What can an insurance company do if they discover an insured concealed information during application after the insured's death?

In the scenario where an insurance company discovers that an insured concealed information during their application after the insured's death, the correct action is to refuse to pay the death benefit because the application was based on potentially fraudulent information. When an applicant provides misleading or incomplete information, this can be viewed as a material misrepresentation.

In this instance, the insurance company is within its rights to investigate the circumstances surrounding the claimed death and the application truth. If it’s found that the concealment of information was indeed significant enough to affect the underwriting decision, the insurer can decline the claim based on fraud.

While it might seem that the company could still opt to pay a decreased benefit, the fundamental principle of insurance coverage hinges on truthful disclosure during the application process. If misrepresentation is established, the company can assert its rights by refusing the claim entirely. Therefore, the proper course of action for the insurance company would align with option C, where they refuse to pay the death benefit due to the established fraud.