C4-L3-P15

License Suspension and Termination

An unethical act can have severe repercussions. This is because what states consider unethical, they have usually made illegal.

A producer’s license can be suspended or terminated for any of the following unethical actions:

• Making a materially untrue statement in the application for a producer’s license;
  
  
• Stating or implying that a policy is self-supporting or that projected dividends under a participating policy will be sufficient to assure any benefits without any further payment of premiums;
  
  
• Implying that a policy is being sold or issued by the investment department of a life insurance company;
  
  
• Conveying the idea that by purchasing a policy the applicant will become a member of a limited group of persons who will receive special advantages or favored treatment by the insurance company;
  
  
• Stating that a prospect must buy a policy immediately or lose the opportunity to purchase it;
  
  
• Describing a premium as a deposit unless the payment establishes a debtor-creditor relationship and clearly shows when and how the deposit may be withdrawn;
  
  
• Giving any indication that future policy dividends are guaranteed;
  
  
• Stating that an insured will be guaranteed certain benefits should a policy lapse without giving an adequate explanation of nonforfeiture benefits;
  
  
• Stating that a policy contains certain benefits not found in any other insurance contract;
  
  
• Avoiding any clear and unequivocal statement that insurance is the subject of the solicitation;
  
  
• Using such terms as “financial planner,” “financial consultant,” “investment counselor” or “financial counselor,” implying that the producer is in an advisory business in which compensation is unrelated to sales, unless such is actually the case;
  
  
• Using amounts and numbers in such a way as to mislead the prospect with regard to the cost of the policy or any other significant aspect of the contract;
  
  
• Disparaging a competitive producer or insurer or their policies, services or business methods; and
  
  
• Using any method of policy cost comparison that does not take into account the time value of money.

Knowledge and calculated awareness can help the honest and ethical producer avoid many of the traps described in this chapter.