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

Author

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  • Bahnsen, Lewe
  • Neusius, Thomas

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.

Suggested Citation

  • Bahnsen, Lewe & Neusius, Thomas, 2026. "Private compulsory long-term care insurance in Germany: A comprehensive overview," wifin Working Paper Series 20/2026, RheinMain University of Applied Sciences, Wiesbaden Institute of Finance and Insurance (wifin).
    • Handle: RePEc:zbw:wifinw:340009
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    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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