Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 110

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1A
Chunk 110
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 insurance can also affect assets and interest in policies.

There
are risks that policies may be procured based on fraud or misrepresentation in connection with the application for the policy. Types
of fraud that have enabled carriers to rescind or void the related policies successfully include, among others, misrepresentations concerning
an insured’s financial net worth and/or income, need for and purpose of the life insurance protection, medical history and current
physical condition, including age and whether the insured is a smoker. Such risk of fraud and misrepresentation is heightened in connection
with life insurance policies for which the premiums are financed through premium finance loans or other structured programs. In particular,
there is a significant risk that applicants and potential insureds may not answer truthfully or completely questions related to whether
the life insurance policy premiums will be financed through a premium finance loan or otherwise, the applicants’ purpose for purchasing
the policy or the applicants’ intention regarding the future sale or transfer of the life insurance policy. Such risk may be further
increased to the extent life insurance agents communicate to applicants and potential insureds regarding potential premium finance arrangements
or profits to be made on policies that will be sold after the contestability period. If an insured has made any material misrepresentation
on his/her application for life insurance, there is a heightened risk that the insurance company will contest or successfully rescind
or void the related policy, although an issuing insurance company may not be able to raise such claims after the expiration of the contestability
period. There has been significant litigation regarding whether or not a policy can be contested for fraud after the expiration of the
contestability period. Florida, California and New York have concluded that a carrier may not contest a policy after the contestability
period. New Jersey and Delaware have allowed such contests by the carriers. Even if such fraud in the application could not serve as
a basis to challenge a policy because the contestability period has expired, it may be raised as evidence that the policy was provided
as part of a STOLI arrangement. Furthermore, such misrepresentations can adversely affect the actuarial value of the death benefit under
the related life insurance policies.

17

The
risk of litigation with issuing insurance companies could substantially raise our costs of operation and increase our risk of loss.

Some
of the programs relating to the premium finance transactions through which certain underlying insurance policies are originated, or other
programs having similar characteristics, may be objectionable to certain life insurance companies and other parties, including certain
regulators,