Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 108

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1A
Chunk 108
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. Price Dawe, (Supreme
Court of Delaware) and Principal Life Insurance Company v. Lawrence Rucker 2007 Insurance Trust (District Court of Delaware)).
These courts have invalidated policies where the original policy owners financed the policies and did not intend to purchase the policies
with their own money and further intended to ultimately sell the policies in the life settlement markets. However, the Rucker case did
provide that premium financing could qualify as an insured procuring a policy and satisfy requirements related to insurable interest.
There is also legislation in most states regulating premium financing that must be complied with for policies originated after the legislation
was enacted.

Also,
in every state that has addressed the question other than New York and Michigan, the expiration of an insurance policy’s contestability
period may not cut off the insurer’s ability to raise the insurable interest issue as a defense to the payment of the policy proceeds.

One
or more states could adopt legislation that would require a holder of an insurance policy to have an insurable interest in the insured
at the time a policy is purchased and at the time of death of the insured. Neither us nor the Holders will have an insurable interest
in the insureds polices acquired by or 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