Proceeds payable to the insured's executor or estate are includible in the insured's gross estate and thereby exposed to transfer costs and taxes.

• A. True
• B. False
• C. Only if the policy is owned by someone else
• D. Only if the executor is also beneficiary

Answer: (A)

Proceeds payable to the insured’s executor or estate are included in the insured’s gross estate because the death benefit ends up as part of the decedent’s assets at death. When the estate is the beneficiary or when the insured has ownership or incidents of ownership in the policy at death, the death benefit is treated as property that passes through the estate. That puts the amount into the gross estate used to compute estate taxes and to cover probate and other transfer costs. If the policy is owned by someone else and the estate is not the beneficiary (and there are no ownership interests at death), the proceeds typically do not become part of the gross estate.