If the insured's age or gender was misrepresented, what action may the insurer take?

• A. The insurer can adjust premiums, benefits, or rescind coverage
• B. The insurer must pay death benefit as stated
• C. The insurer can only adjust age but not benefits
• D. The insurer must cancel the policy

Answer: (A)

Misrepresentation of age or gender is treated as a material misstatement in life insurance. Since age and gender directly affect mortality and the cost of coverage, the insurer is allowed to correct the contract to reflect the true risk. The remedy can include increasing premiums to the correct level, adjusting the death benefit to what the current premium would have purchased at the true age, or rescinding the policy if the misstatement is fraudulent or material. In other words, the insurer isn’t obligated to keep the original terms if the information provided was inaccurate; they can adjust or even cancel the contract to align with the true risk.