The insurance gap is widest for aged 55 and over, MetLife has said.
The insurer's nationwide research reported two fifths of employees had suffered redundancy or long-term health, yet only 15 per cent of workers had ill-health insurance. Just 12% of over 55s had protection in place.
Stephanie Baillie, employee benefits director of MetLife UK, said: "In the current economic climate, the threat of redundancy is becoming ever more real and one in five of the working population has already suffered redundancy.
"Long term sickness absence - leading to more than four weeks off work - has been experienced by a significant proportion of the working population."
She added good quality health insurance was more crucial than ever, despite the backdrop of squeezed incomes.
Adrian Murphy, associate partner at Ayr-based IFA Murphy Financial, said building protection into clients' financial plans was a huge challenge.
He said: "The consequences of not getting protection can be dire. But realistically at the moment, a client who is worried about affordability probably just will not do it.
"Advisers need to be able to demonstrate how it can work in a financial plan and how important it is."
The MetLife survey revealed northern workers had the highest rate of long-term ill health at 28 %, with almost half the proportion - 13 % - reporting similar claims in London.
