A new Aviva study of more than 2,500 British adults suggests that those living in rented houses are far less likely to have certain financial products including life insurance, savings accounts or pension savings, than those living in mortgaged homes.
Only one in four (23%) people living in rented accommodation said they had life insurance, while just 3% had critical illness cover and 2% had income protection. Given that around 9.3 million households in Britain are living in rented accommodation, this potentially leaves almost 7 million households unprotected, should they lose an income through critical illness, injury or death.
The Aviva study also found that more than a third of people living in rented accommodation - including 35% of 35-44-year olds and half (50%) of those aged 45-54 - believe they will never be in a position to buy a home.
And although 15% of renters say they are saving for a deposit with plans to buy a home in the future, the research reveals that this can often be a long-term goal, with 41% of these savers saying they have lived in rented accommodation for more than five years.
While renting is commonly seen as the preserve of younger people, the proportion of people in their late 20s and 30s is growing. The private rented sector in England has grown by 889,000 households since 2008-09, including 434,000 additional households in the 25-34 age band. In 2008-09, a third (31%) of all households in the 25-34 age band rented privately; by 2012-13 this had increased to 45%.
The main reason given for renting is affordability - 56% say they cannot afford to buy a house, but it is clear that many families are putting down roots in their rented homes. Nearly a quarter (22%) say they are renting because the house has become their family home, and one in 10 (8%) say they chose to rent because the house is in a good area to raise a family.
However, the research also shows that renters are more likely to move around than those with a mortgage. Homeowners had moved on average 1.8 times over the last 10 years, compared to private renters who had moved 3.0 times.
Louise Colley, protection director for Aviva says:
“Renting offers many benefits such as affordability and flexibility, but there’s a concern that many renters are being left financially exposed. When someone takes out a mortgage they are often asked to consider how they might pay it if they were seriously ill or if sadly an income-earner was to die. This can often prompt people to take out protection products like life insurance and critical illness cover.
“If a family rents, these conversations may not happen, so there’s a risk that if a renting family loses an income, they may not have the protection that could help to pay the rent and cover the bills. Whether paying a mortgage or renting, we’d encourage every family to think about the ‘what ifs’ and take steps to make sure suitable cover is in place.”
