State RegulationsMI specificDifficulty 1/5
Under Michigan law, if the age of the insured is misstated in an individual life insurance policy, what is the required effect on the policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.C.L. 500.4018 governs misstatement of age or gender in individual life policies: the policy is not voided, and the insurer adjusts the benefit to the amount that the premiums actually paid would have purchased at the correct age (or gender). This is an equitable recalculation, not a forfeiture — the insured keeps coverage, and the insurer only pays what the true facts would have bought for the same premium. The practical consequence is that a discovered age error reduces the payout proportionally rather than eliminating it.
Why the other options are wrong
- A) Voiding the policy is the remedy for rescission of a contestable material misrepresentation, not for age misstatement — M.C.L. 500.4018 specifically preserves the policy.
- B) Refund-and-terminate is the free-look remedy, not the age-misstatement remedy; M.C.L. 500.4018 requires benefit adjustment while the policy continues.
- D) The 2-year contestability period under M.C.L. 500.4014 does not authorize denying claims for age errors; the adjustment remedy of M.C.L. 500.4018 controls.
Memory hook
Wrong age, wrong face — the premium buys only what the truth would have bought.