Recommendations of Long-Term Care Insurance to Customers (Suitability)

PURPOSE: This rule implements the requirements of sections 375.141.1(8) and 375.143, RSMo, with respect to the codification of professional standards in the recommendation of long-term care contracts. Failure to meet these standards would constitute the demonstration of incompetence, untrustworthiness or financial irresponsibility of producers in the offer, sale or exchange of long-term care contracts. (1) The professional standards of conduct codified in this rule reflect standards of a licensed insurance producer. Grounds for the discipline or disqualification of producers shall include, in addition to other grounds specified in section 375.141, RSMo, failure to comply with or violation of the following professional standards of conduct: (A) Long-Term Care Insurance. 1. In recommending to an individual customer the purchase, sale, or exchange of a long-term care insurance contract, a producer shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his insurance and investments and as to his current and reasonably anticipated financial situation and needs. 2. Prior to the execution of a long-term care insurance transaction recommended to an individual customer, a producer shall make reasonable efforts to obtain information concerning— A. The customer’s financial status, including annual income, financial situation and needs, and existing assets; B. The customer’s tax status; C. The customer’s financial objectives; D. The customer’s long-term care objectives; and E. Such other information used or considered to be reasonable by such producer in making recommendations to the customer; (B) The standards and systems designed by insurers under 20 CSR 400-4.100 shall comply with the professional standards codified in this rule; and (C) No person shall materially aid any other person in any violation or failure to comply with any standard set forth in this rule. AUTHORITY: sections 374.040, 374.045, and 375.013, RSMo 2000 and section 375.143, RSMo Supp. 2007.* Original rule filed Nov. 30, 2007, effective July 30, 2008. *Original authority: 374.040, RSMo 1939, amended 1967; 374.045, RSMo 1967, amended 1993, 1995; 375.013, RSMo 1993, amended 1995; and 375.143, RSMo 2007.