Many home owners will purchase critical illness or income protection cover when it comes to getting a mortgage, but it is equally as important for renters to consider this.
Rent is just as much of a financial commitment as a mortgage, yet many tenants fail to have a safety net in place if they suddenly lose their job or fall ill and can’t work.
Research by Scottish Widows found 38% of private renters admit that they’d not be financially secure if their household lost its main income, while almost four in 10 said that if they fell seriously ill and were unable to pay their rent, they would have no idea where they would go or could be left homeless.
Despite this, only 4% of private renters said they have critical illness cover and 22% have life insurance, leaving them at risk of eviction and financial hardship due to lack of a back-up plan if the unexpected were to happen.
Renters may not be prompted by a house purchase to look at how they and their families would manage financially if they were to die or become seriously ill. But while they don’t have a mortgage to pay, they still have financial obligations, not least the monthly rent and regular household bills.
Even if you have savings, this may not be enough to cover the shortfall so it is worth looking at protection. Critical illness will pay a lump sum you if you are diagnosed with a specified illness or injury, while income protection will provide a safety net of paying a percentage of monthly income if you are off work for a sustained period of time.
Showing you are a financially savvy renter, with savings and protection, can also help when looking at properties as a landlord or lettings agent may feel more comfortable renting to you compared with someone who doesn’t have a plan for paying rent if they lost their job.