Millions of families across the UK could be putting their financial futures at risk, according to a new study by Aviva.
It studies the increase in the number of people living in rented accommodation and revealed that renters are far less likely to have certain financial products than home owners.
This could potentially make them financially vulnerable in the long term, as the percentage of people with some key products such as life insurance, savings accounts and pension savings was lower among those in rented homes.
Renters lacking financial protection
People with a mortgage had life insurance in 51% of cases, according to the study, compared to just 23% of those in rented accommodation.
These sorts of financial products are in place to provide a level of cover on assets and finances should something go wrong.
Similarly, products such as critical illness cover and income protection were found to be more popular among those in mortgaged homes rather than rented ones.
Some 13% of mortgage owners had income protection yet only 2% of renters did, while there was a 16% difference between those with critical illness cover depending on their situation.
Given that an estimated 9.3 million households in Britain find themselves in rented accommodation, it could mean around seven million households are unprotected, should income disappear through critical illness, injury or death.
What about other financial products?
Pensions can be an essential part of planning for retirement, yet there was also a notable difference in the number of people with private or employer pensions based on their housing set up!
Just 12% of those renting have a private pension compared to 27% of homeowners, while 28% of tenants had an employer pension compared to 59% of homeowners.
The use of savings accounts and ISAs was also down among those in rented properties, with 53% of people having a savings account and 29% of people with an ISA.
That compared to 70% and 52% respectively among those with mortgaged homes, suggesting greater financial awareness among those who live in at a settled location.
Contents insurance was also less likely to be held among tenants, with 40% compared to 73% opting for this sort of cover.
Are other financial options available?
Renting a property provides a great deal of flexibility and is often more affordable than making mortgage repayments.
However, it should not have to mean that families become more vulnerable as a result, which requires families to consider the various financial products that are available.
Income protection can be essential should something go wrong, while many products can be made affordable with good financial management.
Using a prepaid card to limit spending on certain items could be one way of affording such items, as only funds on the card can ever be spent.
There is no credit facility, so building up debt is not an option while cards can always be topped up if necessary.
Essentially a prepaid card could be used in a similar fashion to a debit or credit card, but it would enable a tighter limit to be placed on spending.
