Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 24

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1
Chunk 24
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 on our behalf. If such legislation were to be adopted without a ‘grandfathering’ provision
(i.e., so as not to be applicable to insurance policies then in force), then we may be unable to collect the proceeds on the death benefits
of the insured persons under our NIBs purchased prior to the enactment of such legislation and our NIBs would be worthless.

16

Additional
insurable interest concerns regarding life insurance policies originated pursuant to premium finance transactions may also result in
adverse decisions that could effect policies.

The
legality and merit of “investor-initiated” or “stranger-originated” life insurance products have been questioned
by members of the insurance industry, including by many life insurance companies and insurance regulators. For example, the New York
Department of Insurance issued a General Counsel’s opinion in 2005 concluding that a premium finance program that was coupled with
the right of the policy owner to put the financed insurance policy to a third party violated New York’s insurable interest statute
and may also constitute a violation of New York State’s prohibition against premium rebates/free insurance. More recently, many
states have enacted laws expressly defining and prohibiting stranger-originated life insurance (“STOLI”) practices, which
in general involve the issuance of life insurance policies as part of or in connection with a practice or plan to initiate life insurance
policies for the benefit of a third-party investor who, at the time of the policy issuance, lacks a valid insurable interest in the life
of the insured. Under these laws, certain premium finance loan structures are treated as life settlements and, accordingly, may not be
entered into at the time of policy issuance and for a two or five-year period, thereafter, depending on the state. Certain court decisions
over the past few years may also increase concerns with premium-financed policies. In 2011, the Delaware Supreme Court stated in PHL
Variable Insurance Company v. Price Dawe 2006 Insurance Trust that the key focus in insurable interest cases is who paid the premiums.
While the decision was not issued in connection with a premium financed policy, investors were concerned with how the court would apply
such reasoning to premium financed policies. This concern was alleviated in the 2012 Delaware District Court case of Principal Life
Insurance Company v. Lawrence Rucker 2007 Insurance Trust that concluded that “an insured’s ability to procure a policy
is not limited to paying the premiums with his own funds; borrowing money with an obligation to repay