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Article

Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society

Department of Economic, Financial and Actuarial Mathematics, University of Barcelona, Diagonal, 690, 08034 Barcelona, Spain
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Sustainability 2020, 12(21), 8894; https://doi.org/10.3390/su12218894
Received: 25 August 2020 / Revised: 23 September 2020 / Accepted: 23 October 2020 / Published: 27 October 2020
(This article belongs to the Section Economic and Business Aspects of Sustainability)
This work analyzes and quantifies the significance of private long-term care insurance for the elderly in protecting families from the increased expenses derived from dependency. We propose an economic and financial model for consumption and income deficit evolution. Survival/dependency are modeled by a Markov process with stochastic simulation techniques to obtain random variable distributions. Based on the Spanish survey of household finances data, Spanish families are classified using a cluster analysis for the wealth decumulation period. The conclusion is that, for a generic family, hiring long-term care insurance causes a significant reduction in the probability of lack of liquidity, the mean first time of lack of liquidity (if it occurs), and the mean present value of overall liquidity needs. It is also observed that there are important differences between these impacts on different groups of families. These results show that hiring long-term care insurance would considerably lower financial problems in the decumulation period. View Full-Text
Keywords: life cycle; cluster analysis; Markov process; survey of household finances; simulation; Spain life cycle; cluster analysis; Markov process; survey of household finances; simulation; Spain
MDPI and ACS Style

Boj del Val, E.; Claramunt Bielsa, M.M.; Varea Soler, X. Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society. Sustainability 2020, 12, 8894. https://doi.org/10.3390/su12218894

AMA Style

Boj del Val E, Claramunt Bielsa MM, Varea Soler X. Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society. Sustainability. 2020; 12(21):8894. https://doi.org/10.3390/su12218894

Chicago/Turabian Style

Boj del Val, Eva, M. M. Claramunt Bielsa, and Xavier Varea Soler. 2020. "Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society" Sustainability 12, no. 21: 8894. https://doi.org/10.3390/su12218894

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