Most people over 65 have not prepared for funding social care in later life, despite around half of all care users having to cover some of the costs themselves.
Research from the Association of British Insurers (ABI) revealed that 89% of over-65s have made no plans to pay for social care.
More than half (51%) of people said the state pension would be their most likely source of funding, while around a quarter (26%) said they would sell their home to pay for care.
Funding for social care is means tested, with local councils in England providing support for individuals with savings and assets under the threshold of £23,250. This includes the value of their home if they move into a care home.
The Government said in March 2017 it would publish a green paper looking at the way social care funding, but this publication has been delayed several times since.
The ABI has called for the paper to be published soon, and suggested a number of options to support people self-funding social care.
These include a tax exemption on pension income used to pay for care, tax-free pension withdrawals for purchasing an insurance product that covers care costs.
Another proposal included in the report was the introduction of a 'care ISA', which would be exempt from inheritance tax on residual amounts at death.
Yvonne Braun, director of policy, long-term savings and protection at the ABI, said:
"The social care system and how it is funded desperately needs an overhaul. People simply aren't preparing to pay for their care costs and this needs to change.
"The Government urgently needs to take important decisions on the future of care funding."
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