L&HNew Yorkmedium
Under NY Insurance Law § 3203(a)(2), if it is discovered after issue that the insured's age was misstated on a life insurance application, what is the proper remedy?
AThe insurer must rescind the policy regardless of when the misstatement is discovered
The benefit payable is adjusted to the amount the premiums paid would have purchased at the correct age
CThe insurer pays the full face amount with no adjustment
DThe insured must repay the difference in premium plus penalty
Why this is the answer
NY § 3203(a)(2) handles age misstatement by ADJUSTING the benefit rather than voiding the policy. The death benefit becomes whatever the premiums actually paid would have purchased at the correct age. This rule survives the 2-year incontestability period (§ 3203(a)(3)) — age misstatement is one of the few defenses an insurer may still raise after incontestability runs. The rationale: age is the foundational pricing variable, and a fair pro-rata adjustment is the equitable remedy.
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