With the percentage or renters increasing, insurance conversations become vital
Over the last decade the amount of people renting property has slowly increased. The government have tried to combat this with several different policies such as Help To Buy ISAs and stamp duty tax breaks for first time buyers. They have also slashed tax benefits for landlords to make being a landlord a less profitable and therefore less desirable exercise. It all seems to be in vain though as the numbers creep up. With this, protecting renters comes to the forefront of the conversation.
With the increase in renters in the UK, the conversation of insurance becomes more relevant. Most renters think that because they have no financial ties to the property, that they are relatively safe. This, unfortunately, could not be further from the truth. At the end of the day if you fall ill and don’t have the finance to pay your rent, landlords have increased powers to make you homeless. Let’s look at some ways protection can make sure this does not happen.
How and why the rental market has grown in recent years
Protecting renters has been something we’ve been advising on for a long time. The difference is that in recent years the rental market has been bigger than it has ever been. This is mostly down to the sharp increase in the average UK property value over the last 20 years. What this increase has done is basically meant that it’s less and less accessible for buyers to purchase homes as the deposit needed grows and grows. Alongside this average rentals have increased meaning people who do choose to rent have less disposable income. With less disposable income comes less ability to save and therefore purchase a home.
This means more and more renters enter the cycle of perpetual renting despite the government’s best attempts to make buying more attractive and lucrative. The simple issue can be found when you look at the average wage over the last 40 years versus the average house price.
The need of tenants to be fully protected
So we know more people are going to rent. But a lot of renters are not considering the financial implications that come with this. It’s all well and good when you are in work and have finance to pay your landlord each month, but what happens when you can’t? Do you think your landlord will let you stay there for free? It doesn’t work that way. Let’s take a look at two common scenarios below where two different types of protection can keep you housed. We’ve been protecting renters with advice on this for many moons.
Paying you whilst you are ill & off work
Sick pay is included in some employers contracts but not all. Even then, it’s often half pay for a certain amount of time and full pay for a specific period. This is often only given to employees after a certain length of service. Even worse is the self employed predicament. They have absolutely no cover should they fall ill and can lose earnings from day one. This is where income protection comes in to save the day.
What income protection does is it pays you a monthly tax free sum should you be off work ill. This can kick in from day one or be deferred for up to 12 months, depending on your circumstances and needs. This financial safety net means you can continue to pay your bills and rent should you not be able to work. Giving you the breathing space and time to focus on a full and proper recovery.
Leaving a monthly allowance to your family should you pass
Life insurance pays out a lump sum that can be very handy when a family member passes away. But what about a regular income to keep the family in the home? This is often what you miss as soon as a family member passes away, their regular monthly income that was needed to pay bills, put the kids through school, buy clothes and even pay the rent.
Family income benefit insurance is where that gap can be filled. Often this insurance policy is priced very well and provides the survivors with a tax free lump sum for a certain amount of years. With this money the family can rest at ease knowing that bills, food and rent are covered. Giving them time and space to grieve properly at the loss of a close loved one.
Arranging a protection specialist to look at your financial scenario
Everyone’s own financial circumstances are different. When it comes to protecting renters though, it’s best to speak to an expert. With many years of experience in our team advising clients from all walks of life, we are best placed to have these conversations with you. We’ll start with an initial chat where we go over your circumstances and needs and we will work from there. As we go along the process we will recommend coverage that suits you and your budget. The best part is, our insurance advice is completely FREE of charge. Contact us today to discuss this further.
Equity Release plans are not right for everyone and it is important that you fully consider your options and receive independent financial advice before making a decision. It is also important that, if you do decide to use an equity release product, you choose one that meets your needs.
Remember that taking an equity release plan is generally a long term option. However, there are flexible plans available that may fit your varying needs and some will allow you to repay in the future without penalties.
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