How does the company determine the payout when there is a misstatement of age?

The appropriate method for determining the payout in the event of a misstatement of age is to adjust it to reflect the actual age. This approach is consistent with the principle of ensuring that the benefits paid correspond accurately to the risk associated with the individual’s correct age. In insurance, the premiums and coverage amounts are often calculated based on the insured's age, as age is a significant factor in assessing risk.

If an insured person misstates their age, it can lead to either overinsurance or underinsurance, which would not be fair to either the insurer or the insured. By adjusting the payout to the actual age, the company aligns the payout with the risk associated with that specific age, ensuring an equitable distribution of benefits. This practice upholds the integrity of the insurance contract, as it confirms that all parties are on the same page regarding the age-related terms of the policy.