Do renters need personal insurance?

While buying a house is a common 'trigger' for getting personal insurance, depending on your circumstances, there can still be good reasons to take out cover while renting.

Here, we look at some of those reasons – and the types of cover that can help you protect your financial future.

You have dependants

If you have loved ones depending on you financially, even if you're renting, some insurance types are worth considering. For example:

  • Life insurance: life cover would provide your family with a lump-sum amount if you were no longer around. They could then use this payout to cover their living expenses, including meeting rent payments in full and on time.
  • Income protection: according to a 2020 survey, one in five Kiwis would only be able to cover their living expenses for up to one week if they lost their jobs, and only 5% could survive financially for six to 12 months. This is where income protection can make all the difference, by replacing up to 75% of your gross pre-disability income if you suddenly can't work due to a serious illness or injury, after your nominated wait period has passed. Again, this could be used to cover your rent payments too – click here to learn more.
  • Mortgage and rent cover: similarly to income protection, mortgage and rent cover provides regular payments, after a specified wait period, if you're unable to work because you're sick or injured. You'll receive the payments until you can return to work or for the payment period you choose, and as a renter, you can usually cover up to 40% of your gross income (to a set maximum).

You have high levels of debt

While you don't have a mortgage, you may still have high levels of personal debt to repay, alongside your rent payments. Would you be able to meet your obligations if you stopped earning an income, or if something happened to you?

Life insurance and income protection may provide the financial safety net you need. On top of this, you may also consider getting health insurance: while this will not give you direct financial support, it could help you afford private medical treatments without having to pay the full amount out of your pocket. It's a great way to protect both your personal and financial health from the unexpected.

You're saving for a home (or other big goals)

Unlike many people think, insurance is not just financial protection for the goals you've already achieved, but also for the journey to get there.

Homeownership is a good example. If you're saving for your first-home deposit while renting, you already know just how difficult it can be to put that money aside on a regular basis, especially now that cost-of-living is rising so fast. For more on protecting your homeownership dream, click here.

In a nutshell, it makes sense to protect your ability to continue saving for the future – be that for a home, a big-ticket item, or even retirement. We've seen how income protection insurance and mortgage and rent cover can help you maintain your lifestyle in times of need. And, if you're saving with a partner, life insurance may ensure that your shared goals are safe and secure.

We're here to help

As you see, even if you don't own a home right now, getting cover can still be a good idea. It's all about peace of mind and finding ways to safeguard your lifestyle, your goals, and your family's future.

Like to find something appropriate for you? Our quote compare tool is a great place to start. But we're also here to answer your questions and help you explore your options. Give our friendly LifeDirect advisers a call on 0800 800 400 or message us here.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

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