What principle states that if it is unclear whether the insured or primary beneficiary died first, the insured is considered to have survived?

The principle that states if there is ambiguity regarding whether the insured or the primary beneficiary died first, the insured is deemed to have survived is known as the Simultaneous Death Act. This legal concept is significant in the context of life insurance because it helps in resolving disputes regarding the distribution of benefits in situations where both parties may have died under circumstances that make it impossible to determine the order of death.

This principle is particularly important in ensuring that the life insurance proceeds are directed to the rightful beneficiaries. By presuming that the insured survived the beneficiary, the benefits are then paid to the contingent beneficiaries or the insured's estate rather than being lost or delayed due to uncertainty about the order of deaths.

The other concepts mentioned do not address the issue of simultaneous deaths. For instance, a grace period refers to the time allowed for premium payments after the due date without penalty, while reinstatement pertains to the process of reactivating a lapsed policy by meeting certain conditions. An automatic premium loan is a provision that allows an insurer to deduct premium payments from the policy's cash value if premiums are overdue. Each of these terms serves a different function in the context of insurance policies and does not relate to the clarification of beneficiary entitlement in cases of simultaneous death.