Pennsylvania no longer issues a “Broker” license, at least for LTCI, life and disability insurance.  We are now called “Producers,” regardless of whether we are independent of an insurer, or are the representative of a single insurer. Either way, an appointed Producer technically represents the insurer, not the consumer.

You can check the companies with whom a producer is “appointed” (i.e., authorized to sell the company’s policies) on the Pennsylvania Insurance Department’s Web site at http://www.ins.state.pa.us. When you go to that Web site, start with “Resources for Producers,” select “more information,” then select “Search for Individual Licensee,” enter the Producer’s license number, select “Accident and Health” under Insurance Type, enter the last name and the first name of the Producer, and the state, PA — then select “search.”

Note that under Act 147 of 2002 (40 P.S. § 310.71), an individual licensed to sell “Accident and Health Insurance” in Pennsylvania could, upon giving notice to the consumer, submit an application for long-term care insurance to a company without being appointed by the company. In such a case, however, the company has the right to decline to accept the application.  This process is a vestige of the Broker’s License process, discontinued in Pennsylvania in 2002.

As a practical matter, you should ask the individuals to identify the companies with whom they are currently appointed and whether or not they have a “principal” company.  I often find in competitive situations that the other producer may say that he or she represents company X as a career producer but says that he or she is “allowed” to sell other companies’ products “where appropriate.”  In my opinion, stay away from that kind of arrangement. 

Affordability should be considered.  Forgive me for sounding like a salesperson, but insurability and what happens between “now and then” are also important considerations.  If LTCI is looked at as an isolated expense against a risk way down the road, a decision on whether to buy a long-term care insurance will be put in the garage, and not just on the back burner.  LTCI should be considered within the context of the individual or couple’s total financial and lifestyle plan.  LTCI addresses a risk not covered by health insurance nor, in any significant way, by Medicare.  LTCI is not an appropriate expense for everyone.  But neither is LTCI necessarily a budget breaker, especially if coverage is tailored to work with the resources of the individuals.  I think that "benefits" are too often over-sold, while useful "benefit structures" are overlooked. You will want to talk with a knowledgeable salesperson about benefit structures such as shared care, limited benefit periods (2, 3, or 4 years), or simple instead of compound inflation riders. Another affordability option is policies that offer a much higher initial benefit amount, but no inflation rider. The client needs to consider other resources, such as social security and retirement benefits, that could be allocated to the cost of care and thus reduce the net LTCI insured benefit needed.

Premiums for LTCI will increase in the future.  Without a working crystal ball, I advise my younger prospective clients to anticipate that premiums are likely to at least double over the course of their payment history, but I also caution clients to remember that those costs will exist in the context of other future inflated expenses and, dare we hope, higher incomes.  Each policy sold in Pennsylvania does include a “Contingent Non-forfeiture Benefit” that provides some (not much) relief should premiums increase a certain percentage over the originally issued premiums for a policy.  More practically, companies will allow an insured to reduce policy benefits or drop riders in later years with a proportionate reduction in premium price.  The bottom line? Long-term care insurance is one element in planning and should be considered in the context of the individual’s total financial and personal circumstances.

The stability of LTCI insurers should be considered prudently.  Don’t buy based on "price" alone or on the basis of fancy brochures.  Even experienced insurers have withdrawn from the market.  That is also true of life and disability income insurers.  I do believe that having catastrophic health care cost protection in place is worthwhile.  Coverage structured appropriately for needs and resources of the individual with an experienced and well-rated insurer that provides the most favorable health underwriting for that individual or for married couples or partners, is the best we can ask for and what we should expect.

In a worst case situation, the insured will have some protection under the Pennsylvania Life and Health Insurance Guaranty Association Act, 40 P.S. § 991.1701 (2007).