What is the consequence of a misstatement of age on a disability policy?

In the context of a disability policy, a misstatement of age typically results in the adjustment of benefits based on what the corrected age would have indicated about premiums and coverage. When an individual misrepresents their age, it can lead to premiums being based on inaccurate information, potentially affecting the risk pool the insurer is underwriting.

If the correct age is determined to be older than what was stated, it is likely that the premiums paid would have purchased lesser benefits, since older individuals usually face higher risks of disability. Consequently, the correct answer reflects that the insurer might terminate the policy and return the premiums if they determine that the misstatement impacts the fundamental insurance contract.

The approach to addressing this misstatement is designed to protect both the insurer and the insured, ensuring fairness in the insurance marketplace. If the policy is voided due to the age misstatement, the return of premiums reflects a standard practice aiming to rectify the situation without penalizing the insured unduly.