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Fund buys life policies from the terminally ill

Tep specialist Shepherds has introduced a traded life policy fund offering guaranteed payments, which it claims is the first such product available outside the US.

Traded life policies are sold by terminally ill policyholders looking to unlock benefits prior to their death. Buyers benefit from the policy value on the death of the seller. Returns in the fund are therefore guaranteed at some stage.

The fund is denominated in dollars and aims for 9 per cent growth a year. Investors earn a bonus of 1 per cent if they stay in the fund for more than four years, 2 per cent after five years and 3 per cent after six years. Minimum investment is $15,000 or £9,500. Charges are 5 per cent initial and 1.5 per cent annual. Commission is 4 per cent.

Managing director Mike Abraham says: “With its guaranteed payout, high fixed returns and freedom from equity market volatility, the traded life policy fund will experience a growth in popularity. Tests against a substantial data sample show annual growth targeted at 9 per cent.”

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