GA Life Insurance
Life insurance, also known as death insurance, is an insurance product and a contract between a person (the insured) and an insurance company that guarantees the payment of a certain amount of money, known as a death benefit, to named beneficiaries after the insured's death. Life insurance companies guarantee the payment of such a sum of money based on the premiums paid by the insured while still alive. In Georgia, life insurance can financially protect your family and loved ones against the unexpected after you die. The amount of money your insurance provider will pay your life insurance policy beneficiaries depends on the set coverage amount. Life insurance is a vital part of a sound financial strategy if combined with other investments.
Besides protecting your loved ones after you pass away, some life insurance policies in Georgia can provide you with money if you are sick and help you pay less in taxes. They can also serve as a supplemental income source when you retire. The Office of Commissioner of Insurance and Safety Fire (OCI) regulates life insurance companies and policies as provided in Chapter 120-2 of the Rules and Regulations of the State of Georgia. Purchasing life insurance in Georgia all by yourself may be overwhelming; you need professional help. Most people are unfamiliar with the insurance industry and the process and may not even know what they need in a life insurance policy. It is best to consult with a Georgia-licensed life insurance agent who understands how each life insurance coverage works if you do not want to end up with the wrong policy. A knowledgeable agent will explain the available variety of life insurance coverage options in the state and can help you determine your needs.
How Does Life Insurance Work in Georgia?
After an insured's demise, their life insurance policy will pay pre-named policy beneficiaries a lump sum of money, known as a death benefit, in exchange for regular premium payments. The death benefit amount is usually subject to an insured's policy coverage limit. Depending on your life insurance policy in Georgia, you may also benefit from life insurance while still alive. Such benefits are called living benefits and are typical of life policies with cash value components. The beneficiaries of a life policy in Georgia can use the lump sum for whatever purpose they want, including paying a child's college tuition and mortgage.
Although choosing a life insurance policy may seem complicated, it is not when you employ the services of a licensed life insurance agent. You have to determine what you want in a policy or discuss it with a professional agent who can help you decide on the right life insurance policy and coverage based on your discussion and needs. While choosing a policy, it is essential to designate individuals or entities (depending on preference) who will be beneficiaries of the policy when you die. When an insured dies, the beneficiaries listed on the life policy are entitled to the policy's payouts and can file a claim with the responsible insurance company.
Life insurance companies are only obligated to pay the named beneficiaries listed on a life policy. Hence, if you have a life insurance policy in Georgia, your beneficiaries should be aware, including telling them the insurer's name and ensuring they have some other vital details about the policy. Beneficiaries can choose to get the lump sum all at once or receive it multiple times through a string of payments. A life insurance policy beneficiaries in Georgia who want death benefits paid out quickly should do the following:
Obtain the insured's death certificate
Contact the insurer and submit a certified copy of the death certificate to the insurer
Complete the necessary paperwork and provide the insurance provider with all supporting documentation
If a life insurance company is unable to resolve issues with your life insurance policy in Georgia, you can file a complaint about the company online using the Consumer Complaint Portal.
What are the Main Types of Life Insurance in Georgia?
The two broad categories of life insurance available in the State of Georgia are cash value life insurance and term life insurance. These are further subdivided into various types, the major ones being:
Whole life insurance
Term life insurance
Universal life insurance
Final expense life insurance
The following two sections discuss cash value and term life insurance in Georgia. It is essential to understand the difference between both before purchasing a life policy in the state.
CASH VALUE LIFE Insurance
Cash value life insurance in Georgia is a type of life policy that provides long-term financial protection and coverage until death, provided an insured does not default on premium payments. Cash value life insurance is sometimes called permanent life insurance, which is more expensive than term life insurance. Some permanent life insurance policies in Georgia offer two features: cash value and death benefit.
Typically, a portion of each premium an insured pays to maintain their cash value life insurance policy in Georgia insures their life while the other builds up a cash value. The cash value component is like a savings account feature that accumulates cash over a long period and earns tax-deferred. You can withdraw (tax-free) or borrow against your policy's cash value account if you have an emergency. This is commonly known as a living benefit of life insurance. However, if the amount withdrawn from your cash value account exceeds the amount that has gone into your policy's cash value component, it will be taxed as income. Withdrawals from your cash value account also deplete the death benefit your insurer will pay out to your policy beneficiaries after you die.
