Now You See It . . .

To avoid becoming a financial burden to her children and grandchildren, Vera Smith bought long-term care insurance. Like a growing number of Americans, the 87-year-old retiree saw it as a sensible way to cover care-giving costs not included in Medicare and conventional health insurance.

But almost two years ago, Smith's insurer stopped paying benefits, contending that she violated the policy's terms by moving in with her daughter after she became too frail to take care of herself. That forced Veray Smith, the daughter, to quit her supervisory job and sell her mother's South Los Angeles house so she could afford to stay home with her.

"I'm the full-time caregiver now. It's hard," said Veray, who along with her mother has sued the insurer for bad faith. The insurer, Penn Treaty Network America Insurance Corp., declined to comment.

Consumer advocates and insurance regulators say that lawsuits and complaints like the Smiths' are likely to mushroom in the coming years as more baby boomers and their ailing parents make claims on long-term care insurance.

Many carriers found their business to be under-funded and were forced to raise rates, deny claims or exit the market altogether. Carriers like CNA, Fortis & TransAmerica are no longer in the LTC business.

Read & understand your policy benefits & limits BEFORE you buy.