Consider the following case scenario concerning life insurance:

On January 1, 2005, Sam Smith presented his application for life insurance to his insurance agent, along with his first premium payment. On the application, he neglected to notify the company of a mild heart attack he had suffered eight years earlier.

On February 15, 2005, he received notification from the company that his application had been accepted. He failed to pay the premium due on January 1, 2007, and on January 30, 2007, he died of a massive coronary infarction.

Discuss in detail with your team the liability of the insurance company, with reference to specific insurance clauses that apply in this instance.