-home Medicaid. Florida’s asset limit for a single applicant is $2,000, and a deferred annuity’s cash value counts against it, so the contract that survived every creditor usually must be cashed in or spent down before Medicaid will pay for care. Life insurance cash value above a small threshold counts too. Giving the annuity to your children makes the problem worse, because a gift starts Medicaid’s five-year look-back and a penalty period of ineligibility. The Medicaid penalty calculator shows how a transfer would land.

One kind of annuity does work for Medicaid. A Medicaid-compliant annuity is immediate and irrevocable, pays out within your life expectancy, and names the state as a beneficiary. The Medicaid-compliant annuity is a planning tool for specific situations, usually to protect a healthy spouse, and it is a different product from the retail annuity you already own. If nursing-home costs are the risk you are planning for, the answer is a Medicaid plan rather than the annuity in your portfolio. The Medicaid eligibility calculator shows where you stand today.

What This Means for You

A Florida resident who holds insurance-company annuities and permanent life insurance, bought before any claim arose, with living beneficiaries named on the policies, is in a strong position against lawsuits without any unusual planning. The remaining work is in the details. Confirm your residency, fix any policy payable to your estate, keep exempt money traceable, and decide which risk you are planning for, the creditor or the nursing home. Savings held in a 401(k) or IRA carry their own unlimited Florida exemption, explained on the retirement account creditor protection page. Physicians and other frequent lawsuit targets can read asset protection for doctors. We sort all of it out at the no-cost consult, and you do not need to have it figured out first.

Frequently Asked Questions

Common Situations

The retiree with the policy payable to his estate. A widower’s old whole life policy still names his late wife, with no backup, so the death benefit would default to his estate, go through probate, and be within reach of his creditors. A ten-minute beneficiary change form moves the proceeds outside probate and outside their reach.

The annuity bought too late. A contractor facing a serious claim wants to move $400,000 from his brokerage account into an annuity “because annuities are protected in Florida.” Annuities are protected, and a purchase made to avoid a known creditor can still be unwound and the exemption stripped. We walk through what he can still safely do, starting with the protections he already has.

The couple planning for the nursing home. A wife is told her husband’s deferred annuity is “protected in Florida,” so she assumes Medicaid cannot count it. Medicaid can count it, and does. We build a spend-down and spousal plan, including converting the right amount into a Medicaid-compliant annuity for her benefit, so his care is covered and she keeps enough to live on.

The homemade family annuity. A widowed father signs his brokerage account over to his daughter in exchange for her written promise to pay him a set amount each month for life, confident that “annuities are protected in Florida.” The exemption he is counting on assumes a real annuity contract issued by an insurance company, and federal courts have refused to protect informal family arrangements like his. If a creditor ever tests it, the homemade version may not hold. We review the arrangement before trouble arrives and, where protection matters, rebuild it around a true insurance-company contract.

Sources of Law

• Fla. Stat. §222.14 (exemption of life insurance cash surrender value and annuity proceeds from creditors); §222.13 (death proceeds exempt from the insured’s creditors when payable to a named beneficiary rather than the estate); §222.30 (fraudulent conversion of non-exempt assets into exempt ones). Goldenberg v. Sawczak, 791 So. 2d 1078 (Fla. 2001) (cash surrender value within §222.14); In re McCollam, 612 So. 2d 572 (Fla. 1993) (exemption not limited by annuity type; payment stream remains exempt); Havoco of America, Ltd. v. Hill, 790 So. 2d 1018 (Fla. 2001) (the homestead-only safe harbor). (retrieved 2026-06-10)

The Case Behind Florida’s Annuity Exemption

In 14 years of law practice, the annuity exemption is the one people are most surprised to learn is real, because it sounds too good to be a statute.

A common question I hear is, "Does that protection survive bankruptcy?" The exemption does survive bankruptcy, and the Florida Supreme Court said so directly. An insurance company owed a woman money under the settlement of her father’s wrongful death claim and, instead of paying her a lump sum, bought her an annuity paying $1,320 a month. When she later went bankrupt, a man with a claim against her from a later car accident argued that an annuity created that way should not count. The Eleventh Circuit asked the Florida Supreme Court to settle the question, and the answer was that the statute exempts the annuity.

What I watch for is the transfer that comes too late. The exemption protects an annuity you already hold. Money moved into an annuity after a claim has arrived faces a different question, and the answer is much worse.

Practice pointer. Date the purchase and keep the paperwork showing what the money was before it became an annuity. Where the protection gets fought, the fight is almost always about timing rather than about the exemption itself.

Avoid assuming the same protection travels with you. Florida’s exemption protects a Florida resident, and a creditor pursuing you in another state may ask a court there to apply its own exemptions instead.

Kevin D. Klagge, Esq., admitted in Florida since 2012. Any case described is a decision of a court rather than a matter handled by this firm. General information rather than advice on your situation.

Updated on September 23, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. General information about Florida law, not legal advice, and no attorney-client relationship is created. Creditor protection depends on your facts, residency, and timing, and no result is guaranteed. Do not send confidential information until we have agreed to represent you.