Could endowment policy cash help fund summer entertainment for kids?

Publication date | 12/07/2010

Families, particularly those headed by one parent, may struggle to cope with the expenses of entertaining youngsters during the summer holidays.

Some grandparents keen to ease such financial pressures may be surrendering endowment policies in order to provide additional money.

According to Moneysupermarket Vouchers, which is part of moneysupermarket.com, families expect to spend a combined total of £5.6 billion on activities with their children during this year's summer break.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers whose children were struggling to cope with the costs associated with entertaining a family over the summer had decided to sell their underperforming endowment policies.

Are summer holiday finances a stretch for you?

Moneysupermarket Vouchers discovered that households expect to spend around £330 on entertaining their kids during the school break.

Nearly two-thirds (64 per cent) noted they are fearful about the effects this will have on their finances, while 21 per cent revealed they will struggle to cope.

Such people may benefit from additional money provided by their own parents that can be generated by surrendering endowment policies.

Responding to the figures, spokesman for Moneyfacts.co.uk Darren Cook said: "The long summer school holiday, especially when we have a spell of good weather, will stretch the family expenses at a time when most have needed to tighten their belts."

He added that after Christmas, the summer holidays must be one of the most expensive times of the year for consumers.

Single parents and those on a tight budget may be particularly stretched, Mr Cook concluded.

Selling endowments could help parents cope with the costs of summer

Mr Radford, from aap, said some of its customers whose children had young families that may struggle to afford the costs of the school summer holidays had decided to sell an endowment policy to provide them additional cash.

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