The death benefit is the amount your life insurance company will pay out to the beneficiaries listed in your life policy when you pass away. The amount paid out as death benefits is usually subject to your policy's coverage limits. The commonly available cash value life policies in Georgia are final expense (FE), whole life, and universal life insurance.
| The Major Types of Cash Value Life Policies in Georgia | |
| Cash Value Policy Type | Description |
| Final Expense (FE) Insurance | Designed for older adults and is typically intended to cover an insured's final expenses, such as funeral costs, medical bills, and other end-of-life expenses after demise. It is a form of permanent insurance whose benefit does not expire, provided an insured does not default on premiums. Premiums paid on FE policies are usually higher than other life insurance policies. Despite being expensive, FE policies have lower payouts than other life policies. FE life policies are primarily for persons ready to make end-of-life plans, even though beneficiaries can also use the payouts for other purposes |
| Whole Life Insurance | Offers coverage throughout your life in exchange for the same premium amount (level premiums) each time you pay your insurer. Besides providing coverage, a portion of your premium goes into your cash value account, a form of investment that earns interest at a fixed rate as determined by your insurer. You can withdraw from or borrow against your whole life policy once you have accumulated enough cash value - living benefit. Most life insurance companies offer between 1.5% and 3.5% interest on whole life policies cash value. After your demise, your insurer will pay the named beneficiaries of your whole life policy a tax-free death benefit |
| Universal Life Insurance (UL)
(formerly known as the Adjustable Life Policy) |
Offers flexibility in premium payments, flexibility in the payment of death benefits, and builds cash value. Flexibility in premium payments implies you can adjust premiums relative to the scheduled premium. If you pay less than the scheduled premium, you can draw from the cash value account to make up the difference. In contrast, if you pay more than the scheduled premium, the excess funds will go into your policy's cash component and add to its value. Universal life insurance provides coverage until maturity, usually at 95 or 125, as long as a policy's cash value has $1. The interest paid on the cash value component of a universal life policy is determined by a variable set by the issuing life insurance company. Variables used by life insurers in determining UL cash value growth are stock indexes (like the S&P 500) and the performance of their (insurers) investments in various accounts of bonds, stocks, and mutual funds |
TERM LIFE Insurance
Unlike cash value life insurance, term life insurance in Georgia provides coverage for a specified period of one or more years, depending on a person's life insurance needs. It offers the best insurance protection for an insured's premium dollar. Common choices of term life policy lengths are 10, 15, 20, 25, and 30 years. Term life policies are more affordable than other life insurance products in Georgia.
Term life insurance does not have a cash value account or build up cash value like some permanent life policies. As such, it is also known as pure life insurance. As a term life policyholder in Georgia, you only pay the same premium for the policy's term. If you die during the active term, your term life policy will pay out a tax-free death benefit to pre-named beneficiaries. Otherwise (if you outlive the policy term), it will not pay out a death benefit, but you may opt to renew the policy in increments of one year.
Each year of a term life policy renewal comes at a higher rate as insurers typically consider the age factor; you pose more risks to life insurance companies as you age, which impacts premiums. Purchasing a term life insurance policy at a younger age is often advised to enable you to lock in a low premium that will remain the same throughout the policy's active period, depending on choice length. Most life insurance companies in Georgia do not issue term life policies beyond 80 years of age. The three major types of term life insurance are:
Convertible Term Life - This permits you to convert your term life policy to a permanent life policy
Decreasing Term Life - This is a renewable term life policy characterized by decreasing coverage at a predetermined rate over the policy's life
Renewable Term Life - Often the most affordable in the beginning, renewable term life policies' premiums increase annually, and insureds should expect to pay higher at each renewal
What Type of Life Insurance Does Not Require a Medical Exam?
Life insurance types that do not require you to take a medical exam in Georgia include:
Group life insurance
Guaranteed issue life insurance
Final expense life insurance
Simplified issue life insurance
Group Life Insurance - This life coverage does not require a medical exam because it is mainly offered as an employer-sponsored or association-sponsored life insurance plan. Group life insurance does not consider a person's health condition since it is issued to a group or employer who holds the master policy. However, coverage limits are typically capped low. Any individual in a group of an employee who needs additional life coverage beyond what is offered than the group policy will be required to complete a medical questionnaire
Guaranteed Issue Life Insurance - These policies are ideal life coverage options for persons who do not qualify for other life insurance products due to their health status. However, they have higher premiums. Guaranteed issue life policies are available without medical exams but issued coverage amounts are lower than policies that require medical exams. Most life insurance companies cap death benefits at $25,000 or less
Final Expense (FE) Life Insurance - If you cannot obtain other life insurance policies and do not wish to burden your loved ones with funeral costs after your demise, get a final expense life policy. Purchasing it does not require taking any medical exam
Simplified Issue Life Insurance - You will not take a medical exam for this life policy type. You only need to provide answers to a questionnaire that touches on your medical history, health, and family medical history. Simplified issue life policy premiums are typically higher than life policies requiring medical exams because insurers take higher risks issuing such policies. Generally, simplified issue life insurance offers higher coverage amounts than FE life insurance, and the death benefit payout can be anywhere from $5,000 to over $10,000
These life insurance policies are also known as no-medical-exam life insurance and do not require any medical exam for underwriting approval. No-medical-exam life insurance plans are especially choice policies for Georgians whose chances of getting life insurance may be affected by medical exams due to their health issues. These people would ordinarily qualify for conventional life policies, and insurers may reject their applications for life insurance policies. Individuals with relatively good health who do not have extensive medical history can also opt for no-medical-exam life insurance. In many cases, insurers charge high premiums on these policies and offer limited coverage options/amounts because of the high risks involved in providing coverage for individuals without their medical histories.
