Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 26

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1
Chunk 26
---
 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, on the basis of constituting a means of originating stranger-originated life insurance. Additionally, as described above,
life insurance policies that are originated through the use of premium finance programs often present a greater risk of there having
been fraud and/or misrepresentations in connection with the issuance of the policies. For these reasons, among others, it is possible
that holders may become subject to, or may otherwise become affected by, litigation involving one or more issuing insurance companies
(either as a plaintiff or a defendant), including claims by an issuing insurance company seeking to rescind a policy prior to or after
the death of the related insured. Moreover, such risk may be enhanced with respect to an issuing insurance company that is experiencing
financial difficulty, since a successful claim by an issuing insurance company could reduce its financial liabilities. In the event any
litigation involving the policy holder was to occur, the policy holder would bear the costs of such litigation, and would be unable to
predict its outcome, which could include losing the right to receive (or retain) the proceeds otherwise payable under one or more of
the underlying policies.

The
contestation of the life insurance policies by the applicable issuing insurance companies could result in the loss of the benefits