If you have a family history of health problems or if you drink or smoke heavily you might be under the illusion that critical illness cover or life insurance cover may be extortionately expensive. Marketing manager at Scottish Equitable Protect, Heather Armstrong, says this isn't always the case, "Many of those drinking, smoking or eating 'too much' may well shy away from cover for fear of being unduly penalised for their bad habits. However, they will most likely find that these vital forms of financial protection cost far less than they think."

GE Frankona, a specialist re-insurer, says only 25 per cent of the working population have life insurance cover and only 11 per cent have critical illness cover, even though it is generally believed that if you are working and/or have dependants and a mortgage, this security is essential. Many, many people are taking uninformed risks.

If a person were to die their life insurance will pay out on their death and hopefully will be enough to pay a mortgage off, and/or provide any dependants with financial security. In the case of critical illness cover it pays out and helps at this time. Even though medicine is advancing all the time and people are recovering from life-threatening illness, they are often unable to work temporarily or are forced to stop completely; this is when a tax-free lump sum can create the financial security needed.

If a person does drink or smoke premiums may be slightly higher but not as standard and from one insurer to another they vary a lot for critical and life cover. Scottish Equitable doesn't raise premiums until a person is drinking the equivalent of 4 pints daily. For a non-smoking 35-year-old, consuming less than 45 units weekly, for 100,000 pounds of life cover, the basic rate is 17.70 pounds per month. If you drink between 45 and 65 units weekly it increases to 25.35 pounds per month.

In comparison, it will cost a 25-year-old non-smoker 18.70 pounds per month for 100,000 pounds of critical illness cover. For a smoker this increases to 32.60 pounds monthly, but the premium only rises again if you smoke over 40 a day.

A family history of conditions such heart disease or diabetes does not mean that premiums will definitely be higher. A 34-year-old psychiatrist, Victor Aziz, comes from a family that has many members suffering from diabetes although his brother and his parents do not. Recently, he and his wife took out life and critical insurance cover with LifeSearch from Norwich Union, giving them cover of 125,000 pounds. Their monthly premium costs 37.50 pounds and Mr Aziz was quite surprised that his family medical history did not influence what they pay.

Managing director of LifeSearch, Tom Baigrie, says if you can't afford to do both, it is wise to cover your mortgage with life insurance and then take as much critical illness cover as is affordable.

"Everyone who can afford it should have critical illness cover," he says. "If you've got dependants you should have life and critical illness cover. The only people who may not require critical illness are those with excellent, not just normal, employee benefits."