LONG-TERM-CARE INSURANCE AND LIFE-INSURANCE DEMAND

This article investigates the interaction between life insurance and l ong-term care insurance markets on the demand side. In the model utili ty depends on both consumption and bequest, and utility from consumpti on is contingent on the state of health. While the demand for life ins urance increases both with decreasing income and with a rising degree of altruism, the influences of these two parameters on the demand for long-term care insurance are ambiguous. If the utility shock arising f rom disability declines, both insurance demands will rise.