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Each agent authorized to solicit long-term care insurance must satisfy the training and continuing education requirements. The training requirements are as follows:
The required LTC training is included in the hours required for overall continuing education, not added to them. Note that long-term care training is not required when an agent is transacting accelerated death benefit provisions or riders that do not require services.
With regard to long-term care insurance, all insurers, brokers, agents, and others engaged in the business of insurance owe their clients a duty of honesty, good faith, and fair dealing. Conduct of an insurer, broker, or agent during the offer and sale of a policy prior to the purchase can be counted in any legal action alleging a breach of these duties.
Insurers, agents, and brokers are not allowed to compel policyholders to replace long-term care insurance policies unnecessarily. It is illegal to cause a policyholder to replace a long-term care insurance policy that will result in a decrease in benefits and an increase in premium.
According to the Insurance Code, any third or greater policy sold to a policyholder within a 12-month period is automatically considered to be unnecessary. This rule, however, does not apply to instances in which a policy is replaced solely for the purpose of consolidating policies with a single insurer.
Every insurer providing long-term care coverage in California must provide a copy of any advertisement intended for use in California to the Commissioner for review at least 30 days before it is used. The advertisement must also be retained by the insurer for at least 3 years.
An advertisement designed to produce leads must prominently disclose that an insurance agent will contact the consumer if that is the case. An agent, broker, or other person who contacts a consumer as a result of receiving information generated by a cold-lead device must immediately disclose that fact to the consumer.
All insurers that market long-term care insurance must develop and abide by suitability standards to determine whether the purchase or replacement of LTC insurance is appropriate for the applicant's needs. A copy of the standards must be available for inspection upon a request by the insurance Commissioner. It is the insurer's responsibility to train its agents in the use of the suitability standards.
California regulates the sale of long-term care insurance in order to promote the public interest, promote availability of insurance, and protect consumers from unfair or deceptive sales or enrollment practices. However, when purchasing LTC insurance, the consumer needs to be aware of benefits and limitations to avoid problems in the event of a claim in the future:
When long-term care coverage is replaced, the sales commission that is paid by the insurer and that represents the percentage of the sale normally paid for first year sales of long-term care policies or certificates will be calculated based on the difference between the annual premium of the replacement coverage and that of the original coverage. If the premium on the replacement product is less than or equal to the premium for the product being replaced, the sales commission will be limited to the percentage of sale normally paid for renewal of long-term care policies or certificates. Replacement is contingent upon the insurer's declaration that the replacement policy materially improves the position of the insured. This rule does not apply to group insurance replacement.