Rental income protection insurance [Quick summary]

  • Income protection pays out a percentage of your income while you’re unable to work due to illness or injury
  • ‘Rental income protection’ or ‘tenant income protection’ simply refers to a policy taken out to help protect rental costs
  • Up to 70% of your earnings before tax could be protected
  • 56% of private renters have no protection in place[1]
  • Income protection starts from 20p-a-day through Reassured ‡

What is rental income protection?

Rental income protection simply refers to a standard income protection policy that’s taken out to help protect monthly rent payments.

Falling ill or injured can be stressful enough, without the worry about of how you’ll continue to pay rent while you’re unable to work.

Thankfully, income protection can help to provide you with a percentage (up to 70%) of your income while you’re off work due to illness or injury.

The monthly, tax-free, payments can allow you to keep up with your rent and other living costs such as monthly bills.

Compare income protection quotes through Reassured. Our advised team can provide you with all the information you need to know and help you compare quotes to find you the best options to protect your rent.

All quotes are fee-free and without obligation.

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Renting in the UK

  • Almost a fifth of UK homes are privately rented
  • The average UK tenant spends around 2/5 of their monthly income on rent
  • The percentage of landlords reporting rental arrears was 35% in Q3 of 2023[2]

It’s argued that renters are in greater need of protection (such as income protection) as they face higher housing costs on average (£658 per month) than those who own their home (£525.90 per month). Despite this, only 3% of renters have income protection in place[3].

Furthermore, 29% of renters surveyed admitted they would struggle to pay next month’s rent if they were unable to work due to illness[4].

How does rental income protection work?

Income protection works by providing you with monthly income payments while you’re unable to work due to illness or injury.

These payments can then be used to help cover monthly living expenses, such as your rent.

Here’s how rental income protection works;

  1. You apply for a policy. During the application you’ll discuss your cover requirements and provide the insurer with some key details about yourself to allow them to assess your eligibility and the price you’ll pay for cover.
  2. Once a policy is in place, you’ll need to pay a monthly premium to keep your cover valid.
  3. If you develop an illness or injury during the policy term, you can make a claim.
  4. If you’re still unable to work once your deferred period has passed (for example, 4 weeks) your payments will commence.
  5. Your payments will continue until you recover and return to work, your payment period comes to an end, your policy term expires or you retire (which ever happens first).

How much rental income protection do you need?

Enter your rental costs and other key to calculate how much cover you might need.

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£723 a month is the average monthly mortgage payment in the UK, with the average monthly rental price coming in at £700.

The majority of our monthly income will go towards rental or mortgage payments.

For this reason, it’s essential to have precautions in place to ensure you could keep up to date with your payments if you weren’t receiving your usual income.

Monthly income protection payments can help to cover this large expense and ensure you can stay in your home.
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According to the Money Advice Service, the average household spends £340 a month on household bills.

This includes electricity, gas, TV and broadband.
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Childcare costs are on the rise with it now costing £137.69 per week for part-time nursery for a child under the age of two.

That’s over £550 per month - is this an amount you’d be able to keep up with if you were unable to work?

Becoming ill could also result in the need for additional childcare while you attend doctors’ appointments or medical treatment.
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The average household in the UK spends around £97 a week on their food shop, totaling £388 a month.

While this may seem like a small amount in comparison to some of the other expenses mentioned, the food shop is often where we try to scrimp and save when we fall on hard times.

Income protection can take care of the cost of your weekly food shop, as well as many other essential costs.
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At the beginning of 2020, credit card debt in the UK was at £2.1 billion, with almost 27 million UK residents in some kind of debt.

Becoming unable to work could make it hard to keep up with credit card or loan payments (including car finance or other financed goods).

Failure to keep up with payments could result in additional interest being incurred or late fees issues - resulting in a higher total needing to be paid.
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The average spent on public transport each month comes to an average of £94.

This includes the cost of public transport, as well as petrol and diesel vehicles.

While this amount may reduce while you’re unable to work as you won’t need to commute there may be additional spending on public transportation if your illness or injury leaves you unable to drive.
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Your total cover estimate

£ 0

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What’s the best income protection for renters?

Any income protection policy could be taken out to help protect your rental payments.

