State RegulationsMI specificDifficulty 2/5
After an insured's death, a Michigan insurer discovers the insured's age was misstated in the application. Under M.C.L. 500.4018, what is the insurer's remedy?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.C.L. 500.4018 does not void a Michigan policy for a misstatement of age or gender. Instead, the benefit is adjusted to what the premiums actually paid would have purchased at the correct age or gender. The policy remains in force and the beneficiary is still paid — only at the corrected amount that matches the true premium basis.
Why the other options are wrong
- A) Michigan never voids the policy for an age or gender misstatement; M.C.L. 500.4018 requires adjustment, not rescission.
- B) Denying the claim as a material misrepresentation confuses age misstatement with contestable fraud; age errors are corrected by adjusting the benefit.
- D) Paying the full stated benefit ignores the adjustment duty in M.C.L. 500.4018, which recalculates the benefit for the premium actually paid.
Memory hook
Wrong age? Recalculate the benefit — never cancel the policy.