Close Brothers Limited, part of the Close Brothers Group, has launched a bank loan product for people with endowments which have two to five years to run, allowing them to take out a secured loan against the policy while keeping their life cover and the right to claim terminal bonuses.
The loans are then repayable upon maturity with Close Brothers taking over paying the monthly endowment premium freeing up the policyholders money at a time that they may need it most. Additionally, directly regulated advisers will still receive commissions from loan referrals.
Close Brothers claims research suggests up to £5.6bn in endowments could be cashed in, with one in five policyholders saying they plan to cash in early.
The research also suggested almost a third of endowment policyholders are unhappy with the performance of their funds but unsure if they should continue paying into the funds.
John Taylor, commercial director of Close Brothers Retail Division, said: “With more than 2.5m policyholders and £30bn invested in the sector there is a real need for more options for customers choosing between continuing to pay into their endowments or surrendering early.”
Panacea Adviser, the online resource for directly regulated financial advisers, is teaming up with Close Brothers , part of Close Brothers Group, to update advisers on the benefits of providing secured loans against endowment policies.
Derek Bradley, chief executive of Panacea Adviser, said: “We are delighted to have the chance to help Close Brothers update regulated advisers about this secured loan option as many younger advisers will not be aware of the existence of policy loans which were popular in the 80s and 90s. This creates a greater spectrum of choice for policyholders than would otherwise be available.”
