As the credit crunch hits home, millions of Britons are likely to be tightening their purse strings and cutting back on things not deemed an absolute necessity.

While exercising in the local park instead of going to the gym or packing sandwiches to work rather than heading for a pub lunch every day are measures to be admired in this time of economic uncertainty, a worrying number of people are more likely to take risks when it comes to insurance.

Unlike car insurance, which is obligatory, and travel or home contents insurance, which consumers are consistently reminded of the need for through incessant advertising campaigns, income protection insurance may be one of the first casualties of this new attitude of frugality, with people weighing up the odds and deciding that the worst-case scenario will never affect them.

Indeed, according to recent statistics published by Axa, just 20 per cent of Britons have income protection insurance in place, meaning the extra 80 per cent could be walking dangerous financial implications.

Harry Katz, principal independent financial advisor at Norwest Consults has argued: "If your family is left with a repossessed house because you’re ill and you can’t work, once that happens you’ll turn around and say 'I wish I had income protection.' Of course at the time that someone mentions it to you, you might think you can’t afford to [take it out]. But you could end up losing your house."

In addition to the increasing chances of businesses introducing redundancies as they attempt to offset the losses caused by a widely-anticipated recession, some financial experts have warned that many more people could become more reliant on income protection insurance should proposals put forward by the Conservative Party concerning changes to incapacity benefits come into effect.

Some 2.6 million claimants could be reassessed under the proposals, with Peter Barnett, head of external affairs at Unum explaining that many could have to fall back on insurance payouts should their benefits be stopped or reduced.

Of course, as with most insurance policies, income protection is not a necessity for all.

Those workers whose partners earn a good wage could, for example, afford to neglect it for a while whereas those households which are reliant upon a sole breadwinner would be unwise to do so.

However, with the only other sensible precaution to redundancy, namely saving for a rainy day, becoming increasingly difficult, it seems likely that the more savvy consumers will cut back on most things, but not income protection insurance.