Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 111

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1A
Chunk 111
---
 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 from
such life insurance policies.

The
ability of an issuing insurance company to seek to rescind one or more life insurance policies depends on whether such issuing insurance
company is barred from bringing a rescission action by operation of an incontestability clause contained in the life insurance policies
or contestability limitations applicable as a matter of state law. Each life insurance policy, in accordance with laws adopted in virtually
every state in the United States, contains a provision that provides that, absent a failure to pay premiums, a policy shall be incontestable
after it has been in force during the lifetime of the insured for a period of not more than two years after its date of issue. However,
as stated above, some states recognize an exception to incontestability where there was actual fraud in the procurement of the policy.
A new contestability period may also arise in connection with information provided on any application for reinstatement of a life insurance
policy following lapse of a policy due to non-payment of premiums, or an application for an increase in policy benefits. The successful
contestation of the life insurance policies by the applicable issuing insurance companies could materially and adversely affect cash
flows.

Increases
in cost of insurance could reduce estimated returns and lower revenues.

Insurers
pass on a portion of their expenses to operate