Don’t They Care? Or, Are They Just Unaware?Risk Perception and the Demand for Long-Term Care Insurance

The potential need for long-term care (LTC) is one of the greatest financial risks faced not only by the elderly, but also by their adult children, who often provide care or financial assistance. We investigate adult children’s role in the demand for LTC insurance. Similar to flood insurance, we find that demand for LTC insurance is low due to low risk perception. The more aware adult children are of the risk, the more often LTC insurance is purchased, either by the adult children themselves on behalf of their parents or by the parents under the influence of their adult children.