Abstract Global mortality rates continue to decline, and life expectancy continues its upward trend. Besides mortality levels, policymakers and providers of financial and health services would also be interested in disability prevalence and its potential future trajectories. The length of time in good health versus the duration with major disabilities or long-term illnesses has significant financial implications for both individuals and society. In this paper, we develop Bayesian common factor models to analyse Australian age- and sex-specific disability prevalence rates. In particular, there are one or more common factors shared by both sexes, as well as specific factors for each sex. Retirement villages are purpose-built residential complexes designed for relatively healthy retirees to live as neighbours and share a communal lifestyle. We apply the model forecasts and simulations to valuate a typical retirement village contract. The cost of this accommodation service is determined by the resident’s total length of stay, which can be estimated using forecasted and simulated disability prevalence rates and mortality rates from our proposed models.
Li et al. (Tue,) studied this question.