The long-term care insurance industry has "been trying to mend its image" as policyholders in recent years "got burned after some insurers that had underpriced their policies suddenly jacked up premiums by 60% or more in some cases," the Wall Street Journal reports. Consumers have complained that the policies put them at risk of losing all their benefits if the cost of premiums goes beyond what they can afford, even if they have paid their premiums for years. According to the Journal, it has now "become common" for long-term care insurers "to offer some level of residual benefits" to policyholders who drop their contracts. Long-term care insurers also are "making the policies easier to understand and trying to cut prices" in order to attract more business, the Journal reports. For example, John Hancock, a unit of Manulife Financial, in October introduced a policy that "eliminates a baffling array of 'riders' that buyers previously needed to consider and includes basic features like inflation protection," the Journal reports. Lincoln Financial Group, a division of Lincoln National, earlier this year launched a simplified version of a combined life insurance and long-term care contract that guarantees premiums will never change. The contract also has a streamlined application process. Meanwhile, Congress is trying to increase usage of long-term care insurance. A pension-overhaul bill signed by President Bush in August includes a measure that will allow consumers beginning in 2010 to take money out of any annuity they already own and use those funds on a tax-free basis to buy a long-term insurance policy. Such transactions previously were taxed as high as 35%. The new law also allows consumers to completely exchange an annuity for a long-term care policy without triggering a taxable event (Opdyke, Wall Street Journal, 11/4).

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