Question

Jennifer is applying for life insurance, with her two children as the beneficiary. jennifer has always been told she looks young for her age and although she is 58, she statess that she is 28 on her life insurance application. what would the insurer be most likely to do if jennifer's beneficiaries attempt to collect on the life insurance policy?

A) void the policy
B) require payment on premiums for a 58 year old insured
C) recalculate the face value of the policy based on actual premiums paid
D) bring a lawsuit against the state

Answer 1

If Jennifer's life insurance policy is discovered to have a misrepresented age, the insurer is most likely to void the policy due to the breach of good faith. Alternatively, the insurer could recalculate the face value or require additional premium payments. A lawsuit against the state would not be relevant to this contract issue.

Step-by-step explanation:

If Jennifer's beneficiaries attempt to collect on the life insurance policy and the insurer discovers that she misrepresented her age, the insurer would most likely void the policy. This is because the premium calculations were based on incorrect information, significantly affecting the risk assessment. Since insurance contracts are based on the principle of utmost good faith, any significant misrepresentation can result in the nullification of the contract. Occasionally, if the misrepresentation is discovered while the insured is still alive, the insurer might choose to recalculate the face value of the policy based on the actual premiums that should have been paid for the correct age or require the insured to pay back premiums for a 58-year-old.

In this situation, bringing a lawsuit against the state would not be a relevant course of action since insurance contracts are agreements between the insurer and the insured, and the state is not a party to this contract.