Budget-conscious consumers are increasingly forsaking insurance policies that would protect them through illness or redundancy as they seek to curb their spending in the face of higher living costs.

In recent months, insurance providers and brokers have seen a drop in sales of life and critical-illness cover, as well as policies that protect income and mortgage payments. Policyholders have been cancelling some policies – such as payment protection insurance – on fears they are over-priced and unsuitable. But they are also giving up, or failing to take out, other protection policies as they struggle to deal with higher mortgage costs, energy bills and food prices.