The world is a more uncertain place than it’s been during most of our lifetimes and, for the UK’s millions of home renters, things can seem even more precarious at the moment.
According to the Office for National Statistics, there are 4.5m households in the private rented sector alone in the UK - and this figure excludes tenants in local authority and housing association accommodation. It can be a vulnerable demographic, often with minimal financial guidance and support available, and, as the current Coronavirus pandemic highlights, those who rent can often find themselves with little more to rely on than their landlord’s goodwill in an unexpected crisis.
Income protection offers breathing space if you’re unable to work due to illness or an accident, and rental income protection benefit is a type of IP designed specifically to cover your rent. Our partner L&G has been a leader in this area, launching the industry’s first Rental Protection Plan to help the many tenants who are under-protected.
What is rental income protection benefit?
Rental income protection benefit is designed to pay out a monthly benefit if you can’t work due to illness or an accident and lose your earnings as a result. It can be used to help towards living expenses such as rent, utilities, medical bills, childcare and other monthly outgoings.
Some rental income protection plans allow you to increase the benefit if your rent rises and, with the L&G plan, there are also stepped benefits, offering a choice of deferment periods and levels of cover. And if you stop renting in order to buy a home, some policies can simply be transferred to a mortgage income protection plan, enabling you to protect your new home and your investment.
Why do I need rental income protection?
The rental market is growing. ONS comparisons reveal that today’s figure of 4.5m private rented households in the UK has risen from just 2.8m in 2007 - and this is set to increase further. L&G predicts that 50% of adults under the age of 40 will be renting privately by 2025, with its research also showing that:
- Rent is expected to climb by 15% in the next five years
- The average rent in the UK is £817 per month, rising to £2,059 in London
- Rent accounts for, on average, 40% of a tenant’s income - double the amount a homeowner spends on the mortgage.
ActiveQuote product development manager James Howell said: “The rental market is a huge demographic largely untouched by financial guidance and support. As a result, many tenants are under-protected, but L&G’s rental income protection opens the door to affording them a good level of cover.
“Nearly one in five of our income protection customers is a tenant, so this goes a long way to specifically serving this audience with a tailored product to suit their needs.”
Income protection can be a real lifeline in difficult times, allowing you to recover from your illness or injury without worrying about how to pay the bills. If you’re an employee, you might benefit from an occupational sick pay scheme, but not all employers offer this, while Statutory Sick Pay (SSP) and other benefits often fall far short of a claimant’s salary.
In addition, there are almost five million freelancers and self-employed workers in the UK, many on fluctuating incomes and with fewer savings and pensions, on average, than staff members. To find out more about the benefits of rental income protection, get an online comparison at a price to suit your budget.