What Can you Do with Life Insurance?
If you catch yourself wondering “Do I need life insurance?”, the answer is: “it depends”. Depending on the type, your life insurance policy can pay out a death benefit to your loved ones when you pass away and/or offer you some living benefits while you are alive. The following are some of the things you can do with your life insurance in Georgia:
It can provide your family with a secure financial future by replacing your income after your death. As such, beneficiaries may use the death benefits payouts to cover vital expenses like your children's college tuition and daily living expenses
Depending on the kind of life insurance, your life policy can provide you with money for treatment if you become terminally ill and need emergency funds to treat or maintain your medical condition. This is known as living benefits. Some life insurance plans offer critical illness or chronic illness riders and may pay out some funds if you become disabled and unable to work
It can be a source of income or supplement what you get at retirement if you have a cash value life policy. This may help you pay off your mortgage or pay for occasional emergencies while still alive
Life insurance can give you access to tax-free loans from your policy's cash value account while you are alive
Depending on the life insurance type, a life policy can prevent a business from going under when a key employee or partner dies, retires, or becomes disabled. It can facilitate the exchange of business ownership in any of these events and assist with business continuation without draining the business' operating capital
The beneficiaries of your life insurance policy can use the death benefits payouts to cater to your final expenses, including medical bills not covered by your health insurance, cremation costs, and funeral expenses after you pass away, leaving your loved ones unburdened with such costs
Your life policy's death benefits can pay off your unpaid obligations, such as an outstanding mortgage, car loans, credit card bills, or any other debt
Life insurance can help you fulfill your philanthropic goals when you die if you name a favorite charitable organization as a beneficiary
What is a Premium in Life Insurance?
Premium in life insurance is the specific amount that an insured must pay their life insurance provider periodically in exchange for life coverage and keep their policy in force. Depending on the agreement with your life insurance company, you can pay life insurance premiums annually, quarterly, or monthly. Georgia life insurance providers determine life insurance premiums using certain factors, including the following:
Age - Younger persons are more likely to lock in lower rates and vice-versa
Health conditions - Healthier individuals have higher chances of getting lower life insurance premiums and vice-versa
A person's lifestyle choices - For instance, a person who uses tobacco is more likely to pay more in life insurance premiums. Similarly, a college professor is more likely to pay lesser than a factory worker who is constantly exposed to hazardous substances
The likelihood of claims - Insurers determines the possibility of filing claims by an insured person's policy beneficiaries using several factors. The higher the possibility of filing claims, the more an insurer will charge the policyholder
Other factors determining life insurance premium costs are coverage amount and policy duration or term. Generally, life insurance premiums in Georgia vary from person to person based on their peculiarity and unique needs. If your insurer's evaluation puts you at a higher risk level, it indicates that you are more likely to pass away before making substantial contributions through premiums. You will most likely pay higher life insurance premiums in such a case. The reverse is the case if your insurer considers you a low-risk individual.
Besides contributing towards death benefits, some life insurance policies in Georgia allow you to pay a considerable amount in premiums into your cash value accounts as a "future investment." An example is a variable universal life policy. If you fail to pay your life insurance premium as and when due, your policy will go into a grace period. A grace period is an additional time offered by insurers to enable you to pay missed premiums before your policy lapses.
What is a Death Benefit in Life Insurance?
A death benefit in life insurance is the amount of money paid out to designated beneficiaries on your life insurance policy after your death. If you have a life insurance policy in Georgia, your insurer will pay your named beneficiaries this sum in return for all your premium contributions during your lifetime. Typically, death benefits correspond to your policy coverage amount. For instance, a $30,000 policy will pay your named beneficiaries a death benefit of $30,000 when you pass away.
