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(London.CityRegions.com, June 15, 2013 ) London, UK -- The new controversial traded life policy investments, known as TLPIs, may provide investors with a boost of 12.5% in returns per year. Those who sell the policies will likely collect more than four times the amount they have from insurance companies.
The new research from a London Business School has declared that the policies are a 'win-win' for the investor, as well as the consumer. The policies have currently undergone regulations in the recent months, which experts say is the cause of the added benefits.
Through the varied analysis of the specific policies, with over 9,000 specifically looked at from over 7,000 individuals, has seen an increase in aggregate benefit by $24 billion from 2001-2011. The London Business School's professor of finance, Narayan Naik, noted an average expected return for investors is 8.4% more than the current treasury sees in yields.
Recent years noted in the study saw an annual return rising by over 18%, from 15.9% of treasury excess overall.
Even with the life expectancy seen for those insured has been understated by a three year mark, while investors who are purchasing the sample of life settlements can see an expected positive return of 3.2% per year, according to Naik.
With the expected return, along with the longevity risk being largely uncorrelated to other markets being surveyed, policies are appear to currently be a worthwhile investment opportunity, says Naik.
TLPIs came under scrutiny by the FCA in 2011 when they noted them as “high risk and toxic”. The City regulators stated a finding that there were significant problems with the fundamental design that were sold to UK retail investors.
Typically, the investors from the United Kingdom put their money into pooled investments in United States Life Insurance policies in order to access the class itself.
While the FSA considered banning the sale to such investors, last week, regulators recently released details regarding the Ucis ban, which restricted product sales to sophisticated investors, while leaving Enterprise Investment Schemes, Venture Capital Trusts, and ETFs out of the ban.
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