Just 4% of the population has made firm plans to fund their future long-term care (LTC) needs while two thirds (63%) have not even considered the matter, according to ABI research.
This is despite 94% of people predicting that care home fees will cost them at least £10,000 a year.
Results from the ABI's Quarterly Consumer Survey for the last three months of 2010 illustrate that people clearly understand care costs will be very significant, but that very few people plan ahead to meet these costs, the Association said.
One in five thought they would either not have to move into a home (12%) while 8% believed the state would pay.
Of the 17% who had considered how to meet LTC expenses, 11% were relying on the sale of their home and 2% were expecting friends and family to fund care.
Currently about 20% of men and 30% of women will require long term care at some point in their lives, suggesting that more planning is necessary.
The ABI also asked 2608 people how much they thought a care home cost each year.
It noted that these fees can change from home to home and also on a regional basis, but more than half the respondents (58%) estimated costs of more than £20,000.
And the survey's figures also reflected the nation's overall economic performance which saw a 0.5% contraction in GDP.
The previous quarter had seen an improvement in expectations about how well people would cope with losing their job, but this quarter saw optimism decline and the ABI Financial Resilience Index fell to the lowest level recorded at -3.99.
Overall, 71% of working adults said they would cope quite or very badly financially with losing their job.
There was also been a small increase in the proportion of people reporting that they are more concerned about losing their job compared with three months ago with 36% of working adults being more concerned about this risk.
