State RegulationsNC specificDifficulty 2/5
An applicant for life insurance in North Carolina states her age incorrectly in the application. Under G.S. 58-3-10, when may the misstatement be used against her?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under G.S. 58-3-10, statements made in an insurance application are representations, not warranties, and a misstatement avoids the policy only if it was fraudulent or material to the risk. A trivial or immaterial inaccuracy - such as an age error that does not affect the risk - cannot be used to defeat coverage, though age or gender misstatements are corrected through the equitable adjustment method stated in the policy.
Why the other options are wrong
- A) The statute requires fraud or materiality; a minor misstatement that affects neither does not void the policy.
- B) There is no free-floating right to rescind until a claim appears; avoidance depends on fraud or materiality, not on the timing of a claim.
- D) Application statements are representations rather than warranties precisely so they CAN be examined, but only for fraud or materiality.
Memory hook
Representations, not warranties - only fraud or materiality kills the policy.