Empirical evidence on long-term care insurance purchase in France

Abstract

While many theoretical arguments have been proposed to explain the decision whether to purchase long-term care (LTC) insurance, little work has been done to study this phenomenon empirically. This article uses cross-sectional data from the newly developed SHARE (Survey of Health, Ageing, and Retirement in Europe) database to estimate the determinants of the probability of purchasing LTC insurance in France. We show that LTC insurance is purchased not only to preserve bequests and to financially protect families in the event of disability, but also to reduce the burden on potential informal care givers. Risk behaviours as well as experience of disability also play a significant role in explaining the demand for LTC insurance in France. © 2008 The International Association for the Study of Insurance Economics.