Mike Ditka Believes in Long-term Care Insurance

No, I think you may have missed my post. This is along the lines of DI sales. if you don't show them the max available and they file a claim and are unhappy, guess where they come for the difference?

We were taught in the old days to take a max illustration and have the client sign off on it for our files. The biggest reason is they can come back and hit your E&O saying had they known more coverage was available they would have bought it.

Agents don't win those situations.
 
No, I think you may have missed my post. This is along the lines of DI sales. if you don't show them the max available and they file a claim and are unhappy, guess where they come for the difference?

We were taught in the old days to take a max illustration and have the client sign off on it for our files. The biggest reason is they can come back and hit your E&O saying had they known more coverage was available they would have bought it.

Agents don't win those situations.



I think that the sales manager who taught you that was more concerned about maximizing his overrides than about protecting you from an E&O claim.
 
"I think that the sales manager who taught you that was more concerned about maximizing his overrides than about protecting you from an E&O claim. "

No sales manager taught that. I think you're whistling past the graveyard. WA state requires showing max available for DI. as agents have been sued for deciding for the client what a policy should have rather than what the policy offers.

I mean heck you can continue to do what you do as I don't care that much anyway, but let me ask you this.

If it were you and somebody sold you a policy where you didn't know all your options and you move into claim and come up short in areas that could have been covered, how fast would you be incontact with your lawyer?

It has nothing to do with making more commission, it has everything to do with not having to give your commission back by doing the right thing.
 
"I think that the sales manager who taught you that was more concerned about maximizing his overrides than about protecting you from an E&O claim. "

No sales manager taught that. I think you're whistling past the graveyard. WA state requires showing max available for DI. as agents have been sued for deciding for the client what a policy should have rather than what the policy offers.

I mean heck you can continue to do what you do as I don't care that much anyway, but let me ask you this.

If it were you and somebody sold you a policy where you didn't know all your options and you move into claim and come up short in areas that could have been covered, how fast would you be incontact with your lawyer?

It has nothing to do with making more commission, it has everything to do with not having to give your commission back by doing the right thing.



If it's the law, in WA, to show the maximum disability benefits possible, then of course you need to show the maximum benefits possible whenever you show a disability insurance illustration.

You didn't say "it was the law", in your original post, you said that you were taught that.


Is it the law in WA state that someone be shown an LTCi policy with the maximum benefits?

For most companies, the maximum benefits would be a $400 Daily Benefit, 5% compound inflation benefit with no cap, a 0 day Elimination Period, Lifetime Benefit Period, not to mention all the riders. You'd be looking at a premium of over $12,000 per year for most companies for a healthy 55 year old.

Oops, I forgot to add the Return of Premium Rider (because we don't want to be sued by the heirs). That makes the premium over $20,000 per year.

This is NOT disability insurance.
It's long-term care insurance.

We need to show suitable, appropriate policy designs, NOT the maximum benefits available.
 
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good luck with that. I hope it doesn't bite you in the ass. I'm sure your position is defensible.


straight from the study guide for WA.

"As every field agent knows, clients often prefer to have the agent make selections for them, but this is not wise. Although the agent will be valued for the advice he or she gives, the actual benefit decisions need to be made by the consumer. This means the agent must fully explain each option so that the consumer can make informed choices. In a way, it is similar to the cafeteria insurance plans where employees have an array of choices in benefits. The difference is that the long-term care policies have no limits on the choices that the consumer can make. If he or she is willing to pay the price, absolutely everything available can be selected. Typically an agent will go from available benefit to available benefit, explaining each option, and getting a decision from the applicant before moving on to the next decision."


Agents must attempt to document whether or not an individual should purchase a long-term care insurance policy, whether that happens to be a traditional long-term care contract or a Partnership contract. Washington requires companies to develop suitability standards (which agents must follow) to determine if the sale of long-term care insurance is appropriate. These standards must be available for inspection upon request by the Insurance Commissioner.

"How does an agent know if a policy is suitable? Simple questions can determine that: Is insurance appropriate for this individual? Can the applicant afford the premiums year after year, especially if the rates increase? Does the policy actually address the applicants potential needs and desires."

"4) In completing the form, each subsection shall contain information which succinctly and fairly informs the purchaser as to the contents or coverage in the contract. If the contract provides no coverage with respect to the item, that shall be so stated. Address the form to the reasonable person likely to purchase long-term care insurance."

part of.
284-54-300
Information to be furnished, style."

