You might think that if you’re renting your home, life insurance isn’t for you. But life and critical illness cover aren’t just for people with mortgages.
Here’s why not being a homeowner shouldn’t be a barrier to putting that protection in place.
Do you need life cover if you’re renting your home?
We all have bills to pay and other regular outgoings. Whether that means paying rent or a mortgage, they’re both financial commitments you’ll want to keep up, even if life takes an unexpected turn.
So consider how you’d pay your rent if you had a serious illness and couldn’t work while you had treatment. Or how your partner who you’re renting with would cope financially if you were to pass away. If you don’t think you or your family could manage on savings or state support, and might struggle with unexpected costs or have to cut back, you might want the peace of mind life cover can offer.
The key thing to remember is that the policyholder — or you and your partner, if you have joint cover — are what’s covered by a life cover policy, not the property you’re renting. We don’t tell anyone how to spend the lump sum payout on a valid claim, and your policy isn’t linked to your rental property. It might help to know that, if you move around a bit.
How does life insurance work?
You take out a policy for a specific number of years and pay monthly premiums. Then, on a valid claim within the policy term, we pay out a lump sum to help you or your family manage financially.
Our critical illness cover pays a single lump sum if you’re diagnosed with, or have surgery for, one of 53 illnesses defined in our policy, and survive for at least 10 days. It eases your financial worries while you focus on your recovery or treatment, and can’t work. Knowing the cash payout could help you pay your rent, regular bills, or cover expenses like travelling for medical treatment, can be reassuring. And with our cover, you automatically get children’s critical illness benefit included as standard.
Our life insurance pays out a lump sum if you pass away during the policy term, or if you’re diagnosed with a terminal illness and aren’t expected to live longer than 12 months. It’s there to provide financial support for your loved ones after you’re gone, to help pay rent, bills and other outgoings — and help maintain their standard of living.
For both types of cover, you can choose level or decreasing term cover, which we explain a bit more here.
Say you had level cover life insurance. That’s where you choose the cover amount and the length of time you’d like your policy for, and pay the same monthly amount for the duration of the policy. You’ll want to consider your loved ones’ bills, rent payments and other outgoings in the total amount of cover. That way, the payout on a valid claim could help make things financially easier for them at a difficult time.
Just bear in mind that life and critical illness policies have no cash value, and if your payments stop, so does your cover. Once the full cover amount is paid out, the policy ends.
The renters’ life insurance cover gap
According to research by the Office for National Statistics 1, the number of households living in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017 — an increase of 63% in just ten years. What’s more, in 2020, people in their mid-30s to mid-40s are three times more likely to rent than 20 years ago.
Despite the swell in numbers, renters are still much less likely to have life insurance and critical illness cover than homeowners. A survey by Sainsbury’s Bank 2 revealed just 26% of renters have life insurance, compared with 41% of homeowners. But, interestingly, over half of renters (54%) are concerned about the financial implications if they pass away before older age, compared with 48% of homeowners.
And it does, unfortunately, happen. When it comes to claims made by our customers, in 2019, the most common age range for women to make a claim on their critical illness policy was 40 to 49 years. The most common reason for both critical illness and life insurance claims, in both men and women, was cancer 3.
Why do so few renters have life cover?
According to the same Sainsbury’s Bank survey, the two most common reasons renters didn’t have cover was they didn’t think they had enough equity or money to need life insurance (29%), while 18% just hadn’t got around to it yet.
But life cover is for tenants, too. If you think you or your loved ones would benefit from a tax-free lump sum to manage financially if the worst happened, life insurance and critical illness cover are worth considering. And your monthly premium might be more affordable than you think.
A non-smoker aged 18 to 40, with a cover amount of £150,000 over 25 years, could get a level cover life insurance policy with us for as little as £6.40 to £16.60 a month 4.