Question 62

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

In the case of a misstatement of age under a life insurance policy, the death benefit amount payable will be adjusted to reflect what the premiums would have purchased based on the insured's correct age. This ensures that the benefits are aligned with the risk associated with the insured's true age.

A) No death benefit is payable.

This option is incorrect because a death benefit is still payable even if the age is misstated. The insurer will adjust the benefit amount rather than denying the payout entirely.

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

This option is also incorrect. If the age is misstated, the insurer does not pay the amount indicated in the policy; rather, they calculate the benefit based on what the premiums would have purchased at the correct age.

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

This statement is correct. It reflects the principle that life insurance benefits are adjusted based on the insured's true age, ensuring that the amount paid corresponds to the risk that the insurer accepted based on accurate information.

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

This option is incorrect as it introduces an unrelated concept of dividend reserves. The adjustment for age misstatement is not based on unfunded dividend reserves but rather on recalculating the benefit based on the correct age.

Conclusion

The correct answer, which states that the amount paid will be what the premium would have purchased at the correct age, accurately reflects the standard practice in life insurance policies regarding age misstatements. All other options fail to recognize the insurer's obligation to provide a death benefit, albeit adjusted, based on the insured's true age, thereby ensuring fairness in the coverage provided.