Life insurance cover gap for UK renters
Only a quarter of renters (26 per cent) are likely to have a life insurance or critical illness policy in place compared to almost half of homeowners (41 per cent).
But despite being less likely to have life insurance or critical illness cover, 54 per cent of renters are more concerned than homeowners (48 per cent) about the financial implications should they pass away before old age. One in five (21 per cent) of renters living in private accommodation worry about this situation on a weekly basis compared to 16 per cent of homeowners.
According to the government’s English Housing Survey, in the past 10 years the number of households renting privately with children has risen by almost 800,000 to nearly 1.6 million.
Renters should consider what their partner or family would do if they unexpectedly needed to cover housing costs such as rent and other monthly outgoings if one partner was to become seriously ill or pass away.
According to Sainsbury’s Bank, based on the average weekly household expenditure in the UK (£572.60) the average renting family should have £687,000 worth of life cover as a financial safety net.
The survey found the top reason renters do not have life insurance is they believe they don’t have enough equity or money to have a life insurance policy (29 per cent), in comparison to homeowners (11 per cent). Nearly one in five of renters (18 per cent) haven’t got round to it yet and 14 per cent said they had no dependents.
According to Sainsbury’s Bank, major life events are the top reasons people decide to buy protection products. Buying a house is the main reason people chose to purchase life insurance (34 per cent), followed by having a child (17 per cent) and getting married (12 per cent). Unfortunate experiences, such as becoming ill (9 per cent) also prompt people to take out a policy.
Karen Hogg, head of insurance at Sainsbury’s Bank, said: “As more people are raising families in rented accommodation, we need to shift our thinking in terms of life and critical illness cover only being relevant for people with a mortgage. That’s just not the case. All people need to consider what protection their partner and children may need should anything happen to them, including how to cover rent, bills and household essentials.
“Our research found that people are more likely to worry about the financial implications of their passing rather than taking action to alleviate any concerns and protect themselves for the future. Taking out a life insurance policy can help give you peace of mind and ensures you have the financial protection in place.”