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Why the Young Do Not Buy Long-Term Care Insurance

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  • Meier, Volker

Abstract

This paper explains why those individuals who purchase long-term care insurance usually postpone their decision until they reach the age of retirement. This behavior is shown to be rational if there are fixed costs of loading or if there is uncertainty about the costs of disability. Individuals with a low risk of becoming disabled before retirement may prefer to buy insurance late in order to avoid losses in expected income. However, if the probability of becoming disabled after retirement is uncertain, it is generally preferable to buy long-term care insurance early. Copyright 1999 by Kluwer Academic Publishers

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  • Meier, Volker, 1999. "Why the Young Do Not Buy Long-Term Care Insurance," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 83-98, April.
    • Handle: RePEc:kap:jrisku:v:18:y:1999:i:1:p:83-98
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    Cited by:

    1. Pierre Pestieau & Gregory Ponthière, 2012. "Long-Term Care Insurance Puzzle," Palgrave Macmillan Books, in: Joan Costa-Font & Christophe Courbage (ed.), Financing Long-Term Care in Europe, chapter 3, pages 41-52, Palgrave Macmillan.
    2. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    3. Rinaldo Brau & Matteo Lippi Bruni, 2008. "Eliciting the demand for long‐term care coverage: a discrete choice modelling analysis," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 411-433, March.
    4. Martin Eling & Omid Ghavibazoo, 2019. "Research on long-term care insurance: status quo and directions for future research," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 303-356, April.
    5. Joan Costa‐Font & Christophe Courbage, 2015. "Crowding Out of Long‐Term Care Insurance: Evidence from European Expectations Data," Health Economics, John Wiley & Sons, Ltd., vol. 24(S1), pages 74-88, March.
    6. CREMER, Helmuth & PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The economics of long-term care: a survey," LIDAM Discussion Papers CORE 2012030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Bonsang, Eric & Costa-Font, Joan, 2020. "Behavioral regularities in old age planning," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 297-300.
    8. Coe, Norma B. & Skira, Meghan M. & Van Houtven, Courtney Harold, 2015. "Long-term care insurance: Does experience matter?," Journal of Health Economics, Elsevier, vol. 40(C), pages 122-131.
    9. Costa-Font, Joan & Rovira-Forns, Joan, 2008. "Who is willing to pay for long-term care insurance in Catalonia?," Health Policy, Elsevier, vol. 86(1), pages 72-84, April.

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