ETHICAL ISSUES INSURANCE AGENTS FACE

Ethical Issues Insurance Agents Face

Ethical Issues Insurance Agents Face

Many life insurance agents lack moral and ethical values when dealing with a client. They sell very expensive life insurance policies which are whole life or universal life insurance. Most clients don't have lots of money, so they can only afford small coverage and pay high premiums for it. Do you know that nearly 60% of people who own individual life insurance say they need more coverage? Some agents misrepresent the product as an investment or a savings plan, which is clearly isn't. No where in a life insurance policy says this policy is a savings plan. It is an insurance contract. Consider life insurance agents as sales people. They only care about their commissions versus the client's needs.

At the company I work for, which is Primerica, they sell term insurance only. Term insurance is inexpensive, therefore the client can get the right amount of coverage for a low price. Before selling life insurance, I explain to them how life insurance works and the theory of decreasing responsibility. Then I find out how much coverage they need using the financial needs analysis. My company also helps client 8eliminate debt and reach financial independence. As you can see, the difference between life insurance agents and myself is that I educate clients and find out how much coverage they need (Akaah, 1989).

Bottom line is that the life insurance industry generally lacks moral and ethical values. I have seen many clients where their life insurance policies makes no sense for them to have. What's even worse, many people don't even read their policies or understand how they work. I had one client who was 35 years old, single, had 2 kids, and has a mortgage. She had a whole life insurance policy with $30k in coverage. If she dies tomorrow, how would $30,000 help her kids and pay off the mortgage? She was paying about $40/month for it. I replace that policy with a 20 year term and gave her $350,000 coverage. She only pays about $25/month. $15 less per month and 10 times more coverage. I don't know what the previous agent was thinking, but he totally ignore her needs. This is a common thing I see when I sit down with clients. They have life insurance, but they don't have enough coverage (Akaah, 1989).

Some clients I dealt with were lied by their previous agent because the agent said that their life insurance policies is a savings plan. I had a client that had 5 universal life insurance policies on the family. One on himself, one on his wife, and one for each child. The agent said the one that he has and his wife has are retirement plans and the life insurance on his kids are college savings plan. By law, it is illegal to represent the product. I hope this guy lose his license and goes to jail. This client was totally pissed off after I explain to ...