Long-term care insurance, according to the March 21 New York Times, is back in the news as policyholders are hit with ever-increasing premiums -- up 50 to 100 percent. Maybe it's time to finally put the stake in the heart of what most would agree is a failed financial product.

It has become apparent that there are too many moving parts in these policies for the insurance industry to accurately predict their costs. They obviously made money in the early days when they were collecting premiums and not having to pay much out in claims. Remember, long-term care collects money from younger adults and builds up a reserve that can pay for long-term care at what might be 10, 20 or 30 years downstream. In the early years, when most of the activity involved collecting premiums and banking them, the policies generated a lot of positive cash flow. Now, the chickens are coming home to roost.

The tragedy of rising premiums for those who have purchased long-term care policies lies at the feet of feckless state insurance commissioners who allow what is clearly a rip-off of our most vulnerable. Those policies were sold years ago with nothing in the marketing or promotional materials suggesting that premiums could more than double in the years before benefits might be paid. Further cynicism of the insurance industry is also expressed in a business model that deliberately predicted that 5 percent of buyers will give up and forfeit all their premium payments before any benefits need to be paid.

Meanwhile, receiving benefits is like pulling teeth. Advocacy companies have formed to help policyholders do battle with their LTC carriers. To collect $9,000 owed to my late mother, I finally had to write to, and repeatedly call, the chairman of the board of directors of a major national insurance company. If I hadn't been a financial columnist, I would still be trying to collect.

The answer is simple. States should allow no premium increases on existing policies. Period. If the new environment of lower interest rates and mortality requires higher premiums for new policies sold going forward, we'll let market forces operate to see if there is a market for new policies priced to reflect low interest rates and no forfeitures.

Meanwhile, why should people who bought contracts 10 or 20 years ago be called upon to subsidize future sales? What could possibly be a fair rationale for having past policyholders subsidizing a company's faulty business model. Insurance companies make plenty of money on the products that work well for them -- like life insurance and mutual fund products. They should use what they make on profitable lines to pay for their error in judgment rather than gouging seniors who've been loyal customers for many years.

When asked for permission to raise premiums, state regulators have the power to "just say NO!" They should force the insurance industry to pay for its mistakes. AARP should use its muscle to protect the seniors who are still paying billions a year to insurance companies. What's even more galling is the fact that since 2004, American taxpayers effectively now guarantee the solvency of these insurance companies. They owe us a lot. Barring an insurance company from selling any business in a state unless they freeze long-term care premiums would not be unreasonable.

Stephen Butler is the author of "Roadmap to Retirement Security" and can be reached at 925 956 0505 #228 or subtler@pensiondynamics.com