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Do You Need Life Insurance If Renting?

December 31 2019 4 min read Blog Mortgage Protection

mortgage protection for renters

Cosy one-bed in heart of city centre. Suits one person, ideally.

€1,500 a month.

A more accurate description is Shoebox, 20 minutes outside of town. Literally isn’t big enough for two people.

No smokers. No craic. No hope.

Right now, renters already face an uphill battle – especially if they’re in Dublin or any of the surrounding commuter cities (which, by the way, currently stretches all the way to include Wexford and Cavan).

Pokey box rooms. Mouldy bathrooms. Tiny flats or a shed at the back of someone’s house with no electricity or Wi-Fi.

We’ve all seen the news. It’s grim for a lot of people. That’s not to say that there aren’t any lovely rentals; of course, there are.

It’d just be remiss of me to write an article about renting and not be honest about it.

Per RTE.ie, over 895,000 people are living in rented accommodation in Ireland. Which is why I’m frequently asked: do you need Life Insurance if you’re renting?

I got this very question in an email from a woman called Lucy, who wrote in (shur aren’t I the Joe Duffy of insurance brokers) with the following:

Hi Nick. I was out with my friends over the weekend. My partner and I are renting as we’re saving to buy, as are most of my friends. One of the girls said she had Life Insurance. We told her she was mad and wasting money…but she made some good points. So, is Life Insurance for renters common? Any pointers would be great… Thank you!

That’s the exact question we’re going to be answering now.

Do you need Life Insurance if you’re renting?

As with many things in insurance (and in life), it depends on your situation. You may or may not have heard about Mortgage Protection. That’s a type of Life Insurance that covers your mortgage: so if you die before you’ve paid your mortgage off, your bank/mortgage provider gets a payment to clear it off. Whoever you leave behind gets to keep the house, but there’s no other money left for them.

As a renter, you don’t need doesn’t apply – but the logic is pretty sound. For most people, the biggest outgoing is their rent and associated bills and whatnot. We all know the drill: get paid and watch all your money immediately disappear again.

The hamster wheel keeps turning. Forever. Until you die.

The joys of capitalism.

You’re probably thinking, ‘hmmm, what would happen if I died or got sick? Who would cover my rent? Would I lose my place?’

And that, my friend, is why some kind of insurance makes a lot of sense. However, the type that makes the most sense for you will depend on your situation, so let’s look at some examples:

Types of Life Insurance for single tenants

If you’re a person who is very familiar with Tinder, Bumble, Hinge and whatever apps are out there – which is to say: single, or very, very bold – and it’s just you and maybe a potted plant or pet or two, you don’t need Life Insurance.

I’m not gonna cod you and tell you otherwise to make a fast buck. It’s tough enough already for renters without that worry.

However, I am gonna ask you to consider your plants or pet – or even yourself here. What happens if you get sick or need to bail from work for a long time? Would you be able to make your rent?

If yes, then you may click out of this blog and send me an email letting me know your line of work so I can consider a career switch.

If it’s a no, then think about Serious Illness Cover (SIC) or even better Income Protection. They both cover illnesses, but in different ways.

With SIC, you get a tax-free lump sum if you get sick with one of the diseases as specified in your policy. So it could cover one type of cancer, but not a different kind – which is why it can be a bit tricky.s

Income Protection, on the other hand, pays you up to 75 per cent of your salary for as long as you need it. Much better shout – though it is more expensive. Think about it! You can read more about choosing between Serious Illness Cover or Income Protection over here.

Lion.ie recommends Income Protection if you’re single and renting, with no financial dependents.

Types of Life Insurance for families who rent

If you have chosen to spawn small versions of yourself in pursuit of love or glory or to live vicariously through them, then this one is for you.

No doubt, you’d probably like to get a mortgage at some point, but it’s very fecking expensive, and we’re living in a delightful housing crisis right now.

If you’re a parent, it’s downright irresponsible not to have some kind of cover. I know life is already mad-expensive.

Trust me: I have three kids and am insured up to my eyeballs because I run my own business. The thought of what might happen if I didn’t, and I died is enough to wake me up in a cold sweat, which is why I bit the bullet and am spending some of my hard-earned spondoolies this way.

Would I rather spend my insurance premium money on pints or a holiday or who knows what else? Of course I would, but I’m paying for peace of mind!

So if you, like me, are ready to make that move, you’ll need to consider which type of insurance you want.

My big piece of advice is this: don’t blow your money focussing on just one type of cover. Instead, be logical about it. You might think the idea of trying to buy Life Insurance cover for a million quid is mildly gas, but you won’t when you see the price.

Life Insurance will be replacing you. What does that look like in real terms to cover the essentials? Let’s say your half of the rent is €1,000 a month. Bare minimum, you’ll want that much cover across 10 or 20 years while your kids are young.

If you’re the main breadwinner, then you need to leave enough behind to cover your family’s rent for the rest of their lives AND replace your income. Or you could leave enough for them to buy a new home.

You should look at Income Protection too.

No income = no rent paid= no roof over your head.

I don’t know if you read what I wrote up above about Income Protection, but here it is again. Income Protection actually pays out while you’re still alive – and it pays you up to 75 percent of your salary up until you can go back to work or you retire if you can’t work because of any illness.

It’s a gem, in the grand scheme of Life Insurance and it could save you from an awful lot of heartache, if something were to happen.

Lion.ie recommends: Get enough Life Insurance so your family can live comfortably until your kids are grown up, and get Income Protection as well, to cover you if you can’t work for any reason. 

Over to you…

No one likes paying for Life Insurance. I’m an insurance broker and I don’t. There are a million other things I’d like to buy instead, but Life Insurance is the one that brings me real peace of mind.

Look, if you’ve got a mortgage and you go into arrears, you’re protected by the Code of Conduct on Mortgage Arrears. You’ll get a grace period of time where you don’t have to make repayments. If you’re a former presenter on RTÉ, you can drag it out for yearrrrs, even if the arrears are over a million quid.

If you’re a renter, your cards are already stacked. Renting is hard. Losing your home (or your kids’ home) would be even harder.

So yeah, I would say this to my dear Aunt Lucy (yer wan who asked the question up top): Life Insurance for renters is more common than you think. It might seem like a mad waste of money, but you’d be surprised how it could save the day.

I’m not yer da, so I can’t do anything more than advise you. (That and, of course, tell you to remember that you can only ever give as much as you have; so make sure you’re always looking after the wellbeing of numero uno.)

If you need any more advice (preferably about insurance!) or have any questions, call me on 05793 20836.

Or complete this questionnaire and I’ll be right back with my recommendation on the types of cover you should be looking at.

Talk soon.

Nick McGowan
lion.ie | making life insurance easier

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