If an insured's age is misstated, the death benefit is calculated as

• A. The full face amount
• B. A prorated death benefit based on the amount of insurance the insured's premiums would have purchased at the correct age
• C. No payout
• D. The policy's cash value

Answer: (B)

When age is misstated, the death benefit is adjusted to reflect the true age and the premiums actually paid. The insurer determines how much life insurance those premiums would have purchased at the insured’s correct age, and pays that amount as the death benefit. This ensures the payout aligns with the actual underwriting risk the premiums covered, rather than simply paying the face amount. It’s not about cash value, and it’s not automatically the full face amount unless the premiums paid would have bought that much coverage at the true age. For example, if the premiums paid would have bought a smaller amount of coverage at the correct age, that smaller amount becomes the death benefit.