Parents' long term care risk:: A financial planning analysis from the children's perspective
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Karlsruhe
VVW, Verl. Versicherungswirtschaft
2007
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| Series: | Versicherungswissenschaft in Berlin
30 |
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| Item Description: | Zugl.: Berlin, Humboldt-Univ., Diss., 2007 |
| Physical Description: | XXVI, 225 S. graph. Darst. 21 cm, 338 gr. |
| ISBN: | 9783899523485 3899523482 |
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| 100 | 1 | |a Schulze, Roman |e Verfasser |4 aut | |
| 245 | 1 | 0 | |a Parents' long term care risk: |b A financial planning analysis from the children's perspective |c Roman N. Schulze |
| 264 | 1 | |a Karlsruhe |b VVW, Verl. Versicherungswirtschaft |c 2007 | |
| 300 | |a XXVI, 225 S. |b graph. Darst. |c 21 cm, 338 gr. | ||
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| 490 | 1 | |a Versicherungswissenschaft in Berlin |v 30 | |
| 500 | |a Zugl.: Berlin, Humboldt-Univ., Diss., 2007 | ||
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Titel: Parents' long term care risk
Autor: Schulze, Roman
Jahr: 2007
Contents
Index of Abbreviations XV
Index of Sets, Operators, and Relations XVII
Index of Symbols XIX
Index of Figures XXIII
Index of Tables XXV
Part I: Introduction 1
1 Motivation 1
2 The Contribution of This Thesis 3
2.1 What We Will Do. 3
2.2 Method . 4
2.3 Positioning Within the Existing Literature. 4
2.3.1 Long-Term Care Risk as an Intergenerational
Problem and the Choice of Insufficient Insurance
Coverage. 4
2.3.2 Financial Planning. 11
2.3.3 Background Risk Taking. 13
2.3.4 Means Testing and Individuals' Financial Behavior 14
2.3.5 Further Demarcation. 16
2.4 Some Results. 18
3 Further Organization of the Thesis 18
Part II: Characterizing Long-Term Care Risk 21
1 Dependency and Care Provision 21
2 Demographic and Social Development in Germany 25
2.1 Increased Life Expectancy. 26
IX
2.2 Low Total Fertility Rate. 29
2.3 Increase in the Population Segment of Old and Oldest Old 29
2.4 Increased Women Labor Force Participation. 31
2.5 Changes in Marriage Behavior and Household Size. 32
3 The Procurement of Formal Nursing Care 35
4 Bearing the Costs 38
4.1 The German Compulsory Long-Term Care Insurance
System. 38
4.2 The Gap in Coverage. 50
5 The Elderly Germans' Income and Wealth Situation 51
5.1 Income Distribution. 51
5.2 Wealth Distribution. 52
6 Children's Legal Obligation to Maintain Their
Dependent Parents 53
7 Shortcoming in the Demand for Complementary
Long—Term Care Insurance 57
8 Prognosis for Gap Development 58
8.1 Developments of Costs and Benefits from Compulsory Long-
Term Care Insurance. 58
8.2 Deficiency Development . 60
9 Claim Rejection and Misclassification Risk 62
Part III: Setting Up the Model 65
1 Textual Description of the Investigated Situation 65
1.1 The Time Structure. 65
1.2 The Parent . 66
1.3 The Decider. 66
1.4 The Parent's Long-Term Care Risk and the Decider's
Liability. . 67
1.5 The Decider's Decision. 69
X
Formalization 70
2.1 The Time Structure. 70
2.2 The Parent . 71
2.3 The Decider. 73
2.3.1 The Decider's Life Process. 73
2.3.2 The Decider's Preferences. 75
2.3.2.1 The von Neumann-Morgenstern
Framework and the Expected Utility
Theorem . 75
2.3.2.2 Equivalence as Utilities . 76
2.3.2.3 Utility Functions with Constant
Proportional Risk Aversion. 76
2.3.2.3.1 Definition. 76
2.3.2.3.2 Some Properties of CPRA Utility
Functions. 78
2.3.2.4 Intertemporal Separability of Total Utility,
Impatience, and Intertemporal
Substitution. 81
2.3.2.5 Life State Dependence. 83
2.3.2.6 Behavior Toward Background Risks . 83
2.3.3 The Decider's Income Process. 87
2.4 The Decider's Liability. 89
2.4.1 Initial Wealth and Wealth Available. 89
