From an E&O perspective, this is a good article warning of the possible consequences of infrequent sales and casual planning. The most important point is made by Tobe Gerard, an LTCi specialist, who suggests that if you are not up on LTCi as an insurance solution to a complex financial and family risk, you had better network with a qualified LTCi specialist. In my opinion, the E&O risk an inexperienced agent or advisor takes when selling LTCi would not come from the insured but the insured’s adult children. Since LTCi claims are only now coming in greater numbers, it remains to be seen how many attorneys will find a fertile field of litigation among those that are disatisfied with the coverage their parents purchased many years previous.
The single most important fact that the agent or advisor should disclose to any candidate for insurance to cover the possible costs of an extended period of care for daily activities is that no long-term care policy promises that it will cover all expenses that may be incurred. At best, a long-term care insurance policy should be positioned as a means to off-set the cost of care. Such language is found in all LTC policies, but the agent or advisor should point that out first. In fact, the agent or advisor might want to come up with a separate document so stating and have the proposed-insureds sign and date it for the file.
Final note: Lifetime payout has virtually disappeared as a policy feature in currently offered LTC contracts. Benefit increase riders remain, but they often more than double the price of basic coverage. These un-capped benefits simply cannot be accurately priced by actuaries. They must depend on claims experience to do so, making such policy benefits subject to being the primary factors for inforce policy premium increases. To get at least some coverage in place – which is better than none – agents and advisors are looking for alternative coverage designs that provide good value, but keep costs down and may result in less exposure to premium increases over time.
From an E&O perspective, this is a good article warning of the possible consequences of infrequent sales and casual planning. The most important point is made by Tobe Gerard, an LTCi specialist, who suggests that if you are not up on LTCi as an insurance solution to a complex financial and family risk, you had better network with a qualified LTCi specialist. In my opinion, the E&O risk an inexperienced agent or advisor takes when selling LTCi would not come from the insured but the insured’s adult children. Since LTCi claims are only now coming in greater numbers, it remains to be seen how many attorneys will find a fertile field of litigation among those that are disatisfied with the coverage their parents purchased many years previous.
The single most important fact that the agent or advisor should disclose to any candidate for insurance to cover the possible costs of an extended period of care for daily activities is that no long-term care policy promises that it will cover all expenses that may be incurred. At best, a long-term care insurance policy should be positioned as a means to off-set the cost of care. Such language is found in all LTC policies, but the agent or advisor should point that out first. In fact, the agent or advisor might want to come up with a separate document so stating and have the proposed-insureds sign and date it for the file.
Final note: Lifetime payout has virtually disappeared as a policy feature in currently offered LTC contracts. Benefit increase riders remain, but they often more than double the price of basic coverage. These un-capped benefits simply cannot be accurately priced by actuaries. They must depend on claims experience to do so, making such policy benefits subject to being the primary factors for inforce policy premium increases. To get at least some coverage in place – which is better than none – agents and advisors are looking for alternative coverage designs that provide good value, but keep costs down and may result in less exposure to premium increases over time.