What must the insurer do once an error concerning the insured's age is discovered?

When an insurer discovers an error concerning the insured's age, it is obligated to adjust the death benefit accordingly. This is because the premiums and benefits of a life insurance policy are often based on the age of the insured at the time of underwriting. If the insured's age has been misstated, this could affect the benefit amount that should be paid out upon the insured's death.

Adjusting the death benefit ensures that it reflects the correct risk associated with the insured's actual age. For instance, if the insured is older than initially stated, the death benefit would likely decrease, as older individuals typically have a higher mortality risk. Conversely, if the insured is younger than previously thought, the benefit may increase. This adjustment is a common practice in the industry to ensure fairness and accuracy in underwriting.

Other options suggest actions that are not standard practice in the industry when addressing age discrepancies. Refusing to pay benefits would be unfair and contrary to the principles of insurance, which contractually obligate insurers to pay valid claims. Cancelling the policy without a refund would also be unjust, as the insured had paid premiums based on the incorrect age information. Lastly, issuing a new policy with correct terms is not typical; instead, adjustments to the existing policy are made to