Why renters need to look at life insurance

Royal London has some advice on how people can financially protect themselves...

With newly-released Census data showing that there were nearly 470,000 households in rented accommodation last year, Royal London is urging renters to protect themselves financially.

The number of renters has climbed 5% since 2011, with rents across the country now 8% higher on average than their Celtic Tiger peak. In Dublin, the cost has increased even higher – by an average 13.7%, with €1,855 a month as the average rent in South County Dublin

Leading protection specialist Royal London makes the case that families in long-term rental accommodation need to take personal responsibility to ensure they have the same financial protections as homeowners.

As such, it is encouraging these long-term renters to review their financial capabilities and consider putting their own form of "rent protection" in place, by taking out life insurance policies. They say a good comparable example is when people put mortgage protection cover in place.

Joe Charles, head of proposition, says:

“18% of people in Ireland live in private rental accommodation, over 850,000 people. Some of these renters are families in long-term rented homes because they don’t have the financial capacity to buy their own homes.

"Irish house prices are forecast to rise by up to 5% during 2017 and the first half of 2018, which means that many families may be renting for a long time to come. This leaves those families in long-term rental accommodation in a potentially precarious position.

"For example, if the breadwinner were to become seriously ill or pass away without the appropriate cover their family may struggle to maintain rental payments over the long-term."

"The profile of ‘renters’ in this country has changed significantly," Charles continued. "Traditionally the renting group in Ireland was single people in their 20s and early 30s. Now a growing cohort of families and individuals in their 30s, 40s and 50s are renting at a time when financial security and protection becomes more important as they grow older, settle down, and especially if they have children to look after.”

The cost of protection

As for how people who need to rent could afford a large-scale extra spend? Royal London has outlined a variety of scenarios to give renters an indication of the costs involved:

 

Royal London report that just 40% of the population is estimated to have life cover in place, which – it believes –means that some of the remaining 60% may be renting their home.

Charles concluded: 

"This means that in these households, if the main bread winner was to fall sick, or die, their families may not be in position to continue to pay their rent, as they do not have financial protection in place.

"No one really likes to consider issues relating to their own mortality, or what would happen to their family finances if they were to becomes seriously ill or die. But it’s important that they do, especially if they have a family to consider and their ongoing financial needs, such as rent payments."