Although it is the defining aspect of life insurance, some policies, like a term life insurance policy, will not pay a death benefit if you outlive the policy. As with other states, payouts from life insurance death benefits in Georgia are income tax-free. Death benefits payouts can cover final expenses like funeral expenses and medical bills or replace lost income and settle an insured's unpaid debts.
When is Death Benefit Payable?
A death benefit is payable immediately after a life insurance company determines a valid claim. Your life insurance policy will only pay death benefits if you die during the active term. Georgia's life insurance companies will not automatically pay death benefits unless the beneficiaries file claims. However, there is no time limit on when a policy's beneficiaries can claim a death benefit.
Filing a death benefits claim with any Georgia life insurance company involves policy beneficiaries filling out a claim form and providing the insurer with the deceased's death certificate. Once an insurer determines a claim as valid, it typically will pay out the death benefit within 30 days. However, this may extend to about 60 days if the insurance company needs additional time to review a claim.
After processing death benefits, a life insurer will either issue a check or pay into a bank account supplied by the beneficiaries. Beneficiaries of a life policy's death benefits in Georgia can choose any of the following payout options:
Lump Sum - They can receive it all in one fell swoop, either by electronic transfer into a bank account or via a check
Retained Asset Account - They can receive it in a lump sum into a cash value account to earn interest on the payout
Annuity - This involves the insurer placing the death benefit in an investment account while the beneficiaries get a portion of the death benefits with interest every year until it is drawn down
Installments - Beneficiaries can choose to receive payments in installments until they exhaust the death benefits amounts
What is a Living Benefit in Life Insurance?
A living benefit in life insurance is a feature of life policies that allows an insured to access some money from their policy's death benefit while still alive. It is common with cash value life policies that build cash value and accumulate over insureds' lifetimes. In Georgia, an insured can borrow against their policy's cash value account or withdraw from it for several purposes like paying for medical care, chronic or terminal illness expenses, long-term care, and nursing home care. Chronic or terminal illness is normally a rider in the policy and what it does is pay out some portion of the death benefit early while the insured is still alive. At retirement, you can access your living benefit as tax-free loans or withdrawals to supplement your retirement savings and use them as you please. Some people also take their dream vacation using their policy's living benefits.
Living benefits, also known as accelerated death benefits, sometimes come as life insurance riders for term life insurance. However, such riders often come at a cost to insureds. Accessing your policy's living benefits may reduce the death benefit payable to your designated beneficiaries if you do not pay it back before you pass away. Depending on your insurer, there might be a waiting period during which you cannot access your policy's living benefits. You can, however, access them by filing a claim with your insurance company once the waiting period is over.
What is MEC in Life insurance policy?
MEC is short for a modified endowment contract. In life insurance, MEC is the name given to a cash value life insurance whose premiums funding has exceeded the federal legal tax limits. Generally, cash value life insurance contracts in the United States, including Georgia, have some tax advantages. However, if you over-fund the cash value component of your cash value life policy, it will lose its insurance status and become an investment vehicle, a point where it will be treated as a MEC. A life insurance policy will become a MEC if it meets the following three criteria:
It satisfies the description of a life insurance contract as stated in Section 7702 of the IRS Code
It went into force after 20th June 1988
It rails the 7-pay test as per the Technical and Miscellaneous Revenue Act of 1988
Once your life policy attains a MEC status, you will lose the tax benefits of withdrawal. Typically, your life insurance company will notify you if your life insurance policy is metamorphosing into a MEC or has become one. If your insurer contacts you whenever your premium payments exceed the seven-pay limit, you may be able to apply for a refund of the overfunded amount. That way, your life insurance policy can maintain its status as life insurance. You cannot reverse the status of your life policy in Georgia once the Internal Revenue Service (IRS) recognizes it as a MEC.
What Is a Rider in Life Insurance?
A rider in life insurance is an add-on coverage that you can purchase for additional protection, especially if you believe your standard life insurance does not provide sufficient coverage. Georgia life insurance companies offer life insurance riders as optional coverages at additional costs to insureds. However, the rate is usually low because it does not require extensive underwriting.
Why are Riders Important in Life Insurance?
Life insurance riders offer insureds the following benefits in Georgia:
They help insureds to fulfill their unique life insurance needs
They provide insureds with enhanced protection
Riders eliminate the need for separate life insurance products, which allows insureds to save on costs
Getting life insurance riders is quick, easy, and affordable. They do not require an extensive underwriting process like if purchasing an insurance policy
They allow insureds to personalize their life insurance policies and tailor them to unlock benefits not offered by their standard policies
What are the Top 11 Most Important Life Insurance Riders?
