Don’t They Care? Or, Are They Just Unaware? Risk Perception and the Demand for Long-Term Care Insurance

Journal of Risk and Insurance, Vol. 77, No. 4, pp. 715-747, December 2010

38 Pages Posted: 1 May 2009 Last revised: 8 Jan 2018

See all articles by Tian Zhou-Richter

Tian Zhou-Richter

Munich Re

Mark J. Browne

St. John's University - Peter J. Tobin College of Business

Helmut Gründl

Goethe University Frankfurt - Department of Finance; International Center for Insurance Regulation

Date Written: May 21, 2009

Abstract

The potential need for long-term care (LTC) is one of the greatest financial risks faced not only by the elderly, but also by their adult children, who often provide care or financial assistance. We investigate adult children’s role in the demand for LTC insurance. Similar to flood insurance, we find that demand for LTC insurance is low due to low risk perception. The more aware adult children are of the risk, the more often LTC insurance is purchased, either by the adult children themselves on behalf of their parents or by the parents under the influence of their adult children.

Keywords: long-term care insurance, insurance demand, risk perception, risk underestimation, adult children

JEL Classification: D10, G22, H53, I11, J14

Suggested Citation

Zhou-Richter, Tian and Browne, Mark J. and Gründl, Helmut, Don’t They Care? Or, Are They Just Unaware? Risk Perception and the Demand for Long-Term Care Insurance (May 21, 2009). Journal of Risk and Insurance, Vol. 77, No. 4, pp. 715-747, December 2010. Available at SSRN: https://ssrn.com/abstract=1397603

Mark J. Browne

St. John's University - Peter J. Tobin College of Business ( email )

New York, NY
United States

Helmut Gründl

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, Hessen 60323
Germany

HOME PAGE: http://https://www.wiwi.uni-frankfurt.de/en/departments/finance/home.html

International Center for Insurance Regulation ( email )

House of Finance
Campus Westend, Goethe University
Frankfurt am Main, D-60323
Germany

HOME PAGE: http://www.icir.de

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