Why Do People Let Their Long-Term Care Insurance Lapse? Evidence from the Health and Retirement Study

This paper empirically analyzes how often and why individuals drop their long-term care insurance (LTCI) coverage, using data from the 2002-2008 Health and Retirement Study. It finds that over a two-year period 13 of LTCI policies lapse. It also finds that the probability of an LTCI lapse increases with a lack of consumer knowledge about their policy's benefit provisions, with prior encounters with the long-term care system, with less expensive policies, and with less generous policies. These findings raise the possibility that some policyholders may not understand their coverage limitations, and learn about them only after actually using long-term care services. Greater consumer awareness of LTCI policy features and limitations may help reduce lapse rates and increase the stability of the LTCI market.

Date revised - 2012-07-01 Language of summary - English Pages - 220-237 ProQuest ID - 1030495712 Availability - URL:http://aepp.oxfordjournals.org Publisher's URL Last updated - 2012-08-02 British nursing index edition - Applied Economic Perspectives and Policy, vol. 34, no. 2, Summer 2012, pp. 220-37 Corporate institution author - Li, Yong; Jensen, Gail A DOI - econlit-1303901; 1303901; 2040-5790

long term care insurance/public policy/consumer economics

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