2020 Georgia Code
Title 33 - Insurance
Chapter 25 - Life Insurance
§ 33-25-3. Required Policy Provisions Generally

1. Except as provided in subsection (b) of this Code section, no policy of life insurance shall be delivered or issued for delivery in this state unless it contains in substance the following provisions:
   1. GRACE PERIOD. A provision that the insured is entitled to a grace period of not less than 30 days within which the payment of any premium after the first may be made, during which period of grace the policy shall continue in force; but if a claim arises under the policy during the grace period, the amount of any premium due or overdue may be deducted from any amount payable under the policy in settlement;
   2. INCONTESTABILITY. A provision that the policy exclusive of provisions relating to disability benefits or to additional benefits in the event of death by accident or accidental means shall be incontestable, except for nonpayment of premiums, after it has been in force during the lifetime of the insured for a period of two years from its date of issue;
   3. MISSTATEMENT OF AGE. A provision that, if the age of the person insured or of any other person whose age is considered in determining the premium or benefit has been misstated, any amount payable or any benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages;
   4. DIVIDENDS. A provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy. Except as provided in this paragraph, any dividend becoming payable shall at the option of the party entitled to elect such option be either payable in cash or applied to any one of such other dividend options as may be provided by the policy. If any other dividend options are provided, the policy shall further state which option shall be automatically effective if the party shall not have elected some other option. If a policy specifies a period within which the other option may be elected, the period shall be not less than 30 days following the date on which the dividend is due and payable. The annually apportioned dividend shall be deemed to be payable in cash within the meaning set forth in this paragraph, even though the policy provides that payment of the dividend is to be deferred for a specified period, provided the period does not exceed six years from the date of apportionment and that interest will be added to the dividend at a specified rate. If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus becoming payable or apportioned while the insurance is in force under the nonforfeiture provision shall be applied in the manner set forth in the policy;
   5. POLICY LOAN. A provision that after three full years' premiums have been paid, and after the policy has a cash surrender value, and while no premium is in default beyond the grace period for payment, the insurer will loan on the execution of a proper note or loan agreement by the owner of the policy, and on proper assignment of the policy and on the sole security of the policy, at a specified rate of interest, a sum equal to or, at the option of the owner of the policy, less than the cash value of the policy at the end of the current policy year including any dividend additions to the policy. The company may deduct from the loan value or from the proceeds of the loan any existing indebtedness on or secured by the policy not already deducted in determining the cash value, including interest due or accrued, and any unpaid balance of the premium for the current policy year, and may collect interest in advance of the loan through the end of the current policy year. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for six months after application for such deferment. The policy may also provide that if interest on any indebtedness is not paid when due, it shall then be added to the existing indebtedness and shall bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy, then the policy shall terminate and become void, but not until at least 30 days' notice shall have been mailed by the insurer to the last known address of the insured or policy owner and to that of any assignee of record at the home office of the insurer. The policy, at the insurer's option, may provide for an automatic premium loan, subject to an election of the party entitled to elect. No condition other than as provided in this paragraph shall be exacted as a prerequisite to any loan. This provision shall not apply to term insurance or to term insurance benefits provided by rider or supplemental policy provisions;
   6. TABLES OF INSTALLMENTS. In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy, there shall be a table showing the amounts of the guaranteed installments;
   7. TABLES OF OPTIONS AND VALUES. In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary, either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy;
   8. REINSTATEMENT. A provision that unless the policy has been surrendered for its cash surrender value or its cash surrender value has been exhausted, or unless the paid-up term insurance, if any, has expired, the policy will be reinstated at any time within three years from the date of premium default upon written application for reinstatement, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums in arrears, and the payment or reinstatement of any other indebtedness to the insurer upon the policy all with interest not exceeding 6 percent per annum compounded annually;
   9. TITLE. On each such policy there shall be placed a title which shall briefly and accurately describe the nature and form of the policy;
   10. PAYMENT OF PREMIUMS. A provision relative to the payment of premiums;
   11. PAYMENT OF CLAIMS. A provision that, when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and, at the insurer's option, surrender of the policy and proof of the interest of the claimant. If an insurer shall specify a particular period prior to the expiration of which settlement shall be made, the period shall not exceed two months from the receipt of such proofs;
   12. ENTIRE CONTRACT. A provision that, if any reference is made to the application for insurance or to the constitution, bylaws, or rules of the insurer as forming part of or as affecting the policy between the parties, there shall be included in or attached to the policy, when issued, a correct copy of the application signed by the applicant and of the constitution, bylaws, and rules to which reference is made.
2. Any of the provisions enumerated in subsection (a) of this Code section or portions thereof not applicable to single premium or term policies shall to that extent not be incorporated in single premium or term policies. This Code section shall not apply to credit or group insurance, or to any provision of a life insurance policy, or contract supplemental to a life insurance policy, relating to disability benefits or to additional benefits in event of death by accident or accidental means.

(Code 1933, § 56-2503, enacted by Ga. L. 1960, p. 289, § 1; Ga. L. 1982, p. 650, § 2; Ga. L. 1983, p. 3, § 24.)

