R is an insured under a life policy in which R's spouse is the designated beneficiary. Both are involved in a car accident that results in R's death. R's spouse survives ten days and then dies. Under the Common Disaster provision in the policy, the benefits will be paid to the:

Rationale

Benefits will be paid to the insured's next of kin.

Under the Common Disaster provision, if both the insured and the beneficiary die in a common event, and the beneficiary does not survive the insured for a specified period, the benefits are paid to the insured's next of kin. This provision is designed to prevent the beneficiary from receiving benefits if they pass away shortly after the insured.

A (insured's next of kin) CORRECT

This choice is correct because under the Common Disaster provision, the life insurance benefits will go to the insured's next of kin if the designated beneficiary (the spouse) does not survive the insured for the required time frame. This ensures that the intended benefit reaches the insured's family rather than the deceased beneficiary.

B (spouse's heirs) YOUR ANSWER

This option is incorrect because the spouse's heirs would only receive benefits if the spouse had been the sole beneficiary and had outlived the insured. However, since the spouse died shortly after the insured, they do not qualify to receive the benefits, which instead go to the insured's next of kin.

C (insured's estate) YOUR ANSWER

While it may seem plausible that the benefits could go to the insured’s estate, this is incorrect in the context of the Common Disaster provision. The benefits are specifically directed to the next of kin to ensure that they are distributed according to the insured's wishes and not delayed through the estate process.

D (spouse's estate) YOUR ANSWER

This choice is incorrect because, similar to option B, the spouse's estate would only be eligible for benefits if the spouse had survived the insured. Since the spouse died shortly after, the benefits do not pass to their estate.

Conclusion

In the event of a common disaster where both the insured and the designated beneficiary die, the life insurance policy directs benefits to the insured’s next of kin if the beneficiary does not survive the insured. This provision ensures that the insured's family receives the intended financial support, circumventing potential delays or complications associated with estate claims.

R is an insured under a life policy in which R's spouse is the designated beneficiary. Both are involved in a car accident that results in R's death. R's spouse survives ten days and then dies. Under the Common Disaster provision in the policy, the benefits will be paid to the:

Benefits will be paid to the insured's next of kin.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test