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In the past, life insurance agents often got a bad rap. Many times, they were seen as salesmen who only wanted to push their products and didn’t give a darn about helping people. Some insurance agents may have been less than scrupulous – and there will always be salespeople who have their own agenda – but the insurance industry is quite well regulated and impressions like that of the pushy insurance salesperson highlight the need for everyone to understand the significant role ethics plays for life insurance agents, insurance brokers and life insurance corporations.
It could be said that an ethical person who becomes an insurance agent (be it a specialist in life insurance, accident and sickness insurance or another form) is likely to behave ethically in all situations. However, it isn’t always that cut and dried. Ethics can be complex and it goes far beyond looking for the right product for a client.
In order to sell life insurance, agents must be licenced. Potential agents must: take a Life Licence Qualification Program (LLQP program) filled with courses that prepare a student for their future role as a life insurance agent (more on that in a bit); pass the exams associated with these courses (LLQP exam); pass the provincial exam in their region; be sponsored by an insurance provider in that province to sponsor their licencing application; obtain errors and omissions insurance; submit their application complete with the licencing fee and background checks; and, satisfy any regulations specific to the province in which they are requesting licencing.
The LLQP program is diverse and delves into the areas a life insurance agent would encounter on a day-to-day basis regardless of their specialization. The majority of the program will explore life insurance including individual and group insurance policies and products that meet a client’s lifestyle and needs. Other course components will cover accident and sickness insurance (both individual and group products) and segregated funds and annuities (as well as group pension plans). In addition to these very practical and product-based courses, students will spend time on ethics, professional practice and understanding common laws. There is a portion of the LLQP exam specific to ethics and the rules governing the life insurance market in the province or territory so this course and exam helps students to prepare for that, as well as the challenges in their future role.
Courses, training and having a sponsor will help prospective agents with the basic ethical issues that may arise. Most life insurance agents acting as sponsors will be able to weed out the unscrupulous insurance agent candidates by watching their process and listening to their conversations. They will be able to help prevent a prospective insurance agent from getting into the market and taking advantage of clients. Anyone who is in the industry for money without compassion for their clients and the desire to help them find the right products for their needs is unlikely to go anywhere in the industry.
While that type of ethical issue is easy to spot and fairly easy to address, others are not so simple.
For example, let’s say Ms. Green, the insurance agent, has been working with Mr. Black, the potential client, for a number of weeks explaining his options for policies and getting him up to speed in understanding his options. Ms. Green knows Mr. Black is ready to make a decision but he is leaving soon for a holiday. While she wants to respect Mr. Black’s personal timelines, she also knows he should have insurance in place before he leaves. She makes one last call to see if they can make a decision prior to his departure, but he isn’t yet ready.
Ms. Green knows not to put herself in the ethical dilemma of pushing Mr. Black into something he isn’t yet ready to do. However, at the airport, Mr. Black is considering what they spoke about and is now ready to make a decision. He calls Ms. Green and tells her to put the policy in place. He doesn’t have access to the internet at the small airport he’s at and asks if she can sign the policy for him.
While Mr. Black has asked Ms. Green to sign the policy for him and has given her his consent to proceed, it is not the right decision for the insurance companies or Ms. Green. Ms. Green doesn’t feel good about it and she recognizes that although other agents may forge signatures, knowing they are doing what the client asked, it isn’t the right thing for her, depute her awareness that Mr. Black needs the insurance.
Ethical issues like these can be challenging for the insurance agent, the insurance broker, the insurance companies and the client. There are situations like this that make ethics training an important element of the life insurance industry. One resource often referred to is the work of Clarence Walton “The Moral Manager” where he describes three levels of ethics: descriptive (what is acceptable and is happening), metaethics (a philosophical look at the meaning of ethics) and normative ethics (the ability to distinguish right from wrong).
This last level, that of normative ethics, also breaks down into three sections: managerial ethics (based on a person’s role in a company or organization), business ethics (how this company or organization behaves in the marketplace) and professional ethics (those which come from being a professional of a certain body like that of a provincial or territorial insurance council).
Walton explains that by blending a respect for the rights of people and the responsibility of consequences, people are most likely to make a good ethical decision and the right one for those involved. Perhaps the most important thing a person can do when faced with an ethical dilemma is to turn to a trusted mentor or colleague to discuss the issue.
In the area of life insurance, ethics is always going to be a challenge. This is why it has a high level of importance in the training of potential agents. With exams in place that test ethics and sponsors helping to do the same, agents can be confident in applying ethics in their decision making, and clients can feel protected.