Do renters need life insurance or critical illness cover?

7 minutes

When it comes to taking out life insurance or critical illness cover, you might have questions about whether you need it and what it’s there for

  • It can provide financial stability for your family if something happens to you
  • Homeowners usually have to take out life insurance to apply for a mortgage 
  • Renters can also benefit from life insurance or critical illness cover

Do you need life insurance or critical illness cover if you rent?

If you’re renting your home, you may think you don’t need life insurance or critical illness cover but it can still be important.

Critical illness cover is usually added onto your life insurance policy. It’s there to minimise the financial strain that could be put on your family if you became critically ill. For homeowners, it would help cover mortgage payments or pay off the total completely, depending on your policy terms.

But, this can be just as important for renters too. Whether you make rent or mortgage payments, they’re financial commitments that keep a roof over your head. If life takes an unexpected turn, you’ll want to keep these up.  

Life insurance and critical illness without a mortgage is there to give you peace of mind in difficult situations. For example, if you had a serious illness and had to stop work to get treatment. It’s also there to support your partner or family financially if you were to pass away.

It provides peace of mind if:
  • You don't think your family could manage paying the bills
  • They would struggle with unexpected costs
  • They would need to consider cutting back on the things they enjoy to make payments

When you take out life insurance, it’s the person who’s covered by insurance and not the property you live in. This means that if you move to a new home or change your mortgage provider, you’d still be covered. If you took out a joint policy, both you and your partner would have life insurance and critical illness in place. 

The rental market today

According to Hymans Robertson’s rental market research, the size of the rental market has continued to grow over the past decade, seeing an increase of nearly 61% since 2007. Of all these people, only 7% of those renters have some sort of personal protection in place [1]

As house prices have increased much faster than wages over the years, renting is increasingly becoming the only viable option.

In 2019, around 365,000 of children were born into rented homes in the UK (almost 50% of all children born that year). It’s the first time in almost six decades a child is as likely to be born into a rented home, rather than owner-occupied. Also, families with children privately renting has risen by 94% in a decade [2]. Despite the increase in numbers, renters are still far less likely to have life insurance or critical illness cover in place compared to homeowners. This leaves a lot of families in a potentially vulnerable position if the worst were to happen.

Life Insurance - renters vs. homeowners 

Most homeowners tend to have a life insurance policy as it’s usually a condition of taking out a mortgage. As this isn’t the same for renting, many tenants assume it’s not something they need. But, if you don’t have substantial savings, taking out a policy could protect your family if they’re suddenly unable to rely on your financial support. 

Data from Mintel’s Term Assurance UK September 2020 report suggests that holdings of mortgage holders is more than double that of renters – 61% of mortgage holders compared to just 28% of renters. 

However, it did find that 15% of renters said they were very likely to take out life insurance, more than double those who own a home with a mortgage.

Effects of the pandemic

The pandemic has changed the financial situations of a lot of people. Recent findings from the English Housing Survey said that 35% of private renters reported their household monthly income had decreased by at least £100 due to Covid-19. 

A further, 9% of private renters said they were very or fairly likely to fall behind with rent payments in the next three months, representing approximately 290,000 households [3].

Regardless of whether you own or rent your home, life insurance and critical illness cover can provide you with the reassurance you need to concentrate on the people who matter most. 

At LV= we're here to make life and critical illness cover a little easier. Learn more about our award-winning cover and all of the great benefits of life insurance here





[3] English housing survey – Household Resilience Study, wave 1 June-July 2020