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

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  • M. Martin Boyer
  • Philippe De Donder
  • Claude Denys Fluet
  • Marie-Louise Leroux
  • Pierre-Carl Michaud

Abstract

We examine the di?erent 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. De?ning the natural market of long-term care insurance buyers as the one catering to individuals aged between 50 and 70, we ?nd 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.

Suggested Citation

  • M. Martin Boyer & Philippe De Donder & Claude Denys Fluet & Marie-Louise Leroux & Pierre-Carl Michaud, 2018. "A Canadian Parlor Room-Type Approach to the Long-Term Care Insurance Puzzle," CIRANO Working Papers 2018s-13, CIRANO.
  • Handle: RePEc:cir:cirwor:2018s-13
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    More about this item

    Keywords

    Long-term Care Puzzle; Risk Perceptions; Supply and Demand of Insurance; Government Programs;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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