More on the optimal demand for long-term care insurance
The demand for long-term care (LTC) insurance depends – among other things – on the relationship between potential policyholders and their relatives since the latter may informally provide LTC that is otherwise purchased on the market. The combined effects of intra-family moral hazard and altruism on LTC insurance purchase are examined in this paper. First, the interaction between LTC insurance and informal care supply are determined. Then the effects of the policyholders’ wealth, the policyholders’ quality of life and the informal care givers’ quality of life on this interaction are analysed. Finally, the conditions under which a two-sided intra-family moral hazard occurs are investigated.
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