What does the Common Disaster Clause primarily protect?

Prepare for the Virginia Health Insurance Exam. Utilize flashcards and multiple choice questions, each with hints and explanations, to boost your knowledge. Get exam-ready today!

The Common Disaster Clause is designed to protect the rights of contingent beneficiaries in life insurance policies. This clause comes into play when both the insured and a primary beneficiary die under circumstances that make it difficult to determine the order of death. In such cases, the Common Disaster Clause ensures that the contingent beneficiaries receive the insurance benefits, rather than allowing the primary beneficiaries' heirs to claim the benefits, which could lead to disputes and complications.

This clause is particularly important in situations where both the insured and the primary beneficiary perish in the same event, such as a plane crash. By specifying how the insurance benefit is to be distributed specifically to contingent beneficiaries, the clause helps to avoid potential legal complications and ensures that the intended beneficiaries receive the benefits as designed in the policy.

Other options do not accurately describe the intent of the Common Disaster Clause. For instance, while it may indirectly protect against fraud or ensure legal compliance, those are not the primary focus. Instead, the primary function of the clause is to create a clearer protocol for benefit distribution in cases of simultaneous death, preserving the rights of contingent beneficiaries.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy