Work

Late-in-Life Risks and the Under-Insurance Puzzle

Year: 2016

Type: preprint

Abstract: Individuals face significant late-in-life risks, including needing long-term care (LTC). Yet, they hold little long-term care insurance (LTCI). Using both "strategic survey questions, " which identify preferences, and stated demand questions, this paper investigates the degree to which a fundamental lack of interest and poor product features determine low LTCI holdings. It estimates a rich set of individual-level preferences and uses a life-cycle model to predict insurance demand, finding that better insurance would be far more widely held than are products in the market. Comparing stated and model-predicted demand shows that flaws in existing products provide a significant, but partial, explanation for this under-insurance puzzle.

Source: RePEc: Research Papers in Economics

Authors: John Ameriks, Joseph Briggs, Andrew Caplin, Matthew D. Shapiro, Christopher Tonetti

Institutions: Vanguard (United States), New York University, National Bureau of Economic Research, University of Michigan

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Good health and well-being

Open Access status: green

OpenAlex ID: W2527612263

Cites: 36

Cited by: 20

Related to: 10