Endowment policy cash could cover unexpected expenses

Publication date | 24/02/2010

The average British householder may only have enough money to cover their bills for two weeks should they or their partner fall critically ill or die, according to a new survey.

Aviva research has found that one in four people would only be able to get hold of £100 in disposable cash within a week if such an unexpected event occurred.

One reason for this lack of financial support could be because of other monetary commitments eating up household coffers, such as credit and store card and personal loan repayments.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers with underperforming endowment policies had decided to make their family finances more stable by selling their endowment to raise the cash required to clear debt commitments.

Family finances are not in the best of shape

The Aviva study found that almost two-thirds of households have no life insurance or critical illness cover.

Not having cover in place could seriously damage the long-term finances of a family.

Indeed, a fifth of Britons admitted that if they had to find an alternative income in light of a death or critical illness then they would be willing to sell their home.

A third of people said they would give up their car in order to raise the money required.

The insurer said many people underestimate the monetary impact of unexpected events, although 59 per cent of individuals believe that it is their responsibility to make sure the loss of an income is covered.

"It is worrying how little money Britons would be able to access without further borrowing and how big the shortfall could be when we consider how much a critical illness or bereavement could actually cost," said Louise Colley, head of protection for Aviva.

Selling endowments to cover a household from unexpected events

Mr Radford, from aap, said some of its customers had decided to sell their unwanted endowments so they could financially prepare for life's unexpected events.

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