Warning to people considering long-term care insurance: Some of these policies are fatally flawed. Instead of protecting you when you're old, they'll force you to drop the coverage before you can make a claim.

Long-term care insurance protects the assets of the frail, confused or ill. It will cover a certain amount of custodial care--help with bathing, eating, dressing--in your own home or a nursing home. This saves you from using your personal money to pay all the bills.

Most policies are sold with a "level premium." To buyers, that means the price of the policy won't go up. If you start at $200 a month, that's where you'll stay.

The policy's fine print, however, says something else. Although the insurer can't raise the price of your policy alone, it can put through a price increase on your entire "class" of policies. That means all the policies like yours that it sold in your state.

This loophole has spawned a dirty game. The insurer (often a small one) will tout a new policy at a bargain price. The policy will carry rich benefits, and might be made available to people who are in poorer health. You think you're getting a terrific deal.

Two years later, however, premiums might jump by 15 percent, 20 percent or 50 percent. In another two years, they'll jump again. At that point, the policy won't be competitive anymore. Healthy customers will switch to something newer and cheaper.

Those left behind--the older and sicker--make claims at a higher rate, so the premiums on the policy will rise again. One by one, most of those older policyholders will let their coverage lapse, because they can't afford to pay. Bye-bye to the old-age protection they had hoped for most.

When consumers have no other voice, they call in the lawyers. A North Dakota class action lawsuit goes to trial in October against Acceleration Life and Commonwealth Life (whose business was bought by Aegon in 1997). The attorney, Allan Kanner of New Orleans, filed a similar case in Florida. He plans to sue in Wyoming and Washington state, too.

The policies at issue weren't going to make any money, according to a company memo produced for the North Dakota case. To solve the problem, the memo said, the insurer should "file large rate increases to encourage higher lapses." In other words, raise prices in hopes of driving people out.

It drove out Harold Hanson, 94. When he bought his "level-premium" policy in 1987, he paid around $1,094 a year, Kanner says. Nine years later, his cost had soared to $3,603, which he couldn't afford to pay.

Nellie McIlroy, 93, saw her premiums leap from about $830 in 1987 to $6,638 this year. McIlroy now has Alzheimer's disease, according to the complaint. She's paying the high premium because she knows she needs the coverage.

Of more than 2,000 people who bought these policies in North Dakota, fewer than 130 are still insured, Kanner told the court.

An official of Aegon says its predecessor, Commonwealth Life, has stood behind the policies at issue.

I heard a similar sad story from Larry Blau, 72, and his wife Janet, 67, of Garden Grove, Calif. Two years ago, they bought a "level-premium" policy from American Travellers Life (ATL). Jointly, they paid $3,499 a year--the most they thought they could afford. Less than two years later, their premium jumped to $4,132.

David Larson of the Larson Long Term Care Group in Bothell, Wash., who has surveyed rate increases on long-term care policies in 35 states, says that ATL is one of the most aggressive price-increasers in the business. ATL spokesperson Jim Rosensteele says that for these policies, claims were higher than anticipated. (The company has just changed its name to Conseco Senior Health Insurance Co.)

The Blaus tape-recorded the ATL agent's sales presentation. They say there's no mention of the likelihood that premiums would rise.

A well-managed long-term care policy needn't rise in price, says Tom Foley of the Kansas Insurance Department. Travelers Life & Annuity says it has never raised premiums on existing policyholders. GE Financial Assurance, Unum and John Hancock Mutual Life say the same.

They charge more at the start than the "bargain" firms do, but you'll pay less in the end.

For a good shopper's guide, try "Long-Term Care Planning," $18.50 from the United Seniors Health Cooperative (1-800-637-2604).

Just steer clear of low-priced policies, says Bonnie Burns of California Health Advocates in Santa Ana, because those are the ones whose rates will probably rise. And tape-record the sales pitch. You never know.