Why might an insurer adjust premiums for a policyholder who misstates their age?

Adjusting premiums for a policyholder who misstates their age is primarily about reflecting the risk associated with the correct age. Insurance premiums are calculated based on various factors, including the age of the insured, as it significantly affects the likelihood of claims. If a policyholder inaccurately states their age, it can lead to an inappropriate premium amount that does not accurately represent the risk the insurer is taking on.

For example, younger individuals typically have lower mortality rates, which can result in lower premiums, while older individuals generally face higher mortality risks, leading to higher premiums. When the insurer discovers a discrepancy in the reported age, adjusting the premium ensures that it accurately matches the risk level that aligns with the policyholder's true age. This adjustment helps maintain actuarial balance within the insurance pool, where premiums must reflect the true risk to ensure the insurer can manage and fulfill their policy obligations effectively.

The other options may relate to aspects of insurance practices but do not specifically justify the need to adjust premiums based on the policyholder's accurate age.