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Long-term care insurance and bequests as instruments for shaping intergenerational relationships


Zweifel, Peter; Strüwe, Wolfram (1996). Long-term care insurance and bequests as instruments for shaping intergenerational relationships. Journal of Risk and Uncertainty, 12(1):65-76.

Abstract

The growing demand for long-term care (LTC) causes the relationship between children and their parents to gain increased importance for society. Parents may create incentives for children to provide LTC through bequests, or they may purchase LTC insurance. While these instruments have been analyzed separately in the literature, this article shows that optimal LTC insurance must be small in the presence of bequests. Thus, the failure of private LTC insurance to diffuse into middle-class households may be explained by the fact that the bequest instrument is fully available to the current generation of parents, who for the first time since 1914 are in a position to bequeath an intact stock of capital in major industrialized countries.

The growing demand for long-term care (LTC) causes the relationship between children and their parents to gain increased importance for society. Parents may create incentives for children to provide LTC through bequests, or they may purchase LTC insurance. While these instruments have been analyzed separately in the literature, this article shows that optimal LTC insurance must be small in the presence of bequests. Thus, the failure of private LTC insurance to diffuse into middle-class households may be explained by the fact that the bequest instrument is fully available to the current generation of parents, who for the first time since 1914 are in a position to bequeath an intact stock of capital in major industrialized countries.

Citations

18 citations in Web of Science®
22 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:1996
Deposited On:11 Feb 2008 12:21
Last Modified:05 Apr 2016 12:17
Publisher:Springer
ISSN:0895-5646
Publisher DOI:10.1007/BF00353331
Related URLs:http://springerlink.metapress.com/content/ur21g685m0208vg9/?p=76e6c2d6c41f45d1a2733e0709b66bdbπ=3

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