Question

When a misreprestation on a life insurance policy application is discovere, what action may an insurance company take?

Answer 1

When a misrepresentation on a life insurance policy application is discovered, the insurance company may deny benefits, rescind the policy, or adjust the premium.

Step-by-step explanation:

When a misrepresentation on a life insurance policy application is discovered, an insurance company may take several actions:

1. Denial of Benefits: The insurance company can deny payment of the policy benefits if the misrepresentation is considered material, meaning it influenced the company's decision to insure the individual or the terms of the policy.
2. Rescission: The insurance company can void the policy from the beginning and refund any premiums paid if the misrepresentation is considered significant.
3. Premium Adjustment: If the misrepresentation is minor or unintentional, the insurance company may adjust the premium to reflect the correct information provided by the insured.