Insuring longevity risk and long-term care: Bequest, housing and liquidity

We study the impact of housing wealth and individual preferences on demand for annuities long-term care insurance (LTCI). build a multi-state lifecycle model that includes longevity risk health shocks. The preference is represented by recursive utility function separates aversion elasticity intertemporal substitution (EIS). When shocks are considered, higher level lowers annuity demand, while lower EIS has opposite effect. diminishes with weaker bequest motive, more liquid wealth, or access to LTCI, all which increase annuities. presence home equity can enhance but enhancement marginal when LTCI available. crowding-out effect strengthened lack motives degree aversion. cash poor asset rich may coverage than their renter counterparts preserve bequests. both life available, we find product robust changes in EIS, providing insights into designs bundle LTCI.