Legal & General has developed a protection product designed specifically for the private rented sector.
The launch today (June 11) comes after the provider completed a pilot phase of the Rental Protection Plan for tenants in conjunction with the Mortgage Advice Bureau.
The plan offers a choice of three products — rental income protection, rental life insurance, and rental life insurance with critical illness cover.
The rental IP plan provides finances to cover rent payments in the event of an illness or incapacity which leads to the inability to work and loss of income, while the life cover pays out a lump sum or monthly benefit at the time of the consumer's death or terminal diagnosis.
The life insurance with CI option means such a pay-out is also payable if the consumer suffers from specified critical illnesses in the plan.
All three policies give tenants the option to change their cover without further medical underwriting if their rent increases, they relocate or otherwise change tenancy agreement.
The cost of premiums will be dependent on individual circumstances and requirements but L&G has not introduced any different rates for the plan compared to its standard products.
Currently only available through intermediaries in the Mortgage Advice Bureau, L&G plans a full market launch later this year.
The provider stated the plan’s development was part of its commitment to growing the protection market and addressing the "underserved private rental sector".
According to a survey of 5,000 tenants by Knight Frank, nearly a quarter of UK households are expected to be in private rental accommodation by 2023, with those aged 35-49 making up the largest proportion.
Craig Brown, director at L&G Intermediary, said: "The protection needs of [renting] 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."
Mr Brown went on to say that tenants were an under-served group in the protection market and that L&G wanted to help the intermediary market better address tenants’ needs.
Peter Brodnicki, chief executive of Mortgage Advice Bureau, added: "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."
Chair of the Protection Distributors Group, Alan Knowles, said the industry often saw developments in the protection market for insuring mortgagees but rarely any innovation for protection renters.
He said: "It’s refreshing to see L&G and the Mortgage Advice Bureau specifically developing the Rental Protection Plan to target and work for renters. There is a huge drive for the protection industry to engage millennials and generation Z and developing products like this is certainly a step in the right direction."