Long Term Care Insurance –
Why People Don’t Buy It
When it comes to long term care, two facts stand out. First, an estimated 70% of people will need such care, which will be costly. And second, most of them refuse to buy insurance to cover it.
The question is why? Dr. Olivia Mitchell and Dr. Daniel Gottlieb are both professors of insurance and risk management as well as business economics and public policy at the Wharton School of the University of Pennsylvania. Together they began researching the various reasons for not buying LTC insurance.
Part of the explanation, for sure, is that long term care insurance is expensive. Some people may also be assuming, incorrectly, that they will qualify for government assistance to help them pay for nursing home care. Rules are in place to disqualify many who won’t meet the strict conditions required.
The Drs. research suggests that a …show more content…
They see the premiums as money that would be wasted if the policy owner ultimately doesn’t need long term care. They don’t think about the catastrophic losses a policy could help them avoid.
Moreover, their research suggests that some consumers’ rejection of long term care insurance is based on what psychologists call “narrow framing,” or people’s tendency to exclude key factors when making decisions. Narrow framing has been found to be common when individuals face complicated decisions; and shopping for long term care insurance is certainly one of those instances. In their study, they looked at a subset of 1,900 survey respondents in the Health and Retirement Study, a nationally representative survey of Americans over the age of 50. Based on their answers, they classified respondents according to how likely they were to be narrow framers. They then looked at whether narrow framers had different amounts of long term care
Why People Don’t Buy It
When it comes to long term care, two facts stand out. First, an estimated 70% of people will need such care, which will be costly. And second, most of them refuse to buy insurance to cover it.
The question is why? Dr. Olivia Mitchell and Dr. Daniel Gottlieb are both professors of insurance and risk management as well as business economics and public policy at the Wharton School of the University of Pennsylvania. Together they began researching the various reasons for not buying LTC insurance.
Part of the explanation, for sure, is that long term care insurance is expensive. Some people may also be assuming, incorrectly, that they will qualify for government assistance to help them pay for nursing home care. Rules are in place to disqualify many who won’t meet the strict conditions required.
The Drs. research suggests that a …show more content…
They see the premiums as money that would be wasted if the policy owner ultimately doesn’t need long term care. They don’t think about the catastrophic losses a policy could help them avoid.
Moreover, their research suggests that some consumers’ rejection of long term care insurance is based on what psychologists call “narrow framing,” or people’s tendency to exclude key factors when making decisions. Narrow framing has been found to be common when individuals face complicated decisions; and shopping for long term care insurance is certainly one of those instances. In their study, they looked at a subset of 1,900 survey respondents in the Health and Retirement Study, a nationally representative survey of Americans over the age of 50. Based on their answers, they classified respondents according to how likely they were to be narrow framers. They then looked at whether narrow framers had different amounts of long term care