An employee's age is misstated on a group life insurance application. Under California Insurance Code Section 10369.3, the insurer will:

Why A is correct

Section 10369.3 sets the standard age-misstatement provision: if the insured's age is misstated, all amounts payable under the policy are adjusted to what the premium paid would have purchased at the correct age. The policy is not voided; the benefit is corrected to reflect the true relationship between the premium and the coverage. This protects both the insurer and the insured from an unintended windfall or shortfall based on age.

Why the other options are wrong

• B) Age misstatement does not void the policy; the payable amount is simply adjusted to the correct age.
• C) The misstatement is not ignored — it changes the benefit amount payable under the policy.
• D) The incontestability clause does not apply here; age misstatement is handled by benefit adjustment, not by contesting the policy.

Memory hook

Age misstatement = the math self-corrects: benefits become whatever the paid premium buys at the true age.

Why A is correct

Under California Insurance Code Section 10369.3, when an insured's age is misstated in group life insurance, the insurer adjusts the benefit to what the premium paid would have purchased at the correct age, rather than voiding the coverage. Because premiums are set by age, the benefit is recomputed proportionally so the insurer is neither over- nor undercompensated. This equitable adjustment keeps the contract in force and is the standard remedy for an age misstatement in both individual and group life coverage.

Why the other options are wrong

• B) Voiding the policy with a full premium refund is not the statutory remedy for a mere age misstatement; the law directs an equitable benefit adjustment. The statute instead preserves coverage and applies an equitable adjustment to the benefit amount.
• C) The coverage is not automatically voided; the insurer adjusts the amount of insurance to match the premium paid at the true age. The contract remains valid and the insurer simply recalculates the coverage to the correct age.
• D) No fine is imposed on the insured by the insurance department for an age misstatement; the contract remedy is the benefit adjustment. No regulatory fine applies; the insurer's remedy is the adjustment required by the code.

Memory hook

Wrong age on file? The benefit shrinks or grows to match the premium at the true age.

Why D is correct

CIC Section 10369.3 contains the age misstatement provision for group life insurance. If the insured's age was misstated on the application, the insurer does not void the policy; instead it adjusts the benefit or the premium to reflect the true age. If the premium was set at the correct age, the amount of insurance is reduced to what that premium would have purchased at the true age; if the benefit is kept, the premium is adjusted. This keeps the contract equitable for both the insurer and the insured.

Why the other options are wrong

• A) The policy is not automatically voided; the statute requires an equitable adjustment of benefit or premium.
• B) Paying the full face amount without adjustment would ignore the misstatement and reward the error.
• C) No fine is imposed on the employer; the remedy is a contractual adjustment between insurer and insured.

Memory hook

Wrong age on the form = benefit resized to match the real age.

Why A is correct

The age misstatement provision provides that if the age of the insured has been misstated, all amounts payable under the policy are adjusted to the amount the premium paid would have purchased at the correct age. This keeps the policy fair: the insurer keeps the premium actually paid and pays only the benefit that premium supports at the true age. The provision prevents the insured from profiting from a lower age at application.

Why the other options are wrong

• B) The policy is not cancelled and premiums are not refunded; the insurer adjusts the benefit amount instead.
• C) The full face amount is not paid regardless of the discrepancy; the benefit is scaled to the correct age.
• D) No new application or medical exam is required; the remedy is the benefit adjustment.

Memory hook

Wrong age on the form? The benefit is resized to what the premium really buys at the true age.