In everyday life, it is impractical to ask for a person to research the law before any action is taken. Indeed, most people are honest and instinctively they know right from wrong. One stays out of trouble by making sure that his actions are not "wrong."
Ethics do not concern themselves with the distinctions as to what is right and what is wrong legally as these distinctions are governed by various laws, regulations, statutes, ordinances, etc. Ethics, on the other hand, is much more subjective in making the distinctions between what is good and bad.
Legal duties are precisely described so that the average man can conduct his affairs with advance knowledge about whether a particular act is legal or a violation of the law. Courts have universally held that laws are unconstitutional if they are so vague that the common man cannot interpret the meaning of the law.
On the other hand, ethical distinctions are not so cut-and-dried and each person has his own ideas of what is right and what is wrong, such ideas differ by person, region, education, background, and a host of other causes. Some people do not feel that dog-fighting is unethical (forget illegal) or is "wrong," but these beliefs have cost millions to those who think that it is nothing but a sport. Yet a volunteer, who assisted in rescuing fighting dogs from a kennel, became violently ill when she saw the remains of dogs that had been executed because they were not "fighters."
All civilizations have a common ethical sense about what is right and what is wrong, so we have been told throughout the ages. Makes one wonder what the philosophers would have thought if they had seen the carnage performed by young men and women strapping bombs to themselves and blowing up hundreds of innocents. Still, core virtues, such as honesty, fidelity, loyalty, integrity, and fairness are common among all members of the culture. From that point on is where it gets rather fuzzy around the edges.
Core virtues are often, unfortunately, accompanied by "qualifying" or "explanatory" anti-virtues, if you will, such as telling a "white lie," imagining "victimless" crimes, casual promises, and the most evil of them all in the business of insurance: caveat emptor."
F There is no such thing as "caveat emptor" in the insurance industry!
If anything, insurance should have the caveat venditor rule. These "anti-virtues" are easily made and such promises are easily broken. They are also all bad for your ethical health.
Everyone has experienced discussions that went from a simple disagreement into an argument where each party claimed to be in the right. In order for such an argument to occur, both of the parties must believe some common ethical code which each one feels is applicable to the behavior of both parties. What is happening is that each party is saying that the other's behavior did not conform to what both believe is the accepted standard of behavior. Both parties agree on the basic ethical principle, but they disagree as to how it is to be applied. So they argue as each is trying to interpret each other's behavior in light of their own bias about what is acceptable out on the fuzzy edges.
Actual example: A new church was presented with an American Flag by the Cub Scout troop that had sponsored the troop. Two men of good faith became involved in the argument as to where the flag should be located in the sanctuary. One man, a retired naval officer, insisted that it should be on the stage near the podium (alter) as that is what is specified in the US Code for chapels and it should, therefore, be to the right of the speaker. The other man disagreed as higher officials from the church had decided that each church should have the flag to the right of the congregation if it was standing on the floor and not on the same level as the alter—which for some reasons was perhaps more practical. Who was right? Did it matter? It did to them, as two of the members left the church although few even cared, just as long as there was a flag.
These arguments are complicated by the fact that we have a tendency to judge our own ethical behavior by our intentions, while we judge others by their acts. If we judged our own acts by the standards that we have set for others, we would all discover that our ethical behavior is not what it should be. Actually, none of us are quite as good as we think we are.
Conversely, if we judged the ethics of others using the same criteria as we used to judge ourselves, we would give them the benefit of the doubt, and then there would be much fewer allegations of dishonesty. Not many people can be as bad as we think they can be, but none of us are as good as we can be. That is one reason that people are going back to church.
Okay, so that sounds warm and fuzzy, but where it gets heated up is when we try to justify some act that is outside of the "fuzzy" area. Why do we do this—do something that we know is not "right"—even though the ethics are clear? It is, simply put, because
F People are often tempted to get something that they believe to be worth more than the value that they place on remaining correctly and unquestionably ethical.
