Part 5 of a 6 Part Series: Long Term Care Insurance – Know What You Sell

Tell Me More: Errors and Omissions InsuranceBefore you sell Long Term Care Insurance, it is extremely important that you take the time to educate yourself not only on the various policies offered among competitors but also in understanding the very limited circumstances under which Medicare may cover some care in a skilled nursing facility.

One out of two people over the age of 65 will need some form of long term care, whether it is homecare, assisted living, nursing home care or a combination of the various levels of care.

This agent did not do his homework and as a result, his client was grossly underinsured when he filed for Long Term Care Insurance benefits.  Long Term Care Insurance sales require a great amount of on-going education and commitment from the agent that wishes to sell this product.


The agent sold the client a long-term care policy, after stating that it would provide comprehensive protection in the event that he was confined to a nursing home. The client, who was 75 years old, became ill and needed to be confined to a nursing home. The insurer paid benefits under the policy, but terminated same after a year.  The client thereafter learned that the maximum amount of benefits allowed by the policy was $65,000 for nursing home or assisted living facility care.

The client filed an action against the insurer and agent.  As to the insurer, the client alleged that it was engaged in a general conspiracy to market inadequate long-term care insurance.  The agent allegedly failed to advise the client that the policy would not provide coverage for more than a limited nursing home confinement. The agent maintained that he merely referred the client to the insurer’s product, and was otherwise unaware that coverage thereunder would be inadequate.

The client’s attorney originally focused the action against the insurer, and pursued conspiracy theories against it. The insurer countered these arguments, by presenting evidence that its policy was approved by state regulators.  The client’s attorney nevertheless argued that the insurer’s promotions and sales presentations were misleading.  He then focused the case on the agent, who conceded that he did not investigate the client’s possible needs for long-term care insurance with limits in excess of $65,000. The agent asserted that such an investigation would have exceeded the scope of his duties owed to the client. However, the court denied his motion for summary judgment on this ground.  The insurer ultimately settled with the client, when faced with adverse publicity and potential exposure, by agreeing to continue payments for his nursing home care.  The agent also settled for $185,000.


  • Always offer your client premiums for various benefit period options and benefit amounts, along with inflation protection options, when it comes to Long Term Care Insurance.
  • Always offer proposals from more than one insurer.
  • Compare and contrast the differences between policies for them.
  • Once the client has made their coverage decision and completed an application, send a letter summarizing what was discussed and what they selected.
  • Make sure you leave an Outline of Coverage with them and make sure you have gone over that outline with them.

If you would like to consult with us regarding your errors and omissions insurance needs, please feel free to contact us today.

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