PSI Ohio Insurance Practice Exam

An insured and the beneficiary are both killed in a fatal accident. Which provision presumes the insured survived the beneficiary?

1. Common disaster clause

2. Beneficiary designation clause

3. Survivorship clause

4. Accidental death provision

The correct answer is: Common disaster clause

The common disaster clause is a provision commonly included in life insurance policies that addresses situations where the insured and the beneficiary die as a result of the same event, such as a fatal accident. This clause is particularly important for ensuring that the proceeds of the insurance policy are paid out in a way that reflects the intended beneficiaries. When the common disaster clause is in effect, it presumes that the insured survived the beneficiary. This assumption has significant implications: it helps to determine who receives the death benefit. In most cases, if both the insured and the beneficiary were to pass away simultaneously or in close temporal proximity, this clause ensures that the death benefit will go to contingent beneficiaries or the insured's estate, rather than the deceased beneficiary. This prevents the situation where the beneficiary would inadvertently benefit from the insured’s death if they die at the same time. Understanding the common disaster clause is essential for individuals involved in estate planning and the management of life insurance policies, as it helps clarify the distribution of assets in unforeseen tragic events.