Firms trading life settlements should heed differences between this and potentially trading annuities in a secondary market, an industry figure has warned.
Barry John, head of life settlements for EEA Fund Management, which runs a fund specialising in buying the life policies of US citizens with limited life expectancy, said: “With life settlements the policyholder is selling an asset that he or she can never enjoy, as the payout comes only with their death.
“Therefore the money generated from a life policy sale, coupled with the savings in premium payments, may represent a significant bonus.”
He added: “With annuities you are selling a guaranteed regular income that could be hard to replace.”
Last year the FCA warned that EEA Life Settlements Fund investors could have been missold the product.
EEA said that it had never provided advice to retail investors, and had only marketed its fund to institutional clients and independent financial advisers.