Complementing Tax-financed Long-term Care with Private Insurance

Abstract

Many elderly people in Finland could increase they standard of living and receive more freedom of choice regarding long-term care by releasing part of their housing equity. The possibility to purchase reasonably priced life annuities and long-term care insurance would increase the benefits of housing equity release. However, there is virtually no market for such insurance in Finland.

This report illustrates the benefits of life annuities and long-term care insurance, provides example of actuarially fair insurance pricing, and describes the conditions for this market to emerge. It argues that the government should support the emergence of an insurance market by clarifying the public welfare promise related to old age care and by promising not to seize private pension and long-term care insurance payouts e.g. via higher user fees for publicly provided long-term care.

Publication info

Series
ETLA Raportit - Reports 98
Date
15.01.2020
Keywords
Long-term care insurance, Life annuities, Ageing
ISSN
2323-2447, 2323-2455 (Pdf)
JEL
H24, G22
Pages
24
Language
Finnish