Colorado Life Producer License Practice Test

What provision is included in a policy if the death benefit is paid to the estate after both spouses die in a common accident?

1. Joint survivorship provision

2. Common disaster clause

3. Double indemnity clause

4. Automatic benefit escalation

The correct answer is: Common disaster clause

The correct answer is the common disaster clause. This provision is designed to address situations where both insured individuals, typically spouses, die as a result of a common accident, such as a car crash. The purpose of this clause is to clarify how the death benefits will be handled when both insureds die at the same time or in close succession under circumstances that make it difficult to determine which individual died first. In cases where the common disaster clause is included in a life insurance policy, it often stipulates that if both spouses die in a common accident, the death benefit will be paid to the estate of the insured who survives longer, or, if both die simultaneously, the benefit is paid to the estate. This clause effectively prevents the situation where the insurer might delay or deny payment to beneficiaries because it is unclear who should receive the payout first. Other options, such as the joint survivorship provision, double indemnity clause, and automatic benefit escalation, refer to different aspects of life insurance. The joint survivorship provision typically applies to policies covering multiple lives, where the benefit is only paid after the death of the last insured. The double indemnity clause typically doubles the benefit for accidental death but does not specifically address issues regarding timing of death in common accidents. Automatic