2.4.2 Uncovered Nursing Care Costs. 89
2.4.3 Extent of Liability and Free Wealth. 90
2.5 The Decider's Decision. 91
2.5.1 The Risk-free and the Risky Asset. 91
2.5.1.1 The Investment Portfolio . 91
2.5.1.2 Linking the Decider's Income to Risky
Return. 92
2.5.2 Consumption, Investment and Next Year's Initial
Wealth. 93
2.5.3 Information Update and Model Evolution . 94
2.5.3.1 The Information Status at the Beginning of
the Planning Horizon. 94
2.5.3.2 At the End of Year To. 95
2.5.3.3 In the Following Years. 96
2.5.4 Optimization. 96
XI
2.5.4.1 At the Beginning of Year TT. 97
2.5.4.2 At the Beginning of Years Tt,
« = to + 1,.,t-1. 98
2.5.4.3 At the Beginning of Year TTo . 101
2.5.4.4 At the Beginning of Years Tt,
t = ry,.,to-1. 102
2.5.4.5 At the Beginning of Years Tt,
t = 0,.,7y-l. 104
3 Solution Method 105
4 Model Calibration 106
4.1 The Time Structure Parameter To. 107
4.2 Financial Market Parameters . 107
4.2.1 Distribution Function of Risky Returns F^. 107
4.2.2 Inflation. 109
4.2.3 Risk-Free Rate of Return . 109
4.3 The Parent . 110
4.3.1 Initial Age zjj\ Latest Year of Death TTo, and the
Parent's Sex. 110
4.3.2 Morbidity Rates and Mortality Rates. Ill
4.3.2.1 Morbidity Rates Data. Ill
4.3.2.2 Mortality Rates Data . 113
4.3.2.2.1 Base Active Mortality Rates . . 113
4.3.2.2.2 Base Dependent Mortality Rates 115
4.3.2.3 Cohort Mortality Rates qf'j. 118
4.3.2.4 Morbidity Rates df . 119
4.3.3 Misclassification Rates mf. 121
4.4 The Decider. 122
4.4.1 Biometric Parameters: Initial Age x$, Sex, Mortality
Rates qf, and Length of Planning Horizon r . . . . 122
4.4.2 Preference Parameters: Degree of Constant
Proportional Risk Aversion 7 and Subjective
Discount Factor /?. 122
4.4.3 Income Parameters. 123
4.4.3.1 Planned Year of Retirement Tty. 123
4.4.3.2 Redundancy Payment Rate aY. 123
4.4.3.3 Unemployment Probabilities tit. 124
XII
4.4.3.4 Unconditional Expected Income Process . 124
4.4.3.5 Initial Income Yo. 125
4.4.3.6 The Link Between Risky Returns and
Labor Income When Employed (6 i, 6 2, r*) 126
4.4.3.7 Retirement Payments yf. 128
4.5 Liability Parameters. 128
4.5.1 Uncovered Nursing Care Costs cfJ. 128
4.5.2 Legal Retention Levels wL and yL, and Liability Rate
of Exceeding Income aL. 129
4.6 Description of Deviating Scenarios. 130
5 Some Descriptive Analyses 131
5.1 The Parent's Life/Health Process Lf. 131
5.2 The Decider's Free-Wealth Operator ip(-). 136
6 Digression: Approaches to Incorporate an Individual's
Own Long-Term Care Risk 143
6.1 Modeling Health . 143
6.2 Modeling Dependency. 144
Part IV: Results 147
1 Optimal Decisions 148
1.1 At the Beginning of Years Tt, t = r0,., r. 148
1.1.1 Base Case. 148
1.1.2 Deviating Scenarios. 153
1.1.3 Summary of Subhorizon Results. 155
1.2 At the Beginning of Years Tt, t = Ty,. ,t0 - 1. 156
1.2.1 Base Case. 156
1.2.2 Deviating Scenarios. 161
1.2.3 Summary of Subhorizon Results. 165
2 Maximum Willingness to Pay and Prohibitive Loadings 166
2.1 Method . 166
2.2 Base Case. 167
2.3 Deviating Scenarios. 170
2.4 Summary of Subsection Results. 174
XIII
Part V: Conclusions 177
1 Thesis Summary 177
2 Directions of Further Research and Policy Implications 179
Appendix 183
References 187
Literature 187
Laws Cited 224
Court Decisions Cited 225
XIV
Index of Figures
Figure II. 1: Percentage point differences in composition of Ger-
man population comparing years 2005 and 2050. 30
Figure II.2: Real average total nursing cost development pro-
gnosis until 2050 (base year 2005), shrinking benefits from
compulsory long-term care insurance, and remaining gap in
coverage. 61
Figure III.3: Flow chart demonstrating the model evolution in
year TJ moving to year Tt+\. 97
Figure III.4: Graphs of the probability density function f^ of
the lognormal distribution (left), and the approximating dis-
crete point probability mass distribution (fi,uji)i for the Rt
