Chapter 5 Review Questions

Agents have an ethical duty to inform prospects of the nature, cost, and levels of LTC. To ensure suitability, agents must gather relevant client information, adhere to state requirements, and document the sales process — including fact-finding forms, correspondence, and notes. Prospects with low incomes and few assets generally should not buy LTCI; they will typically qualify for Medicaid. A wealthy client who self-insures takes on uncapped (unlimited) liability — self-insuring does not maximize estate size if long-term care costs are substantial.

When considering replacement, the identity of the existing insurer is typically not a factor (unless financially impaired) — but tax status, partnership status, policy age, and policy language all matter. The key feature distinguishing a PQ policy from a non-PQ policy in a replacement presentation is asset protection. Factors that could negatively impact a partnership plan include: high income (may not qualify for Medicaid), long benefit period (may never exhaust benefits), and few assets (nothing significant to protect).