Taking Care of Mom and Dad: Regulatory Uncertainty Poses Risks

LTC insurance is still in an evolutionary stage. In 1980, there were a few standard products offered. By 1990, a variety of products had emerged. There are literally hundreds of individual contracts, with none of the standardization that's part of Medicare supplement policies.

While it might seem logical for federal regulation of LTC to follow up with Medicare supplement regulation, experts feel the move would be premature. There are two reasons for the hesitation: fewer people buy LTC insurance and the insurance industry is still experimenting with different versions. Product revisions and changes occur with such rapidity that last year's LTC policy is quickly replaced by a new version.

For example, early LTC policies excluded Alzheimer's disease. Now, most policies cover this ailment. In addition, early policies usually required a period of prior hospitalization before benefits were triggered. Many current policies do not have such a requirement.

In the early years, the LTC policy was a contract sold only to individuals. Now, LTC coverage is marketed on a group basis, as an employer-sponsored benefit and as a rider to life insurance policies.

Probably the most important advantage to ownership of LTC insurance is protection of personal assets. This is insuring against the risk of liquidating assets and exhausting personal financial resources to pay for a nursing home stay.