Private Long Term Care Insurance - A new dawn in the East?
Life expectancy in some Asian countries has increased between 30% and 75% in the last 50 years. As is illustrated in our latest publication, the longevity gap between countries like Japan, Korea, Hong Kong and Singapore and western countries like the U.S. has effectively been closed. In other countries like India and Thailand, the gap is closing fast.
It means that, as in the West, demographic change is taking place that will see the elderly accounting for a clear majority of the population within 50 years in several Asian countries. The implications for the care of these senior citizens are severe.
It is hence interesting to examine which different approaches to finance care have been adopted by Asian countries to address the demographic change taking place - and how these systems may perform under future demographic and economic realities.
The old social order is already breaking down. Long term care in Asian countries has traditionally been largely provided by families - and still is. However, hard pressed families find it increasingly difficult to reconcile high living costs with staying at home to look after relatives. This issue means there should be a growing demand for private long term care insurance, but in reality the market has not yet taken off. One reason is that people have been unwilling to buy private long term care coverage when they are uncertain about what the state sponsored system will offer in the future.
It should require the joint efforts of governments and private insurers to increase the prevalence of private LTC polices. The following measures are likely to play an important role in this respect:
- Introduction of a public LTC scheme which provides basic coverage.
- Direct subsidies towards purchasing private LTC policies which meet minimum standards.
- Introduction of a framework for covering LTC in the context of company pensions.
- Including coverage for the risk of LTC into the scope of all basic products of an insurance company.
Refer to our full publication for more on Long Term Care Insurance.