Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 4

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1
Chunk 4
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) Coverage. Because of the uncertainty of maturity of insurance policies the Holders had, on occasion, previously
contracted with an insurance provider for MRI coverage. MRI coverage typically provides guaranteed cash flow based on the expected death
benefits of the pool of policies being insured calculated at the issuance of the coverage, thereby providing credit enhancement to any
bank providing financing to a Holder. The term of the MRI policies is usually 15 years. Any claims paid by the MRI to the Holder must
be paid back to the MRI provider out of death benefit proceeds from the pool of policies being insured when such death benefit proceeds
are eventually received. This enables the Holder to receive a smoother cash flow from a pool of policies over time and avoid “lumpiness”
in the cash flows that would otherwise be more pronounced in the absence of the MRI coverage. Any claim payment balances would accrue
interest, typically at a spread of 250 basis points over LIBOR, to the extent they remain outstanding. The MRI coverage is obtained by
paying an MRI premium, typically equal to 2% of the cumulative death benefit of the covered life insurance policies, at the outset of
the coverage and, depending on the specific terms of the MRI policy, possibly an additional premium amount at a predetermined time during
the effective coverage period (the “Commitment Fee”), which is typically 1% of the cumulative death benefits of the covered
policies. The insurer under the MRI policy typically must approve the sale of any life insurance policies covered by the MRI policy if
such sale does not result in the full repayment of any outstanding recovery amounts. It is our understanding that there is only one MRI
Provider. While the MRI coverage is relatively expensive, we believe that insurance policies that MRI covers have less volatility, are
more liquid and should achieve higher values for purposes of financing and secondary market sales.

Financing
a policy portfolio’s premium payments gives a Holder additional cash needed to satisfy the premium obligations of its portfolio.
In addition, obtaining an MRI increases the probability that the Holder will receive future cash flows in the event that the underlying
insureds live longer than expected. This combination provides the Holder with sufficient liquidity to stabilize its cash position.

Life
Settlement Purchasing Guidelines as an Advisor

Our
objective is to advise and assist entities as they acquire life insurance policies and portfolios that will produce returns in excess
of all purchase, financing, servicing and insuring costs incurred by the Holder. The guidelines we generally follow regarding the purchase
of policies and