The REAL test of ethics arises when one is willing to do the right thing even if it is not in his self-interest to do so. This happened to a friend: He has suffered from the loss of feelings in his feet and ankles (peripheral neuropathy) and he had to give up his love of fishing and sell his boat and expected never to go out again as he is a lousy swimmer and balance is a definite problem. A mutual friend belonged to a boat club and offered to take him and some friends fishing out in the Gulf in a nice, modern boat, and all he had to do was fish. The only problem was that the boat was only available on a Thursday and he had volunteered to work with a youth group at the church on Thursday and there was no one else to take the job. Sometimes it hurts to do the right thing, sometimes it hurts badly.
It should be pointed out that it is not always in our own best interests to be ethical as being ethical can come with a very high price tag. There are times when acting correctly and honoring a commitment and while it is ethical, a sale, a job, a promotion can be lost—even a friend can be lost.
To stay out of trouble, one must be ethical. Period. Living an ethical life requires a moral commitment that many are not willing to give, particularly to sales goals and other such "achievements." If one has the choice of being ethical or achieving any other goal, one must be willing to forsake that other goal.
A speaker, Michael Josephson, at a CLU National Conference once put it:
F If you are not willing to forsake other victories in order to remain ethical, then you have already decided that you will do anything to win. To be ethical, you have to be willing to lose.
The members of the American Society are bound by a formal Code of Ethics, which is based upon the pledge taken by all those with the professional designations of CLU and ChFC:
"In all my professional relationships, I pledge myself to the following rule of ethical conduct: I shall, in the light of all conditions surrounding those I serve, which I shall make every conscientious effort to ascertain and understand, render that service which, in the same circumstances, I would apply to myself."
This Code contains two ethical imperatives that mandate that a member must provide competent advice which is in the best interest of the client and that a member shall act in a manner that will enhance the public regard for the professional designations held by members.
Laws are a necessary function of civilization as they exist to set a minimum level of behavior. Actions that do not conform to that minimum level will result in fines and penalties. Our legal system creates an imaginary line, which separates, acceptable from unacceptable behavior. The behavior that crosses that line is considered as outlawed behavior and is unacceptable.
Laws do not concern themselves with one's distance from that line—both shoplifting and murder are outlawed. The magnitude of the crime is relevant to the victim and to the punishment, but not to the fact that shoplifting and murder are illegal activities. Once the line has been crossed, then the person is an outlaw. It has been said that in law, there is no distinction between a said and a sinner, if neither one has violated any temporal laws. There are no degrees of legal behavior—either a person is acting legally or he is not.
Ethical codes start with the assumption that all of one's actions are acceptable as all illegal activity is unethical by definition. If one believes and accepts the premise that all ethical behavior is contained within legal behavior, then there must be some legal behavior which is unethical. Otherwise, there would be no distinction between law and ethics and we can all forget about taking ethics courses as all we would have to do is study law.
Of course, there is a distinction. Ethical codes elevate the behavior of men and women above the level of those who just obey the law—the law may require a person to not tell a lie, but it may permit him to give less than a complete answer. Giving less than a complete answer may be legal but it would be unethical.
Example: "I never had sex with that woman" comes to mind immediately, but for practical purposes, you try to sell a Universal Life Insurance policy to your client (how many prospects actually understand Universal Life – really?). When asked if it was a good policy, you reply that "That is the same kind of policy I have on my own life." While that may be true, you may, for whatever reason, be planning on replacing your policy. You have not lied so legally you are OK. Ethically, not so good. The legal response is, in effect, unethical.
If it is ethical to disclose the truth always, then ethics may thereby require the disclosure of unsought information, which, if revealed, could kill a sale or could just be adverse to the interests of the seller. Not hard to figure this. Remember, earlier, "The Code of Ethics provides that a member shall provide advice and service which are in the best interest of the client.”
To put it even more simply, the marketer has an ethical obligation to use his professional expertise for the benefit of the client, and further, he must avoid taking advantage of that knowledge to the detriment of the client. It, therefore, follows that when a conflict arises between the interests of the client and the marketer, the interests of the client must be paramount. Period. End of discussion.
Ethics are enforced by professional organizations as a violation of the Code of Ethics of the organization could cause a member to be sanctioned, reprimanded, and in some cases, expelled from the organization. In many such cases, a legal violation would automatically include the ethical breach. A minor traffic offense would not necessarily have anything to do with an ethical violation, although some crimes or civil acts are arm-in-arm with ethical behavior.