(right). 110
Figure III.5: Estimates of 1999 morbidity rates of a male indi-
vidual against the individual's age. 112
Figure III.6: Estimates of 1999 morbidity rates of a female in-
dividual against the individual's age. 113
Figure III. 7: Estimates of 1999 active mortality rates of a male
individual against the individual's age. 114
Figure III.8: Estimates of 1999 active mortality rates of a female
individual against the individual's age. 116
Figure III.9: Estimates of 1999 dependent mortality rates of a
male individual against the individual's age . 117
Figure III. 10: Estimates of 1999 dependent mortality rates of a
female individual against the individual's age. 118
Figure III.11: Alternative calibrations of the dependent morta-
lity rates qf'd against time. 119
Figure III. 12: Alternative calibrations of the morbidity rates df
against time. 120
Figure III.13: Calibration of the Decider's mortality rates q®
against time. 123
Figure III. 14: Cumulated growth rates of Decider's income over
time for t = 0,., rY - 1 . 125
Figure 111.15: Calibration of annual uncovered nursing care
costs Cf'j. 130
XXIII
Figure 111.16: Descriptive analysis of the Parent's life/health
process: Multi-year nursing care probabilities for the base
case and the deviating scenarios PI and P2. 135
Figure 111.17: Liable parts A(w, y) of initial wealth w and the
three calibrated levels of initial income Yq . 137
Figure III. 18: Effective nursing care costs if uncovered nursing
care costs amount to 10,000€ against initial wealth w and
the three calibrated levels of initial income Yq. 137
Figure III. 19: Expected total liability against initial free wealth
V o . 139
Figure III.20: Expected total discounted liability against initial
free wealth fa. 140
Figure IV.21: Base case: Optimal consumption rates c£ against
wealth available for t = 31, 60, and 70 . 148
Figure IV.22: Base case: Optimal consumption rates c£ against
time for wt = Yt = 16674.30, 250000, and 1500000. 150
Figure IV.23: Base case: Optimal risk-free investment shares
a*t against wealth available for t = 31, 60, and 70. 151
Figure IV.24: Base case: Optimal risk-free investment shares
a*t against time for wt = 16674.30, 250000, and 1500000 . . 152
Figure IV.25: Base case: Optimal consumption rates cf'* against
wealth available for t = to - 1 = 30; fc = 1 (Parent is active)
and fc = 4 (Parent is dead). 157
Figure IV.26: Base case: Optimal consumption rates akt '* against
wealth available for t = to - 1 = 30; fc = 1 (Parent is active)
and fc = 4 (Parent is dead). 157
Figure IV.27: Decider's maximum willingness to pay irD(ipo)
for full-coverage complementary long-term care insurance
in year To against free wealth ipo. 168
Figure IV.28: Prohibitive loading factors TrD(4 o)/nFair for full-
coverage complementary long-term care insurance in year 7b
against free wealth t/ o . 170
XXIV
Index of Tables
Table II. 1: Incidence and prevalence rates for 40-, 70-, and 100-
year-old German men and women. 22
Table II.2: Mortality rates for active and dependent 40-, 70-
and 100-year-old German men and women. 23
Table II.3: Average monthly rates for full-time institutional and
part-time institutional nursing care in Germany. 36
Table II.4: Average monthly accommodation and nutrition rates
for full-time institutional and part-time institutional day
and night nursing care in Germany. 36
Table II.5: Estimated 2003 average monthly total rates for full-
time institutional nursing care in Germany. 37
Table II.6: Help requirements for care levels I to III according
to §15 Abs. 1 SGB XI . 43
Table II.7: Time requirements for nonprofessional caregivers ac-
cording to §15 Abs. 3 SGB XI. 44
Table II.8: Types of benefits according to Chapter 4 of the Ele-
venth Book of the German Social Security Code (SGB XI)
