Texas Life Agent Practice Exam 2026 – Comprehensive All-in-One Guide to Master Your Certification!

The Misstatement of Age provision in a life insurance policy addresses situations where the age of the insured is not accurately represented at the time of application. When the insured's age has been understated, it means that the insurance company was led to believe the insured was younger than they actually are. Consequently, the premiums paid would typically be lower than what would have been charged for the actual age of the insured.

In this case, if the insured passes away, the insurer will adjust the death benefit to reflect the premiums that correspond to the true age of the insured. As a result, the payout at death will be reduced to the amount that corresponds to the premiums that were actually paid based on the misrepresented age, which is typically less than the original face amount of the policy. This aligns with the principle of ensuring that the premiums paid adequately reflect the risk posed by the insured’s actual age.

Therefore, when an insured's age is understated, the death benefit payable will indeed be less than the originally stated face amount, making the statement that, "If the insured's age has been understated, a death benefit smaller than the face amount will be payable," accurate in this context.