Few of us are insured against serious illness even though it may strike at anytime. Unum Provident, the income protection provider, has carried out research that reveals only 4.2 per cent of the country's work force have critical illness cover, even though they will receive a lump sum if they have a heart attack, stroke or suffer from cancer.

17 per cent of people consider the cover to be too dear, the survey reveals, which explains the low take up.

Potential customers are also confused by the wording of policies and the difference between permanent health insurance and critical illness cover.

A working party formed by the Association of British Insurers, is currently reviewing the wording of policies. The situation could become even more confusing if the working party decides to reduce the number of conditions defined as a critical illness.

UnNum Provident have launched a new product called Elixia 123, which it claims cuts the cost of critical illness cover by around 30 per cent and on occasions by as much as 50 per cent.

This will be achieved by letting customers select the illness for which they require cover. There are three categories of risk. Category 1. Strokes, invasive cancer and heart attacks. The policy will only pay out if the condition leads to major life style changes or is life threatening.

Category 2. Conditions that do not have so much impact on life expectancy but do dramatically affect life style. Motor neurone disease, blindness and Alzheimer's are included in this category.

Category 3. Conditions that are traumatic but have little effect on life expectancy. Life style changes may be involved. This category covers strokes and minor heart attacks, open heart surgery and less serious types of cancer.

You choose a combination of categories and your premium is calculated accordingly. If you can't afford all of the categories you might only select category 1 to cover you for life threatening events. You would then receive a 100 per cent pay out if you are diagnosed with a category 1 event and nothing under categories 2 and 3.

Perhaps you are more concerned about long term disability, in which case you might opt for a full payment under category 2 and a lower percentage for 1 and 3. Customers who want comprehensive cover can choose the full 100 per cent benefit no matter which category their illness is in.

Many people may not understand enough about critical illness to choose between the three levels of cover. This is certainly the view of Donna Bradshaw of independent financial advisers Fiona Price and Partners. She thinks letting customers choose maybe dangerous as there is a lot of jargon in an insurance policy and the medical terms are difficult to understand. She advises clients to opt for the most comprehensive cover as one doesn't know what the future holds. Choose a lump sum payment equivalent to your mortgage is her advice.

Critical illness cover is not that expensive so it is advisable to opt for a comprehensive policy, which will give you peace of mind.

Nye Jones, the distribution development manager at PPP, is concerned about how the terms are defined. He emphasise that consumers must understand exactly what they are purchasing. For example, when is an illness defined as major? The first and the third categories need clarification before taking cover as there is not much difference between them in his view. Problems can occur later if the consumer has not fully understood the terms of the policy when they sign, says Nye Jones.