A combination of unaffordable house prices, the advent of ‘Generation Rent’ and a more transient attitude to individual and family living, means that the rental sector is now the fastest growing component of the housing market. A recent National Housing Statistics study estimated that in 10 years time over 50% of the UK population would be in rented accommodation.
But where are the touch points for renters to understand the need to protect their finances? The protection industry has been slow to keep pace with the needs of individuals and families renting a property, with a 2019 study by Sainsbury’s bank showing that only a quarter of renters (26 per cent) are likely to have a life insurance or critical illness policies in place compared to almost half of homeowners (41 per cent) – creating a large protection gap.
Where does the gap stem from?
While a small percentage of the rental population understand the need for financial protection insurance and are happy to buy online, the reality is that not enough is being done to either educate renters around the need for this insurance, or to make it accessible enough for them. The bulk of protection policies are proactively sold to home buyers (normally alongside a mortgage process), and there is no established sales point for protection insurance within a rental journey – hence it gets missed.
And it is something that renters are concerned about. The Sainsbury’s 2019 research goes onto highlight that, despite being less likely to have life insurance or critical illness cover, 54% of renters are more concerned than homeowners (48%) about the financial implications should they pass away before old age.
It’s true that the aggregator market and new insurtech organisations are starting to pick this sector up, but their impact in protection sales is far less than in general insurance and is a long way from filling the gap.
Do renters need financial protection insurance?
For those unfamiliar with financial protection insurance, it’s a way to provide financial security to those you love most as well as yourself. Life insurance is a way of helping a family or dependents cope with the financial impact of losing a loved one. Insurances such as Income Protection or Critical Illness Cover can assist when you have been diagnosed with an illness or have had an accident that means you are unable to pay your monthly bills.
Many people concentrate on arranging their home and motor insurance, even their pet insurance and forget about their financial protection cover; yet it is such a critical form of cover to have in place.
How do I know if I need the insurance?
Just ask yourself these questions:
- Could my family continue to pay the bills if I wasn’t able to earn through illness or injury?
- If something happened to me, would my family be able to continue to live in their current home?
- Would it significantly change my life/my families lives if I wasn’t here?
Where can I go to get the insurance?
Financial protection insurance can be a complex subject, but if you know what you need and the level of cover you need, you can access online solutions or go direct to a provider to arrange cover for you. If you aren’t sure and would like some advise, you will need to make sure you speak to an ‘advised’ financial protection specialist ie they will be able to support you in selecting the right product for you.
Have a look at our financial protection solutions on the website – Cignpost Life insurance is our simple easy to use online product which will take you less than 5mins to arrange cover. For advice or to talk to someone about what you need, you can contact our Albany Park team who are here to support you every step of the way.