Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceMedium
A life insurance policy states that if the insured and the primary beneficiary die in the same accident, and it cannot be determined who died first, the death benefit will be paid as if the primary beneficiary died before the insured. Which clause or act is being described?
- ACommon Disaster Clause
- BSpendthrift Clause
- CUniform Simultaneous Death Act (USDA)
- DFacility of Payment Clause
Show answer & explanationAnswer & explanation
Correct answer: C. Uniform Simultaneous Death Act (USDA)
The Uniform Simultaneous Death Act (USDA) is a law, often incorporated into policies, that stipulates if the insured and primary beneficiary die simultaneously, or if the order of death cannot be determined, the death benefit proceeds are distributed as if the primary beneficiary died first. This allows the proceeds to go to contingent beneficiaries or the insured's estate.
Why the other options are wrong
- A. While related, the Common Disaster Clause is a policy provision that typically requires the beneficiary to survive the insured for a certain period (e.g., 30-90 days) to receive the proceeds. The USDA is a law that applies when survivorship cannot be determined.
- B. The Spendthrift clause protects beneficiaries from creditors, not simultaneous death scenarios.
- D. The Facility of Payment clause allows the insurer to pay small amounts for final expenses, not address simultaneous death.
Uniform Simultaneous Death Act (USDA)
A law that dictates how property, including life insurance proceeds, is distributed when two people, such as the insured and primary beneficiary, die at or near the same time and the order of death cannot be determined.
- Applies when order of death is indeterminable
- Treats primary beneficiary as pre-deceased the insured
- Allows proceeds to pass to contingent beneficiary or insured's estate
- Often incorporated into policy language
Memory trick: Simultaneous deaths, sequential payouts.