WHEN MADELINE BURNS

, a 60-year-old native of Charleston, S.C., moved her Alzheimer's-stricken mother into an assisted living facility three years ago, she assumed that the long-term-care-insurance policy that her mother bought in 1985 would pay for the expenses. Unfortunately, neither of them realized that the policy only covered nursing-home stays. By the time her mother, now 87, finally moved into a nursing home, she had been billed more than $126,000 in assisted-living expenses.

"Neither of us had really read the paperwork," says Burns. "You really had to sit down and look at the lingo to understand."

Since first launched in the 1970s, long-term-care insurance has grown increasingly complex as dozens of plans, complete with numerous riders and thick booklets of terms, have entered the market. The latest generation of plans aims to alleviate some of the costs and some of the restrictions that were once standard in the industry. Unfortunately, however, these plans are just as confusing as their predecessors.

"The biggest problem for people shopping right now is understanding what they ought to be buying. You feel like you need a crystal ball. [And] I think some of the complexities arise from sellers who may not fully understand the products," says Sandy Praeger, president of the National Association of Insurance Commissioners, a consortium of state insurance commissioners who oversee the insurance industry.

To help you wade through all the options, here's what you need to know about some of the latest in long-term-care-insurance plans. (For details on premiums and benefits of these plans please see the table at the end of this story.)

Life Stage Products

In the past, policyholders were forever stuck with the same benefits they opted for when they bought their policy. Now, life stage plans allow them to boost their benefits at their own discretion.

Policyholders with John Hancock's Leading Edge plan, for example, can increase their coverage each year, assuming they remain healthy. If they tack on the consumer price index inflation rider (with this, benefits increase at the same rate as the annual change in CPI), they get the option to increase coverage by 10% of their daily benefit every three years regardless of health status. By March, the plan will be available in every state except California.

MetLife's LTC LifeStage Advantage policy offers two options. The "simple advantage plan" allows a holder to increase their coverage every three years until age 65 for a total benefit that's double the original amount. And the "custom advantage plan," offers a 3% or 5% inflation protection, which is added to the policyholder's current benefit amount every year. This policy will likely be available in every state by the end of 2008.

Sharon Luker, a certified financial planner and president of LTC Planning Consultants in Plano, Texas, sells John Hancock's life stage policy. She says life stage plans are geared toward people who currently don't have enough cash (either because they're paying for their child's college tuition or caring for an aging parent) to buy a long-term-care policy with better benefits, but expect to have more money in the future. Like most long-term-care policies, however, these products have drawbacks. "Most seniors really do have very low incomes," says Molly O'Malley, senior policy analyst at the Kaiser Family Foundation. So, it's unrealistic that people will have more money for long-term-care insurance as they're aging and working less.

Plus, these plans can get expensive. "Insurance companies don't give anything without being paid," says Richard Drew, a certified financial planner (who doesn't sell long-term-care insurance) at Westport, Conn.-based Hayden Financial Group. As you add more benefits, be prepared to see premiums increase, says Drew.

Partnership Plans

In an effort to reduce Medicaid spending on long-term-care needs, a growing number of states are signing up for partnership programs. Combining long-term-care insurance with Medicaid, these plans aim to reduce pressure on Medicaid, while also helping to prevent consumers from losing their savings to long-term-care costs.

Here's how it works: Consumers who purchase a policy are given dollar-for-dollar protection. This means that for every benefit dollar that the private insurer pays, a dollar of your assets, which are used to establish your eligibility for Medicaid, is protected. Policyholders are insured for long-term care up to a certain dollar amount through a private insurer. Once that private insurance is exhausted, they can continue covering their long-term care under Medicaid without spending their assets, which is usually required to meet the criteria for Medicaid eligibility. The requirements to qualify for the Medicaid part of the program vary by town and state. They are, however, strict enough that only the very poor will qualify, says O'Malley. Currently, a single person can't have more than around $1,000 of monthly income, no more than $2,000 in assets (savings and CDs), and no more than $500,000 in home equity (up to $750,000 in some states), according to O'Malley.

Also, it's important to know that should you exhaust your private insurance, you may not be able to receive the same exact benefits through Medicaid, says Diane Dambach, section chief for health insurance at the Wisconsin Commissioner of Insurance office. One potential pitfall, she says, is that the nursing home you wind up at through your private insurance may not accept Medicaid coverage.

Both Genworth and John Hancock currently offer these plans. Partnership programs are currently available in 13 states, including California, New York, Florida and Virginia. (The plans have also been approved, but not yet launched in six other states.)

Low-Premium Policies

With average premiums at $2,000 a year, plenty of people can't afford long-term-care insurance, says John Wider, vice president of health products and services at AARP Services.

To make premiums more palatable, Genworth unveiled Cornerstone Advantage, which cuts the premium in half to around $1,000. That savings comes at a cost, though: The policy won't kick in until a deductible that's 50 times the daily benefit is paid. If your daily benefit is $200, you'll need to rack up $10,000 in out-of-pocket payments before your claims are eligible for reimbursement. Once the deductible is met, Genworth will pay 80 cents of every dollar.

Before you sign up for this plan, make sure you can afford the deductible and the co-pays, says Dambach. You also want to find out if having this coverage will keep you from receiving Medicaid, she says. If you have difficulty paying the premiums and you believe you can qualify for Medicaid, it may make sense to forgo long-term-care insurance altogether and hold out for Medicaid. Keep in mind, though, that you'll have fewer choices when it comes to Medicaid-covered services.

Hybrid Plans

A common argument against long-term-care insurance is that there's no way to guarantee that you'll ever require long-term-care services, and should you pass away without using the plan, the premiums you paid will go to waste. The insurance industry's answer to this is the hybrid plan, which allows premiums to roll over into a death benefit. Genworth's Total Living Coverage, for example, combines a long-term-care policy and life insurance.

Before deciding on a hybrid plan, consumers should make sure that it has enough long-term-care insurance and life insurance benefits for them, since many times these plans don't offer enough of both, says Dambach.