L&HNJhard
A New Jersey life policy has been in force 4 years when the insured dies. The insurer then discovers the insured understated his age by 5 years on the application. Under N.J.S.A. 17B:25-3, how must the insurer handle the claim?
Pay the amount the premium paid would have purchased at the insured's correct age
BDeny the claim entirely because of material misrepresentation
CPay the full face amount because the policy is past the 2-year contestability period
DRescind the policy and refund all premiums with interest
Why this is the answer
N.J.S.A. 17B:25-3 makes the misstatement-of-age remedy benefit adjustment, not rescission. Even after the 2-year incontestability period, the insurer pays the amount the actual premium paid would have purchased at the insured's correct age.
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