What factor precludes the insurer from recovering proceeds paid under presumption of death if the insured later reappears?

• A. The full proceeds were paid on behalf of a minor dependent beneficiary.
• B. The beneficiary predeceased the reappearance of the insured.
• C. The proceeds were paid under a compromise settlement.
• D. The beneficiary lives in a foreign country.

Answer: (C)

When a death benefit is paid under presumption of death, the insurer is treating the claim as resolved based on the insured’s disappearance rather than proven death. If the insured later reappears, the insurer would ordinarily have a path to seek recovery because the payment was not made on a proven death, and the situation could create overpayment or incorrect settlement.

The reason the factor in question precludes recovery is that the proceeds were paid under a compromise settlement. A compromise settlement is a binding agreement between the insurer and the beneficiary that resolves the PD claim and finalizes the amount paid. Once such a settlement is reached, it bars further claims or attempts to reclaim the funds, even if the insured reappears, because the settlement constitutes a complete and final resolution of the dispute.

The other scenarios do not provide the same protection. Proceeds paid to a minor dependent beneficiary involve the status of the beneficiary but do not automatically bind the insurer against recoupment if the insured reappears. If the beneficiary predeceased the reappearance, there would be a different distribution issue but not a blanket bar to recovery. If the beneficiary lives in a foreign country, location does not create a preclusion to recovery. The key protection against recovery in this context comes from a formal compromise settlement.