Although, it is entirely possible that a person has acted legally and is still in violation of the Code of his organization. Therefore, for such Codes to be most effective, the gap between acceptable behavior in the eyes of the law and ethical behavior is maintained and encouraged.
You are driving down the road in your car on a wild, stormy night, when you pass by a bus stop and you see three people waiting for the bus:
1. An old lady who looks as if she is about to die.
2. An old friend who once saved your life.
3. The perfect partner you have been dreaming about.
Which one would you choose to offer a ride to, knowing that there could only be one passenger in your car?
Think before you continue reading.
+++++++++++++++++++++++++++++++++++
This is a moral/ethical dilemma that was once actually used as part of a job application. You could pick up the old lady because she is injured and will die, and thus you should save her first. Or you could take the old friend because he once saved your life, and this would be the perfect chance to pay him back. However, you may never be able to find your perfect mate again.
The candidate who was hired (out of 200 applicants) had no trouble coming up with his answer. He simply answered: "I would give the car keys to my old friend and let him take the lady to the hospital. I would stay behind and wait for the bus with the partner of my dreams."
Sometimes we gain more if we are able to give up our stubborn thought limitations. Never forget to "Think outside of the box."
Ethics actually can be a code of personal ethics, used in everyday life, and is more philosophical (and religious to many). These give the person great satisfaction, and affects both the personal life and professional life. Practically, though, ethics helps one to avoid controversy and misunderstandings and become more efficient in their occupation. While most of us see a distinction between knowing that it is wrong to steal a candy bar, it becomes a problem where a multi-form application for insurance is missing one signature and the applicant needs the coverage as they are leaving the country tomorrow–is it ethical to "window pane" (forge) the signature?
Very simply put, ethics can be considered as a set of instructions on how to deal on a daily basis with a group and with a community, and which revolves around social behavior that favors the group over the individual. Because this is so, communities throughout the years used ethics as a base for common law which has evolved into our civil and criminal laws.
If everyone could "ponder" different choices of actions in order to determine the proper direction, it would be a better, but slower, world. Unfortunately, in today's fast-paced environment, it is difficult to have the time to thoroughly "think through the problem." This also leads to a person focusing on practical and expedient solutions whereas their main consideration should be the ethical approach.
Ethics, according to textbooks, is "a branch of philosophy that deals with the values of human life in a coherent, systematic and scientific manner." Webster says:” the discipline dealing with what is good and bad and with moral duty and obligation." Legally, Black's Law Dictionary says: "(1) Of or relating to moral obligations that one person owes another. (2) In conformity with moral norms or standards of professional conduct."
These definitions doesn't really give much information to the student, but if it seems confusing, you can take solace in the fact that even philosophers disagree as to what is ethically correct. Kant, a German philosopher stated that what is right is based on pure reason. But another philosopher, Jeremy Bentham, believed that right is that which will produce the greatest good. Religious philosophers, St. Thomas Aquinas comes to mind, said that right is determined by the will of God and wrong is anything that is contrary to God. Several texts believe that Albert Schweitzer said it best: "Ethics is the name we give to our concern for good behavior. We feel an obligation to consider not only our own personal well being, but also that of others and of human society as a whole."
Now, there should be felt a common thread among all of these definitions. Those with Christian religious training—even just a little—can remember from the Gospels of Matthew and Luke, "Do unto others what you would have them do to you." It may be surprising to learn that this rule is also fundamental to Confucius, Aristotle, and to Buddha. This is often stated as "love thy neighbor as thyself."
This rule is often presented as "treat others as you want to be treated." If a little thought is given to this, it will be realized that this rule promotes consistency and eliminates double standards. It, in turn, creates two questions: Do you treat others differently than how you treat yourself? If such is the case, is more expected from others and less from yourself?
Ethics, obviously, is not a set of hard and fast scientific rules, but they deal with attitudes, ideas and beliefs. Ethics have sometimes been defined as a set of instructions for a way of life that allows a person to live in harmony with others.
F Ethics favors the group over the individual.
Today's society has a tendency to often reward unethical actions as they are ignored in the search for "success"—usually defined as how much money one is making. In case it is not apparent, many people are impressed with how much money a person has, and not in the way that such money was made.
