After an insured's death, the insurer determined that the insured misstated his age on the application for life insurance. What action will the insurer likely take in this case?
A. Return the cash value to the beneficiary, minus a surrender charge
B. Retain the death benefit since there was a misrepresentation
C. Adjust the death benefit to the amount that the premium at the correct age would have purchased
D. Pay the full death benefit since the mistake was not discovered during the underwriting process
Answer (2)
Upon discovering that the insured misstated their age, the insurer will adjust the death benefit based on what the premium would have purchased at the correct age. This adjustment reflects the principle of misrepresentation in insurance contracts. The insurer will not pay the full death benefit if the premium is based on a different age. ;
Upon discovering an age misstatement, an insurer will typically adjust the death benefit rather than cancel it entirely. This adjustment is based on what the premium would have provided for the insured's accurate age. Therefore, the correct answer is Option C: Adjust the death benefit to the amount that the premium at the correct age would have purchased.
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