The following are the top life insurance riders offered by Georgia life insurance companies:
Guaranteed Insurability Rider - This rider permits you to increase your life policy's death benefit without going through another application process. It is suitable for people who anticipate marked change in life circumstances and an increase in financial responsibilities in the future, for instance, the birth of a child or declining health. Guaranteed insurability riders are typical with permanent life insurance policies and do not require a medical exam
Terminal Illness Rider - This rider allows an insured diagnosed with any qualifying terminal illness, like advanced cancer or neurological disease, to access part of their death benefit while alive for such illness management. It is sometimes called accelerated death benefit rider
Chronic Illness/Disability Rider - With this rider, an insured who has a qualifying long-term illness or disability, such as asthma or arthritis, can access part of their death benefit to manage or treat the situation
Critical Illness Rider - Allows an insured who suffers from an acute illness, such as stroke or heart attack, to claim part of their death benefit while still alive. Insurers pay benefits for this rider in cash to enable insureds to spend them as they deem fit
Accidental Death Rider - This rider increases the death benefit available to an insured policy's beneficiaries if they (insured) die due to an accident
Waiver of Premium Rider - This rider kicks in and covers or waives premiums if an insured becomes permanently disabled or ill and cannot work
Return of Premium Rider - With this rider, an insured pays a low premium and gets their money back once the policy term ends if they are still alive. Their beneficiaries will receive the benefit if they (insured) die before the end of the policy term
Long-Term Care Rider - This rider provides an insured who needs to receive home care or stay in a nursing home with monthly payments to ease financial stress if they become disabled or ill
Family Income Benefit Rider - This rider provides a deceased insured's dependents with a steady income
Overloan Protection Rider - This rider prevents a life policy from lapsing due to loan balances exceeding the policy's cash value
Spouse Life Insurance Rider - This rider adds a limited amount of life coverage to an insured's policy to protect their spouse. While it may cost less than taking a separate life policy for the spouse, the coverage is minimal
If you intend to add a rider to your life insurance policy in Georgia, it is best to discuss it with a professional life insurance agent. An agent will evaluate your needs, explain the benefits of each rider option, and help you determine which is suitable for your needs.
Is There a Deductible in Life Insurance?
Generally, personal life insurance premiums in Georgia are not tax-deductible because the IRS considers them personal expenses; personal expenses are ineligible for tax deductions. However, there are a few exceptions, which are listed below:
Life policies purchased as part of spousal or child support (alimony) agreements before 2019 are tax deductible
Premiums paid on life insurance policies donated to charity become tax-deductible after the donation
You may be able to deduct premiums paid towards life insurance policies offered as employees benefit from your tax, provided your employer does not benefit from the policy. However, premiums for business owners are only deductible for life insurance coverage under $50,000. You cannot write off premiums on your taxes if your employer-sponsored life policy coverage exceeds $50,000 because the IRS considers such coverage as employee wages; you cannot deduct employee wages from taxes
How Do Life Insurance Companies Operate in Georgia?
Georgia life insurance companies operate a robust business model where they make money by selling insurance products for more than they cost. However, this does not imply that these companies make money at the expense of insureds. Generally, the longer an insured lives, the more profits a life insurance provider makes as the insured gets to pay more premiums. Since almost everyone likes to live long, insurers will keep making more money. For instance, if someone takes out a life policy for 15 years, that costs them a certain amount (premiums) annually. In exchange for the insured's premiums, a life insurance company will promise to pay a death benefit, for instance, $40,000, to the policy beneficiaries if the insured dies within the policy term.
Most life insurance companies in Georgia also invest the cash (insurance premiums) in their custody in other interest-yielding ventures, creating more revenues. Life insurance companies are expected to save a certain percentage of the premiums insured persons pay for claims, especially death benefits, when the insured persons die. This percentage must be large enough to pay claims in case there is a surge in claims filing.
Mutual vs. Stock Insurance Companies
Insurance companies in Georgia, including life insurance providers are generally categorized as either mutual or stock insurance companies depending on the ownership and leadership structure, goals, and investment strategies.
