Deciding Not to Purchase Long-Term Care Insurance

By Richard Shank

A qualitative study conducted by researchers at Yale University outlines the reasons why many people opt not to purchase long-term care insurance. Utilizing in-depth interviewing and focus groups, researchers outlined the motives behind the decision. Affordability does figure into the decision-making; however, it’s far from being the only motivating factor.

Many states are seeking to offset rising Medicaid costs in a variety of ways, including providing incentives for individuals to purchase long-term care insurance on their own. The assumption has been that long-term care insurance can be an effective tool for long-term care planning because it provides a predictable and affordable premium and protection against potentially catastrophic financial loss. Despite the economic rationale for obtaining long-term care insurance, there has only been a very modest demand for it from consumers. This new research calls this assumption into question.

Most respondents do find the long-term care premiums “too costly,” but these costs are not entirely economic in nature. Non-purchasers are skeptical about the integrity and viability of private insurance companies and often distrust the published information. As a consequence, potential purchasers feel uninformed and sometimes overwhelmed by the decision-making process. Next, family dynamics are taken into account when weighing options, with available caregivers being more likely to opt against purchase. Finally, the decision-making process actually triggers psychological responses that lead many respondents to opt against even thinking about the possibility of long-term disability later in life.

For groups looking to promote long-term care insurance, these researchers recommend looking beyond the purely economic risks of long-term care. Social and psychological considerations must be made; e.g., in a social atmosphere where insurance companies don’t share widespread legitimacy and trust, people will opt against utilizing their services.

Source: Curry, L., Robinson, J, Shugrue, N., et al. 2009. Individual decision-making in the non-purchase of long-term care insurance. The Gerontologist 49(4): 560-569.

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