Do renters need life insurance?

More and more people and families are choosing to rent for the long term instead of buying homes, whether it’s due to financial constraints or a desire for flexibility. People tend to assume life insurance is for homeowners, but renters could also benefit from having cover in place. But why exactly would you need cover if you're renting?

Learn more about how life insurance works

Do I need life insurance when renting?

If you have other people who depend on your income, and you don’t already have life insurance in place, you may need cover regardless of whether you have a mortgage or not.

Consider if you were to pass away, what would the financial impact be on your partner? (and vice versa). Not just the loss of household income, but also things like funeral costs. Where would the money come from?

If either of you would struggle to pay for any of this, then life insurance may be worth considering.

Why is it a good idea to have life insurance as a renter?

There are a number of ways in which life insurance could benefit you as a renter, such as:

• Your partner or spouse could use the payout to cover living costs, rent, and bills if you were to pass away.
   

• The money doesn't have to be used to cover rent specifically, but could also be used for other living expenses or to pay off debts.
   

• If you have children, life insurance can provide financial support for their future education or care.
   

• Your family could use the money to cover your funeral costs, which can be expensive.
   

• You can use policies like term life insurance to tailor the length of the policy to match the term of your rental agreement.

What happens to your tenancy if you die?

If you were to die during your tenancy, your tenancy agreement will likely determine what happens next. Note that the tenancy won't automatically end upon your death, instead it could fall to your co-tenant, partner, or family member to continue the tenancy or give notice as required by the agreement.

The Rent Act 1977 states that the tenancy will pass on to another living tenant, such as a partner or family member, if they were living with you at the time of your death. They can continue to live in the property as long as they pay rent during the rental term.

But if you're a sole tenant, with no one else named on the tenancy will pass to your personal representatives as part of your estate when you pass away. This could be the executors of your will or the public trustee appointed by the courts if you die without leaving a will.

Protecting Your Income

Thinking beyond life insurance, It’s certainly worth considering an income protection policy. Injury or illness can happen to anybody, not just homeowners and those with children.

An Income Protection policy is designed to pay a monthly benefit to you to support you if you cannot work because you are ill or injured, but don’t typically include cover for redundancy.

An Income Protection policy is designed to pay a monthly benefit to support you if you are unable to work due to illness or injury, but don’t typically include cover for redundancy.

Income Protection is there to support you in your time of need however it is not designed to make your financial position better if you are not able to work,  with restrictions in place on how much cover you can have. Therefore the money from these policies can help to cover your rental payments, while also maintaining savings and keeping you on track for your house deposit.

One thing to note is that Income Protection is there to support you in your time of need however it is not designed to make your financial position better if you are not able to work. There are restrictions in place on how much cover you can have. Therefore, the money from these policies can help to cover your rental payments, while also maintaining savings and keeping you on track for your house deposit.

Remember, not all conditions are covered, and each provider has a different amount of overall conditions covered within their policy. The ability to claim on a Critical Illness policy is not based on your ability to work, but meeting the criteria set out by the insurance provider as specified on the inception of the policy.

Depending on your situation and budget, the most suited provider for your needs can vary. It’s important to understand the comprehensiveness of a policy is not always linked to the premium. In addition, where one provider may place exclusions on an existing condition or increase the premium as a result of it, others may not.

If you’re renting now, are you looking to get a mortgage one day?

Saving a deposit for a house requires dedication and prudent financial planning. Making sure your income and savings are protected should the worst happen should be factored in as an important part of your planning too.

One specific type of policy you may wish to take out to cover a repayment mortgage is decreasing term life insurance - also known as 'mortgage life insurance'.

How much does life insurance cost for renters?

When it comes to buying life cover, income protection or critical illness cover - the younger you are, the less expensive it will generally be. There are other factors that will affect the cost of your cover such as:

• Your health - including family medical history
   

• Smoker status
   

• Policy type
   

• Policy length
   

• Cover amount

It’s also worth bearing in mind that if you’re at the beginning of your financial journey, there will be lots of changes that will happen over the coming years. As these changes come, so will your insurance needs.

Whatever your situation, there’s always no better time than now to take out life insurance cover, sospeak to Cavendish Online today, who can help guide and support you in choosing the policy that best suits your needs.

Prefer to phone?

Sometimes, it’s easier just to give us a call and speak one-to-one with one of our insurance specialists, who can guide you through the process and support you in choosing the best cover for you and your family. 

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Cavendish Online is committed to ensuring our fees and charges are highly competitive and transparent - so you know exactly what you are paying for when you use our different services. 

We can help you find the most suitable (and affordable) option for your individual circumstances, so we seek products from leading financial service providers - with minimal charge amounts. To find the best policy for you, we won’t limit your search to just one company.