Many people do not think they need protection insurance until they apply for a mortgage to purchase a house. However, according to a February 2017 report in the website MoneyFacts.co.uk, people renting accommodation are advised to take out protection insurance.
MoneyFacts published figures from recent Scottish Widows research showing that only 16% of renters have life insurance compared to half of people with a mortgage. Just 3% of renters have critical illness cover, but 20% of mortgage holders do.
When reviewing their financial plans, a survey has shown that 35% of renters have not considered taking out protection insurance. About 30% of renters have no significant savings to cover the rent if they are ill or have an accident.
Many couples renting rely on two incomes to cover the rent. If one partner cannot work for a while, the partner may struggle to pay the rent.
Some people believe that the benefits system will cover their rent if they are unemployed, but welfare reforms over the last few years mean that fewer people will have their full rent paid.
MoneyFacts recommends that renters should take out protection insurance. These policies include income protection that pays a percentage of your income if sick or injured, critical illness that pays a lump sum if diagnosed with a severe illness, and life insurance that enables your dependants to pay the rent if you die.
A broker can discuss your protection insurance options and find a policy to protect you in case you unexpectedly lose your income.