Housing wealth and long-term care insurance demand: Survey evidence

This paper uses survey methods to assess the impact of access to housing wealth on long-term care (LTC) insurance demand. We compare two new mechanisms to finance LTC insurance with housing wealth: reverse mortgage loans and home reversion (partial sale and leaseback). Using data from an online survey of urban Chinese homeowners, we find that housing liquidity increases the stated demand for LTC insurance. On average, the survey participants spent 15.7% of their given total wealth to buy LTC insurance when they could use savings and a reverse mortgage, 12.8% when they could use savings and home reversion, and 5.2% when they could only use savings. Product demand was linked to economic factors, demographic variables, health, bequest motives, house price expectations, product understanding, and financial capability. Our results inform the design of new public or private sector programs that allow individuals to access their housing wealth while ‘aging in place’.