Could endowment policy cash help reduce holiday debts?

Publication date | 09/07/2010

Many Britons aspire to leave the country at least once a year on a summer holiday.

However, new research conducted by Bright Grey has found some people are prepared to jeopardise their finances in order to achieve this, meaning they may benefit from surrendering endowment policies to provide them with extra money.

The firm discovered that more than ten million consumers will rack up debt by going abroad during the sunny season.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who wanted to go on vacation but were not prepared to get into debt had decided to sell their underperforming endowment policies.

Do you long to go abroad?

Bright Grey showed that 32 per cent of people polled were getting into debt in order to fund the expense of trips to other countries.

Meanwhile, more than half (58 per cent) noted they do not have the money to repay their debtors immediately.

For this reason, they may end up facing additional interest payments of over £100 each month, it warned.

Individuals who want to avoid such problems may benefit from surrendering endowment policies so they have the cash up front to pay for their trips.

Responding to the findings, proposition director at Bright Grey Roger Edwards said: "Getting away on holiday can be a high point of the year for many people, however with one-in-three borrowing to pay for their getaway, it is important to make sure they don't end up with a financial holiday hangover on their return."

The temptation to get out of the UK may be less this year than it has been over recent times because of the warm weather expected by forecasters.

Selling endowments could make holidays possible

Mr Radford, from aap, said some of its customers who did not want to get into debt because of their summer holidays had decided to sell an endowment policy to provide them with more 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