Seniors: Beware of Long Term Disability Care Insurance Scammers

Tallahassee, FLIt's one of the most unsavory crimes against a vulnerable segment of society—taking advantage of seniors. To that end, the Chief Financial Officer (CFO) for the state of Florida announced in May the arrest of Neal Seth Smalbach, 49, under suspicion of grand theft in the misrepresentation of details relating to financial products to seniors.

The financial products referenced in the financial fraud, appear to be insurance products. Smalbach was an insurance agent prior to the revocation of his licenses to vend insurance. It was also revealed in the release that Smalbach would have to abide by a permanent ban from his participation in the insurance industry.

It is alleged that various seniors suffered a combined loss estimated at $2 million. The accused faces, if convicted, up to 54 years in prison.

For a senior, life is very much a perfect storm: you have reduced capacity to understand and comprehend complex documents such as insurance policies—and you have life savings that scam artists would love to get their hands on.

Long term care disability insurance, as a product and a philosophy, is a good idea as Americans age. There may be times when you need partial, or ongoing care that a spouse or adult children may not be in a position to provide. For that reason, insurance providers have a host of products available designed to ensure you have access to, and are afforded the right care when you need it.

But you also have to be able to afford the premiums. And you also have to understand what you are buying. Had a good look at an insurance policy lately? Page upon page of complex jargon, in very small print. Here, one needs to rely on the honesty of the vending agent to translate the small print and explain what is covered, what is not, determine if it's appropriate for you and whether or not you can afford it.

On Guard For Seniors is a service of the Florida Department of Financial Services and is designed to help ward against scam artists who ply their powers of persuasion against trusting seniors. Their —web site recommends that seniors spend no more than 5 percent of their income on long term care disability insurance. As an example, a senior would need an income of $60,000 annually in order to easily afford a $3,000 long term care insurance policy.

The site advocates that any senior with large investments, stocks or property to protect may be wise to invest in long term care insurance. However, any senior on a limited income through social security or a small pension may be ill advised to spend money they may not have on long term care insurance.

In either scenario, it is incumbent on the sales agent to be sensitive to a senior's financial situation and refrain from talking a senior into products they can ill afford—either through regular monthly or yearly income, or the liquidation of investments or savings—in an attempt to maximize potential commissions.

Persuading a trusting senior to purchase long term care insurance they can ill afford, and failure to explain the benefits and limits of the policy in plain language, constitutes fraud and brings the potential for a lawsuit.

"Florida's seniors have worked hard for many years to earn their money and prepare for retirement," Florida state CFO Jeff Atwater said in the release. "Criminals who choose to prey on the elderly for their own financial gain will be caught and they will be brought to justice."