According to new findings, millions of UK policy holders have cut back on their life insurance cover in an attempt to save money in the recession.

In the last 12 months as a direct consequence of their financial situation, over half a million people (532,000) are estimated to have cancelled their life insurance policy to save money. However people are being reminded by insurers that cutting back on essential cover can prove to be a false economy.

Concerns grow even more as millions have moved to a cheaper provider due to struggling finances. This again can be a mistake as cheaper cover may not meet an individual’s exact requirements.

“It can be tempting, with some insurance policies, to simply hope for the best. But policies vary a great deal, and cancelling your cover or opting for a cheaper deal that doesn't offer adequate cover could have serious financial consequences when something goes wrong. Insurance should be viewed as a necessity, not a luxury”, said Neil Laird, an insurance manager.

It is predicted that more than 816,000 consumers have either given up or claimed to have applied for reduced cover in the last year.

Laird urged the public not to make cuts: “Given the financial state we're in it's inevitable that people are going to be looking to make cut-backs, but it's a real concern when those cut-backs leave them vulnerable to far greater expense down the line.”