What does the misrepresentation of age affect in a life insurance contract?

When a life insurance application contains a misrepresentation of the insured's age, the most common effect is that the face amount of the policy can be adjusted. Insurance premiums and coverage amounts are typically based on the insured’s age at the time of application, as age is a significant factor in determining mortality risk and subsequently premium rates.

If a policyholder is found to have misrepresented their age, the insurer may recalculate benefits based on the correct age. For example, if someone older than they claimed is discovered, the insurer might lower the death benefit to align with the premiums that would have been charged for that person’s actual age. Conversely, if the insured is actually younger, this could result in a higher face value being paid out than initially expected, reflecting the premium that corresponds to the true age.

Thus, the adjustment of the face amount ensures that the coverage accurately reflects the risk and corresponding premiums associated with the true age of the insured. This adjustment maintains fairness in the contract based on correct information.