for social and private long-term care insurance (LTCI), ma-
ximum amounts. 46
Table II.9: Average 2003 monthly coverage gaps between costs
for some types of formal care and benefits from compulsory
long-term care insurance. 50
Table 11.10: Estimated 2005 average monthly total rates for
full-time insitutional nursing care in Germany. 60
Table III.11: Possible states of the Parent's life/health process 71
Table III.12: Probabilities important in the evolution of the
Parent's life/health process. 72
Table III.13: Possible states of the Decider's life process . 73
Table III. 14: Possible states of the Decider's employment pro-
cess. 88
Table III.15: Results of discrete approximation of the distri-
bution of the risky asset returns Rt using Gaussian quadra-
ture: discrete return points fj and corresponding probability
weights (bi. 109
Table III. 16: Summary of deviating scenarios. 130
XXV
Table 111.17: Descriptive statistics of the Parent's life/health
process: Mean sojourn times and fair full-coverage insurance
premiums nFair. 132
Table III. 18: Descriptive statistics of the Parent's life/health
process: Active life expectancy (ALE), total life expectancy
(TLE), and relative active life expectancy (aLE = ALE/TLE
• 100%) . 133
Table 111.19: Descriptive analysis of the Parent's life/health pro-
cess: expected value, standard deviation, skewness, and ex-
cess kurtosis of the discounted total uncovered nursing cost
distribution in the base case. 136
Table IV.20: Summary of optimal decision analysis for years
Tt, t = To., t comparing deviating scenarios and base case 155
Table IV.21: Summary of parameter variation effects on the De-
cider's liability exemption-rule utilization and risk percep-
tion/exposure; comparisons with respect to base case cali-
bration . 166
Table IV.22: Fair full-coverage insurance premiums (nFmr),
break-even amounts of free wealth (ipBE), largest maximum
willingness to pay (¦Kmax), corresponding amounts of free we-
alth (ipmax) and maximum prohibitive multiplicative loading
factors (Trmax/nFatr) for base case and deviating scenarios 171
Table IV.23: Summary of parameter variation effects on the at-
tractiveness of complementary full-coverage long-term care
insurance for a given amount of free wealth; comparisons
with respect to base case calibration . 175
XXVI |
| adam_txt |
Titel: Parents' long term care risk
Autor: Schulze, Roman
Jahr: 2007
Contents
Index of Abbreviations XV
Index of Sets, Operators, and Relations XVII
Index of Symbols XIX
Index of Figures XXIII
Index of Tables XXV
Part I: Introduction 1
1 Motivation 1
2 The Contribution of This Thesis 3
2.1 What We Will Do. 3
2.2 Method . 4
2.3 Positioning Within the Existing Literature. 4
2.3.1 Long-Term Care Risk as an Intergenerational
Problem and the Choice of Insufficient Insurance
Coverage. 4
2.3.2 Financial Planning. 11
2.3.3 Background Risk Taking. 13
2.3.4 Means Testing and Individuals' Financial Behavior 14
2.3.5 Further Demarcation. 16
2.4 Some Results. 18
3 Further Organization of the Thesis 18
Part II: Characterizing Long-Term Care Risk 21
1 Dependency and Care Provision 21
2 Demographic and Social Development in Germany 25
2.1 Increased Life Expectancy. 26
IX
2.2 Low Total Fertility Rate. 29
2.3 Increase in the Population Segment of Old and Oldest Old 29
2.4 Increased Women Labor Force Participation. 31
2.5 Changes in Marriage Behavior and Household Size. 32
3 The Procurement of Formal Nursing Care 35
4 Bearing the Costs 38
4.1 The German Compulsory Long-Term Care Insurance
System. 38
4.2 The Gap in Coverage. 50
5 The Elderly Germans' Income and Wealth Situation 51
5.1 Income Distribution. 51
5.2 Wealth Distribution. 52
6 Children's Legal Obligation to Maintain Their
Dependent Parents 53
7 Shortcoming in the Demand for Complementary
Long—Term Care Insurance 57
8 Prognosis for Gap Development 58
