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Long-Term Care: Risk Description of a Spanish Portfolio and Economic Analysis of the Timing of Insurance Purchase

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Author Info

  • Jean Pinquet

    ()
    (CECO - Laboratoire d'econometrie de l'école polytechnique - CNRS : UMR7657 - Polytechnique - X)

  • Guillén Montserrat

    ()
    (CECO - Laboratoire d'econometrie de l'école polytechnique - CNRS : UMR7657 - Polytechnique - X)

Abstract

This paper analyzes the rationale of long-term care insurance purchasing, from a statistical analysis of insurance data and a life cycle model. We make a short survey of the pros and cons of LTC insurance purchase. Then risk distributions in the occurrence and duration dimension are estimated on a Spanish portfolio. Calendar effects are estimated besides age and gender. These statistical results are integrated in a life cycle model of savings and insurance purchasing. A numerical illustration is also provided, which leads to an optimal age of forty years for insurance purchase.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number hal-00343104.

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Date of creation: 2008
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Publication status: Published, The Geneva Papers on Risk and Insurance, 2008, 33, 659-672
Handle: RePEc:hal:journl:hal-00343104

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Related research

Keywords: Long-term care insurance; Lee-Carter models; life cycle approach; calendar; gender and age effects;

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  1. Leung, Siu Fai, 1994. "Uncertain Lifetime, the Theory of the Consumer, and the Life Cycle Hypothesis," Econometrica, Econometric Society, Econometric Society, vol. 62(5), pages 1233-39, September.
  2. Robert B. Barsky & Miles S. Kimball & F. Thomas Juster & Matthew D. Shapiro, 1995. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Survey," NBER Working Papers 5213, National Bureau of Economic Research, Inc.
  3. Brown, Jeffrey R. & Finkelstein, Amy, 2007. "Why is the market for long-term care insurance so small?," Journal of Public Economics, Elsevier, Elsevier, vol. 91(10), pages 1967-1991, November.
  4. Christian Gollier, 2004. "The Economics of Risk and Time," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262572249, December.
  5. Sloan, Frank A & Norton, Edward C, 1997. "Adverse Selection, Bequests, Crowding Out, and Private Demand for Insurance: Evidence from the Long-Term Care Insurance Market," Journal of Risk and Uncertainty, Springer, Springer, vol. 15(3), pages 201-19, December.
  6. Amy Finkelstein & Kathleen McGarry, 2006. "Multiple Dimensions of Private Information: Evidence from the Long-Term Care Insurance Market," American Economic Review, American Economic Association, American Economic Association, vol. 96(4), pages 938-958, September.
  7. Hanming Fang & Michael P. Keane & Dan Silverman, 2006. "Sources of Advantageous Selection: Evidence from the Medigap Insurance Market," NBER Working Papers 12289, National Bureau of Economic Research, Inc.
  8. de Meza, David & Webb, David C, 2001. "Advantageous Selection in Insurance Markets," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 249-62, Summer.
  9. Samuelson, Paul A, 1969. "Lifetime Portfolio Selection by Dynamic Stochastic Programming," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 239-46, August.
  10. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(2), pages 537-79, May.
  11. Gupta, Aparna & Li, Lepeng, 2007. "Integrating long-term care insurance purchase decisions with saving and investment for retirement," Insurance: Mathematics and Economics, Elsevier, vol. 41(3), pages 362-381, November.
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Cited by:
  1. Jean Pinquet & Montserrat Guillén & Mercedes Ayuso, 2011. "Commitment and Lapse Behavior in Long‐Term Insurance: A Case Study," Journal of Risk & Insurance, The American Risk and Insurance Association, The American Risk and Insurance Association, vol. 78(4), pages 983-1002, December.
  2. Jean Pinquet, 2008. "Quel avenir pour l'assurance dépendance? Leçons de l'expérience américaine," Post-Print, HAL hal-00396151, HAL.

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