Not having enough money is most people's biggest worry – yet the majority do little to safeguard their situation by building an effective safety net.

Over 2.6 million adults are unemployed and more are likely to lose their jobs in the coming months.

Serious ill-health can strike at any time. Last year, insurance giant Aviva paid out over £1.2 million a day on life and critical illness policies. The average age of its female critical illness claimants was only 44, while the typical man was 46.

Half the life-cover claims paid out in 2011 by Scottish Provident were to people under 55. Jennifer Gilchrist of Scottish Provident says: "Our claims figures are a stark reminder about the very real need for individuals to look after their and their families' financial livelihood throughout their whole lives."

Yet, according to Aviva, two-thirds of families have no life cover, and almost half of those who answered a savings survey by insurer Bright Grey admitted they had less than £1000 in accessible emergency cash. Nearly a quarter had none at all.

A quarter of respondents said if their household's main breadwinner was diagnosed with a serious illness, suffered a disability or died, the family would need to cut back drastically on living costs, while a further quarter simply wouldn't know what to do.

Matt Morris, senior policy adviser at independent broker Lifesearch.co.uk, believes there are two main reasons for being poorly prepared.

He explains: "Unless they've had a close friend or relative experience some kind of tragedy, most people think it won't happen to them.

"Or they tend to think that if it does, the welfare state will help. But the welfare state provides only a very basic safety net; it won't enable them to maintain their lifestyle – only protection products will do that."

The key is to choose the right ones for your needs. Morris says: "If you have children or other dependents, you need to think about life insurance."

But he adds: "The main thing you need to protect is your income, because you're more likely to get ill before you retire than to die.

"Check what you're getting through work though – if you already have income protection, you won't need to take it out."

More people take out critical illness insurance than income protection, but Morris points out: "Critical illness only covers a specific number of problems and it's a one-off payment – you can't claim again.

"Income protection will pay out if you stop earning a salary, and once you go back to work, you can claim again if you need to."

CASE STUDY

Cara Lewis took out life insurance when she and husband Stuart bought a house together.

The 36-year-old Jobcentre adviser says: "We used to live in a tenement flat in Edinburgh that was in Stuart's name.

"When we moved to Musselburgh to buy a bigger place together I started to think: what if something happened to one of us?

"We asked our financial adviser to look at what was available and he suggested I go with Scottish Provident. Stuart's also got critical illness cover. I haven't, but I would get sick pay through work."

Cara and Stuart, a 34-year-old civil servant, have a daughter, Madeleine, who is now four-and-a-half, and Cara feels it may be time to review their situation.

She says: "We need to sit down and look at what cover we've got and see what we really need.

"Madeleine goes to school this year and we won't be paying nursery fees any more, so we might think about saving more, too."

PREPARING FOR THE WORST

Life insurance

A whole-of-life policy gives indefinite cover, paying out a lump sum whenever you die or are diagnosed as terminally ill.

A term policy, which runs for a specified period, such as the length of a mortgage, is generally much cheaper.

Decreasing term cover, where the sum insured falls as the years pass, costs less than level cover.

Family income benefit provides a regular tax-free income for a set number of years, instead of a lump sum.

Critical illness

This form of insurance is often tacked onto a life policy. It pays out a lump sum on diagnosis of any one of a range of serious conditions, including many cancers.

Income replacement

For most people, an income replacement policy, which pays out monthly if they become unemployed or can no longer work, is a better investment, as it covers far more conditions.

Payments continue indefinitely and, provided the premiums are maintained, if you return to work but fall ill again or lose this job too, you can claim again.

The self-employed should take sickness cover only, as they won't be able to claim for unemployment without winding up their business.