Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 107

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1A
Chunk 107
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 and some states, such as Delaware, require premiums to be returned in cases where the policy is successfully
challenged by the carrier. Even if such claims are unsuccessful, significant amounts may need to be expended in defending such claims,
thereby reducing the amounts we may receive from NIBs and other life settlement interests we may purchase.

Concern
also exists regarding the applicability of state insurable interest requirements applicable to the purchase of a policy by an insured
or a person with an insurable interest in the life of the insured in circumstances in which the owner of the policy obtains a loan secured
by the policy to finance the payment of premiums on the policy, often referred to as a premium finance transaction. A substantial number
of the life insurance policies underlying NIBs have been originated pursuant to premium finance transactions. While it is generally accepted
by state law that an individual has an insurable interest in his or her own life, it is possible that a court might construe a premium
finance transaction as an attempt to evade the requirement that an insurable interest exist at the time an insurance policy is issued.
If the borrower in such a transaction is found to be acting, in fact, on behalf of a premium finance company to procure an insurance
policy, it is possible that a court might find that the real party in interest is the premium finance company, which by itself would
not have an insurable interest sufficient to support the insurance policy. As a result, the insurance policy may be void or subject to
attack, which could diminish the value of the policy. States have varying precedent on this subject. California, New York and Florida
have case law that is very favorable to the policy owner (see Lincoln v. Jack Teren and Jonathan S. Berck, as trustee of the
Jack Teren Insurance Trust (Superior Court of the State of California, San Diego), Alice Kramer v. Lockwood Pension Services,
Inc., et al., (United States District Court – Southern District of New York)). These courts have held life insurance policies
to be enforceable even where the policies were clearly purchased with an intent to sell the policies in the future. Florida has case
law that is also favorable (see PrucoLife Insurance Company v. Wells Fargo (Florida Supreme Court, which held that a policy
may not be contested after the expiration of the policy’s contestability period). Delaware has laws which benefit the insurance
carrier and others that are more favorable to the policy owner (see PHL Variable Insurance Co. vs