This paper explains why those individuals who purchase long-term care insur
ance usually postpone their decision until they reach the age of retirement
. This behavior is shown to be rational if there are fixed costs of loading
or if there is uncertainty about the costs of disability. Individuals with
a low risk of becoming disabled before retirement may prefer to buy insura
nce late in order to avoid losses in expected income. However, if the proba
bility of becoming disabled after retirement is uncertain, it is generally
preferable to buy long-term care insurance early.