Answer:
Rescind the policy
Explanation:
In this scenario the insuredad a misstatement on the application and dies after 6 months. To avoid any legal issues with the beneficiaries the best line of action of the insurer is to rescind the policy.
The reason for rescinding the policy should be stated as misstatement in the application.
Rescinded insurance policy will make it as if the agreement between the insurance company and policy makers was never made. Since the policy was not cancelled, the policy holder or his beneficiary will get back any premiums that have already been paid.
On the other hand if the policy were to be cancelled the only money returned to the policy holder will be the balance in the remaining portion of the term.
