Selling your endowments could help when saving accounts run low

Publication date | 04/03/2010

Saving for the future is an important task that many Britons may have recently neglected because of the economic downturn.

A recent study from National Savings and Investments (NS&I) found that the amount of cash people are putting to one side has dropped to a two-year low.

With a number of important events to cover the cost for - such as weddings, university fees and family additions - having enough money in savings could prove advantageous for many households.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers had decided to sell their underachieving endowment policies in order to raise the cash required to cover the cost of future events.

Saving could be on the backburner for many households

The NS&I survey found that an average 6.25 per cent of monthly take-home income is put to one side by Britons. However, average income has fallen, which could make it more difficult to put money to one side.

When a household income drops, saving may no longer be seen as a financial priority, especially when debt repayments and other everyday costs have to be met.

However, not saving for the future could mean that when the time arrives for an important event, such as a wedding, parents and grandparents are unable to financially help as much as they would like.

The NS&I poll discovered that individuals in East Anglia and the West Midlands save more money when compared to their take-home income.

Savers in East Anglia are the best performing, with an average 7.7 per cent of their wage stashed for the future.

People in London manage to save a typical £99.45 a month, the first time the figure has dropped below £100 in two years.

"With the new financial year approaching, now is a good time for people to take a closer look at their finances and set themselves savings goals for the year ahead," said Tim Mack, senior savings spokesman for NS&I.

Endowment policy cash could help cover life's expensive events

Mr Radford, from aap, said some of its customers had sold their unwanted endowment policies in order to raise the money required to cover expensive events when savings alone were not enough.

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