Life insurance cover gap revealed for UK renters

19 Jun, 2019

19 Jun 2019 A new study from Sainsbury’s Bank reveals that renters are significantly less likely to have life insurance or critical illness cover, with just 26% of renters taking out a policy in comparison to 41% of homeowners.

In the past 10 years, the number of households renting privately with children has risen by almost 800,000 to nearly 1.6 million. Renters are being urged to consider what their partner or family would do if they unexpectedly needed to cover housing costs such as rent and factoring contributions and other monthly out goings if the unthinkable was to happen.

Despite being less likely to have life insurance or critical illness cover, 54% of renters  are more concerned than homeowners (48%) about the financial implications should they pass away before old age. Also 21% of renters living in private accommodation worry about this situation on a weekly basis compared to 16% of homeowners. 

The survey found the top reason renters do not have life insurance is they believe they don’t have enough equity or money to have a life insurance policy (29%), in comparison to homeowners (11%).

Main reasons renters don’t have life insurance % of UK adults
I don’t have enough equity/ money to need to have life insurance 29%
I haven’t got around to it yet 18%
I have no one who needs money in the event of me becoming ill or dying 14%
I’m too young to have life insurance 13%
There are no serious hereditary illnesses in my family 9%

Important life events are the top reasons people decide to financially protect themselves. Buying a house is the main reason people chose to purchase life insurance (34%), followed by other memorable life stages, such as having a child (17%) and getting married (12%). Unfortunate experiences, such as becoming ill (9%) also prompt people to take out a policy.

Karen Hogg, Head of Insurance at Sainsbury’s Bank said: “As more people are raising families in rented accommodation, we need to shift our thinking in terms of life and critical illness cover only being relevant for people with a mortgage. That’s just not the case. All people need to consider what protection their partner and children may need should anything happen to them, including how to cover rent, bills and household essentials.

“Our research found that people are more likely to worry about the financial implications of their passing rather than taking action to alleviate any concerns and protect themselves for the future. Taking out a life insurance policy can help give you peace of mind and ensures you have the financial protection in place.”

Sainsbury’s Bank offers five top tips on life insurance

  1. Ignore common misconceptions: A common assumption is that you have to be a certain age before you get life insurance. This is the reason preventing nearly one in 10 from taking out life insurance, but anyone with financial responsibilities should consider life insurance regardless of age.
  2. Renters must prepare: One in five (21%) renters worry every week about the financial implications of their passing. Instead of letting stress set in, it’s important to turn that worry into action, something as simple as looking into a life insurance policy can offer relief from financial concerns.
  3. Look at lifestyle choices: Small changes that can make improvements to your health and wellness, such as quitting smoking, may also result in cheaper life insurance premiums.
  4. Choose the right cover: It’s important to know the difference between life insurance and critical illness cover. Life insurance provides a lump sum payment upon passing during the policy term that can be left to loved ones. Critical illness cover can provide a cash sum if you are diagnosed with or undergo a medical procedure for a specified critical illness during the policy term, to help financially during your recovery. Both can help ensure that your family’s financial prosperity will be protected in a time of need.
  5. Check your calculations: Before buying a life insurance policy, calculate how much cover you will need. In just four easy steps, Sainsbury’s Bank Life Insurance provides a helpful Life Insurance calculator which can  help you discover the amount of life cover you need and calculate how much your monthly premiums could be.