Could selling your endowment policy help you out of debt?

Publication date | 11/03/2010

The latest Credit Action report has revealed that the average UK household debt stands at more than £58,000 when mortgages are taken into account.

Many households will have been hit hard by the economic downturn and may find it a constant struggle to keep up with their debt commitments, as well as meeting other everyday costs and household bills.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers with a number of financial commitments that were steadily increasing had decided to sell their underperforming endowment policies in order to raise the money required to ease the monetary burden.

The debt outlook of UK households

The Credit Action report found that average borrowing by each Briton on retail finance and motor deals, credit cards, unsecured personal loans and overdrafts rose to £4,667 at the end of January.

Indeed, many people may be forced to rely on credit because their household income does not spread as far enough as possible to cover the different number of financial commitments that households have to meet.

However, relying on credit can result in debt repayments taking up a large proportion of an income.

According to the survey, each household pays approximately £2,710 every year on interest alone.

The Credit Action report said: "Total credit card debt in January 2010 was £61.4 billion. The UK collective credit limit on credit cards is £158 billion, which is an average credit card limit of £5,129 per person."

As previously reported by aap, figures from the Insolvency Service revealed that during the fourth quarter of 2009 there were 35,574 individual insolvencies across England and Wales.

However, insolvency may not be a route many Britons want to go down.

Have you considered selling your endowment policy?

Mr Radford, from aap, said some of its customers had decided to sell their unwanted endowment policies in order to raise the money required to place their household on a more stable financial footing.

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