If you're renting, you may not have thought about things like life cover and critical illness insurance, with it often only being when people buy a home that they're prompted into action. However, this could be a big mistake, with research from Scottish Widows showing that many renters are at risk of financial hardship by failing to protect themselves.
The research found that just 16% of private renters surveyed have life cover (compared with 50% of mortgage holders) and only 3% have critical illness insurance (20% of mortgage holders), which means huge numbers are worryingly under-protected. Not only that, but 35% paid little or no attention to insuring their rent when reviewing their finances, which means their entire home could be at risk if the worst were to happen.
Unfortunately, financial protection is far down the priority list: 80% view a mobile phone as essential, yet only 28% think the same about life cover, and just 21% think critical illness cover is a necessity. This is despite 56% having dependents (children under the age of 16), and 30% admitting they wouldn't be financially secure if their household lost its main income.
It can be easy to gloss over, but it's vital to consider what you'd do in that situation. Let's say you or your partner were unable to work for six months or more – would you be able to cover the bills on a single income? Over a third (35%) of respondents wouldn't be able to, with 36% saying they could only afford to pay bills for five months, while 13% couldn't pay anything at all.
A further 30% said they'd use savings to manage, but that could be easier said than done, particularly with 20% having less than £1,000 put aside, and 30% having no savings whatsoever. This is why investing in suitable insurance and income protection cover is so important, and why it's worrying that so few people – renters in particular – view it as a priority.
Johnny Timpson, Scottish Widows' protection specialist, commented on the findings: "Renters are not 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.
"Many renters assume they can rely on benefits, but welfare reform means that fewer of them would get their rent paid in full if their circumstances changed without warning. Having a financial plan in place will help protect their living arrangements in this type of eventuality and give greater peace of mind about avoiding eviction and being able to keep up with their regular outgoings."
So don't leave yourself financially exposed – if you've yet to arrange some form of life insurance, critical illness cover or income protection, use our insurance search tool to obtain a few quotes and make sure you're ready for anything.
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