Question 10

The amount paid will be what the premium would have purchased at the correct age.

When the age of an insured is misstated in a life insurance policy, the death benefit amount will be adjusted to reflect what the premium would have purchased if the correct age had been provided.

A) No death benefit is payable.

This option is incorrect because, while misstatement of age can affect the death benefit, it does not eliminate the payment entirely. Insurance policies typically have provisions to adjust the benefit rather than void it.

B) The amount indicated in the policy will be paid to the beneficiary.

This statement is incorrect because if the insured's age is misstated, the insurer will not simply pay the amount indicated in the policy. Instead, they will calculate the benefit based on the correct age and the premiums paid.

C) The amount paid will be what the premium would have purchased at the correct age.

This option is correct as it accurately reflects the standard practice in insurance policies regarding age misstatements. The insurer adjusts the death benefit to ensure it correlates with the premiums that would have been paid at the correct age.

D) The amount paid will be reduced by the unfunded dividend reserve.

This option is incorrect because the calculation of the death benefit due to a misstatement of age does not typically involve deductions for dividend reserves. The focus is on adjusting the benefit according to the premiums based on the correct age.

Conclusion

The correct answer, which indicates that the death benefit will be adjusted to reflect what the premium would have purchased at the correct age, is consistent with industry practices regarding age misstatements. All other options incorrectly assert that the benefit is either eliminated or paid as stated in the policy without adjustment, thereby failing to align with how life insurance policies are structured to handle such discrepancies.