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A Canadian Parlor Room-Type Approach to the Long-Term Care Insurance Puzzle

Martin Boyer, Philippe De Donder (), Claude Fluet (), Marie-Louise Leroux () and Pierre-Carl Michaud ()

Cahiers de recherche from Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques

Abstract: We examine the different hypotheses which have been put forward to explain the low demand for long-term care insurance using the results from a survey of 2000 Canadians that was conducted in the autumn of 2016. Defining the natural market of long-term care insurance buyers as the one catering to individuals aged between 50 and 70, we find that a remarkable proportion of this natural market has never been approached to purchase such protection. We estimate that approximately 60% of this natural market is currently under-served. After eliminating risk perception and demand side explanations for the low market penetration of long-term care insurance, we conclude that supply-side factors and the crowding-out by government programs are the most likely culprits in explaining the low proportion of Canadians that purchase LTC insurance from private providers.

Keywords: Long-term care puzzle; Risk perceptions; Supply and demand of insurance; Government programs (search for similar items in EconPapers)
JEL-codes: G02 G12 C14 (search for similar items in EconPapers)
Date: 2018
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Working Paper: A Canadian Parlor Room-Type Approach to the Long-Term Care Insurance Puzzle (2018) Downloads
Working Paper: A Canadian Parlor Room-Type Approach to the Long-Term Care Insurance Puzzle (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:crrecr:1806

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