An insured and the sole named beneficiary die in the same accident, and there is no sufficient evidence of who died first. Under the common disaster concept, how are the life policy proceeds treated, and how does this differ from a spendthrift protection?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
The common disaster provision resolves an unprovable order of death by deeming the insured to have survived the beneficiary, so the proceeds are not paid to the beneficiary's estate and double probate is avoided; they pass instead to the contingent payee or as the policy directs. Spendthrift protection is a different tool for a different problem: it blocks the beneficiary's creditors from reaching proceeds before payment. The Pennsylvania Insurance Department's outline treats both as beneficiary-clause concepts, with the survivorship presumption and the creditor shield serving distinct functions under the probate framework that includes 20 Pa.C.S.A. § 6111.2.
Why the other options are wrong
- A) Reversing the presumption would send the proceeds into the beneficiary's estate, defeating the common disaster provision's purpose, and spendthrift protection addresses creditors, not order of death.
- C) An equal split between estates is not the rule; the provision applies a survivorship presumption in favor of the insured.
- D) The insurer does not keep the money; the common disaster provision supplies a definite alternative payee through the survivorship presumption.
Memory hook
Common disaster: insured outlives on paper. Spendthrift: creditors stay outside. Different problems, different tools.