Tennessee Insurance Practice Exam 2025 – All-in-One Resource for Exam Success!

The common disaster clause is a provision typically found in life insurance policies that addresses situations in which the insured and the sole named beneficiary die as a result of the same accident or event, often within a specified timeframe. This clause is designed to determine who receives the death benefit when there is ambiguity about the order of death, which can often occur in such scenarios.

In this context, the correct answer indicates that the payment of proceeds goes to the insured's estate. This is significant because it prevents the beneficiary's estate from receiving the proceeds in case the beneficiary dies at the same time as or shortly after the insured. By stipulating that proceeds go to the insured's estate, the clause helps ensure that the policy benefit can ultimately be distributed according to the insured's wishes as outlined in a will or other estate planning document. Thus, if both parties perish, the common disaster clause maintains clarity about the flow of benefits through the insured's estate, addressing potential complications in the naming of beneficiaries and the settlement of claims.

The other options relate to different ways of distributing the proceeds, but the specific nature of the common disaster clause is to ensure that the insured maintains control over the benefits upon their passing rather than allowing them to be directly forfeited or directed to the beneficiary’s