8.1 Developments of Costs and Benefits from Compulsory Long-
Term Care Insurance. 58
8.2 Deficiency Development . 60
9 Claim Rejection and Misclassification Risk 62
Part III: Setting Up the Model 65
1 Textual Description of the Investigated Situation 65
1.1 The Time Structure. 65
1.2 The Parent . 66
1.3 The Decider. 66
1.4 The Parent's Long-Term Care Risk and the Decider's
Liability. . 67
1.5 The Decider's Decision. 69
X
Formalization 70
2.1 The Time Structure. 70
2.2 The Parent . 71
2.3 The Decider. 73
2.3.1 The Decider's Life Process. 73
2.3.2 The Decider's Preferences. 75
2.3.2.1 The von Neumann-Morgenstern
Framework and the Expected Utility
Theorem . 75
2.3.2.2 Equivalence as Utilities . 76
2.3.2.3 Utility Functions with Constant
Proportional Risk Aversion. 76
2.3.2.3.1 Definition. 76
2.3.2.3.2 Some Properties of CPRA Utility
Functions. 78
2.3.2.4 Intertemporal Separability of Total Utility,
Impatience, and Intertemporal
Substitution. 81
2.3.2.5 Life State Dependence. 83
2.3.2.6 Behavior Toward Background Risks . 83
2.3.3 The Decider's Income Process. 87
2.4 The Decider's Liability. 89
2.4.1 Initial Wealth and Wealth Available. 89
2.4.2 Uncovered Nursing Care Costs. 89
2.4.3 Extent of Liability and Free Wealth. 90
2.5 The Decider's Decision. 91
2.5.1 The Risk-free and the Risky Asset. 91
2.5.1.1 The Investment Portfolio . 91
2.5.1.2 Linking the Decider's Income to Risky
Return. 92
2.5.2 Consumption, Investment and Next Year's Initial
Wealth. 93
2.5.3 Information Update and Model Evolution . 94
2.5.3.1 The Information Status at the Beginning of
the Planning Horizon. 94
2.5.3.2 At the End of Year To. 95
2.5.3.3 In the Following Years. 96
2.5.4 Optimization. 96
XI
2.5.4.1 At the Beginning of Year TT. 97
2.5.4.2 At the Beginning of Years Tt,
« = to + 1,.,t-1. 98
2.5.4.3 At the Beginning of Year TTo . 101
2.5.4.4 At the Beginning of Years Tt,
t = ry,.,to-1. 102
2.5.4.5 At the Beginning of Years Tt,
t = 0,.,7y-l. 104
3 Solution Method 105
4 Model Calibration 106
4.1 The Time Structure Parameter To. 107
4.2 Financial Market Parameters . 107
4.2.1 Distribution Function of Risky Returns F^. 107
4.2.2 Inflation. 109
4.2.3 Risk-Free Rate of Return . 109
4.3 The Parent . 110
4.3.1 Initial Age zjj\ Latest Year of Death TTo, and the
Parent's Sex. 110
4.3.2 Morbidity Rates and Mortality Rates. Ill
4.3.2.1 Morbidity Rates Data. Ill
4.3.2.2 Mortality Rates Data . 113
4.3.2.2.1 Base Active Mortality Rates . . 113
4.3.2.2.2 Base Dependent Mortality Rates 115
4.3.2.3 Cohort Mortality Rates qf'j. 118
4.3.2.4 Morbidity Rates df . 119
4.3.3 Misclassification Rates mf. 121
4.4 The Decider. 122
4.4.1 Biometric Parameters: Initial Age x$, Sex, Mortality
Rates qf, and Length of Planning Horizon r . . . . 122
4.4.2 Preference Parameters: Degree of Constant
Proportional Risk Aversion 7 and Subjective
Discount Factor /?. 122
4.4.3 Income Parameters. 123
4.4.3.1 Planned Year of Retirement Tty. 123
4.4.3.2 Redundancy Payment Rate aY. 123
4.4.3.3 Unemployment Probabilities tit. 124
XII
4.4.3.4 Unconditional Expected Income Process . 124
4.4.3.5 Initial Income Yo. 125
4.4.3.6 The Link Between Risky Returns and
Labor Income When Employed (6 i, 6 2, r*) 126
4.4.3.7 Retirement Payments yf. 128
4.5 Liability Parameters. 128
4.5.1 Uncovered Nursing Care Costs cfJ. 128
4.5.2 Legal Retention Levels wL and yL, and Liability Rate
of Exceeding Income aL. 129
4.6 Description of Deviating Scenarios. 130
5 Some Descriptive Analyses 131
5.1 The Parent's Life/Health Process Lf. 131
5.2 The Decider's Free-Wealth Operator ip(-). 136
6 Digression: Approaches to Incorporate an Individual's
Own Long-Term Care Risk 143
6.1 Modeling Health . 143
6.2 Modeling Dependency. 144
Part IV: Results 147
1 Optimal Decisions 148
1.1 At the Beginning of Years Tt, t = r0,., r. 148
1.1.1 Base Case. 148
