Why renters should consider Income Protection

For most tenants, the rental payment is often their biggest monthly outgoing. The number of privately rented UK homes has more than doubled over the last 20 years and now stands at 5 million, according to the 2021 Census [1].

Research conducted by HomeLet, tells us that the average rent prices across the UK were up 10.8% in December 2022 with the average Greater London homes being priced at more than £2,000 pcm; if you take London properties out of the equation, rents were still up by 9.4%. This means that single tenants could be paying 35% of their monthly income on rent which is the highest level of rental unaffordability in over a decade. [2]

If you were unable to work because of an accident or an illness and no longer receiving an income, have you considered how you would be able to pay your rent and keep a roof over your head? By taking out Income Protection, you can get the peace of mind knowing that you have a ‘Plan B’ when it comes to your income.

What is Income Protection?

It’s basically an insurance policy that pays out if you are unable to work for medical reasons – physical or mental, illness or injury; it won’t pay out if you lose your job through any other route like redundancy. This product is built to protect against not being able to work for health reasons such as long-term back pain, serious injuries caused by an accident, depression and other serious illnesses such as cancer, heart attacks and strokes. Having Income Protection in place is a longer-term solution unlike sick pay or savings and can prevent you from getting into debt, having to use your savings or potentially being evicted.

Do I need Income Protection as a tenant?

This very much depends on your personal circumstances. You may have someone else who you can rely on financially, access sick pay entitlement through your employer or tap into any savings to tide you over; but would these cover you for any long-term time off work?

By having Income Protection in place, you can make sure you have enough to cover essential living costs including covering your rental payments and bills. Although renting can be a short-term commitment as opposed to taking out a mortgage, it is still a big financial responsibility. Having the peace of mind that Income Protection can offer, means you can focus on getting better, returning to full health and getting back to work.

How does it work?

Just like any other insurance policy, you will pay a monthly premium to be insured and if you are signed off work for medical reasons which are covered by your policy, you will receive a monthly income payment from the insurer. Most insurers will cover up to 50-70% of your income, which should be enough for rent, bills and food. Usually, Income Protection policies have a waiting period before they start paying out, so you would need to be able to cover your finances during this period – the longer the waiting period is before you are eligible to make a claim, the cheaper your insurance policy will be.

If Income Protection is something you think you could benefit from as a tenant and you would like more information about our products, please arrange a FREE 30-minute discovery call to see how the friendly team at Downton Mortgages and Financial Services can help.

The information contained within was correct at the time of publication but is subject to change.

[1] Census 2021

[2] The Week, 2023