March 15, 2005, at 4:45 p.m.
University Events Room
Glickman Family Library, 7th floor
Portland USM Campus
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Click on the link to read the original article and to read the November 9, 2006, announcement of the national award this article recently received from the Financial Planning Association
This study compares the financial desirability of buying long-term care insurance versus the opportunity cost of investing the required funds at several different rates of return. Because of the timing differences between premium payments and potential receipts of benefits, the study computes the net present value of buying LTC insurance based on the present value of the expected receipts minus the present value of premium payments. We use data from the 1999 National Nursing Home Survey (NNHS) and older data from a New England Journal of Medicine study to determine the probability of needing nursing home care at certain age ranges (40–55, 55–65, and over 65) and for what length of stay, broken down for male and female. We use a 2002 market quote for insurance costs and benefits from a leading long-term care insurer. The NNHS data alone indicates that buying insurance appears to be preferred over self-insurance for all but the most aggressive female investors. It is also desirable for cautious male investors, but may not be for more aggressive investors.
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Joel Gold, Ph.D., CFP, teaches finance and personal financial planning as a professor of finance at the Univer of S. Maine. He is founder and principal of The Gold Company, a registered investment advisory firm in Portland . Gold has been a newspaper columnist and television and radio host on financial matters.
David VanderLinden, Ph.D., teaches finance, international business, and international finance as an Associate Professor of Finance at the University of Southern Maine. Professor VanderLinden spent 16 years in several finance positions in Fortune 500 firms before changing to an academic career about 15 years ago. Much of his research work has centered on foreign exchange risks and hedging, although he has occasionally has addressed other topics such as this study long term care insurance. Professor VanderLinden has been published in the Financial Analysts Journal, Managerial Finance, Journal of Multinational Financial Management, Review of Financial Economics, Applied Financial Economics, and the Journal of Emerging Markets.
John S. Herald, M.A., FAHM, has a Master’s Degree in Public Policy and Management from the Edmund S. Muskie School of Public Service, and is currently a graduate candidate at the University of Southern Maine in a joint degree program for a Master's in Accounting and Master's in Business Administration. He is a Fellow in the Academy of Healthcare Management.
The colloquium is sponsored by the L.L. Bean/Lee Surace Endowed Chair in Accounting.
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USM Professor Jeffrey Gramlich was appointed the first L.L. Bean/Lee Surace Chair in Accounting in the USM School of Business in 2003. His appointment was made possible by a $1 million gift from L.L. Bean, Inc., its board chair, Leon Gorman, his wife Lisa, Jim and Maureen Gorman, and Tom Gorman, who established the chair in memory of L.L. Bean CFO Lee Surace '73, '81, who died in March of 2001. Surace was chair of the USM School of Business' Advisory Council and was a frequent guest lecturer.
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