LTCI Versus Self- Insurance: Authors Respond

VanderLinden, David; Gold, Joel I.
April 2007
Journal of Financial Planning;Apr2007, Vol. 20 Issue 4, p16
Academic Journal
The author reflects on whether long term care insurance is a wise purchase compared to self insurance. The theory described is that if individuals only bought policies with positive net present values (NPV), insurance companies would go out of business; therefore out of risk aversion, individuals buy policies with negative NPVs. The use of averages and probabilities in determining a fair insurance policy rate is discussed. Catastrophic coverage is defined along with possibilities of amending the set policy on elimination periods.


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