South Carolina Life and Health Practice Exam

What is an insurer required to do when an error is made under the Misstatement of Age provision?

1. Pay age-corrected benefits

2. Void the policy

3. Review the claim's eligibility

4. Adjust premiums

The correct answer is: Pay age-corrected benefits

When an insurer identifies an error under the Misstatement of Age provision, the appropriate action is to pay benefits that are adjusted according to the insured’s correct age. This provision is designed to ensure that the policyholder receives benefits that are proportionate to their actual age at the time of policy issuance. If the age was misstated, the insurer recalculates the benefits or premiums based on the correct age, which helps to maintain fairness and equity in the insurance contract. For example, if an individual is found to be older than what was originally stated, the insurer may pay a lesser benefit than what was initially thought because premiums for older individuals are typically higher and benefits may decrease accordingly. This adjustment ensures that the policy remains valid without penalizing either party unduly for the mistake. The other options do not align with the typical application of the Misstatement of Age provision. Voiding the policy would be an extreme measure and not consistent with the intent of maintaining coverage while correcting errors. Reviewing the claim's eligibility pertains to different issues and would not directly address the age misstatement. Adjusting premiums might be a part of the overall adjustment, but the primary requirement is to correct the benefits accordingly. Thus, the action to pay age-corrected benefits is