Basically, some people believe that term funding agreement is a much more accurate term than guaranteed investment contract. That’s generally because the only guarantee is from the insurance company itself. The money investors put into them is not guaranteed by the government in the same way as buying Treasury securities such as bonds. They are also not protected by a government scheme in the same way as cash deposited into a bank.
For some countries, the phrase funding agreement can also be used for situations where people want to take civil legal action but do not have enough money to pay for it. Firms will offer to take on the case in return for taking a commission of any money the client receives from the court, for example in compensation. Such deals are often marketed as being on a “no win no fee” basis. However, in some situations, the client is required to take out an insurance policy against the possibility of losing the case.
