If Mike discovers he has lung cancer after submitting a Term Assurance proposal, what must he do?

When Mike discovers that he has lung cancer after submitting a Term Assurance proposal, the correct course of action is to notify Alpha about this new development because it is considered a material fact. In insurance, a material fact refers to information that can affect the insurer's decision to accept or adjust the terms of the proposal. Any change in health status, especially concerning a serious condition such as cancer, is critical for the underwriter to assess the risk accurately.

Failure to disclose such information could lead to complications later, including the potential denial of a claim or cancellation of the policy after it has been issued. This principle is rooted in the duty of utmost good faith—an obligation for both parties to be honest and transparent regarding material facts throughout the insurance process.

Thus, notifying Alpha ensures that the insurer can make informed decisions based on Mike's current health status, possibly leading to adjustments in the proposal or coverage options. The other options do not align with the requirement for disclosure that is central to maintaining the integrity of the insurance agreement.