Misstatement of Age and Sex Provisions
When calculating the premium of a Hong Kong life insurance policy it is important for the insurance company to know all the material facts, including the policyholder’s age and sex. These factors will have a significant impact of the overall cost of the coverage, and even the decision by the insurance company to offer coverage.
For example, the insurer may not provide coverage to new applicants over the age of 75. If an applicant older than 75 years old states a lower age on their application the insurance company may provide coverage against its interests.
A Life Insurance policy may have a provision to deal with misstatements of Age or Sex, as policy cannot normally be cancelled after the contestability period has expired. If the misstatement is discovered during the contestability period then the insurer may cite a breach of utmost good faith on the part of the policyholder, rendering the contract invalid.
How Do Misstatement Provisions Work?
If the misstatement is discovered after a claim has been made under the policy then the total benefit payable by the plan will be adjusted to reflect the amount which would have been paid for the correct age, with the premium amounts as they were.
In many cases insurers will only adjust the benefit downwards, with instances of misstatement resulting in too much premium being paid simply returning the excess premium to the policyholder or their beneficiaries.
In the event that the misstatement is discovered before a claim is made then the policyholder is usually given an option to leave the face value of the policy the same and pay the correct premium given the true facts, with any difference being made up. Alternatively, the policyholder may adjust the face value of the plan so that there was, effectively, no misstatement.
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