Legal & General has announced a foray into tenant protection insurance, carried out in conjunction with Mortgage Advice Bureau. According to press reports, L&G is the first major insurer to offer a protection type product to tenants.
The plan offers the choice of three products: ‘rental income protection benefit’, ‘rental life insurance’, and ‘rental life insurance with critical illness cover’.
There is definitely an expanding market for this, as tenants are now obliged to pass strict affordability, plus lifestyle and credit checks, before signing new tenancy agreements. Recent legislation also suggests that the private rental market is heading towards a marketplace where longer tenancies are guaranteed in law, no matter who wins the next General Election.
Which is great for renters, so long as you can rustle up the rent every month, because defaulting may well cost you a long term tenancy in the future. That’s where the insurance kicks in, if say you have to change jobs and it takes three months to get a salary payment into your bank account, or you have an accident and cannot work full-time.
There’s a great opportunity for the insurance industry here, with options like PAYG and menu style add-on options, all sold via a smartphone app.
The new plan will allow tenants to increase the amount of cover if their rent increases, if they relocate, or if they change their tenancy agreement – without the need to go back through medical underwriting. This product is currently available through MAB intermediaries only.
Legal & General Intermediary director Craig Brown says: “Nearly a quarter of UK households will be renting by 2023 and the protection needs of these families will need to be met by products and solutions specifically designed for them.
“First-time buyers usually receive a protection ‘nudge’ when they seek mortgage advice, but most renters do not benefit from the same prompt. This leaves tenants facing a greater risk of vulnerability due to unforeseen circumstances.
Mortgage Advice Bureau chief executive Peter Brodnicki adds: “The tenant market is completely untapped with the current focus totally on protecting the landlord. Tenants have the same outgoings as homeowners, and so keeping both groups in their home should be our priority.
“Legal & General worked closely with us to deliver a product we felt would resonate with tenants, and we have found that it has done that.”