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LONG-TERM 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 two of 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 appeal especially 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 9 percent for 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."

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 now 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.

At the time of purchase, you decide how many months you want the LTC benefits to run. You can take payments over as little as two years or as many as four years (after four years, New York Life extends you for another 18 months). The payments are guaranteed to last for the promised period.

CNA Insurance calls its combo Viacare. It pays benefits at the fixed rate of 2 percent a month. But the agents are still learning how to sell it, says Bob Miller, vice president for life marketing.

"The life guys don't understand LTC, and the LTC guys aren't comfortable explaining the life part."

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, says Nancy Magee, a vice president.

Washington Post Writers Group

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