An insured understated his age on a Michigan individual life policy. Two years after issue, the insurer discovers the misstatement. Under Michigan law, what may the insurer do?

Why B is correct

M.C.L. 500.4018 fixes the exclusive remedy for age or gender misstatement: recalculate the benefit to what the premiums paid would have purchased at the correct age or gender. The incontestability clause of M.C.L. 500.4014 limits defenses after 2 years to non-payment of premium and similar narrow grounds — age misstatement is not among them. So after the contestability window, the insurer's only lawful response is the statutory benefit adjustment, and coverage continues.

Why the other options are wrong

• A) Age misstatement is not an exception to incontestability, so rescission after the 2-year period is not available under M.C.L. 500.4014.
• C) Non-payment of premium is the incontestability exception, but it is irrelevant here — premiums were paid; only the age figure was wrong.
• D) M.C.L. 500.4018 requires adjusting the benefit amount, not merely repricing; a retroactive premium increase alone does not satisfy the statute.

Memory hook

After year 2, recalculate — never rescind.