Your estate agent may work with a particular insurer and may recommend you use their services, however you’re unlikely to get the best deal by doing this.

Comparing multiple quotes can allow you to find the right policy to meet your needs at the best price.

Each insurer will have different terms and conditions, so it’s important to go with the insurer that offers the cover that’s right for your needs.

Policy terms and conditionsDefinition
Benefit amount (or monthly benefit)How much you’ll receive on a monthly basis if you make a valid claim. Your benefit amount will be a percentage of your earnings before tax (your gross earnings), often up to a maximum of 70%.
Policy termThis is how long your cover will last for. During the application you’ll decide on a term to best meet your needs, this could be until you retire, but cover must cease by age 70 with most insurers.
Definition of incapacityWhat makes you eligible to claim on your policy. Most policies come with an ‘own occupation’ definition which allows you to claim if you’re unable to do your own job.
Deferred periodWhen making a claim, your payments will commence if you’re still unable to work once your deferred period has passed. Common options include 4, 8, 13, 26 and 52 weeks.
Payment periodHow long a claims period will last for. Options include short-term (which pays out for a maximum of 1, 2 or 5 years per claim) or long-term (which could pay out to you until your policy comes to an end if you’re unable to return to work).
Premium typeHow you’ll pay for your cover. Premiums can be guaranteed (remain the same), reviewable (change at the discretion of the insurer) or age-based (increase each year as you get older).

Why not use the whole of market income protection comparison service offered by our advised team?

A friendly expert can help you find the best option to protect your monthly rental payments.

How much is income protection for renters?

The price you pay for income protection will depend on your personal circumstances.

Whether you rent or own your home isn’t a factor insurers consider when determining the cost of your cover.

The price of your policy is based on:

Below are some example quotes using our whole of market comparison service.

Quotes are based on a non-smoker, in good health, with an annual income of £30,000. The policy term is until age 65 with a 6 month deferred period and 12 month payment period:

Age Vitality
Holloway Royal London
Guardian
20£5.00£5.55£6.05£6.34
25£5.00£5.84£6.55£6.82
30£5.41£6.16£7.55£7.64
35£6.00£6.50£8.85£8.73
40£7.31£7.75£11.06£11.17
45£8.85£10.06£14.51£14.13
50£11.37£13.61£19.04£19.33

As you can see from the table, the price you pay can vary between insurers, highlighting the importance of comparing multiple quotes.

All quotes through Reassured are fee-free and without obligation, so why not get in touch today?

Compare Whole of Market Quotes »

Benefits of income protection for renters

Income protection can have many benefits for tenants and renters, here are the key benefits that we have identified:

  1. Keep up to date with your payments - You can focus on your recovery and not worry about how you’ll continue to pay rent as monthly payments could be used to cover this cost.
  2. Cover household running costs - Your monthly payments could also help you to cover household bills and utilities.
  3. Take the time off that you need - Without some form of financial support, you could feel forced back to work before you’re ready to minimise your loss of income.
  4. Payments aren’t tied to a specific cost - While you can use your payments to cover rental costs, they aren’t paid directly to your landlord. Therefore, if your situation changes or you join the property ladder, your payments can be used to help protect your new circumstances.
  5. Have peace of mind - Ultimately, the points mentioned above help to provide you with peace on mind that you’re protected should the unexpected happen.

Compare rental income protection quotes

Rental income protection can allow you to protect your home should you fall unexpectedly ill or injured.

The monthly payments you receive can allow you to cover your rent and/or the cost of running your home.

Compare rental income protection through Reassured to find the best option for your needs.

Our advised service can help you compare quotes from the whole of the market, finding you the best available deal.

Compare fee-free quotes today.

Save Money » Compare Fee-Free Quotes

Sources:

[1] https://www.covermagazine.co.uk/news/4348048/half-private-uk-renters-protection

[2] https://www.uswitch.com/mortgages/buy-to-let-statistics/private-rental-statistics/

[3] https://protectionreporter.co.uk/renter-protection-gap-revealed-as-just-3-take-out-ip.html

[4] https://healthcareandprotection.com/a-third-of-uk-tenants-would-struggle-to-pay-rent-if-they-fell-ill-lifesearch/

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