A study by the investment company found that more than three quarters of people don’t have life insurance, while only 40% of adults said they have a workplace pension.

The study suggests that with a recession looming and inflation predicted to hit 13%, most UK consumers are ill-equipped to weather the abrupt change in the economic climate.

The protection gap

A closer look at how prepared people are to absorb financial shocks reveals a disturbing picture.

According to Charles Stanley, fewer than one in four people say they have life insurance in place to support their families in the event of their death. Only 7% have critical illness insurance, while only 7% have income protection.

The research also found that people are ditching insurance policies to keep up with the rising cost of living. One in 10 of those questioned said they had already given up insurance policies such as life insurance, private health insurance and income protection to save money.

Neglected investments and pensions

Investments can also provide a financial cushion in difficult times. But the study suggests relatively few people have built up a nest egg.

More men (21%) than women (12%) have investments in place to support them. This equates to fewer than one in five (16%) of respondents overall.

Charles Stanley found that 11% of investors had given up investing with a further 17% considering doing so soon.

The investment firm also found that only 40% of adults said they had a workplace pension. It described this figure as “remarkably low” and said it in no way tallies with auto-enrolment figures.

But the figure might suggest that people are unaware of what financial products they actually have, especially as it only rises to 47% of those who are employed full time.

Beyond the workplace, a fifth (21%) of people say they have a personal pension, which, when split by gender shows men (25%) are more likely to have a personal pension to support them financially than women (18%).

Lisa Caplan, director at Charles Stanley, said: “The findings of our recent study make for difficult reading. At a time when financial education is inconsistent and many do not have access to professional advice, people just aren’t equipped to manage the difficult months ahead. As a result, many are resorting to radical changes to household finances in order to steady the ship – actions which could have long-term ramifications for their financial health and wellbeing. We urgently need to take steps to boost financial resilience now.”