After an insured's death, the insurer discovers that the insured understated his age by 5 years on the original application. Under the misstatement-of-age (or sex) provision, the insurer will:

Explanation

The misstatement-of-age (and now misstatement-of-sex) provision required by California Insurance Code §10113.7 provides an EQUITABLE adjustment, not a rescission, so adjusting the death benefit to the amount the premium actually paid would have purchased at the insured's correct age is the right remedy. Because life insurance premium varies with age, an understatement means the insured underpaid; the death benefit shrinks accordingly. Paying nothing on the theory that a misstated age is a material misrepresentation voiding the contract is too harsh — California treats this as an arithmetic adjustment, not contract fraud, because age is universally verifiable. Paying the full face amount and then billing the insured's estate for the underpaid premium plus interest is not the chosen remedy. And rescinding the policy and refunding all premiums fails as well: misstatement of age is specifically EXCLUDED from the incontestability defense; it can be used at any time, but only for arithmetic adjustment, not rescission.