ETLA report: Insurance could provide additional security for retirement days

Private insurance offers an effective means for personal financial preparedness, concludes a report by the Research Institute of the Finnish Economy (ETLA). The issue is pressing: the number of 80-year-olds may even double in the next twenty years as the Finnish baby boom generation gets older.

In a welfare society like Finland, taking care of seniors is typically seen as the society’s responsibility. However, some citizens want more options and a higher quality of service than what public funding can provide. It therefore makes sense to have the option of supplementing public care with one’s own funds.

“Supplementing public care with voluntary insurance policies could improve the standard of living, especially for middle-class people. Private care and pension policies could ensure that a person doesn’t have to spend all of their money on user fees for public care”, says Tarmo Valkonen, Research Advisor at ETLA.

Getting insurance cover does not necessarily involve additional saving. Many could fund their insurance policy by releasing their existing housing equity, for example by moving to a smaller house or apartment or to a rental home. ETLA’s report argues that the government should support this new market by clarifying the public welfare promise and by promising not to seize private pension and long-term care insurance payouts e.g. via higher user fees.

The report was funded by Finance Finland.

Abstract of ETLA’s report