Following on of our recent blog articles where I discussed the benefits of Income Protection, I noticed an increase in queries regarding the broader issues of financial security should ‘the worst’ happen and a person’s income was compromised. For example:
Q I AM currently a long-time renter with no short- or medium-term prospect of purchasing my own home. I’ve heard the term ‘mortgage protection’ (i.e. a form of life insurance, designed to pay off the outstanding balance on a mortgage in the event of death), and understand the peace of mind that provides homeowners. As a renter, I couldn’t help but worry about what would happen to my family if something was to happen to me. How would the rent be paid? Who would pay the rent? Can you even get protection as a renter?
A YES, you can get protection as a renter and ‘rent protection’ is just as important for renters as mortgage protection is for homeowners. Rent protection can be taken out as a form of a Life, Serious Illness, and/or Income Protection policy.
Unlike our continental European counterparts, where renting is commonplace, many Irish people still consider the prospect of owning one’s own home the standard to strive for. That said, Irish society is changing, and long-term renting is increasing while home ownership is decreasing.
Traditionally, the demographic of renters in Ireland was single people in their 20’s and early 30’s – often students, young professionals or those passing through on contract work who usually rented for short-term periods. Various things, including the recent pandemic, as well as rising building costs, negatively impact the supply of housing to purchase, making the transition from renting to home ownership more challenging than ever.
Consequently, this traditional demographic has grown to include families and individuals in their 30’s, 40’s and 50’s who are renting long term. For this cohort, financial security and protection will become more important as they age, especially if they have a family to provide for.
The truth is long-term renters will be vulnerable if they were to experience an accident or illness because this could have a significant impact on the household’s ability to make rental payments. I would encourage renters to consider the implications for them and their family if they do not have protection in place to cover them.
With the right type and amount of insurance in place, all renters can protect themselves financially if they are unexpectedly unable to pay their rent.
Getting financial advice from a broker, on the right policy for you can ensure financial support which will help pay for rent and other ongoing expenses if they were to get seriously ill or pass away.
In today’s climate, it is especially important for long-term renters to consider putting their own form of ‘rent protection’ in place by taking out a Life, Serious Illness and/or Income Protection policy. Life Cover can give protection similar to how mortgage protection works (i.e. protecting mortgage holders with a lump sum payment, if a policyholder was to pass away) providing peace of mind for long-term renters and ensuring rent or other outgoings can be maintained by the family should anything happen to the breadwinners. If you are unable to work due to illness or injury, Income Protection can provide a monthly wage until you are able to return.
In my experience, the main reason people do not consider taking out cover is because they consider it too expensive. They wonder ‘how can I afford to pay for another expense on top of my current outgoings?’ but the majority are surprised to learn how little it can cost per month to have protection in place.
If you are currently renting, now is a good time to take stock of your financial capacities. You can speak to a financial broker to find out more about the financial protection you can put in place to best meet your individual needs.
This article aims to give information, not advice. Always do your own research and/or seek out advice from a financial broker before acting on anything contained in this article.