Maybe it's different in Jersey. But in WA it is pretty much show em their options, let them decide, indicate what they chose and what they turned down.

I would think when push comes to shove in court, documents showing you did a complete presentation would hold up better than saying "I didn't think they could afford it, so I didn't go over it with them."

But good luck with that.


 
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good luck with that. I hope it doesn't bite you in the ass. I'm sure your position is defensible.


straight from the study guide for WA.

"As every field agent knows, clients often prefer to have the agent make selections for them, but this is not wise. Although the agent will be valued for the advice he or she gives, the actual benefit decisions need to be made by the consumer. This means the agent must fully explain each option so that the consumer can make informed choices. In a way, it is similar to the cafeteria insurance plans where employees have an array of choices in benefits. The difference is that the long-term care policies have no limits on the choices that the consumer can make. If he or she is willing to pay the price, absolutely everything available can be selected. Typically an agent will go from available benefit to available benefit, explaining each option, and getting a decision from the applicant before moving on to the next decision."


Agents must attempt to document whether or not an individual should purchase a long-term care insurance policy, whether that happens to be a traditional long-term care contract or a Partnership contract. Washington requires companies to develop suitability standards (which agents must follow) to determine if the sale of long-term care insurance is appropriate. These standards must be available for inspection upon request by the Insurance Commissioner.

"How does an agent know if a policy is suitable? Simple questions can determine that: Is insurance appropriate for this individual? Can the applicant afford the premiums year after year, especially if the rates increase? Does the policy actually address the applicants potential needs and desires."

"4) In completing the form, each subsection shall contain information which succinctly and fairly informs the purchaser as to the contents or coverage in the contract. If the contract provides no coverage with respect to the item, that shall be so stated. Address the form to the reasonable person likely to purchase long-term care insurance."

part of.
284-54-300
Information to be furnished, style."

Maybe it's different in Jersey. But in WA it is pretty much show em their options, let them decide, indicate what they chose and what they turned down.

I would think when push comes to shove in court, documents showing you did a complete presentation would hold up better than saying "I didn't think they could afford it, so I didn't go over it with them."

But good luck with that.




Of course the outline of coverage needs to be filled out and completed and given to the client. That's what this statute is saying.

Nowhere in this statute does it say what you said.

You said that the client has to be shown an illustration with the maximum benefit choices AND you said that the client has to sign that illustration.

Just out of curiosity, do you really show illustrations to every prospect that include the maximum benefits allowable by the company(ies) you represent? Do you really show them a $400 Daily Benefit, 5% compound with no cap, Lifetime/Unlimited, and a 0 or a 30 day Elimination Period? Do you also include every possible rider in that illustration?
 
"This means the agent must fully explain each option so that the consumer can make informed choices"

What I do is explain that" I am required to show you all your options and their costs. That does not mean you HAVE to take them, but it should be up to you to decide their worth. "

So yes, we go over options and discuss their importance.

I'm pretty dam flexible, I have learned not to come into a meeting with a preset idea.

We just do things differently.

I've been to court (securites), caught in a client divorce and split up of his 401(k). While I didn't do anything wrong in the first place, what saved my ass, was the fact that I do cover the bases and let the client decide what they want. I would suggest you follow what ever your state says to do, cause that's what a judge is going to look at and make their decisions from.
 
I am a big believer in due diligence when it comes to CYA; especially considering how litigious our industry has become.

The definition of "financial advice" and the qualifications to be able to give that advice out seem to be expanding all the time, and are becoming a legal grey area depending on the state your in.

Insurance agents who are engaged in insurance sales/advice are more and more being held to the fiduciary standards of a RIA when a complaint comes down the line against them.
What was an "insurance sale" 10 years ago, could very well be classified as "financial advice" by FINRA/DOI/DOJ/Judge/Jury.

After all, insurance products are financial instruments; so would making a recommendation during a sale be construed as financial advice? You are "advising" them on purchasing a financial instrument....
By that logic it would take a series 7 or 66 to give advice on any insurance product....


With all the ambiguity in the air once your slapped with a lawsuit; why would you not exercise a bit more due diligence when presenting to a prospect??


While I might not have a max illustration signed off on for each client; I do speak to them about how much coverage they would qualify for and based off of that what level of coverage they would be comfortable with.
I also spreadsheet 3 options for clients, the top tier option is what would usually be considered a cadillac type plan.
I do have the client sign the sheet with the options presented. I give them a copy and I keep a copy.
 
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