Selling endowments could help clear debt and its climbing interest repayments

Publication date | 05/02/2010

The average household debt in the UK, including mortgages, stands at £57,937, according to the latest Credit Action report.

Such a figure means that the average owed by every UK adult is £30,252, 129 per cent of typical earnings.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers with high levels of debt had decided to sell their underachieving endowment policies in order to service their credit card balances and to free themselves from interest repayments.

Household debt could risk a family home

Interest repayments can prove to be a financial headache for many households.

The Credit Action report stated that the average interest paid on total debt each year by every household is £2,620. When added up over the number of years that Britons have used credit cards and personal loans, it may be easy to see how interest repayments can take a significant toll on household finances.

Being unable to keep up with debt can lead to serious problems if people do not take action to clear what they owe.

In the UK a property is repossessed every 11.2 minutes. While bankruptcy is seen by many as a last resort, some Britons do ignore their debt until it spirals out of control.

As such, many individuals may want to clear their debt as soon as possible to prevent it growing into unmanageable amounts.

Bankruptcy can have an impact on certain professionals. People who have been declared bankrupt cannot work in the police, the army, hold a directorship position or work as a solicitor or accountant.

Endowment policy cash could put finances back on track

Mr Radford, from aap, said many of its customers in debt had decided to sell their unwanted endowment policies to significantly reduce - or even clear - what they owe to avoid any potentially serious consequences from credit card and personal loan balances spiralling out of control.

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