| Mutual Insurance Company | Stock Insurance Company | |
| Ownership and Leadership | Owned by policyholders. Policyholders can vote on its board of directors | Owned by shareholders. Policyholders have no control over the company's leadership unless they are also investors |
| Primary Goals | To continuously maintain adequate capital to satisfy policyholders' needs | To maximize profits for shareholders' benefits |
| Earnings | Earn income from premiums paid by policyholders and share surplus profits to policyholders via dividends or retain the profits and exchange them for discounts on future premiums | Earn income from policyholders' premiums and distribute surplus profits only to shareholders through dividends, reinvest it in the company, or pay off the company's debt |
| Risk | Insurance premium collection is the main income source and may be forced out of business if unable to raise funds. However, a financially troubled mutual insurance company can become a stock company through a process known as demutualization instead of going moribund and dissolving the company | Have multiple channels of generating revenues and, as such, can quickly overcome financial challenges. They offer policyholders more stability |
| Investment Strategy | Invest in long-term, low-yielding, conservative assets and are not under pressure to turn in outlandish profits | Invest more in riskier, short-term, higher-yielding assets due to the pressure from investors to maximize profits and enjoy higher dividends |
How Can Life Insurance Companies Afford to Pay Out the Claims?
Life insurance companies in Georgia can afford to pay out claims because it is not likely that all insureds will die at once. Typically, life insurer providers make money by taking premiums from a large pool of insureds and only making a few payouts on requests. Essentially, they ensure that premiums collected are enough to cover the costs of the paid-out benefits on any policy. They invest the rest of the premiums in a wide range of financial products and markets to generate more revenue, from which they can afford to pay out more claims.
How Do Life Insurance Companies Make Money if Everyone Dies?
Life insurance companies in Georgia will still make money even if everyone dies. Typically, payouts made by life insurance providers are lower than they receive in premiums. Besides premium collections, life insurance companies generate more money by investing insureds' premiums into financial markets and products.
What Does Life Insurance Cover in Georgia?
Depending on the type, you can use life insurance to manage some expenses while you are still alive and/or as a financial safety net for your loved ones when you pass away. A typical life insurance policy in Georgia covers the following:
Mortgage payments
End-of-life expenses
Personal obligations, including credit card bills or car loans
Daily living expenses
Lost income
Children college tuition
Furthermore, typical life insurance in Georgia covers almost causes of death (although with a few exclusions), including accidents, natural causes, suicide, and homicide. However, it will only cover a suicide that occurs after a life policy's two-year suicide clause period ends. A life insurance policy will not cover a homicide where it is determined that the policy's beneficiary is involved in the insured's murder.
Who Should Buy Life Insurance?
Anyone in Georgia with individuals relying on their income and depend on them for survival should buy life insurance. Purchasing a life insurance policy in the State of Georgia while you are still young and healthy is recommended to enable you to lock in lower premiums. Like other insurance products, you can always find a life insurance policy to meet your unique needs regardless of age and status. According to data published by the National Association of Insurance Commissioners (NAIC), Georgians purchased life insurance policies estimated at $131 billion (coverage amount) in 2020. As of 2020, the state had over 5 million individual life insurance policies in force with a face amount worth over $1.1 trillion.
Generally, the following categories of people in Georgia should buy life insurance:
Anyone with dependents, such as spouse or children, whose death and subsequent income loss would negatively affect their dependents
Anyone carrying a lot of debt, especially if they have a cosigner who would take responsibility for what is owed without life insurance in place
A business owner or someone in a business partnership. The death benefit in a life policy can finance the selling of a business, pay off debts owed by the business or partner, and can keep it running after an insured's death
Anyone who does not wish to burden their loved ones with their burial expenses after passing away. Depending on the county in Georgia, funeral costs range between $8,000 and $12,000
Can I Buy a Life Insurance Policy on Anyone?
In Georgia, you can buy life insurance on anyone, provided you have an insurable interest in them, and they consent to it. Additionally, such persons must demonstrate to the insurer that their death could pose a financial challenge to you by signing off on the purchased life policies. You can take out life insurance on your spouse, business partner, children, parents, sibling, former spouse, and a key employee.
Who Can you Not Buy Life Insurance on?
In Georgia, you cannot buy a life insurance policy on someone who is merely a stranger or an acquaintance. Purchasing a life policy is not something you can do secretly. Typically, anyone on whom you are taking out a life policy must permit the insurer to collect their data and append their signature to the application. You must also have an insurable interest in the person.
Who is the Owner of a Life Insurance Policy in Georgia?
In an ideal situation, the owner of a life insurance policy in Georgia is the person who purchased, owns, and has control over the policy. They have the power to change the policy beneficiary or surrender it during their lifetime. In this situation, the policy owner is the insured since they bought the life policy on themselves. However, if someone takes out a life insurance policy on another person, the insured and the policy owner are two separate people. In this case, the policy owner is the person who bought the policy, while the insured is the person whose death will prompt the insurer to pay out death benefits.
