[C233]

common disaster clause

Found in life insurance policies. If the insured (husband) and the primary beneficiary (wife) die in the same car accident, the secondary beneficiary (Junior) will become the beneficiary. If wife survives for a while and then dies without a common disaster clause, her estate would receive the benefits of the policy. In addition to problems with survivors, there can be tax implications with the payment of benefits to the wife that could be mitigated by payment to Junior. The common disaster clause states that the primary beneficiary must survive the insured by (usually 30-90 days) or the benefit is automatically paid to the secondary beneficiary.