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Life Health > Long-Term Care Planning

Some European countries seek private long-term care help

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Some European countries are hoping use of private annuities and insurance policies can help their residents hold down long-term care costs.

Edith Bocquaire, a French insurance industry analyst, has described how some European countries build private-sector arrangements into long-term care planning efforts in a paper posted on the website of the Schaumburg, Illinois-based Society of Actuaries.

Bocquaire notes in the article that some European countries, such as Denmark, Norway and the Netherlands, rely almost entirely on public long-term care financing programs, and that others, such as Italy, have had little luck with bringing private markets for long-term care insurance to life.

The governments of the countries in the Organisation for Economic Co-operation and Development (OECD), a group for wealthy nations, spent an average of 1.3 percent of gross domestic product on public long-term care programs in 2007. Analysts are predicting the OECD public long-term care spending average to increase to 2.4 percent of GDP in 2050, Bocquaire writes.

She says the percentage of GDP going to public long-term care spending in 2050 could rise to 2.9 percent, from 1.7 percent in 2007, in Italy; to 4.5 percent, from 2.2 percent, in Norway; and to 8.2 percent, from 3.4, in the Netherlands.

France, German, Spain and the United Kingdom all spent less than 1.5 percent of GDP on public LTC programs in 2007, and they are all hoping to hold public long-term care spending to less than 2.5 percent of GDP in 2050.

Germany and the United Kingdom both have large, active long-term care annuity markets.

In Germany, the pricing depends solely on issue age, and the premium is the same as the maximum public insurance program premium, Bocquaire says.

In 2010, she says the average long-term care benefit averaged the equivalent of about $11,000 per year.

In France and Spain, insurers require applicants to go through medical underwriting to qualify to buy contracts. The products pay guaranteed lifetime streams of benefits to insureds who are unable to perform normal activities of daily living or meet other requirements.

In the United Kingdom, Bocquaire says, insurers offer a variety of annuity-based contracts, including single-premium immediate annuity contracts designed for people who already need long-term care services.

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