Could endowment policy cash help fund relatives' education?

Publication date | 15/07/2010

The cost of attending university in the UK is rising and many feel they are not able to afford it.

Parents or grandparents may wish to help out by providing finance and one way in which this could be made easier is by surrendering endowment policies.

According to new research from the Association of Investment Companies (AIC), 82 per cent of mothers and fathers say the recession has increased the financial strain of higher education costs.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who wanted to help cover education costs had decided to sell their underperforming endowment policies.

Are university costs too high for your family?

The AIC also found that 49 per cent of students polled believe it will take them over a decade to repay their student debt.

Their financial problems may be compounded by the possible lack of jobs they will find after completing their courses.

Indeed, 55 per cent of respondents were worried they will not get a position on graduation.

Parents and grandparents who want to lessen the financial burden of university could sell an endowment policy to provide them with cash which can be used by their younger relatives for such purposes.

Annabel Brodie-Smith, communications director at AIC - which was formed in 1932 and is a trade body for the closed-ended investment company industry - said parents are facing an "ever increasing financial burden".

She added: "If you can start saving for your children for the long-term from an early age you can give them a financial advantage in life."

Selling endowments could help fund university

Mr Radford, from aap, said some of its customers who had younger relatives who could not afford university costs had decided to sell an endowment policy so they could provide them with extra money.

He added that should aap make an offer to purchase an endowment policy, it will always pay more than the surrender value offered by the insurance company.

Reasons to sell your endowment policy