Why the young do not buy long-term care insurance

Volker Meier

Munich Reprints in Economics from University of Munich, Department of Economics

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.

Date: 1999
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Citations: View citations in EconPapers (12)

Published in Journal of Risk and Uncertainty 1 18(1999): pp. 83-98

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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:19205

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