1.1.2 Deviating Scenarios. 153
1.1.3 Summary of Subhorizon Results. 155
1.2 At the Beginning of Years Tt, t = Ty,. ,t0 - 1. 156
1.2.1 Base Case. 156
1.2.2 Deviating Scenarios. 161
1.2.3 Summary of Subhorizon Results. 165
2 Maximum Willingness to Pay and Prohibitive Loadings 166
2.1 Method . 166
2.2 Base Case. 167
2.3 Deviating Scenarios. 170
2.4 Summary of Subsection Results. 174
XIII
Part V: Conclusions 177
1 Thesis Summary 177
2 Directions of Further Research and Policy Implications 179
Appendix 183
References 187
Literature 187
Laws Cited 224
Court Decisions Cited 225
XIV
Index of Figures
Figure II. 1: Percentage point differences in composition of Ger-
man population comparing years 2005 and 2050. 30
Figure II.2: Real average total nursing cost development pro-
gnosis until 2050 (base year 2005), shrinking benefits from
compulsory long-term care insurance, and remaining gap in
coverage. 61
Figure III.3: Flow chart demonstrating the model evolution in
year TJ moving to year Tt+\. 97
Figure III.4: Graphs of the probability density function f^ of
the lognormal distribution (left), and the approximating dis-
crete point probability mass distribution (fi,uji)i for the Rt
(right). 110
Figure III.5: Estimates of 1999 morbidity rates of a male indi-
vidual against the individual's age. 112
Figure III.6: Estimates of 1999 morbidity rates of a female in-
dividual against the individual's age. 113
Figure III. 7: Estimates of 1999 active mortality rates of a male
individual against the individual's age. 114
Figure III.8: Estimates of 1999 active mortality rates of a female
individual against the individual's age. 116
Figure III.9: Estimates of 1999 dependent mortality rates of a
male individual against the individual's age . 117
Figure III. 10: Estimates of 1999 dependent mortality rates of a
female individual against the individual's age. 118
Figure III.11: Alternative calibrations of the dependent morta-
lity rates qf'd against time. 119
Figure III. 12: Alternative calibrations of the morbidity rates df
against time. 120
Figure III.13: Calibration of the Decider's mortality rates q®
against time. 123
Figure III. 14: Cumulated growth rates of Decider's income over
time for t = 0,., rY - 1 . 125
Figure 111.15: Calibration of annual uncovered nursing care
costs Cf'j. 130
XXIII
Figure 111.16: Descriptive analysis of the Parent's life/health
process: Multi-year nursing care probabilities for the base
case and the deviating scenarios PI and P2. 135
Figure 111.17: Liable parts A(w, y) of initial wealth w and the
three calibrated levels of initial income Yq . 137
Figure III. 18: Effective nursing care costs if uncovered nursing
care costs amount to 10,000€ against initial wealth w and
the three calibrated levels of initial income Yq. 137
Figure III. 19: Expected total liability against initial free wealth
V o . 139
Figure III.20: Expected total discounted liability against initial
free wealth fa. 140
Figure IV.21: Base case: Optimal consumption rates c£ against
wealth available for t = 31, 60, and 70 . 148
Figure IV.22: Base case: Optimal consumption rates c£ against
time for wt = Yt = 16674.30, 250000, and 1500000. 150
Figure IV.23: Base case: Optimal risk-free investment shares
a*t against wealth available for t = 31, 60, and 70. 151
Figure IV.24: Base case: Optimal risk-free investment shares
a*t against time for wt = 16674.30, 250000, and 1500000 . . 152
Figure IV.25: Base case: Optimal consumption rates cf'* against
wealth available for t = to - 1 = 30; fc = 1 (Parent is active)
and fc = 4 (Parent is dead). 157
Figure IV.26: Base case: Optimal consumption rates akt '* against
wealth available for t = to - 1 = 30; fc = 1 (Parent is active)
and fc = 4 (Parent is dead). 157
Figure IV.27: Decider's maximum willingness to pay irD(ipo)
for full-coverage complementary long-term care insurance
