PREMIUM INCREASES AND POLICY CANCELLATIONS

Companies can't single you out for a rate increase. However, they can increase rates on a class of similar policies in your state. Most premiums do increase over the life of the policy. The National Association of State Insurance Commissioners has established rate-setting standards and about half of the states, along with several of the large insurance companies, have adopted these measures.

Long-term care policies are "guaranteed renewable," which means that they cannot be canceled or terminated because of the policyholder's age, physical condition or mental health. This guarantee ensures that your policy won't expire unless you've used up your benefits or haven't made your premium payments.

PROBLEMS PAYING THE PREMIUMS

If you stop paying your premium or drop your benefit, a "nonforfeiture option" will allow you to receive a reduced amount of benefit based on the amount of money you've already paid. Some states require policies to offer nonforfeiture benefits, including benefit options with different premiums.

Since nonforfeiture provisions vary by location, check with your state's insurance department or your state's listing at the National State Health Insurance Assistance Program (SHIP) before dropping your policy. If your policy doesn't have a nonforfeiture option and you stop paying the premiums, you'll lose all the benefits for which you have paid.

POLICY SHOPPING

If you've determined which long-term care insurance options best meet your needs and you're ready to buy a policy, do the following:

• Ask your state insurance department for a list of companies approved to sell long-term care insurance policies in your state. Find out whether there were complaints about any of the companies that sold them.

• Check the stability of the company and be sure it has a long history with this type of insurance. You can check this information at websites for companies including Moody's Investors Service, Standard and Poor's and A.M. Best.

• Compare information and costs from at least three major insurance companies. Find out how often and by how much the companies have increased their premiums.

• Get a written copy of any policy you're considering. Review it carefully, perhaps with the assistance of your attorney or financial adviser. Write out your questions, and have a representative of the insurance company respond to your questions in writing.

• Never let anyone pressure or scare you into making a quick decision.

• Never pay any insurance premium in cash, and always make your check payable to the company and not an individual.

• Nearly all states require insurance companies to give you 30 days to review your signed policy. During this time, you can return a policy for a full refund if you change your mind.

• Still have questions or concerns? Contact the agency listed for your state at the State Health Insurance Assistance Program (SHIP).

Deciding whether long-term care insurance is right for you can take a significant amount of time and research, but making the effort will be time well spent.