A computer model will be developed to evaluate long-term care insurance policies. The model will form the base of an advisory service for individuals and groups considering the purchase of these policies. In contrast to existing models, this evaluation model will be specifically designed to model the coverage limitations of private long term care policies, including restrictions of specific disabling conditions such as Alzheimer's Disease. The model will predict future long term care need and cost for an individual, based on current health, age, sex, and marital status. The consequences of purchasing alternative policies and of not purchasing insurance will be analyzed. Based on a Markov or state-transition design, the model will use transition probabilities estimated from large national and regional longitudinal studies. Multiple simulations of future events will be carried out to produce a probability distribution of predicted long term care costs. This will inform the client of the likelihood that different lifetime costs will be incurred, and allow making an informed choice based on one's personal goals and attitudes toward risk. The advisory service will be marketed to organizations which counsel the elderly on health and financial issues. The goal is to create an on-going service to aid the elderly and other individuals and groups in making rational decisions regarding the purchase of long-term care insurance.
