A life insurance policy is a contract between the policyholder and the company. The proceeds are paid according to the terms of each contract.

Life insurance should be payable specifically to a designated beneficiary. A contingent beneficiary or beneficiaries as well as a primary beneficiary should be named in each policy. A contingent beneficiary is important in case of simultaneous death of both the policyholder and the beneficiary, or if the beneficiary dies first. Without a contingent beneficiary, life insurance money passes to the estate and is subject to Georgia inheritance tax and the executor’s, administrator’s or personal representative’s commission.

Although insurance proceeds may be subject to Federal Estate Tax, a named beneficiary will receive the insurance free from the Georgia Inheritance Tax or other charges against the estate.