State RegulationsNY specificDifficulty 3/5
After a New York life policy has become incontestable, the insurer discovers that the insured's age was misstated in the application. The insurer must:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §3203(a)(5), the misstatement-of-age provision operates independently of incontestability: even after the policy is incontestable under §3203(a)(3), the insurer adjusts the benefit to what the premiums would have purchased at the true age rather than rescinding. Incontestability bars contesting the policy's validity, not the mechanical recalculation of benefits for age.
Why the other options are wrong
- A) Incontestability bars contesting validity on misrepresentation grounds, but it does not eliminate the age adjustment required by §3203(a)(5).
- B) Rescission with the Superintendent's approval is not an available cure after the policy has become incontestable.
- C) Ignoring the misstatement would overpay the benefit relative to the premiums paid at the true age.
Memory hook
Incontestable adjusts, never rescinds, an age error.