Private compulsory long-term care insurance in Germany: A comprehensive overview

Lewe Bahnsen and Thomas Neusius

No 20/2026, wifin Working Paper Series from RheinMain University of Applied Sciences, Wiesbaden Institute of Finance and Insurance (wifin)

Abstract: In 1995, Germany established a two-tier compulsory long-term care insurance scheme. While the public branch, with its pay-as-you-go character, lacks sustainable financing due to demographic circumstances, the capital-funded private branch is supposed to be sustainably financed through its special financial architecture. However, specific legal regulations restrict the calculation of premiums, as is the case in a free competitive insurance market with capital funding, and make the inclusion of transfer elements necessary. We present a synopsis of actuarial expertise on German private compulsory long-term care insurance. Therefore, we make the existing German-speaking literature available to an international audience. In doing so, we provide a comprehensive overview of how private compulsory long-term care insurance in Germany works. Considering recent debates on reforming long-term care insurance financing, understanding the functioning and sustainability of the private branch is of increasing interest. As the financial strain on the public sector intensifies, questions arise about the potential future role of capital-funded private long-term care insurance.

Keywords: Private long-term care insurance; equivalence principle; capital funding; premiums; ageing provisions; Germany (search for similar items in EconPapers)
JEL-codes: G22 I11 I13 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-age, nep-eur and nep-hea
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