in year To against free wealth ipo. 168
Figure IV.28: Prohibitive loading factors TrD(4 o)/nFair for full-
coverage complementary long-term care insurance in year 7b
against free wealth t/ o . 170
XXIV
Index of Tables
Table II. 1: Incidence and prevalence rates for 40-, 70-, and 100-
year-old German men and women. 22
Table II.2: Mortality rates for active and dependent 40-, 70-
and 100-year-old German men and women. 23
Table II.3: Average monthly rates for full-time institutional and
part-time institutional nursing care in Germany. 36
Table II.4: Average monthly accommodation and nutrition rates
for full-time institutional and part-time institutional day
and night nursing care in Germany. 36
Table II.5: Estimated 2003 average monthly total rates for full-
time institutional nursing care in Germany. 37
Table II.6: Help requirements for care levels I to III according
to §15 Abs. 1 SGB XI . 43
Table II.7: Time requirements for nonprofessional caregivers ac-
cording to §15 Abs. 3 SGB XI. 44
Table II.8: Types of benefits according to Chapter 4 of the Ele-
venth Book of the German Social Security Code (SGB XI)
for social and private long-term care insurance (LTCI), ma-
ximum amounts. 46
Table II.9: Average 2003 monthly coverage gaps between costs
for some types of formal care and benefits from compulsory
long-term care insurance. 50
Table 11.10: Estimated 2005 average monthly total rates for
full-time insitutional nursing care in Germany. 60
Table III.11: Possible states of the Parent's life/health process 71
Table III.12: Probabilities important in the evolution of the
Parent's life/health process. 72
Table III.13: Possible states of the Decider's life process . 73
Table III. 14: Possible states of the Decider's employment pro-
cess. 88
Table III.15: Results of discrete approximation of the distri-
bution of the risky asset returns Rt using Gaussian quadra-
ture: discrete return points fj and corresponding probability
weights (bi. 109
Table III. 16: Summary of deviating scenarios. 130
XXV
Table 111.17: Descriptive statistics of the Parent's life/health
process: Mean sojourn times and fair full-coverage insurance
premiums nFair. 132
Table III. 18: Descriptive statistics of the Parent's life/health
process: Active life expectancy (ALE), total life expectancy
(TLE), and relative active life expectancy (aLE = ALE/TLE
• 100%) . 133
Table 111.19: Descriptive analysis of the Parent's life/health pro-
cess: expected value, standard deviation, skewness, and ex-
cess kurtosis of the discounted total uncovered nursing cost
distribution in the base case. 136
Table IV.20: Summary of optimal decision analysis for years
Tt, t = To., t comparing deviating scenarios and base case 155
Table IV.21: Summary of parameter variation effects on the De-
cider's liability exemption-rule utilization and risk percep-
tion/exposure; comparisons with respect to base case cali-
bration . 166
Table IV.22: Fair full-coverage insurance premiums (nFmr),
break-even amounts of free wealth (ipBE), largest maximum
willingness to pay (¦Kmax), corresponding amounts of free we-
alth (ipmax) and maximum prohibitive multiplicative loading
factors (Trmax/nFatr) for base case and deviating scenarios 171
Table IV.23: Summary of parameter variation effects on the at-
tractiveness of complementary full-coverage long-term care
insurance for a given amount of free wealth; comparisons
with respect to base case calibration . 175
XXVI |
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| dewey-sort | 3368.382 |
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| discipline | Rechtswissenschaft Soziologie Wirtschaftswissenschaften |
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| genre_facet | Hochschulschrift |
| geographic | Deutschland (DE-588)4011882-4 gnd |
