196 / Does a common disaster clause disqualify life insurance proceeds for the marital deduction?

Where a true common disaster clause is used, the beneficiary-spouse will not receive the proceeds if he or she dies of injuries sustained in the same accident (or other disaster) that causes the death of the insured, regardless of how long that spouse actually survives the insured. A common disaster clause creates a terminable interest. But as a special exception to the terminable interest rule, a clause will not disqualify the proceeds unless the death of the insured and that of the spouse actually are caused by the same disaster.¹ A true common disaster clause is seldom used in an insurance policy.

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1. IRC § 2056(b)(3).