Nearly half (24 million) of people in the UK have no insurance in place to cover loss of income through illness or the death of a breadwinner.
According to research from Friends Provident, even those who have considered taking some action would be underinsured by an average of £14,500 per year.
Additionally, of those with policies, 53% have no idea how much they would receive if they were to claim.
The under-insurance is partly blamed on unreasonable assessment of needs.
A third think they could live on less than 35% of take home pay if unable to work through illness or injury.
Based on an average weekly salary of £489, that would be an income of £171 per week, compared with the average weekly household expenditure of £471, not enough to survive on.
Ed Stuart-Brown, head of protection sales commenting on the Protection Oversight research said: "Imagine being told that you had just been given a 66% cut in your income - the impact of that for most people would be catastrophic.
"Ignorance is not bliss, it's irresponsible. The shortfall in protection of £14,500 per year shows a huge opportunity for both advisers and insurers to educate people."
Peter Lurie, director of IFA Proactive Medical and Life, commented: "These figures are shocking on paper and when talking to clients, while avoiding a hard sell, we would certainly look to highlight these sort of things.
"However, we would stress more just how little the Government provides, and the fact that we don't know what it will do in the future - the Government's input is peoples' main benchmark."
He added: "Essentially it is best to at least aim for maximum protection in every case."
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