More than one in five (23%) Brits with savings say they wouldn't last longer than a couple of months if they were unable to work, yet less than one in 20 protects their income, according to research from Scottish Widows.
More than 80% of the 5,000 people polled said they have heard of life insurance, income protection and critical illness cover.
However, just one in 10 (8%) have a critical illness policy, compared with almost half (48%) who have taken out home insurance.
The research also found that one in seven have been affected by critical illness, and more than a third (37%) rely on two incomes.
Out of those affected by critical illness, 42% said they had to make lifestyle changes in order to cope with the financial impact, while only one in 20 had a policy in place.
Out of those questioned who said they had to reduce outgoings or build extra money for extra living expenses in the past 12 months.
Over a quarter (27%) chose to cut down on gifts for family and friends while 27% said they avoided putting the heating on. One in five reported that they have sold items online (e.g. Gumtree or ebay) to generate extra cash.
Those polled also expected their financial priorities to change the most when buying a property (19%), as a result of government spending cuts and welfare benefits (18%), and having children (15%).
However more than a than a third (35%) are carrying non mortgage debt over each month and this rises to 52% of 25-34 year-olds and 48% of 35-44 year olds.
Almost two-fifths (39%) said they considered providing financial security for their family in the event of death as essential - a drop from more than half in four years.
This is compared to eight out of 10 (80%) who considered broadband and mobile phones (71%) essential for daily living.
Esther Dijkstra, head of protection at Scottish Widows, said: "The ongoing struggle between short versus long-term financial priorities continues to threaten people's financial resilience, despite an awareness of the key points at which these change and the risk of savings running out should they become unable to work.
"Our research shows that the majority (70%) of consumers look for value for money when making decisions about protection and are doing more to research their options online, yet the real lifetime value comes with investing in a safety need to suit people's individual needs."
She continued: "Educating and informing consumers will not only build a clearer understanding of protection products and the importance of getting the right advice, but also help to improve the UK's financial resilience which will be of increasing significance from April next year when working age welfare support for mortgage interest and bereavement benefits are scheduled for reform."
