62. If the age of an insured under a life insurance policy is misstated which of the following is CORRECT concerning the death benefit amount?
Answer: C
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 paid will reflect what the premiums would have purchased if the correct age had been stated. This means that the insurer adjusts the benefit to align with the insured’s actual age at the time of the policy issuance.
A) No death benefit is payable.
This option is incorrect because even if the age is misstated, a death benefit is still payable. The insurer does not void the policy due to a mere age misstatement; rather, they adjust the benefit based on the correct age.
B) The amount indicated payable in the policy will be paid to the beneficiary.
This option is incorrect because the amount indicated in the policy may not be payable if the age is misstated. Instead, the insurer calculates the benefit based on the premium that would have been paid for the correct age, which can result in a different payout.
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 practice of insurers when an age misstatement occurs. The death benefit paid will be adjusted to match what the premiums would have provided had the insured's correct age been used in the calculation.
D) The amount paid will be reduced by the unfunded dividend reserve.
This option is incorrect because the payout is not affected by an unfunded dividend reserve in the context of an age misstatement. The death benefit is solely adjusted based on the insured's correct age and the corresponding premium calculations, not on any reserve factors.
Conclusion
The correct answer is C, as it clearly explains how insurers handle misstatements regarding the insured's age. Options A and B incorrectly suggest that no benefit or the stated amount will be paid regardless of age, while D introduces unrelated factors that do not apply in this scenario. Thus, C correctly encapsulates the insurer's approach to ensuring equitable payouts based on accurate age information.