State RegulationsMI specificDifficulty 2/5
A woman in Jackson misstated her age on her individual life application. The insurer discovers the misstatement after the contestable period has expired and a claim is filed. What is the outcome under Michigan law?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.4018 applies the age-misstatement remedy whenever the misstatement surfaces: the benefit is adjusted to the amount the premiums paid would have purchased at the correct age, and the claim is paid on that basis. The expiry of the contestable period neither forces payment of an unadjusted benefit nor allows the policy to be voided for the age error.
Why the other options are wrong
- A) Age misstatements never void the policy under M.C.L. 500.4018; the statutory remedy is benefit adjustment.
- C) The benefit is not paid as written; it is recalculated to reflect the true age.
- D) A refund of premiums is not the remedy; an adjusted death benefit is payable.
Memory hook
Late-found age lie: adjust, then pay.