- For note, "Incontestability Clauses in Georgia Insurance Contracts," see 13 Ga. L. Rev. 850 (1979).

This section requires that policies be incontestable after two years; within that period, parties are free to agree to any lesser period. Smith v. New York Life Ins. Co., 579 F.2d 1267 (5th Cir. 1978).

- Under an incontestability clause, the insurer is, except as to certain conditions as to premiums, precluded from setting up any defense based upon misrepresentations or warranties made by the insured in the application, whether fraudulent or otherwise; and such a clause manifests the intention of the parties that all grounds of defense, save nonpayment of premium, shall be cut off by the clause. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).

After the period of incontestability has run, the insurer is only barred from contesting the validity of the policy itself, e.g., on grounds of fraud in the procurement, etc.; the insurer still reserves the right to deny any claim if the claim is not within the coverage as stated under the policy's terms, and this is true regardless of the import of any statements made in the application for insurance. Keaten v. Paul Revere Life Ins. Co., 648 F.2d 299 (5th Cir. 1981).

Georgia legislature and judiciary fully intend to treat the question of incontestability the same regardless of the type of policy issued. Keaten v. Paul Revere Life Ins. Co., 648 F.2d 299 (5th Cir. 1981).

Incontestability clause excludes operation of additional clause that in order for policy to take effect, the insured must have been in good health on its date, even though at that time the insured was in bad health and was afflicted with an incurable disease, from which the insured died after the time limit stated in the incontestability clause. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).

- Limitation in an incontestability clause relates to the right of contest within a period of two years from the date of the policy, and does not exclude the time which might ensue without a contest subsequent to the death of the insured. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).

- If an insured dies within two years of the date of the policy, proof of death is filed immediately, and the company in accordance with an exception to liability stated in the policy refuses to pay the claim on the ground that the insured was afflicted with a fatal disease on the date of the policy, such refusal to pay having been in ample time to allow action on the policy to be filed before the expiration of two years from the date of the policy, in action on policy after two years from the date of the policy, the insurance company, by virtue of the company's two-year incontestability clause, is not permitted to contest the policy on the ground that the insured was afflicted with a fatal disease on the date of the policy. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).

- When the insured dies within the two-year period of contestability provided by an incontestability clause in a policy, a mere refusal within the two-year period to pay a claim, on the ground that the insurer is not liable because of another provision in the policy, will not suffice to serve as a contest of liability; such a mere refusal to pay, while manifesting the insurer's conception of the insurer's rights and the insurer's purpose to maintain those rights, does not constitute an attack upon the validity of the continued protection afforded by the contract of insurance, which requires some affirmative or defensive action in court. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).

- When a receipt is given to an applicant for insurance by a local agent of a life insurance company for the first premium upon a policy of insurance, and the money is forwarded to the home office of the company and there accepted as the first payment upon the policy, and the policy is issued and forwarded to the local agent for delivery to the insured, the contract of insurance becomes effective upon the acceptance of the premium by the company and the issuance of the policy, notwithstanding that the policy may, according to the policy's terms, take effect at a later date. Interstate Life & Accident Ins. Co. v. McMahon, 50 Ga. App. 543, 179 S.E. 132 (1935).

Insurer is not barred by incontestability clauses from arguing that policies are void ab initio because the proposed insured, who was then an adult, neither signed the applications nor consented in writing to the issuance of the coverage as required by O.C.G.A. § 33-24-6(a). Guarantee Trust Life Ins. Co. v. Wood, 631 F. Supp. 15 (N.D. Ga. 1984).

- Incontestability clauses in policies do not bar the insurer, who has paid the proceeds of those policies to the beneficiary, from affirming the insurance contracts and seeking damages in tort for the fraud and deceit of the beneficiary with regard to representations made in the policy applications. Guarantee Trust Life Ins. Co. v. Wood, 631 F. Supp. 15 (N.D. Ga. 1984).

- In a case in which a life insurance policy lapsed for nonpayment of premiums before the insured died and the beneficiaries, relying on O.C.G.A. § 33-25-3(a)(1), asserted that the insured died during the contestability time period, the beneficiaries had no right to recover under the contract. The insurance company's letter to the insured did not indicate that the grace period was extended, only that the lapsed coverage could be reinstated, and O.C.G.A. § 33-25-3(a)(1) only required that a 30 day grace period be included in life insurance contracts, and there was no dispute that the contract at issue met that prerequisite. White v. New York Life Ins. Co., 564 F. Supp. 2d 1372 (S.D. Ga. 2008).

Cited in Gulf Life Ins. Co. v. Lanier, 114 Ga. App. 277, 151 S.E.2d 161 (1966); Robertson v. Southland Life Ins. Co., 130 Ga. App. 807, 204 S.E.2d 505 (1974); Liberty Nat'l Life Ins. Co. v. Davis, 146 Ga. App. 38, 245 S.E.2d 316 (1978); Phillips v. Old Republic Life Ins. Co., 155 Ga. App. 537, 271 S.E.2d 676 (1980); Goodley v. Fireman's Fund Am. Life Ins. Co., 173 Ga. App. 277, 326 S.E.2d 7 (1985).

