In January, the FTSE 100 company unveiled a 9pc fall in UK sales to £12.2bn against what industry experts described as “an increasingly difficult economic backdrop”. Reports suggest that during the fourth quarter, life and pensions sales declined 25pc to £2.4bn.

Recent studies show that millions of Britons are not prioritising life insurance cover, despite the risk of leaving their families and dependants financially exposed.

A research by the Post Office found that nearly 36 million (75 per cent) adults in the UK have no life cover. Respondents who have avoided life insurance cover said that a major life-changing event could force them to take out a life policy.

The slide shows that many Britons are spending less money on life insurance and other savings products since the economic gloom struck. Job losses are also on the increase and although many employers give comprehensive protection packages which looks after a family when the employee is ill or dead, cover will cease immediately one leaves employment.

Death in service benefits are usually a combination of lump sum protection and includes a widow’s or widower’s pension. This is what would normally constitute the majority of life insurance cover for a policyholder. As a result, redundancies or any period of unemployment could potentially leave your family vulnerable.

What you could do

If you are a policyholder, it is worth considering whether or not you need to replace your life insurance benefits. One of the steps to take include setting up a combination of term cover which will pay out a lump sum if death occurs within a set time period, and Family Income Benefit, to pay out a tax free monthly income spread over a given period.

Always ensure that the any life cover you take out is set at the correct level, and market experts are advising people to seek professional guidance on the matter before making any final decisions. It is vital that you ensure policies are written in trust as a way of guaranteeing that any pay outs made to the beneficiaries is done in a fast and tax efficient way possible.

Policyholders should bear in mind that the policies work on the same basis as any other insurance such as car or home which means that cover remains in force as long as premiums are maintained.

For those who leave employment and your next employer provides adequate insurance, then you can cancel the policies and the cover will lapse. In cases of a loss of sickness or accident cover, some employers will offer an income replacement policy, if you are unable to work because of ill health.

What not to do

Industry experts believe that cancelling a life insurance policy is a bad decision particularly in the current economic downturn. Market sources say that recession-hit consumers should not cancel their protection policies because replacing them could prove expensive.

Life insurer, Prudential, says that the cost of cancelling an existing policy and replacing it in a few years could run into thousands in additional premiums over the term, because protection insurance is likely to become more expensive as you grow older.