What assumption is made under the common disaster provision?

The common disaster provision in insurance is designed to address situations where both the insured and the primary beneficiary die in a common event, such as an accident, and their deaths occur within a short period of time. Under this provision, the assumption is made that the insured individual died last.

This assumption is important because it serves to ensure that the proceeds of the life insurance policy are paid to the contingent beneficiary (or the estate) instead of the primary beneficiary who may have also died in the same incident. By presuming that the insured died after the primary beneficiary, the insurance policy can effectively stipulate that the death benefit will go to the next designated beneficiary instead of being paid out to a beneficiary who has not survived the insured. This helps protect the insured’s intentions regarding how their assets are distributed after their death.

In this context, the correct answer aligns with the purpose of the common disaster provision to facilitate clear and fair distribution of benefits when uncertainties arise due to simultaneous deaths.