The care annuity provider found 38 per cent of people believe the State will help and 37 per cent think it will cost less than £20,000.
The actual cost of a UK care home on average is £27,612 per year, meaning people are underestimating the cost by over £7,000.
When broken down into regions, those in the North West paid the least at £24,336 while those in London paid the most at £31,096.
Those in the South East were least aware of the actual cost of care while those in the West Midlands overestimated the cost of the care.
In the South East care costs £30,888 annually but consumers expect to care £28,933 while in the West Midlands care costs £25,740 but consumers expected to pay £28,939.
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Plans by the Health Secretary Jeremy Hunt propose families should pay £75,000 before the cost of care transfers to the State. However, this does not include accommodation or hotel costs which would still need to be paid by the family. This would be introduced from April 2017.
Chris Horlick, managing director of care at Partnership, said: "Despite the publicity over the last few years, 38 per cent of people continue to believe that the State will pay for their care and 37 per cent underestimate the cost of residential care by over £7,000 per year.
"This suggests that for a large cohort of people when they either need to arrange their own care or sort out care for a family member, they will be faced with paying substantially more than anticipated."

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