Q: What is a life settlement fund?

The market for buying policies is based in the US, where the legal system guarantees policies must pay-out to beneficiaries provided they have been held for at least two years (in most federal states).

Peter Winders, marketing director of life settlement funds provider EEA, said: “Americans tend to buy more life cover than we do and will often have several policies and be paying hefty premiums.

“Policyholders, who sell their policies are typically aged over 65 and have some impairment to their health.

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“The prices paid for policyholders to the life insured are typically significantly higher than the redemption value available to the insured if they cashed in their policy with the insurer.

“By selling policies in the open marketplace they can release capital, which may be used to pay for healthcare, for instance, and reduce bills too, making this an ethical investment.”