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, according to new research from Royal London.
The insurer found that 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 39% of working renters have no savings at all, compared with 23% of the wider population. 58% of renters have less than £2,000 in savings. The average amount of debt per renter is over £4,600; nearly 32% of working renters owe between £2,000 and just under £10,000 with 14% owing £10,000 or more.
Working renters were asked what steps they would take if they were ill and couldn’t work for three months or more; 48% would apply for state benefits, 45% said they would reduce their household expenses, and 36% said they would use their savings – 4% said they would use an insurance policy such as income protection. 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 spokesperson 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 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.
“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.”