Endowment policy cash could clear joint debts during divorces

Publication date | 28/01/2010

The divorce rate in England and Wales fell in 2008 when compared to the previous year, with 11.5 divorcing people per 1,000 married population, new figures from the Office for National Statistics (ONS) showed.

It marks the lowest level since 1979 when it stood at 11.2. The average age at divorce has risen from 40.4 in 1998 to 43.9 ten years later.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who had got divorced had sold their endowments so that they could split their assets.

Divorces on hold until the economy recovers?As previously reported by aap, a recent study by Unbiased.co.uk found that some solicitors have blamed the economic downturn for slower divorce procedures.

Two-fifths of solicitors have found that it has taken longer to reach a settlement over the past year than usual.

Figures from the ONS would appear to support the link between fewer divorces and the recession.

Between 2007 and 2008 the number of divorces granted in the UK dropped by 5.5 per cent to stand at 136,026 - this is 25 per cent lower than the highest number of divorces which peaked in 1993.

One financial concern that Britons who divorce may have is how to clear debts in both an ex-couple's name. In order to gain a fresh start, individuals who sold their endowment policy during divorce proceedings may decide to use the money raised to clear their credit card and personal loan balances.

Selling endowments during divorces could help with debt

Mr Radford, from aap, said some of its customers who had divorced, or who were going through a settlement, had decided to sell their unwanted endowment policies so they could use the cash to clear their joint debts, allowing for a fresh financial start.

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