How to Choose a Beneficiary for Life Insurance
Keep the following recommendations at heart when choosing your life insurance policy's beneficiaries in Georgia:
Select individuals with insurable interests in you who mostly depend on your income for survival and may be the most financially hit by your death
Choose adults where possible. If you must select minors, decide how and when to receive the funds. You can create a trust and name a trustee who will manage the account until the policy beneficiary, who is a minor, attains a legal age specified in the trust and can manage money
Know your options and be specific in naming your policy beneficiaries. Generally, you can select your child, spouse, a trust, or a charitable organization
Name a secondary (contingent) beneficiary to avoid probate if the first beneficiary dies before you
Note: Review your life insurance beneficiary designations with your life insurance agent at least once every two years, especially after a life event like childbirth, marriage, spousal death, divorce, or adoption.
Who is a Beneficiary in Life Insurance?
A Georgia life insurance policy beneficiary is a person or entity legally designated by the insured to receive the policy's death benefit after the insured's death. A life insurance policy beneficiary can either be primary or contingent. A primary beneficiary is the first in line to receive a policy's death benefit, while a contingent or secondary beneficiary serves as a primary beneficiary's backup. If a life policy's primary beneficiary dies before an insured, the contingent beneficiary will receive the death benefit.
Who Chooses the Beneficiary?
In the State of Georgia, the sole responsibility of choosing the beneficiaries of a life insurance policy lies with the policyholder, who in most cases, is the insured.
How to Change a Beneficiary
You can change your life insurance policy's beneficiaries in Georgia by contacting your insurance company and requesting a beneficiary change form. Complete the change of beneficiary form with the required information and spell out the names of the new beneficiaries correctly. Once done, return the completed form to your insurer via any means advised by the company with the necessary supporting documentation. Typically, a licensed life insurance agent in the state can assist you with the entire process.
You may not be able to change your life insurance policy's beneficiaries without obtaining the current beneficiaries' permission in some instances. For example, if you made an irrevocable designation while naming a beneficiary, the person must provide their consent before you can change them. Also, if the need to change your policy's beneficiary stemmed from divorce, you will need your spouse's consent.
Who Should I Name as my Life Insurance Beneficiary?
In Georgia, you can name a person, a trustee, or an entity as your life insurance policy's beneficiaries. Essentially, you can designate the following as beneficiaries of life insurance:
Immediate family members, such as a spouse, parent, child, or sibling
A charitable organization
A friend or distant relative with special needs who needs financial support
An adult custodian who you can trust with money or a trustee until your child, who is minor, attains a legal age
Who you Should Never Name as your Beneficiary
Never name the following as your life insurance policy's beneficiaries in Georgia:
Minors - Naming your child who is a minor as a life policy's beneficiary will prompt a court to appoint someone to oversee the funds from the death benefit; this is usually an expensive and complicated process
Estate - If you designate your estate as your life policy's beneficiary, the total amount of funds paid as death benefit will be taxed. Instead of dispersing the funds as set out in your will, the funds will pass through a legal process known as probate, where a judge determines your owed debts before passing away. If you have any, the court will settle your creditors before dispersing the rest of the estate as maintained in your will. In the end, your loved ones may get a little or nothing from the death benefit payout
Pets - Pets cannot manage money if you name them your policy's beneficiaries. The best you can do is establish a pet trust, so your policy can pay into it and decide who will be responsible for the pets and how to use the funds
Disabled Persons - Naming a disabled individual as your life policy's beneficiary may deprive them of receiving government benefits
How Can Life Insurance Work as an Investment in Georgia?
Not all life insurance policies in Georgia can work as investments. For instance, a term life policy will not serve an investment purpose since it does not have a cash value component. Cash value life insurance policies such as guaranteed issues, whole, and universal life insurance provide investment opportunities because of their cash value component. Cash value life insurance policies, which include indexed universal life (IUL) and whole insurance, build cash value over time. You can achieve two things with the cash value account, namely:
The policy can earn capital gains as an investment and pay out to your loved ones when you die
Access the cash value account or take out a loan from it while you are alive for other investment purposes
Furthermore, depending on the type, your life insurance policy in Georgia can work as an investment in retirement planning. With a cash value policy, you can direct as much premium as possible into the cash value component, which you can access in the future to supplement your retirement income.
Is Life Insurance an Investment Vehicle?
Although life insurance in Georgia is first an insurance product whose primary purpose is to protect an insured's loved ones when they die, some life policies can also serve as investment vehicles. Essentially, a cash value life policy, such as a whole or universal life policy, enables you to build cash over time. You can access this cash value account tax-free while alive as a living benefit and invest it in other profitable ventures
What is Credit Life Insurance?
