Premiums for Long-Term Care Insurance Packages: Sensitivity with Respect to Biometric Assumptions

Ermanno Pitacco
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Ermanno Pitacco: Department DEAMS “Bruno de Finetti”, University of Trieste, Piazzale Europa 1, Trieste 34127, Italy

Risks, 2016, vol. 4, issue 1, 1-22

Abstract: Long-term care insurance (LTCI) covers are rather recent products, in the framework of health insurance. It follows that specific biometric data are scanty; pricing and reserving problems then arise because of difficulties in the choice of appropriate technical bases. Different benefit structures imply different sensitivity degrees with respect to changes in biometric assumptions. Hence, an accurate sensitivity analysis can help in designing LTCI products and, in particular, in comparing stand-alone products to combined products, i.e. , packages including LTCI benefits and other lifetime-related benefits. Numerical examples show, in particular, that the stand-alone cover is much riskier than all of the LTCI combined products that we have considered. As a consequence, the LTCI stand-alone cover is a highly “absorbing” product as regards capital requirements for solvency purposes.

Keywords: long-term care insurance; LTCI; biometric functions; multi-state models; Markov models; mortality laws; mortality of disabled people (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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