LTC private insurance — premium challenges in the context of the feminization of old-age — case of Poland

The article addresses the problem of fi nancing the risk of long-term care in old age using private insurance as a challenge for the Polish market — due to the lack of systemic solutions in Poland for taking on old-age LTC risk, and the still low level of total expenditure on LTC risk. Attention was focused on the issue of the cost of private LTC insurance in the context of the feminization of old age — as a factor infl uencing both demand and supply. Therefore, the research issue is the empirical analysis of the pure premium as determining the cost basis of the instrument, taking into account diff erences in life expectancy and the risk of old-age dependency due to age, as factors determining the risk, but also the potential interest in purchasing an instrument and the need for the insurer to calculate the premium in a unisex formula. The aim is to check whether the cost of risk management in the private LTC insurance formula would be acceptable, considering the age at which the decision to purchase it was made. The main finding is the identification of a demand barrier for individual private LTC products related to the high cost of such insurance in relation to average incomes. The contribution exceeds the ceiling of 10% of the average net salary (this is the amount that should be voluntarily transferred from the income received) for Polish women and men aged 45 and over. On the other hand, the insurer would have to significantly increase the pure premium based on unisex life tables to maintain a safe and profi table portfolio structure. If the pure premium is left at the average level for gender, the profi tability of the portfolio is maintained only up to a maximum of 40% of women’s share, and yet women should (for social and demographic reasons) be the main recipients of this product.