Long-term care insurance is growing ever more complex.

As the population ages, larger numbers of people are purchasing coverage. Meanwhile, the industry hopes to reach younger, more affluent buyers by combining long-term care (LTC) with life insurance.

A basic LTC policy covers the potentially catastrophic cost of a long-term stay in a nursing home. It pays for people with severe mental impairment, such as Alzheimer's disease, or those who can't handle their essential physical needs (typically, bathing, dressing, eating, continence and moving around). Average national cost: $56,000 a year.

Comprehensive LTC policies include coverage at home, in adult day care and at assisted-living communities. These kinds of policies especially appeal to older buyers.

The newest approach adds LTC coverage to cash-value life insurance. The sales pitch: You get something back the life insurance even if you never need long-term care.

What are the odds that you'll actually need a nursing home?

A medical study done 10 years ago projected that around one-third of the people reaching 65 would spend at least three months in a nursing home; 24 percent would be there for at least a year, and just 9 percent at least five years. Women are more likely to face long-term stays than men are.

"Today, nursing-home stays are shortening as more people opt for home care or assisted living," says Steve Moses, president of the Long Term Care Center in Bellevue, Wash. "But the need for long-term care is going up."

How it works

Here's how combined life insurance/LTC insurance generally works:

You buy cash-value life insurance if you need the coverage anyway. For example, you might own a lot of real estate or a closely held business. Your family will need cash after your death, while untangling your illiquid assets.

If you need long-term care, you start taking money from the death benefit usually on a prearranged schedule. The withdrawals are tax-free. At death, your beneficiaries get whatever remains of the insurance. For example, taking $60,000 from a $100,000 policy leaves $40,000 for heirs.

As far as I know, all the combos involve cash-value insurance, not term insurance. The insurers who offer combo products structure them in various ways.

New York Life calls its product the Asset Preserver. You put up a single cash premium enough to buy at least $24,000 of universal-life insurance. The cost depends on your age, sex and health.

Women currently account for 70 percent of the business, says Eugene Luciani, a vice president at New York Life. A 65-year-old woman, investing $50,000 in the policy, would get $92,150 in death benefits and pay about $252 a year for the LTC protection.

CNA Insurance calls its combo Viacare. It pays benefits at the fixed rate of 2 percent a month.

John Hancock offers Unison a variable universal-life policy plus an LTC rider. You invest your policy's cash value in mutual funds. The amount of money available for LTC care will depend on how much you put into the policy and how the markets do.

Of the policies sold, the average face value is running at $450,000, says a vice president, Paul Strong. If you're 55 and want to assume that your policy will earn 10 percent on its investments, you'd pay $5,839 a year plus an extra $348 for LTC benefits. If you want to assume a 6 percent return, you'd pay $8,237 for the insurance and $360 for the LTC benefits.

GE Long Term Care Insurance has no combo and isn't sure the market needs one. "People are better served by buying a good LTC policy and separately buying life insurance," says President Tom Skiff.

Prudential doesn't offer combos, but is considering them, said Nancy Magee, a vice president.

But at Prudential and many other insurers, your regular cash-value or level-term policies may already allow for "accelerated benefits." Under that provision, you can start using up your death benefits if you've been in a nursing home for six months and expect to stay there permanently.

It's no substitute for LTC coverage, but don't overlook it.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington, 20071-9200.

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