State RegulationsAZ specificDifficulty 2/5
After an Arizona life insured dies, the insurer learns that the age stated on the application was understated. Under A.R.S. 20-1206, the insurer must:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
A.R.S. 20-1206 applies its equitable adjustment even at claim time: the death benefit becomes what the premiums paid would have purchased at the true age. The claim is paid at the corrected amount rather than denied, because age misstatement is never a ground to void the policy; the adjustment mechanism fully replaces rescission for this situation.
Why the other options are wrong
- A) denial is wrong; the statute mandates payment of an adjusted amount.
- B) the face amount overpays where the premiums bought less at the true age.
- C) the statute directs an adjusted payment, not a premium refund.
Memory hook
Pay the claim at the age-corrected amount.