If an insured's age is misstated in the application, what happens?

When an insured's age is misstated in the application, the insurance company typically adjusts the payout based on the premium that was actually paid relative to the correct age of the insured. This is because premiums are often calculated based on age, with younger individuals generally paying lower premiums and older individuals paying more due to the higher risk of mortality.

If it is revealed that the age was misstated, the insurer will determine what the premium would have been based on the correct age. The death benefit payout will then be altered according to what the policy would have provided had the correct age been disclosed. For example, if someone had paid lower premiums due to being reported as younger than they are, the payout upon their death may be reduced to the amount that would correspond with the accurate age and the premium that should have been paid.

The other options do not accurately reflect standard practices in the insurance industry regarding age misstatements. Claims are typically not denied outright, policies are rarely voided without specific circumstances, and repaying all premiums is not a usual consequence of age misrepresentation. Instead, the payout is the primary aspect that is adjusted.