Selling endowment policies could prevent uncontrollable debt

Publication date | 09/02/2010

The latest report from the Insolvency Service has been released and it has revealed that individuals and businesses alike have suffered as a result of the economic downturn.

Figures revealed that across England and Wales in the fourth quarter of 2009 there were 35,574 individual insolvencies.

However, being declared bankrupt could have serious consequences for both individuals and a company and so Britons with debts may want to find another way to settle what they owe.

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 sell their endowments in order to raise the money to help clear their debt, rather than letting repayments get out of control.

Bankruptcies and IVAs increase for cash-concerned consumers

The Insolvency Service report found that during the fourth quarter of 2009, 17,007 people were declared bankrupt, while 13,219 individual voluntary arrangements were undertaken, a 26.3 per cent rise when compared to the same quarter of 2008.

Those who have been declared bankrupt are barred from professions including being a solicitor, accountant or police officer, while people cannot hold a directorship role.

Companies have also been hit hard. There were 4,566 compulsory liquidations and creditors' voluntary liquidations across England and Wales during the fourth quarter of 2009.

This, in turn, could increase the number of people made redundant, impacting on their ability to meet their debt repayments.

Peter Sargent, president of insolvency trade body R3, said: "We know from previous recessions that, although the overall economic outlook is brighter, this is the most dangerous time for businesses as creditors attempt to collect money owed and policy makers cut measures aimed at helping those in financial trouble."

Endowment policy cash could avoid the need for insolvency

Mr Radford, from aap, said some of its customers had decided to sell their unwanted endowment policies in order to raise the cash to help clear debt, preventing repayments from spiralling out of control in the future.

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