Possible response:

This is a case of Misrepresentation in Insurance Application, which can have serious consequences for both the insurer and the insured. Misrepresentation occurs when a person makes a false statement or suppresses a material fact with the intention to deceive or induce the other party to enter into a contract. In this case, the insured stated a lower age than his actual age, which could affect the risk assessment and premium calculation by the insurer.

The following are some key aspects of this case:

Legal framework:

- The Insurance Act 1938 governs the regulation and supervision of insurance business in India, and defines various terms related to insurance contracts, such as proposal, policy, premium, risk, and claim.
- Section 45 of the Act provides for the consequences of misrepresentation and non-disclosure of material facts in insurance proposals. It states that a policy can be called into question within three years of issuance or revival if the insurer can prove that the insured made a false statement or suppressed a material fact and that such statement or suppression was material to the acceptance of the risk or the assessment of the premium. However, if the misrepresentation was innocent or due to ignorance or mistake, the insurer can only adjust the premium or the terms of the policy, but cannot avoid the policy altogether.

Facts of the case:

- The insured filled up the insurance application form and stated his age as 25, while his actual age was 27.
- The insurer issued a policy in his favour, charging a lower premium than what it should have charged if the actual age had been given.

Analysis of the case:

- The insured made a false statement regarding his age, which is a material fact for the insurer to assess the risk and determine the premium. By stating a lower age, the insured could have misled the insurer into believing that he was healthier or less likely to die than he actually was, which could have resulted in a lower premium than what he actually deserved.
- The insurer, on the other hand, did not verify the age of the insured through any independent source, such as a birth certificate or a medical examination, which could have prevented the misrepresentation. Therefore, the insurer also failed to exercise due diligence in underwriting the policy.
- If the insurer discovers the misrepresentation within three years of the policy issuance or revival, it can avoid the policy and return the premium to the insured. However, if the insurer discovers the misrepresentation after three years, it cannot avoid the policy but can only adjust the premium or the terms of the policy.
- The insured could face legal and financial consequences if the insurer decides to challenge the validity of the policy on the basis of misrepresentation. The insured could also lose the benefit of the policy if it is avoided by the insurer.

Conclusion:

Misrepresentation in insurance applications can have serious implications for both the insurer and the insured. It is important for both parties to be truthful and transparent in their dealings and to follow the legal and ethical norms of insurance contracts. Insurers should also adopt proper underwriting practices and verification mechanisms to prevent misrepresentation and ensure fair treatment of policyholders.