In 2010 John Hancock Financial Services, a unit of Toronto-based Manulife Financial Corp., filed for permission with state regulators to raise premiums for some of its long-term-care policies by an average of 40 percent. So far 15 states have approved increases. In 2007 Genworth announced it would raise premiums by 8 percent to 12 percent on many of its policies, and in October announced a further 18 percent premium increase for some of its policies.

"Sales have ramped up," for combination policies during the same period, said Milliman's Friedrich, who's based in Lake Forest, Illinois. Sales of hybrid life and long-term-care policies by Genworth increased 124 percent in 2010 compared with 2009, said spokesman Tom Topinka. Genworth estimates that industrywide sales figures for 2010, which are not yet available, will increase by more than 50 percent, Topinka said.

Top-Selling Policy

In 2010 sales of life and long-term-care combination products at New York-based New York Life Insurance Co. jumped 92 percent, said Vice President Michael Lackey. Lincoln sold $108.5 million of MoneyGuard, the top-selling hybrid long-term-care insurance in the U.S. in 2010, a 62 percent increase compared with 2009. Sales of life and long-term-care blended products have increased by 67 percent annually since 2008 at the State Life Insurance Company.

The policies offer a more cost-effective way of insuring against the possibility of a very long nursing home stay than other products currently on the market, said Milliman's Friedrich.

"We believe the combination policies are poised to take a leadership role in financing long-term care," said Bruce Moon, vice president of marketing for State Life, a subsidiary of Indianapolis-based insurer and employee-benefits provider OneAmerica Financial Partners Inc.

Extension Of Benefits

Policies may offer an extension of benefits rider so that they'll continue to pay, up to a certain amount, if a holder spends through their death benefit while receiving long-term care. Sales commissions generally are about 8 percent of the upfront premium, said Ryan, the broker.

"It's a more 'affordable' way for certain people to add long-term care onto their policies," said David O'Leary, executive vice president and head of the financial protection division of Axa Equitable Life Insurance Co., a unit of Paris-based Axa SA.

For a 60-year-old New York man who doesn't smoke, putting $100,000 upfront into a Lincoln MoneyGuard Reserve policy would translate into maximum monthly benefits of about $5,000 a month for at least 6 years for a policy with an automatic 5 percent inflation adjustment after the first two years of benefits, according to a quote obtained by Ryan and confirmed with the company. The first $119,460 spent on long-term-care would draw down the policy's guaranteed death benefit, after which the holder would have an extension of benefits of $238,920 or more to spend if he remained in long-term care, according to the quote.

Class Act

"You have to put up a pretty sizeable amount of cash in order to get a long-term-care benefit that's meaningful," said John Sherman, president of the Cincinnati-based LTC Experts, a long-term-care insurance broker.