Example: For football fans, the names may come easily. One NFL player has (had) a multi-million dollar contract, plus a bunch of money from endorsements. His hobby (it is discovered) involves dog-fighting and he has financed a "fighting dog ranch." Another NFL player on the same team has a good contract, but is not one of the highest paid. He has overcome the (huge) problem of being undersized and is praised as an honest, hardworking team-oriented player who is well known for helping poor and impoverished families get into their own homes. Which is the most successful?
Financial gain is a method used by the insurance industry to motivate employees. No real problems there, as long as employees are not motivated entirely by finances. "Top Producer of the Month," "Lifetime MDRT Member," etc. are awards, but in some fashion they spotlight financial achievement but often ignoring professionalism and public service. The problem is that it is not always acknowledging success through financial gain and ignoring service to others, but it is extremely difficult to set up guidelines to honor those who serve their fellowman best.
If an insurance agent does not think that their relationship with the insurance company that they represent is mostly or entirely based upon what they can do for the company, then what other means does an insurance company, usually located miles away (often in another state), have to evaluate the services of the agent, whether he be employee or private contractor?
One of the problems in this relationship is, of course, that the company contains many individuals, each of whom differ from the others in respect to how they deal with each other. The Agency Department judges by production, the Underwriting Department judges by quality of the business, the Actuarial Department has very little relationship one way or the other, the Claims Department are concerned with how a policy was presented and sold, etc.
Having worked closely with Underwriting Departments at one time, it soon became obvious that many underwriters closely judged agents by their ethics. On several occasions, agents have their own list of those agents that they can "trust" and those that they cannot. For instance, an agent who notifies the company that although the application being submitted has been completed correctly, the agent has some problems with the character of the applicant—ranging from obvious family abuse, to obviously living way beyond their means, to obvious physical problems (wheelchair in the corner, for instance), etc. The agent is risking his commission (read livelihood) but he is doing what he feels is right. These underwriters often have a list or a file of those agents they consider as ethical in their dealing with the insurer, and if there are situations where the agent needs a favor (such as where the applicant is overweight by the charts but is a bodybuilder in excellent condition—happens often) the underwriter will work with him, or the underwriter will take extra effort to make sure that his cases are processed quickly. Ethics at work. Okay, some purist may argue that the underwriter is not ethical by giving applications from one agent precedence over others… Sometimes realism runs smack into ethics.
Still, keep in mind,
F Ethics is personal in nature and does not demand that one trust other implicitly—one has little control over the conduct of others, only over their own conduct.
Sometimes there exists a conflict between ethics and the law as ethics deals with the way that things should be, but which may not be entirely practical in our society; such conflict creates confusion among many people in trying to determine the difference between ethics and the law. These are two separate concepts as ethics is determining what is right for "rights" sake, while the law is a set of minimum standards that society needs in order to function in a civilized manner.
Still, as stated earlier, the law is based upon ethics, and while many ethical standards of conduct have become law (codified), some have not for whatever reason. It is not illegal to sell a person more life insurance than they need or can afford, but it is unethical.
Under the law, ethical conduct is defined as that which a reasonable person is expected to do under the circumstances. The actions of a reasonable person are an important part of civil law. Law takes ethics a step further and defines what is illegal, what is improper conduct, and the penalties for such conduct.
These distinctions can lead to problems sometimes. If a person commits an act (or is contemplating an action) and they can then say that their action is not illegal, ergo, it must also be ethical. False advertising, questionable sales tactics, gifts-to-obtain-business are all unethical but may not be illegal. And sometimes, what is unethical today can become illegal tomorrow (think congressional "perks" [unethical] such as family trips on constituent's private planes—all at once they are now considered as "bribes" [illegal])
Unethical selling of used automobiles that have been wrecked, for years was just considered as unethical. Now "lemon laws" and other laws have stopped a lot of this misrepresentation.
There is a hazard here, however, inasmuch as some will rely on illegalities only as that is the easy way to solve a dilemma, therefore keeping the individual out of trouble, but they have a hard time looking at themselves in the mirror the next morning.
RULE: DO NOT DO ANYTHING THAT WILL NOT ALLOW YOU TO BE SATISFIED WITH YOUR REFLECTION IN THE MIRROR IN THE MORNING!
