State RegulationsAZ specificDifficulty 1/5
An insured's age was misstated in the application for an Arizona life policy. Under A.R.S. 20-1206, how is the claim adjusted?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under A.R.S. 20-1206, a misstatement of age does not void the policy; the amount payable is what the premiums paid would have purchased at the correct age. This equitable adjustment puts the parties where they would have been had the true age been reported.
Why the other options are wrong
- B) Misstatement of age triggers adjustment, not voidance, under A.R.S. 20-1206.
- C) No penalty enhancement exists in the statute.
- D) The full face amount is not owed when premiums would have bought less coverage at the true age.
Memory hook
Age wrong? Pay what the premiums bought at the true age.