| geographic_facet | Deutschland |
| id | DE-604.BV023205958 |
| illustrated | Illustrated |
| index_date | 2024-07-02T20:10:00Z |
| indexdate | 2024-07-20T09:34:48Z |
| institution | BVB |
| isbn | 9783899523485 3899523482 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-016392112 |
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| physical | XXVI, 225 S. graph. Darst. 21 cm, 338 gr. |
| publishDate | 2007 |
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| publisher | VVW, Verl. Versicherungswirtschaft |
| record_format | marc |
| series | Versicherungswissenschaft in Berlin |
| series2 | Versicherungswissenschaft in Berlin |
| spelling | Schulze, Roman Verfasser aut Parents' long term care risk: A financial planning analysis from the children's perspective Roman N. Schulze Karlsruhe VVW, Verl. Versicherungswirtschaft 2007 XXVI, 225 S. graph. Darst. 21 cm, 338 gr. txt rdacontent n rdamedia nc rdacarrier Versicherungswissenschaft in Berlin 30 Zugl.: Berlin, Humboldt-Univ., Diss., 2007 Finanzplanung (DE-588)4017200-4 gnd rswk-swf Altenpflege (DE-588)4001420-4 gnd rswk-swf Eltern (DE-588)4014516-5 gnd rswk-swf Pflegeversicherung (DE-588)4125308-5 gnd rswk-swf Deutschland (DE-588)4011882-4 gnd rswk-swf (DE-588)4113937-9 Hochschulschrift gnd-content Deutschland (DE-588)4011882-4 g Eltern (DE-588)4014516-5 s Altenpflege (DE-588)4001420-4 s Pflegeversicherung (DE-588)4125308-5 s Finanzplanung (DE-588)4017200-4 s DE-604 Versicherungswissenschaft in Berlin 30 (DE-604)BV008188812 30 text/html http://deposit.dnb.de/cgi-bin/dokserv?id=2999008&prov=M&dok_var=1&dok_ext=htm Inhaltstext HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=016392112&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Schulze, Roman Parents' long term care risk: A financial planning analysis from the children's perspective Versicherungswissenschaft in Berlin Finanzplanung (DE-588)4017200-4 gnd Altenpflege (DE-588)4001420-4 gnd Eltern (DE-588)4014516-5 gnd Pflegeversicherung (DE-588)4125308-5 gnd |
| subject_GND | (DE-588)4017200-4 (DE-588)4001420-4 (DE-588)4014516-5 (DE-588)4125308-5 (DE-588)4011882-4 (DE-588)4113937-9 |
| title | Parents' long term care risk: A financial planning analysis from the children's perspective |
| title_auth | Parents' long term care risk: A financial planning analysis from the children's perspective |
| title_exact_search | Parents' long term care risk: A financial planning analysis from the children's perspective |
| title_exact_search_txtP | Parents' long term care risk: A financial planning analysis from the children's perspective |
| title_full | Parents' long term care risk: A financial planning analysis from the children's perspective Roman N. Schulze |
| title_fullStr | Parents' long term care risk: A financial planning analysis from the children's perspective Roman N. Schulze |
| title_full_unstemmed | Parents' long term care risk: A financial planning analysis from the children's perspective Roman N. Schulze |
| title_short | Parents' long term care risk: |
| title_sort | parents long term care risk a financial planning analysis from the children s perspective |
| title_sub | A financial planning analysis from the children's perspective |
| topic | Finanzplanung (DE-588)4017200-4 gnd Altenpflege (DE-588)4001420-4 gnd Eltern (DE-588)4014516-5 gnd Pflegeversicherung (DE-588)4125308-5 gnd |
| topic_facet | Finanzplanung Altenpflege Eltern Pflegeversicherung Deutschland Hochschulschrift |
| url | http://deposit.dnb.de/cgi-bin/dokserv?id=2999008&prov=M&dok_var=1&dok_ext=htm http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=016392112&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
| volume_link | (DE-604)BV008188812 |
| work_keys_str_mv | AT schulzeroman parentslongtermcareriskafinancialplanninganalysisfromthechildrensperspective |