policy taken out by the insured to pay the beneficiary a certain amount upon the insured's death. Proceeds on the death of the policyholder are includable in his or her gross estate under two sets of circumstances: (1) the insurance is payable to his or her estate and (2) the decedent possessed at least one incident of ownership in the policy. The latter means that the decedent either owned the policy until death, or transferred it but retained the right to change the beneficiary, borrow on the policy, and cancel it. To accomplish estate tax exclusion, transfer of the policy must occur more than three years prior to death.