2.1 Georgia Life Insurance Policy Requirements

Statutory Source: O.C.G.A. 33-25-3

Georgia does not let an insurer write a life contract on whatever terms it likes. O.C.G.A. 33-25-3 ("Required policy provisions generally") lists the clauses every individual life policy delivered in Georgia must contain, and 33-25-2 lists clauses that are prohibited. On the exam, treat these as the floor: an insurer may give the consumer more than the statute requires (a 20-day free look instead of 10), but never less.

Free Look (Right to Examine)

The free look lets a buyer return the policy for a full premium refund, no questions asked, starting the day the policy is delivered (not the day it was issued or applied for).

Note the trap: candidates often memorize "30 days for replacement" from other states. In Georgia the replacement right-to-examine under Rule 120-2-24 is 20 days. If the policy is returned within the window, the insurer must refund 100% of premium paid.

Worked example: A policy is issued March 1 but the agent delivers it March 10. A standard 10-day free look runs from March 10, so the buyer has through March 20 to rescind. If it had been a replacement, the buyer would have through March 30.

Incontestability

Georgia requires a 2-year incontestability clause. After the policy has been in force for two years during the insured's lifetime, the insurer cannot contest it for misstatements or omissions in the application.

• The clock runs from the date of issue.
• Exceptions that survive forever: non-payment of premium, and (in cases of intentional fraud) the insurer may still defend, though Georgia courts read the clause strictly in the insured's favor.
• A material health misrepresentation discovered in year 3 cannot be used to deny the claim.

Suicide Clause

The suicide exclusion is capped at 2 years from issue. If the insured dies by suicide within that window, the insurer's liability is limited to a refund of premiums paid. After two years, suicide is covered like any other cause of death. A reinstatement can start a new exclusion period running from the reinstatement date.

Misstatement of Age (and Sex)

If the application stated the wrong age, Georgia does not allow the insurer to void the policy. Instead the benefit is recalculated.

Worked example: A man states age 40 but is truly 45. His $250,000 policy charged a 40-year-old's rate. At 45 the same premium would only buy roughly $215,000. The insurer pays the reduced figure, not zero - the contract stays valid.

Grace Period

O.C.G.A. 33-25-3 mandates a grace period of not less than 30 days for any premium after the first. Key points:

• Coverage continues during the grace period.
• If the insured dies during grace, the claim is paid minus the overdue premium.
• The period runs from the premium due date.

Watch the wording: the statute says "not less than 30 days," so a contract showing a 31-day grace period still satisfies Georgia law - the exam-correct minimum is 30 days.

Claims Payment and Interest

Georgia expects prompt, good-faith claim handling. Practical timeline tested on the exam:

• Acknowledge receipt of a claim promptly (industry/unfair-claims standard ~15 days).
• Pay death proceeds within the period set by contract and statute once due proof of death is received.
• Interest accrues on death proceeds not paid timely, protecting beneficiaries from delay.

Acceptable proof of death

• Certified death certificate
• Attending physician's or coroner's statement
• Completed claimant's statement and policy

Standard vs. Prohibited Provisions

• Required (33-25-3): grace period, incontestability, entire-contract clause, reinstatement provision, free look, settlement-option and loan provisions.
• Prohibited (33-25-2): clauses letting the insurer backdate more than 6 months to gain a lower age, or any provision less favorable than the statutory standard.

Common trap: The entire-contract clause means the policy plus the attached application is the whole agreement - the insurer cannot later incorporate outside documents or its bylaws to defeat a claim.

Reinstatement

Georgia policies must allow reinstatement of a lapsed policy, typically within 3 years of lapse, provided the owner:

• Submits a written application and evidence of insurability acceptable to the insurer.
• Pays all overdue premiums with interest plus repays or reinstates any outstanding loan with interest.

A reinstated policy starts a new 2-year contestable and suicide period measured from the reinstatement date - but only as to statements made in the reinstatement application. This is a frequently missed nuance: reinstatement does not re-open the original two clauses on the original application.

Settlement Options Tested in Georgia

When the death benefit is payable, the owner or beneficiary may select how proceeds are paid:

Proceeds paid to a named beneficiary generally pass outside probate and, under Georgia and federal law, the death benefit is income-tax-free, though any interest credited under a deferred settlement option is taxable. Naming a beneficiary other than the estate also shields proceeds from many of the insured's creditors.