As the UK economy falls further down the black hole, more people are discovering new ways to cut down on spending as a bid to save money.

One idea people feel that would save them more is cutting back on life insurance. According to a recent report, millions of Brits have turned their heads away from purchasing life insurance cover placing their families at great financial risk.

A study by The Post Office revealed that approximately 36 million adults in the UK have not yet taken out a life insurance policy as the current economic crisis acts as an uphill struggle for many.

The firm found that 28 per cent of those without cover are unable to meet the expense for cover as life insurance is ‘downright unaffordable’ regardless that insurance costs have decreased by approximately 70 per cent over the past 30 years.

Head of protection at the Post Office, Duncan Caesar-Gordon recently warned those without life insurance of the possible downturns it may have on their families and assets.

He said: "What is interesting is the calculation that people make when working out how much their life is worth. What people need to consider is a lump sum of money that will help their loved ones pay towards something like a mortgage, should the worst happen."

Recent research from Barclays Financial Planning also revealed that over a half of the adults in the UK have not invested in a life insurance policy, income protection and critical illness cover due to the crisis.

The figures show that 52 per cent of the UK’s adults do not hold a life insurance policy whilst those who do are unaware of what their policy covers.

As the financial downturn of the UK economy worsens, the figure for future life insurance customers are ‘worrying’ as more people are expected to opt out.

Life and pensions adviser, Simon Firmin of Plan Insure said: "It doesn't surprise me that, because of the difficulties people are facing, this problem has become more severe."

 Why do I need life insurance?

Those who have not yet taken out a life insurance may find that their assets and families are at a great financial risk in the case of an accident resulting in death. Life insurance enables stability for your family providing you have cover.

Alison Tattersal, Head of Customer and Proposition of Barclays Financial Planning said: “People must consider the financial consequences of what would happen if they were unable to work, or their dependants' situation if they died, it would be far worse than any concerns they currently have over struggling to meet their outgoings.”

“When finances are tight it is often responsibilities like protection policies that fall to a lower priority, and of course these policies protect outcomes that people don't want to think about.” She added.

Lying and life insurance

Furthermore, an increasing number of those with life insurance have also been found to be lying on their insurance applications.

According to the Association of British Insurers (ABI), more customers are committing fraud by providing insurers with false details when applying for a life insurance policy as a bid to keep premiums low.

However, the ABI has warned that those found providing false details are more likely get their policies invalidated.

Director of general insurance and health, Nick Starling of ABI said "Honesty is the only policy. Cheating to get cheaper insurance puts your cover in jeopardy, with potentially disastrous consequences.

Being truthful and shopping around will mean that your insurance delivers when you need it, and that you get the best possible deal."