An insured's age is misstated on a group life insurance certificate. When the error is discovered after the insured's death, the insurer will:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The misstatement of age provision, cited at CIC §10369.3, provides that if the age of the insured is misstated, all amounts payable under the policy are adjusted to the amounts the premium paid would have purchased at the correct age. This adjusts the benefit to reflect what the premium actually supported rather than voiding the coverage. Misstatement of age is corrected by adjustment, not by rescission, because the insurer would have issued the coverage at a different amount or premium had the correct age been known. The provision balances fairness to the insured with protection for the insurer's premium structure.
Why the other options are wrong
- B) The insurer has no duty to verify age that would override the statutory adjustment rule; the misstatement is corrected, not rewarded. Full payment would ignore the premium structure at the correct age.
- C) Misstatement of age does not void group coverage; it adjusts the benefit amount payable to match the premium actually charged. The provision specifically favors adjustment of the benefit over rescission of the certificate.
- D) No fixed penalty equal to twice the premium exists in group life age misstatement rules; the death benefit is recalculated to what the premium actually purchased. The adjustment formula is the statutory remedy, not a flat fine.
Memory hook
Wrong age on the certificate? Benefits are re-measured to what the premium really bought.