title: Long-term care insurance: Does experience matter?
abstract: We examine whether long-term care (LTC) experience helps explain the low demand for long-term care insurance (LTCI). We test if expectations about future informal care receipt, expectations about inheritance receipt, and LTCI purchase decisions vary between individuals whose parents or in-laws have used LTC versus those who have not. We find parental use of a nursing home decreases expectations that one's children will provide informal care, consistent with the demonstration effect. Nursing home use by in-laws does not have the same impact, suggesting that individuals are responding to information gained about their own aging trajectory. Nursing home use by either a parent or in-law increases LTCI purchase probability by 0.8 percentage points, with no significant difference in response between parents' and in-laws' use. The estimated increase in purchase probability from experience with LTC is about half the previously estimated increase from tax policy-induced price decreases.
authors: Center for Retirement Research at Boston College, United States; Netspar, The Netherlands; NBER, United States. Electronic address: nbcoe@uw.edu.
authors: Norma B
authors: NB
authors: Coe
authors: University of Georgia, United States.
authors: Meghan M
authors: MM
authors: Skira
authors: Durham Veterans Affairs Medical Center, United States; Duke University Medical Center, United States; Netspar, The Netherlands.
authors: Courtney Harold
authors: CH
authors: Van Houtven
mesh_terms: D017028:Caregivers / Q000523:psychology / Q000706:statistics & numerical data; D005260:Female; D006699:Home Care Services / Q000706:statistics & numerical data; D006801:Humans; D007353:Insurance, Long-Term Care / Q000706:statistics & numerical data*; D008297:Male; D008875:Middle Aged; D015233:Models, Statistical; D009735:Nursing Homes / Q000706:statistics & numerical data; D010290:Parents; D018570:Risk Assessment; D014481:United States
keywords: Behavioral economics; D81; Expectations; G22; Informal care; Insurance; J14; Long-term care
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