Friends Life has urged for the Government to go further to address the current issue of long-term care provision despite changes announced in the Budget.
The insurer has recommended introducing tax incentives to encourage customers to fund long-term care so that fewer people have to rely on the state.
Friends Life believes there is still a long way to go in raising consumer interest, awareness and demand in this space.
The insurer believes pension rule changes should be linked with long-term care provision by allowing long-term care premiums to be paid for out of pension funds without income tax being applied.
Andy Briggs, group chief executive of Friends Life, said: "Significant changes are being made to the rules governing pensions. There is a real opportunity to extend these changes to provide greater incentive for consumers to save for their own retirement and to provide for their long-term care by making it more tax-efficient for them to do so.
"In the UK, we have an ageing population, which brings with it a greater personal responsibility for people to save to ensure that they have the best retirement possible. We also know that take-up of long-term care cover is low but the need for care is likely to increase, which makes it a more pressing consideration.
"The new pension rules give people greater flexibility and it has never been more important for them to plan for their future, and this includes making provision for future care needs."