A Canadian Parlor Room-Type Approach to the Long-Term Care Insurance Puzzle

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27 Mars 2018
Types de publication: 
Cahier de recherche
Martin Boyer
Philippe De Donder
Claude-Denys Fluet
Marie-Louise Leroux
Pierre-Carl Michaud
Axe de recherche: 
Politiques publiques et réglementation
Long-term care puzzle
Risk perceptions
Supply and demand of insurance
Government programs
Classification JEL: 

We examine the different hypotheses which have been put forward to explain the low demand for long-term care insurance using the results from a survey of 2000 Canadians that was conducted in the autumn of 2016. Defining the natural market of long-term care insurance buyers as the one catering to individuals aged between 50 and 70, we find that a remarkable proportion of this natural market has never been approached to purchase such protection. We estimate that approximately 60% of this natural market is currently under-served. After eliminating risk perception and demand side explanations for the low market penetration of long-term care insurance, we conclude that supply-side factors and the crowding-out by government programs are the most likely culprits in explaining the low proportion of Canadians that purchase LTC insurance from private providers.


Martin Boyer, HEC Montréal
Philippe De Donder, ESG UQAM
Claude Fluet, Université Laval
Marie-Louise Leroux, ESG UQAM
Pierre-Carl Michaud, HEC Montréal