C4-L3-P17

Key Words and Phrases to Remember from Chapter Four

The producers' opportunities for self-serving actions are so common that many clients say ethical behavior is the number one characteristic they want in their insurance producer.

Ethical behavior is a key ingredient of success in the insurance industry.

Compliance means conducting business in accordance with current rules and laws set by government regulatory agencies and the courts

Ethics are standards of conduct and moral judgment.

Market Conduct is a combination of both ethics and compliance.

Under the law, ethical conduct is generally defined as that which a reasonable person is expected to do under any circumstances.

Insurance producers have ethical responsibilities to insurers, policy owners, the public, and the state.

Deceptive sales presentations have probably generated more complaints of unethical behavior than any other activity.

The more flexible the policy and the more aggressive the assumptions, the more sensitive the product will be to changes in mortality, expense and interest rates.

The purpose of IMSA (Insurance Marketplace Standards Association) is to promote high ethical standards in the sale of individual life insurance, annuity products and long-term care insurance by its member companies.

On IMSA’s own commentary on its website (www.imsaethics.org) the first principle is a restatement of The Golden Rule.

The top ethical concerns producers have can be broadly categorized into three areas:

1. Skill and competence issues;
   
   
2. Obligations associated with a commitment to, or lack of, professionalism; and
   
   
3. Moral issues stemming from individual behavior.

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Skill and competence are prerequisites to selling insurance.

All producers should be committed to a program of continuing education and participate in industry organizations, such as (FAIFA) the Florida Association of Insurance and Financial Advisors.

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Always place the client’s interest beyond one’s self-interest.

If a sale cannot be made with honesty, fairness and objectivity, it must not be made at all.

If there is an opportunity for personal gain, but it comes at the expense of another person or company, it must be ignored.

Thus, the ethical producer Learns very early the difference between right and wrong in the business and practices and acts accordingly.

A producer’s primary ethical duty to the public and each prospective insured is to provide accurate information regarding insurance policies and benefits in a fair and unbiased manner.

Attempting to sell a new policy, or any policy, without adequate knowledge and training is unethical because it is a producer’s responsibility to determine if and how a policy will fit the prospect’s needs.

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The Organized Sales Presentation

The organized sales presentations purpose is to uncover the needs of the prospect and eventually show how life insurance satisfies those needs.

The purpose is also to help people solve financial problems.

The objective is to educate clients so they can make informed decisions about what is best for them, not to sell them or convince them that the producer’s recommendations are best.

This approach to selling involves a partnership between producer and client that enables the client to make informed decisions based on facts.

Full and accurate disclosure is the cornerstone of the product presentation.