Long
Term Care Insurance
Gambling
analogy
Some people consider Long Term Care Insurance a type of wager (particularly
as associated with moral hazard) that executes over the policy period.
The Long Term Care Insurance company bets that you or your property
will not suffer a loss while you put money on the opposite outcome.
The difference in the fees paid to the Long Term Care Insurance company
versus the amount for which they can be held liable if an accident
happens is roughly analogous to the odds one might expect when betting
on a racehorse (for example, 10 to 1). For this reason, a number of
religious groups including the Amish avoid Long Term Care Insurance
and instead depend on support provided by their communities when disasters
strike. In closed, supportive communities where others will actually
step in to rebuild lost property, this arrangement can work. Most
societies could not effectively support this type of system and the
system will not work for large risks.
