Selling endowments could help grandparents support loved ones

Over a third of grandparents currently put money to one side for their grandchildren, with over 40 per cent claiming they save on a regular basis, new research has revealed.

According to the study by OnePoll.com commissioned by F&C Investments, a greater proportion of grandparents in London save or invest for their grandchildren compared to the rest of the country.

This could be because of higher private school fees and more expensive property, meaning loved ones may need a helping hand when it comes to putting a deposit down on their first home.

Grandparents who want to financially help out their grandchildren for a number of expenditures, including education, the cost of a new car or a deposit on a first home, may have considered taking out a loan or dipping into their savings in order to be of some assistance.

However, putting their own finances at risk may be a route many grandparents will want to avoid, but at the same time, they could be concerned how loved ones will cover the cost of such ventures.

Chris Radford, chief executive officer of aap - the UK's biggest buyer of endowment policies - said some of its customers with grandchildren had decided to sell their underperforming endowment policies in order to help raise the cash to cover the cost of education for their loved ones, as well as other expensive outgoings.

The study discovered that providing funding for education is the most common reason why grandparents save money for their family. This percentage increased for those living closer to London.

For 30 per cent of grandparents, saving allows their grandchildren to spend the money on whatever they like, which could include a new car for when they pass their driving test.

Commenting on the findings, Jason Hollands, director at F&C Investments, said: "The UK economy differs widely across the country so it is perhaps less surprising to see a greater proportion of grandparents based in and around the capital investing for their grandchildren.

"With London and Edinburgh the UK's biggest financial centres, it is also unsurprising to see grandparents in these locations most willing to use stockmarket-based investments."

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 financially support their grandchildren.

He added that should aap make an offer to purchase an unwanted endowment policy, it will always pay more than the surrender value offered by the insurance company.


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