“We would like to see more advisers building closer relationships to estate agents to bridge this gap. A tenant that has income protection in place must be far more desirable for all involved.
"As a landlord, would you really want to evict a tenant who could not afford to pay rent because they were too ill to work? From the estate agent's point of view it would reduce the number of tenants on the book that might [enter into arrears] and can help build a better relationship with those tenants.”
Education is key
There are clearly products out there to help renters, but what benefit are they if the people that need the cover are not buying them and how can advisers help to bridge this widening gap?
Kathryn Knowles, managing director of Cura Financial Services, says education and engagement is key.
“A good start would be to engage with landlords and estate agents. Inform them of the benefits of protection, that if their tenant falls ill and has income protection, their rental fee is still likely to be paid,” she adds.
Paul Shearman, proposition director, at The Openwork Partnership, agrees that collaboration between advisers, estate agents, letting agents and landlords is critical to increase take-up insurance cover.
And while there is still a long way to go, he has seen growing evidence that moves are being made on this front.
He cites the creation of risk reports detailing the likelihood of being unable to pay rent or maintain living standards during future years as a result of sickness or accidents, and the increasing use of guaranteed insurability options (GIOs) within income protection policies to respond to renters needs for flexibility.
He says these types of shift should increase advisers' effectiveness in engaging and positioning protection with renters moving forward.
>If the events of the last 12 months have taught us anything, it’s that we are all a lot more vulnerable than we thought we were. Income protection will keep the cash flowing when the income stops.--David Mead
Chapman says he has heard of many advisers partnering with letting agents to provide referral services that offer protection advice to tenant clients.
“This is a potential win-win for all involved,” he adds. “The letting agent has access to a new supplemental income stream; the adviser gains access to new potential customers with whom they can build long-term relationships.
"The tenant gains financial security and the ability to remain in the property in the event of incapacity, and the landlord gets assurances that the rent will be paid each month regardless of the tenant’s ability to work.”