Mike Is Dying of AIDS and Knows It, but Does

Multiple Choice

Mike is dying of AIDS and knows it, but does not tell his agent when applying for life insurance. The contract is issued and Mike dies three years later, at which time the insurer learns of Mike's condition. In this case the insurer must:

A) pay the face of the policy to the beneficiary
B) return all premiums plus interest
C) return all premiums without interest
D) pay the beneficiary, but the insurer can then subrogate against the insured's estate