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 an insured's age is misstated on a life insurance policy, the death benefit is adjusted based on the accurate age. This means that the benefit amount will reflect what the premiums would have purchased if the correct age had been reported, ensuring fairness in the policy's valuation.
Option A is incorrect because a death benefit is still payable; it simply may be adjusted. Option B is misleading, as it implies the policy pays the stated amount regardless of age, which is not true. Option D is incorrect because unfunded dividend reserves do not directly affect the death benefit in this context; they relate to policy dividends, not age misstatements.
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