What is the effect of misstatement of age when discovered within the contestability period?

• A. Misstatement of age discovered within contestability period can lead to policy rescission or premium adjustment; after, policy remains in force.
• B. Misstatement of age discovered after the contestability period can lead to rescission.
• C. Misstatement of age discovered within contestability period can lead to rescission or premium adjustment.
• D. Misstatement of age discovered within contestability period has no effect on coverage.

Answer: (C)

Misstatements of age found during the contestability period are treated seriously because age directly affects risk and cost. Within this window, an insurer can address incorrect information by either rescinding the policy (voiding it as if it never existed) or by adjusting the premium to reflect the correct age. This reflects the insurer’s ability to align the contract with the true risk before the policy has aged into more settled terms. After the contestability period, rescission is generally not allowed for misstatements, and the focus shifts to adjusting benefits or collecting any back premiums as needed, rather than canceling the policy.