Managing Partners, a boutique fund manager, has welcomed legislation in Washington State that requires life insurance companies to inform policyholders that they have the option of selling their policies rather than letting them lapse.

Managing Partners anticipates that the legislation will be replicated across the US states and will provide a massive boost to the traded life policy market.
 
Currently 85 per cent of insurance policies lapse without payout, with a mere three per cent surrendered for cash value. Only 12 per cent of all life insurance policies taken out will have a payout on death.
 
The new measure was introduced to protect policy holders, giving them the option of cashing in their policies and legally obliging insurance companies to disclose this option to them. USD23trn of death benefit existed in the US in 2006, making it the largest life insurance market in the world.
 
Jeremy Leach, managing director of MPL (pictured), says: 'We are delighted that the need for change has been recognised. Appetite for TLP funds has risen exponentially over the last year, as a result of the difficult market conditions forcing investors to turn to the steady, uncorrelated returns that TLP funds offer.'
 
TLPs are US-issued whole-of-life policies sold before their maturity date, allowing the original owners to enjoy some of the benefits during their own lifetimes. TLPs can be used to deliver steady, incremental returns that are uncorrelated to other financial asset classes.