For the long haul: understanding the regulations surrounding long-term-care insurance is the first step to successfully selling it.

No doubt about it--Americans are getting older. Today, more than 34 million people are over age 65; by 2030, one in every five people will be over 65. Along with aging comes increasing awareness of the need for long-term-care insurance, which is heavily regulated.

LTC insurance provides benefits for skilled, intermediate and/or custodial care. Skilled care must be prescribed by a doctor, given by a registered nurse and available 24 hours a day; intermediate care refers to occasional nursing and rehabilitative care tinder the supervision of skilled medical personnel; and custodial care involves assistance with activities of daily living, such as bathing or eating. The best policies pay for all three kinds of care.

Benefits are paid on an "indemnity" or "reimbursement" basis. A reimbursement policy will not pay more than the actual charge, regardless of the maximum daily benefit amount, with any unused portion carried over. Under an indemnity policy, the insured is paid the daily or monthly benefit, regardless of the actual charges.

Benefits are generally triggered by the loss of two ADLs or a cognitive impairment. Some policies count bathing and dressing as two separate ADLs, while others combine them. Since most insureds tend to lose bathing and dressing first, the effect of combining both into one ADL is significant--no benefits will be paid until the ability to perform a third ADL is lost, which may never occur.

Important features to look for in LTC policies include coverage for skilled, intermediate and custodial care; low ADL requirements; no prior hospitalization requirement; inflation-protection features; waiver of premium; guaranteed renewability; and coverage for Alzheimer's and other cognitive impairments.

The National Association of Insurance Commissioners established model acts and regulations to standardize LTC insurance, and most states have enacted similar statutes. Understanding these statutes is essential.

Agents must provide an outline of coverage to all prospective applicants that must include: a brief description of

benefits along with limitations or exclusions; terms under which the policy may be returned and the premium refunded; relationship of the cost of care and benefits; and terms under which the policy may be continued, including any waiver of premium provisions.

According to one statute, insurers must "develop and use suitability standards" to determine if the LTC insurance is right for the applicant. These standards must take into consideration the applicant's ability to pay; his goals with respect to LTC; and the value, benefits, and costs of his existing insurance, if any, compared to the proposed coverage. Agents must make "reasonable efforts to obtain the [necessary] information" to determine if the applicant meets these standards by asking him or her to complete an LTC personal worksheet.

Additionally, "all insurers, brokers, agents and others engaged in the business of insurance owe a policyholder or a prospective policyholder a duty of honesty, and a duty of good faith and fair dealing" The statute separately provides that the conduct of an agent during the offer and sale of a policy "is relevant to any action alleging a breach of the duty of honesty, and a duty of good faith and fair dealing." It is not dependent on the issuance of a policy.

Clearly, there is the potential for premium dollars in the LTC market. Before you jump in with both feet, commit the time and effort necessary to learn its intricacies, including the statutes that regulate its sale and substance.

Frank N. Darras, a Best's Review columnist, is a partner with Shernoff Bidart Darras LLP, Claremont, Calif. He is a plaintiff's lawyer representing disabled insureds. He can be reached at [e-mail].