Over the years, I have had many people ask me whether I miss the practice of law and why I have loved the long term care industry as much as I have since joining it in 1999. I usually respond that watching The Good Wife had the effect of triggering my PTSD from the days that I did have to frequent Daley Center in downtown Chicago and be at the mercy of the person wearing a robe sitting behind the bench as if on some exalted throne. Conversely, I have loved being in LTCI sales because we help people safeguard their futures by offering them tomorrow’s peace of mind solutions today. I have also been heard to say that the long term care industry was a great “do over” for me in terms of rejuvenating myself professionally and providing a firm foundation for retirement financially.
Having just attended yet another industry conference—for good, bad, or indifferent reasons, I have lost count of how many ILTCI, GAMA/LAMP, NLTCN, and individual carrier and agency conferences that I have attended over the years—I once again find myself reflecting on the state of the industry and just how I feel about the potential of the marketplace. As a now “old dog” in the industry, I find that my belief in our products is deeper than ever, and my commitment to helping people help themselves find protection against the financial, physical, and emotional ravages of long term care even greater than it was twenty-three years ago.
I firmly believe that with the proper level of commitment and persistence, the opportunity afforded a long term care planning specialist has never been as great as it is today. With the return of carriers to the marketplace, additional carriers taking the plunge into the marketplace, as well as a range of new products being launched, the true long term care planning specialist has never had as many arrows in his or her quiver in terms of meeting the needs of the client. However with this opportunity comes associated risk. It is critical that we meet these needs by asking pertinent questions, and listening to their respective answers, while being in the position of offering sound recommendations as to product and carrier. We must always remain client-centric in our recommendations, and not be swayed by a more attractive compensation structure or ease of electronic submission.
The balance between risk and reward is such that it is imperative that the long term care planning specialist has a keen and broad exposure to all available products, and now develops a set way to conduct interviews and plan design by following a standardized and replicable fact-finding process that will potentially hold up under judicial scrutiny. Some may ask why.
As a former practicing attorney well familiar with the litigious nature of the Society we live in today, I will make the casual observation that anyone can sue anyone for any reason with or without an underlying basis—legitimate Cause of Action be damned. Justice and Equity do not recognize that frivolous lawsuits are any less expensive, time consuming, or stressful to defend. Since failing to defend such a suit can lead to a default judgment, ignoring it is never an option. Why would anyone sue you as an insurance producer or practicing financial advisor or estate planning attorney? Easy answer: Your malpractice or errors and omissions insurance policy makes for an attractive target! Long has the adage been, “When all else fails, sue the professional. If his pockets are not deep, we’ll put our hand in the insurance company’s pocket.” That may sound very cynical, and contrary to what a reader can normally expect from one of my articles, but that is the harsh reality of what has become a very dog eat dog battle between defendant and plaintiff’s bars.
Having worked closely with Compliance leaders over the years, and filling that role many times myself, I continue to exhort producers and leaders at all levels to embrace Compliance and to recognize that they exist to help us avoid problems and should not be viewed as the enemy or the “Don’t Patrol.” I have witnessed how adversely impactful a frivolous lawsuit or even a complaint with the Department of Insurance, FINRA, or the state Attorney Disciplinary Commission can be, and can categorically state that the way to avoid them is to always put your clients’ interests first.
We do not want to be in the position of defending a lawsuit twenty or thirty years down the road brought by the children or heirs of a policyholder who are looking to recoup the costs associated with their loved one’s long term care when the modest policy they purchased was long exhausted and the burden of these expenses fell back on the family coffers. A disclaimer of some kind that acknowledges the why behind the ultimate plan design chosen by the client and eventual policyholder could prove to be an integral part of a successful defense or even preclude such an action from going beyond the pre-trial stage. For this reason, a producer must have a routine way they engage clients from initial contact to policy delivery and ongoing servicing post-issue.
Won’t happen you say? It’s happening now! Courts have become extremely plaintiff friendly especially against the insurance industry and the insurance producer/financial professional. Fueling this winning streak by the plaintiffs is something known as the Doctrine of Reliance.
The Doctrine of Reliance is usually a winner because it is so easy to manipulate in favor of a sympathetic plaintiff especially before a jury of his peers. Arguments such as “My parents relied on you for your advice,” or “As a widow, my Mom relied on your recommendation as to what plan to buy…” are going to be very persuasive. Can you see where this is going, and why you don’t want to be on that train?
Through my own personal trial and error, I have determined that the best way to stay out of trouble and to “remember” pertinent aspects of the interview is to be a proficient note taker. When in doubt, write it down! This is especially important when capturing for posterity the essence of why the client is investigating long term care insurance, and the very reasons, e.g., not wanting to be a burden or dependent on their family, asset protection, independence, etc. (I have also found that when I am discussing a potential in-force rate action with a client years after the purchase, that it is great to be able to recite their own words back to them as to why they originally purchased the plan.) To this end, a good fact finder, started while on the phone prior to scheduling the actual interview, carried through the face to face or remote appointment, and concluded with policy delivery can in fact become the best insurance policy that you will ever own and it won’t cost you a dime’s worth of premium.
As we move forward with the new products that offer smaller, fixed pools of benefits, in an effort to reach more of the Middle America market, as well as new policies that offer unlimited lifetime benefits, or the flexibility afforded the “Live-Die-Quit” mantra of several carriers, we must exercise caution and apply the prudent man standard as to what is both suitable and appropriate for the client.
With the Department of Labor Ruling on fiduciary standards and individual states adopting similar legislation, there is an ever-increasing burden on the producer/advisor. Unfortunately, when coupled with the Doctrine of Reliance, we can be sued for the advice we give as well as the advice we do not tender. Not mentioning a higher cost of living allowance factor or an unlimited policy because of the higher premium attached to it, when family history may dictate the appropriateness of this plan design could be as dangerous to the producer as would be “under selling” a plan based on associated price.
Johnny Cash sang a song about a father who decided that he was going to toughen up his son by giving him the girl’s name of Sue. As expected, Sue spent a good bit of his time “kicking and a-gouging in the mud and the blood and the beer.” That is not how I want to spend the golden years of my retirement, nor do I want to see my agents bearing the burden of these frivolous lawsuits that I know are just over the horizon. Just as we know that beyond the horizon is not the end of the ocean, we know that our responsibility to these clients does not end with the sale but remains while we are the servicing agent up to, and including, the time that they or their family file a claim.
While a carefully completed factfinder like the one we utilize in our agency, that is subsequently reviewed by the client and can even be signed by the client, may not be an ironclad defense in an errors and omissions action, I am confident that it will carry enough sway as to mitigate if not eliminate culpability.
Making plan design a collaborative effort between you and the client and placing him or her in the position of expressing the why they are purchasing a policy and what they want the policy to do and then literally signing off on it, will not only be a very powerful way to protect yourself legally, but also to really solidify the sale! Satisfied clients should also become centers of influence for you in terms of referrals and introductions to their friends and family as well as their attorney and financial advisor.
Going the extra mile requires commitment on your part. It is the essence of excellence and will always differentiate you from other producers and advisors. It will be the reason that clients want to refer you to their friends and family more than just to validate their own decision to purchase. At first it may be challenging to go the extra mile, but once you make it a habit, the benefits will far outweigh the cost of investment and you will find yourself in a class by yourself! Make fact finding a part of your business today!
