What if the insured lied about his age?

If the insured’s age was understated, suppose he said he was 40 but was really 50 (remember the younger someone is, the lower the premium would be), most policies and state laws enable the insurer to reduce the death benefit. The company provides the same amount of death benefit as the insured would have received for the same premium.

If he said he was 40 years old, and at age 40 a $500 premium would have bought a $50,000 policy, but he was really 50, and that same $500 premium would have purchased only a $32,335 policy, if he dies the beneficiary would get only the lower amount. Unlike other material misrepresentations, it doesn’t matter when the insurer learns about it — the 2 year incontestable provisions do not apply to age.

Case Studies: Implications of Age Misrepresentation in Insurance Policies

Case Study 1: Understated Age and Reduced Death Benefit

The insured individual misrepresented their age, stating they were 40 years old when they were actually 50. By understating their age, the insured hoped to secure a lower premium since younger individuals typically receive lower rates. However, most policies and state laws allow insurers to reduce the death benefit if the insured’s age is misrepresented.

Consequently, if the insured were to pass away, the beneficiary would only receive the lower death benefit corresponding to the accurate age and premium. This highlights the potential financial repercussions of age misrepresentation on the beneficiaries.

Case Study 2: Ineligibility for Coverage

An insured individual intentionally misrepresented their age as being younger than their actual age to qualify for a specific insurance policy. However, during the claims process, the insurer discovered the age misrepresentation and deemed the insured ineligible for the coverage.

As a result, the insured faced the loss of the intended coverage and potential financial difficulties in covering the expenses that the policy was supposed to address. This emphasizes the importance of providing accurate information during the insurance application process to avoid coverage denial.

Case Study 3: Policy Rescission and Premium Refund

An insured individual misrepresented their age when obtaining an insurance policy. After a period of time, the insurer discovered the age misrepresentation and decided to rescind the policy.

As a result, the insured faced the cancellation of their coverage and the potential loss of any premiums paid. This demonstrates the serious consequences that can arise from providing false information about age, including the possibility of policy cancellation and the loss of financial investment.