New research suggests that millions of people renting a home in the private rented sector on the UK do not have a plan B in place to cover rent payments if they became too ill to work for three months or longer.
The analysis from mutual life insurer Royal London also shows that 48% of those with no plan in place have never thought about how they would cope financially if they were too ill to work.
Overall 39% of working tenants have no savings at all, compared with 23% of the wider population and 58% of renters have less than £2,000 in savings.
The average amount of debt per renter is over £4,600 and 32% owe between £2,000 and just under £10,000 with 14% owing £10,000 or more.
The firm suggests that 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.
The report also suggest that the findings of the survey 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 with 48% saying they would apply for state benefits, 45% say they would reduce their household expenses, and 36% say they would use their savings.
Just 4% say they would use an insurance policy such as income protection, 37% say they would speak to their partner, friends or their family to seek help, and 17% say they would speak to a financial adviser if they were facing hardship.
‘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,’ said Jennifer Gilchrist, insurance specialist at Royal London.
‘Only three in 10 renters would receive full pay if they were ill and less than one in 10 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,’ she pointed out.
‘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,’ she added.
