A life insurance policy contains a common disaster clause. If the insured and the primary beneficiary die in a common accident, the clause generally provides that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A common disaster clause, consistent with the Uniform Simultaneous Death Act, creates a presumption of survivorship to prevent the proceeds from passing through the beneficiary's estate and then being distributed according to the beneficiary's will. Typically the clause provides that if the insured and the beneficiary die simultaneously or within a short specified period, the beneficiary is deemed to have predeceased the insured, and the proceeds go to the contingent beneficiary or the insured's estate. This keeps the death benefit flowing according to the insured's intent rather than the beneficiary's testamentary plan.
Why the other options are wrong
- B) Equal division is not what the clause provides. The clause orders survivorship between the parties instead of splitting the proceeds between estates.
- C) The insurer always pays the proceeds to someone. Simultaneous death never forfeits the death benefit; it only determines who receives it.
- D) The clause presumes the beneficiary died first, not the insured. As a result, the beneficiary's estate takes nothing under the policy.
Memory hook
Common disaster equals a presumption of order, so the money follows the insured's plan.