Institutional investors are showing increasing interest in the diversification potential offered by second-hand US life insurance policies. But the growth in the market for traded life policies (TLPs) raises questions for investors about the ethics of making money from successfully predicting someone’s death, according to a report* published today by the Pensions Institute. Regulation of the sector, which is worth in excess of $13bn (£6.5bn, €8bn) and expected to grow to $160bn in the next few years, is also an issue.

The report says this relatively new alternative asset class – which is not correlated with traditional equity and bond markets – has attracted interest from large investment banks, insurance companies, asset managers, hedge funds, and pension funds.