Actuarial Studies

A seminar by Katja Hanewald from the University of New South Wales

Title: Long-term care insurance financing using home equity release: Evidence from an experimental study

Abstract: Population ageing is a global trend and many countries including China face increasing pressures to provide long-term care services for the elderly. We explore new mechanisms to fund long-term care using housing wealth. We conduct and analyze an experimental online survey fielded in China that assesses the potential demand for new financial products that allow individuals to access their housing wealth to buy long-term care insurance. We find in our sample of 1,200 Chinese homeowners aged 45-64 that the stated demand for long-term care insurance increases when individuals can use housing wealth in addition to savings to purchase long-term care insurance. Individuals prefer to access housing wealth via reverse mortgage loans rather than via home reversion, which is a partial sale of housing wealth. Our results inform current policy reforms in China which aim at developing the private market for health and long-term care insurance products.