Sell Endowment to Pay off Loan?

Preserving_Anonimity

I started this thread in DebtFreeWannaBe, but with hind-sight, it might have been better here, so apologies for repeating myself.....

Preserving_Anonimity wrote: »

I've been asked by a collegue for some advice (I am a regular MSE visitor posting under a new name) but I am really out of my depth but I know that someone out here will be able to give me some help.

Should my collegue (MC) sell his endowment to pay off a loan?

After going through a separation/divorce, MC finds themself in a financial difficult position. He leaves the marriage in debt and not being able to afford to rent unless in a shared house which he really is too long in the tooth to do if at all possible.

There is a car loan of around £6500 at APR 19.6% with 2 years to run which could be settled this month at £5500. Monthly payments £240.

There is an endowment with Sun Life Canada which has 16 years left and is costing £50. For reasons which are irrelevant, it is accidently in arrears of around £300ish.
They will settle at £4100.

Cashing in the endowment will enable MC to pay off the loan and free up £290 per month enabling rent and other costs to be met in a (small) rented flat.

Is this a sensible move?
Where else should MC look if the endowment is to be cashed, could a better deal be struck elsewhere as opposed to just taking the offer from the provider?

Thanks

dunstonh

It would be logical to clear arrears and debts. However, is the endowment his to do what he wishes or is it to be shared or assigned to the other party as part of a settlement?

EdInvestor

If the endowment is in joint names he would not be able to surrender it without the agreement of his wife who would be due half the money.

If it is his alone to surrender/sell the following info is needed to see if it's a good idea

Guaranteed sum assured
Declared bonuses
Surrender value
Maturity date
Maturity projections
Interest rate payable on loan

Sale quotes can be obtained here: https://www.apmm.org

Preserving_Anonimity

The endowment is not in joint names - it was his before the marriage. The finances have been split and the endowment and loan are part of his half.

Maturity date is 2024
Surrender Value - I'm assuming that is what the £4100 is - it takes into account the arrears.

Don't know the answer to the other questions - will find ask and report back.
Interest on Loan is 19.6% APR

Thanks for the link.

Preserving_Anonimity

Thanks for all your comments - MC has decided that although it may not necessarily be the best decision long-term, it makes sense to clear the debt for a fresh start.