When an applicant misstates her age on a life insurance application, what impact does it have on the death benefit?

When an applicant misstates her age on a life insurance application, the impact on the death benefit is that it will be adjusted based on the correct age. Life insurance premiums and benefits are calculated based on various risk factors, with age being one of the most significant.

If the insured's age is understated (that is, they claim to be younger than they really are), the insurer typically adjusts the death benefit payout to reflect what the policy would have provided had the correct age been reported. This means that if the insured passes away, the payout will be recalculated based on their actual age at the time of application, which often results in a lower benefit than what was initially expected if the age misstatement reflects a younger age. Conversely, if the applicant overstated their age, the insurer may still honor the policy but adjust the rates accordingly.

This adjustment ensures that the insurer can manage the risk appropriately. Hence, the correct answer reflects how the insurance process seeks to maintain fairness and accuracy in underwriting by aligning the death benefit with the proper risk assessment based on the insured's real age.