Factors affecting the decision to purchase long-term care insurance: A Maryland study

Long-term care insurance is a private sector alternative to long-term care financing and is intended to protect against the potential catastrophic cost of long-term care. Despite the rising costs of long-term care, however, relatively few consumers have purchased long-term care insurance.; This research examines the impact of various factors on the decision to purchase long-term care insurance using the logistic regression method: knowledge and attitudes of long-term care and its financing, demographic characteristics, financial planning behaviors, and the availability of long-term care insurance through an employer or other organization. The analysis uses data from a survey conducted in 1999 of non-institutionalized Maryland residents between the ages of 40 and 70 years who were not using long-term care services at the time of the survey.; The findings indicate that few knowledge and attitudinal factors affect the decision to purchase long-term care insurance. Knowledge that long-term care insurance is not intended only for the poor or affordable only to the rich is positively associated with insurance purchase. A perceived high long-term care risk and investment in a personal pension plan also positively affect the purchase decision. The most important factor indicated by the analysis, however, is the availability of long-term care insurance through an employer or other organization. This factor increases the likelihood of purchase by 17 probability points and accounts for 12 percent of the nearly 22 percent of explained variance in the purchase decision model. Like the individual market for long-term care insurance, the employer-sponsored market is small. The analysis suggests that expansion of the employer-sponsored market is key to growth in the long-term care insurance market and thus emphasizes the need for employer support and employee education about long-term care insurance.