Summary of Ethical Considerations & Suitability

Ethical Concerns

To ensure that she always acts in an ethical way, a sales professional in the long-term care insurance field must be guided both by her own sense of right and wrong and by a knowledge of the established rules of conduct and the applicable legal and regulatory requirements.

An agent must disclose to clients the information they need to make informed decisions, maintain the confidentiality of the information entrusted to her, strive to serve her clients with competence and diligence, and sell a product only when it is suitable to the needs and circumstances of the client. An agent must never engage in certain prohibited activities, including misrepresentation, churning, twisting, cold lead advertising, and high-pressure tactics.

As part of the sales process, the agent must educate the client, determine whether the proposed product is suitable for him, tailor the product to his needs, help him accurately and completely fill out the application, and make all required disclosures to him. The agent must comply with all state laws and regulations governing LTCI sales, and she must document that she has done so and otherwise acted ethically. But despite all her efforts, an agent may still be accused of negligence or improper conduct, and she should obtain errors and omissions (E&O) coverage to protect herself against this risk.


Long-term care insurance offers many advantages, and for many people it is a better approach to funding long-term care than relying on one's savings and assets or on Medicaid. But LTCI is not suitable for everyone.

There are no hard-and-fast rules about who should and should not buy LTCI, but in general a person should not buy if he will have difficulty paying the premiums, has limited assets, or is eligible for Medicaid. .

An agent must make reasonable efforts to obtain information relevant to suitability, discuss suitability standards with the client, and document that she has done so, usually by filling out with the client a standardized personal worksheet. If a client does not meet suitability standards and still wants to buy, he may do so, but the agent must document her discussions with him.

Replacing an insured's existing LTCI policy with a new policy can improve his coverage, but it is not always advisable. The insured and his agent should compare the premium rate as well as the benefits and features of each policy. They should also take into account whether the client is insurable under the replacement policy.

In addition to the suitability issues relevant to all LTCI coverage, there are a few considerations specific to partnership policies. Consumers considering a PQ policy should be aware of the following: Medicaid recipients may have limited choices in facilities and types of long-term care services; there is no guarantee that someone with partnership coverage will qualify for Medicaid; income is not protected by a partnership program, and not all assets are protected, including possibly one's home; and asset protection may not be available in another state. Nonetheless, a PQ policy offers an important advantage for many people -- some assurance that some of their assets can be preserved in the event they have to apply for Medicaid.