State RegulationsGA specificDifficulty 2/5
An individual life policy issued in Georgia contains a provision excluding liability for death by suicide, sane or insane, within two years of the policy issue date. The insured dies by suicide during that period. Under O.C.G.A. § 33-25-5, what must the insurer pay?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under O.C.G.A. § 33-25-5, a Georgia life policy MAY exclude liability for suicide, sane or insane, within two years of issue — but if it does, the insurer must pay an amount not less than the policy's reserve, computed under the Commissioner's reserve valuation method. Georgia deliberately requires the reserve rather than a mere return of premiums, so the beneficiary receives the policy's accumulated value. The full face amount is payable only after the two-year exclusion period expires.
Why the other options are wrong
- A) The exclusion limits payment but does not eliminate it; at minimum the reserve must be paid under § 33-25-5.
- B) A refund of premiums is the model-law remedy, but Georgia requires payment of not less than the reserve.
- D) The full face amount becomes payable only after the two-year exclusion period; during it, the reserve is the floor.
Memory hook
Suicide inside two years in Georgia: pay the RESERVE, not just premiums.