New Jersey Life Insurance Exam Practice Question
If the age of an insured under a life insurance policy is misstated, which of the following is CORRECT concerning the death benefit amount?
Correct Answer: C
Rationale: When the age of an insured is misstated, the death benefit is adjusted to reflect what the premiums would have purchased at the correct age. This means that if the insured had been accurately represented, the insurer would have charged different premiums, thus altering the benefit amount.
Option A is incorrect because a death benefit is still payable, albeit adjusted. Option B is misleading; the policy amount may not reflect the actual value due to the age misstatement. Option D is irrelevant in this context, as unfunded dividend reserves pertain to different aspects of policy valuation and do not directly affect the death benefit calculation related to age misrepresentation.
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