Protection Report PROTECTION FOR

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1 Protection Report PROTECTION FOR PRIVATE Tenants June 2014

2 protect the future of your HOME Tenants own fewer financial products than home owners, but many are keen to step on the property ladder.

3 Ours is a curious nation, one that is fixated on owning property unlike many of our European neighbours. To us Brits, owning property seems to be the point at which we engage with our finances, as if receiving the keys for that first property marks the beginning of our financial lives with everything else slotting in around that change in status. Our research, conducted by YouGov, into a nationally representative sample of over 5,000 people found that tenants are significantly less likely to have a company or personal pension, a cash ISA, a stocks and shares ISA, or other investments than their home owning peers. In fact, only 78% of private tenants have a current account compared with 85% of those with a mortgage. Many private tenants are keen to get a foot on the property ladder so stretch themselves to save for a deposit and make ends meet on a day-to-day basis. It s a particular squeeze when both rental prices and the cost of living are increasing at the same time. Which of the following financial products do you own? 85% 42% 44% 4 24% 12% 78% 39% 3 24% 11% 4% Current account Company pension Cash savings account Personal pension Cash ISA Stocks and shares ISA 22% 15% of private tenants don t have a current account compared to of mortgage holders. 3

4 Which of the following financial protection products do you own? 28% 50% 1 4% 15% 3% 5% 26% Financial protection, life insurance, critical illness or income protection Life insurance Income protection insurance Critical illness insurance None of these No wonder, then, that there is a tendency for tenants to be under-insured, both for reasons of cost but also because deep down perhaps we feel that if we don t own property, we don t really have anything to protect. Just of private tenants have financial protection, compared with 28% of those with a mortgage. And this low number has dropped from 9% in

5 Worryingly, awareness of these kinds of products is also lower among tenants. More than 80% of people in the UK have heard of critical illness cover, but that drops to 69% of private tenants. And for income protection, once again, around 80% of us have heard of it, falling to just 6 among private tenants. For those tenants who have managed to save money towards a first deposit for a home, inability to work through illness or disability may jeopardise that first move on to the property ladder if they have to rely on their savings to cover day-to-day living costs. With 3% of the population being diagnosed with a critical illness in the last two years, the need to consider protection needs remains vital. Which of these financial products had you HEARD of before today? Critical illness 88% 69% 20% 5% 11% Income protection 85% 8% 6 21% 12% Yes, I have heard of this. No, I have not heard of this. Don t know. 5

6 Income protection is one insurance solution that can provide financial protection for private tenants in the event of illness or disability. Currently this type of insurance is held by just 5% of private tenants. s don t have income protection for a number of reasons, mainly cost and awareness. Many feel they can t afford it, some don t consider the eventuality of getting an illness and others don t know about the types of product that could help if they did. Insurance providers have a real opportunity to drive home the important message that tenants, more than almost any other group, have a real protection need and a lot to lose by not having adequate financial protection in place. However, to achieve this, providers must be able to demonstrate how a protection plan can support the private tenants ownership dream by helping to protect what matters most to them. Income protection is held by just 5% of private tenants. 6

7 life feels better when you have a plan 54435B 06/14 Scottish Widows plc. Registered in Scotland No Registered Office in the United Kingdom at 69 Morrison Street, Edinburgh EH3 8YF. Telephone: Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number