RESEARCH REFERENCES

Am. Jur. 2d.

- 44 Am. Jur. 2d, Insurance, § 1046 et seq.

- 45 C.J.S., Insurance, § 1053.

- Insurance: incontestable clause as excluding a defense based upon public policy, 13 A.L.R. 674; 35 A.L.R. 1491; 170 A.L.R. 1040.

Life insurance: forfeiture for nonpayment of premiums or assessments as affected by physical or mental disability, 15 A.L.R. 318.

Date from which life insurance premium periods are to be computed, 32 A.L.R. 1253; 80 A.L.R. 957; 111 A.L.R. 1420; 169 A.L.R. 290.

Requirement of "positive" proof of death of insured as excluding circumstantial evidence, 60 A.L.R. 592.

Misdescription of status, or relationship to insured, of beneficiary named in contract of life insurance or mutual life insurance, 60 A.L.R. 977.

Flat life insurance premium rate regardless of age, or failure to apply rate applicable according to age, as discrimination, 84 A.L.R. 525.

Time when incontestable clause in life insurance policy becomes effective; death of insured before end of contestable period, 85 A.L.R. 234; 105 A.L.R. 992.

Who are within term "heirs" in designation of beneficiaries of life insurance, 88 A.L.R. 624.

Dividends as applicable to extension of period of extended insurance, or to purchase of paid-up insurance, 92 A.L.R. 702.

Retroactive effect of statute prescribing terms or rights under life insurance policies, 106 A.L.R. 46.

Validity of provisions of life insurance policy which discriminates, as regards options allowed, between borrowing and nonborrowing insurants, 106 A.L.R. 1537.

Apportionment of divisible surplus of insurance company between different policies, 108 A.L.R. 1212.

Change in, renewal of, or substitution for original policy of life insurance as affecting time limitation prescribed by original policy in respect of defenses available to insurer, 110 A.L.R. 1139.

Who entitled to proceeds of life insurance under policy naming two or more beneficiaries, in event of death of one or more but less than all of them before insured, 112 A.L.R. 729.

Constitutionality, construction, and application of statutes relating to contractual time limitation provisions of insurance policies, 112 A.L.R. 1288.

Payment or tender, after lapse of policy for nonpayment of premium, of amount of loan on policy as affecting computation of paid-up or extended insurance, 114 A.L.R. 901.

Conclusiveness or controlling effect of table of surrender values contained in policy of insurance, 116 A.L.R. 793.

Delivery of policy of life insurance without payment of premium as waiver of condition that policy shall not be in force until payment of first premium, 118 A.L.R. 1072.

Statutory or contractual limitation where presumption of death of the insured from seven years' absence is relied upon, 119 A.L.R. 1308.

Incontestable clause of statute or policy as applicable to claims other than for death benefits, 121 A.L.R. 1437; 147 A.L.R. 1015.

Provision or option for payment in instalments of amount of life insurance policy as creating "annuity,", 128 A.L.R. 981.

Validity, construction, and application of automatic premium loan provision in life insurance policy, 129 A.L.R. 1105.

Age adjustment clause of policy as affected by incontestable clause or statute against avoidance of policy because of misrepresentation, 135 A.L.R. 445.

Provision in life insurance policy excluding or limiting liability if insured is not in sound health on date of delivery of policy as confined to change in condition after making or acceptance of application, 136 A.L.R. 1516; 60 A.L.R.2d 1429.

Insurer's failure to deduct future premiums from proceeds of loan as permitted or provided by policy or statute, as affecting subsequent lapse of policy for nonpayment of premium, 137 A.L.R. 836.

Effect of insurer's wrongful rejection of insured's claim under disability clause of life policy, 140 A.L.R. 781.

Compounding interest on a policy loan under a life insurance policy, 161 A.L.R. 433.

Excess payment and receipt of life insurance premiums as carrying additional insurance benefits, 161 A.L.R. 1000.

Date at which coverage begins upon reinstatement, renewal, or revival of insurance policy after default, 167 A.L.R. 333.

Right of insurer to restitution of payments made under mistake, 167 A.L.R. 470.

Admissibility against beneficiary of life or accident insurance policy of statements of third persons included in or with proof of death, 1 A.L.R.2d 365.

Incontestable clause as applicable to suit to reform insurance policy, 7 A.L.R.2d 504.

Form and sufficiency of proof of death in case of insured's disappearance, 26 A.L.R.2d 1073.

Right of life insurance beneficiary against estate of insured who used policy as collateral, 91 A.L.R.2d 496.

Insured's exercise of election afforded under life insurance policy as affected by his death before complete consummation of option, 15 A.L.R.3d 1317.

Beneficiary's ignorance of existence of life or accident policy as excusing failure to give notice, make proofs of loss, or bring action within time limited by policy or statute, 28 A.L.R.3d 292.

Construction and effect of "visible sign of injury" and similar clauses in accident provision of insurance policy, 28 A.L.R.3d 413.

Liability under life or accident policy not containing a "violation of the law" clause, for death or injury resulting from violation of law by insured, 43 A.L.R.3d 1120.