Credit life insurance in Georgia is an insurance policy taken out by a borrower for the benefit of their lender to pay off an unpaid loan in the event of sudden death. You need it to protect your loved ones from carrying the financial burden of having to pay outstanding obligations in the face of your loss. In practice, credit life insurance companies roll the premiums paid by insureds into their monthly loan payment. If an insured dies before paying down their loan, the insurer will pay the lender the outstanding balance. Credit life insurance in Georgia is common with mortgage and auto loans.
When Does Life Insurance Mature?
In Georgia, all permanent life insurance policies mature after the insured persons die or attain a certain age as determined by the adopted Commissioner Standard of Ordinary Mortality (CSO) table. The maturity age is usually between 95 and 125 years for insureds who live long to witness it. When a life policy matures, the insured or beneficiaries are liable to receive the maturity benefits.
What Life Insurance Policy Never Expires?
Permanent life insurance does not expire until the maturity date. The maturity date is tied to the insured’s age. Permanent life insurance policies issued prior to 2004 have the maturity date of 100 years old. After 2004, the standard life insurance maturity date became 121 years old. As long as the premiums are made, the policy will continue to exist.
Can I Get Free Life Insurance?
While someone still has to pay for it, yes, you can get free life insurance. Life insurance that you are likely to get for free is either temporary in nature, is an attempt to make a bigger sale, or it is written to the benefit of someone other than the insured and their relatives:
- Employer sponsored life insurance: Some Georgia employers offer basic group life insurance as an employment benefit. In some organizations the employer may choose to cover some or the full cost of the premium, thereby making it free life insurance to the employee. Typical free group life insurance coverage is up to $50,000.
NOTE: Most employer-sponsored life insurance is canceled once the employment of the insured stops.
- Free coverage as a sale opportunity: Some membership organizations, such as banks, may offer small amounts (typically under $2,000) of life insurance to the members though affiliated insurers.
NOTE: Such coverage usually comes with a sales pitch to purchase additional coverage, which is usually higher-priced than you can find through any knowledgeable independent life insurance.
- Keyman insurance: Key person life insurance is purchased by businesses, to protect the business interests.
NOTE: It insures the employee’s life, but the employer is the owner and the beneficiary of the death benefit.
Does Life Insurance Cover Suicide in Georgia?
Life insurance will only cover suicide in Georgia if it occurs after two years of a life insurance policy term. Per Section 33-25-5 (a(5)) of the 2010 Georgia Code, death by suicide within two years from the issuing date of a life insurance policy is not covered by life insurance. This two-year waiting period is otherwise known as a suicide clause in a life insurance policy.
Cryonics and Life Insurance
Cryogenics promises a second chance at life using life insurance as one of the several options for funding a cryonic suspension. Also known as cryopreservation, cryonics is the science and process of freezing a deceased or "turned-off" person's body or brain with the hope of reanimating them in the future.
Some cryonics companies in Georgia make cryopreservation services accessible to residents by accepting life insurance policies as proof of guaranteed income to cover cryonics costs and other expenses. If you intend to use your life insurance policy to cover cryopreservation, you must name the cryonics company of choice as the primary beneficiary of your life policy. After your death, the cryonic company will have access to those funds to pay for suspension costs and regular maintenance of your body. You must ensure that your life policy has sufficient funds to cover these costs and, more essentially, make sure the policy does not lapse.
Is Life Insurance a Good Investment?
Although life insurance should not be your long-term financial plan, it can be a good investment in Georgia, depending on your policy type. Generally, term life insurance cannot serve an investment purpose. Cash value life insurance policies accumulate cash and interests over time in a cash value account, offer guaranteed returns, and can serve investment purposes. You can take out loans against your cash value policy if you have built enough cash value for investing in profitable ventures or other purposes. However, if you do not repay such loans, your insurance provider will deduct any outstanding from the death benefit payout when you die.
How to Get a Life Insurance Policy?
You can get a life insurance policy from a state-licensed life insurance agent or a broker. Regardless of how you find the policy that you would like to get, you will be dealing with a licensed agent in person, on the phone, over an email, or via a video conference. The main thing that is important to know is how many options does your agent have access to:
Independent life insurance agents can represent various insurers, with which they have agreements in place. You purchase the policy that fits your needs the most and the agent is paid commissions by the insured you chose.
Captive life insurance agents can offer you only the options that are offered by their employer. Captive agents cannot run life insurance quotes on their competitions.
NOTE: Insurers that use in-house Captive agents may not work with Independent agents, so make sure to check the quotes from all sides. The more you compare, the better you understand the market and the market costs.
