Which clause states the contingent beneficiary's rights in a common disaster?

• A. Simultaneous death clause
• B. Beneficiary substitution clause
• C. Spendthrift clause
• D. Common disaster clause

Answer: (D)

When multiple people die in the same event, a life insurance policy needs a clear rule about who gets paid and under what conditions the contingent beneficiary can receive the proceeds. The common disaster clause provides exactly that: it sets the rule for the contingent beneficiary’s rights when the insured and a primary beneficiary die in a single disaster and the order of death can’t be determined. This clause ensures the contingent can receive the proceeds rather than the money becoming tied up or passing through the insured’s estate.

That’s why this choice fits best. The simultaneous death clause covers similar scenarios, but the common disaster clause is the standard way policies specify the contingent beneficiary’s rights in these joint-death situations. The spendthrift clause is about protecting a beneficiary’s interests from creditors, not about death order in a disaster, and the beneficiary substitution clause concerns replacing beneficiaries after death, not the distribution when a disaster occurs.