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長期照顧保險商品設計與風險效果分析
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Analysis of the Risk Effect of the Product Design of Long-Term
Care Insurance
1. Introduction
Increase in the average life span and improvements in medical technology have
generated an increased demand for long-term care insurance. However, the market share of
such retirement products remain limited because of adverse selection and strict underwriting
problems. According to a 2009 report by the National Development Council, the number of
disabled persons requiring long-term care services has grown by an average of
approximately 20% annually since 2008. Despite the increasing demand for long-term care,
most elderly individuals in Taiwan have not purchased long-term care insurance. Therefore,
designing appropriate long-term care insurance products to meet the significant growth in
future demand resulting from population aging is very critical.
Previous studies have investigated the problems of high prices and low demand in long-
term care insurance markets. Some studies have suggested that appropriate product design
would increase the demand for long-term care insurance. Brown and Finkelstein (2007) find
that the premiums of long-term care products are substantially higher than the expected
benefits, and they suggest that insurance companies should design more comprehensive
policies. Brown and Finkelstein (2009) further find that the low demand for long-term care
insurance is due to the low risk perception of insureds. These problems have led to the
stagnation of the long-term care insurance market.
From these perspectives, insurance companies should design more appropriate long-
term care products for elderly individuals. The concept of utilizing product design to solve
these problems is proposed by Murtaugh et al. (2001). They show that the combination of
annuity with long-term care insurance enables most of the population currently rejected by
underwriters of long-term care insurance to receive coverage. Brown and Warshawsky
(2013) find that the combination of life annuity with long-term care insurance can increase
the long-term care insurance coverage ratio.
Jennifer L. Wang
, Professor, Department of Risk Management and Insurance, National Chengchi
University
Yu-Fen Chiu
, Assistant Professor, Department of Financial Engineering and Actuarial Mathematics,
Soochow University
Ming-Hua Hsieh
, Associate Professor, Department of Risk Management and Insurance, National Chengchi
University
Yen-Chih Chen
, Ph.D. Candidate, Department of Risk Management and Insurance, National Chengchi
University