Life and Health
Life Insurance
Frank applied for a life policy and stated his age as 45, but he was actually 50 when the policy was issued. He dies later, and the insurer discovers the error. The policy contains a misstatement of age provision. What should the producer explain the insurer will do?
- APay the full face amount and ignore the age error after issue.
- BDeny the claim and refund all premiums because the application was inaccurate.
- CAdjust the death benefit to the amount the premium would have bought at age 50.
- DReduce the death benefit by the difference in premiums collected.
Not A. The misstatement of age provision requires adjusting the death benefit rather than paying the full face amount despite the age error.
C is right. A misstatement of age provision adjusts the death benefit to the amount the premium paid would have purchased at the insured's correct age. It does not void the policy or allow the insurer to deny the claim outright. Reducing the benefit by a premium difference is not how the provision works.