LV= believes that long-term care costs will hit £38bn by 2025 as rapidly rising life expectancy puts pressure on the infrastructure of care services in the UK.
The figure is based on a report entitled The Future of Long-Term Care, published by the insurer last week.
LV= says a combination of factors, including rising longevity, women increasingly working later in life rather than providing care and families living further apart are driving up the cost of care.
As a result, the annual cost of care is expected to rise from £26,000 per person per year in 2012 to £33,000 by 2025.
LV= head of equity release Vanessa Owen says: “People who have the burden of long-term care costs approaching could be faced with an open-ended bill, which makes it difficult to plan effectively to meet these costs.
“The cost of care looks set to increase by 27 per cent in real terms by 2025, so people need to make sure they have thought about the possibility of paying for care and how it will be funded.”
The Dilnot Commission report, published in July 2011, called for a cap on the lifetime contributions of individuals to social care costs of between £25,000 and £50,000 and suggested £35,000 as the recommended figure.
The Government is expected to publish a progress report on cross-party talks over the proposals in June.
However, in January, Money Marketing revealed concerns among senior LibDems that Dilnot’s plans are expensive, bureaucratic and regressive.
Partnership managing director of care Chris Horlick says the Government needs to raise awareness of products that can be used to fund care, such as equity release and immediate needs annuities.
He says: “If the Government’s imminent white paper provides a greater focus on information and advice for people seeking to fund the costs of care, this will inevitably stimulate greater awareness of these important financial products.”