Long-term care insurance has its rewards but may not be for everyone

Still, some companies underprice their premiums for new policyholders, then raise premiums dramatically. The price increases help make the policies profitable by boosting revenue. Also, the insurer gets to pocket the premiums paid over the years by people who have to drop their coverage because they can no longer afford it.

Tom Russell, an insurance agent in Payson, Ariz., who sells long-term care insurance, found that low initial premium costs were a powerful selling point for his competitors.

"I would explain over and over again to prospective policy owners that the lower rates these companies were offering for the LTC insurance would not hold, and as time went by, the company would raise their premiums because the insurance pool would not be solvent," Russell says.

When Leonard Bloom, of Sarasota, Fla., bought a long-term health care policy eight years ago, he was told the policy couldn't be canceled unless he and his wife missed a payment. Since then, his policy's premium has soared 35%. Now, he and his wife feel trapped: They find it increasingly difficult to afford their policy. Yet they've been paying premiums for eight years, so dropping it now would feel like throwing away tens of thousands of dollars.

Good policies out there

While some policyholders have waged frustrating battles to secure benefits from their long-term care policies, others are grateful they bought theirs.

Elizabeth Morin and her husband, Dave, took out long-term care insurance when they retired 15 years ago. Dave Morin was diagnosed with Alzheimer's in 2002. His policy paid for home health care once Elizabeth could no longer care for him by herself. And when Dave moved to an assisted-living facility in 2005, insurance paid $100 a day towards that, too, just as the policy promised.

"It gave me such peace of mind and saved our resources for our children," Elizabeth Morin says. "As long as you pick a sound company, I cannot understand why anyone, who can afford it, does not buy long-term care insurance."

Despite her tribulations in collecting on her husband's long-term care policy, Paula Johnson was glad he had it: Her bills were about $6,000 a month. "I'd be financially ruined without long-term care insurance," she says.

Even the most fervent advocates of long-term care insurance point out that it's not for everyone. The very poor, for example, have Medicaid, which pays for nursing home care. The very wealthy can afford to pay for long-term care themselves.

And the middle class? Medicare isn't the answer; it doesn't pay for long-term care. Which is why long-term care insurance appeals to many middle-income Americans.

With different policies offering vastly different features, though, consumers must research their options with extreme care.

For some, the cost dwindles in relation to the benefit. Judy Koehler had been wrestling with whether to get a long-term care policy when her mother died. At the time, she was considering buying a new car, too.

"The amount I was going to pay to buy the long-term insurance for one year was just 1/20 of what that car cost me," she says. She bought the policy.

For others, the cost of coverage and the uncertainty of receiving benefits don't seem worth it. Shirley Callen, of Harrisburg, Pa., was turned down for a long-term care policy because of her health. She has sarcoidosis, a type of inflammation that produces microscopic lumps in various parts of the body.

"I'm glad they did," she says. "I couldn't afford $232 a month."

Callen plans to save and invest her money instead: "If I'm unable to care for myself, I'd rather be dead."

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