What stipulation is included for the distribution of life insurance proceeds if the primary beneficiary dies shortly after the insured?

The common disaster clause is an important stipulation in life insurance policies that addresses the situation where the primary beneficiary dies within a specified period, usually 30 to 90 days, after the insured. This clause ensures that the life insurance proceeds do not inadvertently go to the deceased beneficiary's estate rather than the intended heirs of the insured.

In scenarios where both the insured and the primary beneficiary die in close succession, this clause allows the insurer to treat the primary beneficiary as though they had predeceased the insured. As a result, the death benefit would be paid to the contingent beneficiaries named in the policy, or to the insured’s estate if no contingent beneficiaries are specified. This clause helps prevent complications and delays in the distribution of benefits, ensuring that the insured's wishes are honored according to the beneficiary designations.

The other options, while they may relate to insurance concepts, do not specifically address the situation of beneficiary succession in the context of a primary beneficiary dying shortly after the insured.