Why the young do not buy long-term care insurance

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.