If the insured and policy's beneficiary die in the same accident, the common disaster provision states the insurer will continue as if

• A. The insured outlived the beneficiary
• B. The beneficiary outlived the insured
• C. The policy is canceled
• D. The payout is unchanged

Answer: (C)

The concept being tested is how a common disaster clause handles simultaneous deaths. When both the insured and the beneficiary die in the same accident and there’s no surviving beneficiary to receive the proceeds, there’s no one left to pay. In many policies this leaves no payable beneficiary, so the contract is treated as having no payout and is effectively canceled. That’s why, in this scenario, the insurer will cancel the policy rather than continuing payments to someone who doesn’t exist or to an estate without a named beneficiary. The other options assume there would still be someone to receive funds or a continuing payout mechanism, which isn’t available here.