New research from insurer, Royal London,has revealed that 5.8 million working private renters do not have a plan B in place to cover their rent if they or someone in their household became too ill to earn an income for three months or longer.
Worryingly nearly half (48%) of these people have never thought about how they would cope financially if they were too ill to work.
The survey of over 2000 UK adults revealed that over a third (39%) of working renters have no savings at all, compared with around a quarter (23%) of the wider population. Nearly three in five (58%) of renters have less than £2,000 in savings. The average amount of debt per renter is over £4,600; nearly a third (32%) of working renters owe between £2,000 and just under £10,000 with 14% owing £10,000 or more. So not only do renters need to consider how they would pay their rent if illness struck, they would also need to find the money to pay the debt if they were too ill to work. These findings highlight just how far off the dream of owning their own home is for a lot of renters.
Working renters were asked what steps they would take if they were ill and couldn’t work for three months or more; nearly half (48%) would apply for state benefits, just under half (45%) said they would reduce their household expenses, and around a third (36%) said they would use their savings – fewer than one in twenty (4%) said they would use an insurance policy such as income protection. Over a third (37%) would speak to their partner, friends or their family to seek help, with only 17% choosing to speak to a financial adviser if they were facing financial hardship.
Jennifer Gilchrist, Insurance specialist at Royal London said: “Our research shows the average renter owes nearly as much in debt as they hold in savings, this highlights that the dream of owning their own home is a long way off. Only three in ten renters would receive full pay if they were ill and less than one in ten have an insurance policy such as income protection that could provide a monthly income if they were ill. Just over a third of renters said they could afford to live for fewer than three months if they couldn’t work, so they really need to think about what their financial plan B would be.
I would urge renters to look at their budget to see if they could reduce their outgoings so that they can start the savings habit, no matter how little they can afford to put away this will help to provide a financial cushion if illness struck. The results show just how financially vulnerable renters would be if they were not able to work.”