Could endowment policy cash stave off debt problems?

Publication date | 08/07/2010

The recession has had a negative impact on many people's finances and some are facing the prospect of bankruptcy.

According to insolvency trade body R3, different regions have greater and lesser levels of such monetary worries, meaning people residing in certain areas may benefit from surrendering endowment policies to generate additional cash.

It noted that the north-east of England is the place in which the highest rate of bankruptcy exists.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who were unable to manage their debts had decided to sell their underperforming endowment policies to help them stay afloat.

Can you cope with your debts?

R3 found that the likelihood of becoming insolvent was 69.5 per cent higher in the north-east than in London.

It discovered that out of every 10,000 people, 29 of them became insolvent in the northern area, which is higher than the 17.1 per cent recorded in the capital.

Meanwhile, the average number across the UK as a whole was found to be 24.3 per 10,000.

Individuals who are at risk of going bankrupt may benefit from surrendering endowment policies to generate more money.

Responding to the findings, R3 president Steven Law said: "Unfortunately, with the announcement of public sector job cuts, it is likely that the figures will worsen, especially in areas such as the north-east where public sector employment is high."

Recently, the organisation claimed a total of almost one million consumers who are finding it difficult to cope with their levels of debt have not yet sought help.

Selling endowments could reduce debt concerns

Mr Radford, from aap, said some of its customers who were struggling to cope with their debts had decided to sell an endowment policy to provide them with additional 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