What does an insurance company do if an insured is found to have misstated their age or gender upon death?

When an insured individual is found to have misstated their age or gender at the time of policy issuance and subsequently passes away, the insurance company typically adjusts the death benefit based on what the premium that was paid would have purchased if the correct age or gender had been disclosed. This approach is fair because the premiums for life insurance policies are often calculated based on various factors, including the insured's age and gender, which significantly affect the risk underwriting process.

If the true age or gender indicates a higher risk, the premiums would generally have been higher, resulting in a lower benefit payout compared to what was originally contracted. Therefore, the insurer calculates the correct benefit amount that would have been applicable for the premium paid, rather than outright denying the claim or providing a full payout. This ensures that the insurer remains equitable while adhering to the terms of the insurance contract and the principle of utmost good faith, which requires both parties to act honestly in the insurance agreement.