Parents may want to sell their endowment policy to secure their own finances

Publication date | 09/03/2010

Some parents are getting into debt themselves in order to help their adult children stay on top of their finances, a new study has stated.

As well as lending to their children, many mums and dads are financially helping their grandchildren out, the Scottish Widows poll found.

However, this has resulted in their own financial stability taking a hit, jeopardising their future monetary security.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who constantly funded their adult children had decided it was time to strengthen their own finances.

He stated that some had decided to sell their underperforming endowment policies to raise the money required to clear their debt and prepare for the future.

Helping out others at the risk of damaging their own finances

The Scottish Widows poll discovered that one in ten mums and dads with adult children had got into debt in order to help their loved ones, with many even remortgaging their home to do so.

More than a third of parents who had lent their grandchildren or adult children cash had seen it used on day-to-day expenses and living costs.

Furthermore, 38 per cent of grandchildren and grown-up offspring had used the money to clear their debt.

However, the current economic climate means parents are leaving themselves at risk of ruining their own monetary security, said savings expert at Scottish Widows Iain McGowan.

He stated: "On the one hand, 'generation Y' is looking ever more to its parents for help as it struggles to get jobs, credit and mortgages - and to clear debt. At the same time, the 'Bank of Mum and Dad' is not as readily available as it once was, often for the same reasons."

Selling your enowment policy could organise finances for the future

Mr Radford, from aap, said some of its customers had decided to sell their unwanted endowment policies to clear their own debt, secure their financial stability and, with left-over cash, help out loved ones.

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