Addressing long-term care risk through pension-linked insurance in the Italian context: a stochastic approach using severance pay scheme

This paper addresses the growing challenge of long-term care (LTC) dependency in aging populations by proposing the integration of LTC insurance with pension funds through the allocation of severance pay. A stochastic model is introduced to evaluate the financial sustainability and effectiveness of this approach, using Monte Carlo simulations to analyse the trade-offs between pension income and LTC benefits. The findings emphasize the need for welfare reforms and improved health and financial literacy to ensure broader adoption of LTC solutions, contributing to a more sustainable and equitable management of aging-related risks.