According to Office for National Statistics data, the number of households in the UK Private Rented Sector (PRS) has risen from 2.8 million in 2007 to 4.5 million in 2017 – an increase of 63%. Furthermore, it’s younger people who are more likely to rent, with the 25 to 34 years age group making up the largest proportion (35%).
But despite the fact these individuals risk losing their home if they are unable to pay their rent, protection remains something of a rarity among renters.
The Sainsbury’s research echoes figures released by Aviva earlier this year, which showed only 3% of households in the UK Private Rented Sector have critical illness cover or income protection. In addition, just two out of five have suitable home contents insurance to protect their belongings.
So, if the main wage earner in these households was unable to work due to an injury or an illness, many would have no option but to fall back on their savings (if they have some).
Renters also more likely to worry about finances
Ironically, despite being significantly less likely to have protection, renters are more concerned than homeowners about the financial implications of them passing away before they hit old age. In fact, 21% of people living in the UK Private Rented Sector worry about this on a weekly basis, compared to 16% of people who own a home.
When it comes to why renters are less likely to have protection than their homeowner counterparts, these were the top reasons given:
- I don’t have enough equity/money to justify life insurance 29%
- I haven’t got around to purchasing yet 18%
- I have no dependants 14%
- I’m too young to have life insurance 13%
- There are no serious hereditary illnesses in my family 9%
Homeowners are also more likely to have protection because the actual action of purchasing a house is seen as a significant life event, one that spurs them into sorting cover. Protection conversations often begin once a mortgage has been agreed. Likewise, having children and getting married are also life events that often trigger people to review their protection plans.
There’s also a tendency for protection literature to emphasise the importance of protecting “homes” and “mortgages”, which further excludes renters from the conversation.
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.”
The bottom line is that renters stand to lose their homes if they are unable to pay their rent. And with figures showing that some individuals renting in London spend a colossal 85% of their earnings on rent, the need for protection has never been greater.
I joined Premier Choice Group as a Healthcare & Protection Consultant in 2017, where I now look after the needs of over 200 clients nationwide. Prior to joining the Premier Choice Group, I worked for a large Private Healthcare Insurer, VitalityHealth, and managed SME and Individual clients across the country.