You might just be getting the idea that in order to stay out of trouble, one must not only not commit illegal acts, but they must also not commit unethical acts. Have you ever heard "That act will come home to bite him in the (rear)—you just wait and see?" It's true usually.
A number of bank and store robberies have been "thwarted" because the robber "got cold feet" and for got the whole thing and just ran away. Was this because of the fear of going to jail? Those that were caught admitted that usually they were not afraid of jail, but they just knew that "it was not the right thing to do." Ethics at work.
One could (rightfully) ask at this point, “How does this apply to insurance and insurance sales?” The best way to answer such an inquiry might be to recall actual instances of unethical behavior. Some of these situations would now not only be unethical, but also illegal. One thing to keep in mind is:
F Repeated unethical activity will, in most cases, eventually be made illegal.
For those in the Health Insurance industry, it appears that most publicized unethical actions over the past few years have occurred in this particular line of insurance. There are several reasons for this, with the result that this branch of insurance seems to have suffered more regulations and more “housecleaning” probably more than any other area of insurance.
Any Health Insurance agent who has been active very long, can still remember situations where it was discovered that a policyholder has multiple coverages on the same risk because a “slick” agent convinced them that they needed the coverage (that could never be used) for a variety of reasons. The elderly are obviously the most gullible, and there have been (are?) agencies that target elderly widows as many (if not most) were in an unfamiliar position of having to make financial decisions formerly handled by their late husbands. Many agents have seen “portfolios” of duplicate (or even triplicate) coverages.
As discussed earlier, “financial planners,” many of them former “agents” are under scrutiny in the modern market. A large problem in ethics arises where, for instance, a “financial planner” who is also an insurance agent, is made privy to the financial records of a client, and who then passes this information on to a stockbroker or mutual funds salesman, sometimes for a “fee” and sometimes for “goodwill.” This raises many questions— such as should the agent disclose his connection to the broker to his client and would that make it OK? Or is it just the right thing to do if it is apparent the client would benefit more by investing in a mutual fund or whatever?
WARNING: For agents who normally do not market health insurance but are involved in financial and/or estate planning, it is strongly suggested that when working with persons who are covered by Medicare (the vast majority over age 65), do not touch, discuss, recommend, or in any other way become associated with or indicate any interest or expertise in, Medicare Supplemental insurance.
These policies are basically an "easy sell" because the federal government has required that there only be 10 such plans and every insurer who sells these plans must offer exactly the same plans. There are a few variations, particularly if an HMO is involved, and it may look like an easy way to pick up a few dollars if a company that you are representing offers these plans. But, unless you are very familiar with Medicare and Medicare plans and are well trained in those plans, do not attempt to sell the Medicare Supplement policies, or even recommend companies that do offer such plans.
"Financial advisors" are often asked about Medicare Supplemental policies, and the smart ones deny any knowledge. This is smart because (1) change is really not welcome to the typical senior citizen, (2) usually the person has had his Supplement for some time and his premiums are usually based on his age when he first took out the policy—if he changes, his now attained age would determine his premiums and in most cases (he is older now, and generally that would mean his premiums went up), that would make a new plan less affordable, and (3) the commissions are so small that it is not worth the effort.
In respect to health insurance, there is an interesting situation familiar to many health agents, wherein a client comes to them with the problem of unaffordable premiums with their present carrier because of age, and they are nearing the magical age of 65 when they will be eligible for Medicare. Many agents will suggest a “Temporary” policy with higher deductibles and which are usually issued for only one year and have limited health questions, but have a much lower premium. One of the primary reasons for the low premium is that they do not cover any preexisting conditions under any circumstances. For relatively health older persons, this is acceptable and in some cases, commendable from the viewpoint of the client.
An ethical problem can arise, however, in some situations, if for instance, the client has 3 years (or so) before qualifying for Medicare. Some agents simply find another (a good Health agent will usually have 2 or 3 applications in their briefcase) and rewrite the policy with another company. The problem is that there is NO coverage for preexisting conditions, and sometimes the agent “forgets” to tell the client that any illness that occurs while covered by a Temporary policy, will not be covered under the new Temporary policy. So the client could find themselves without coverage for a couple of years if they should become ill when covered by the first Temporary policy. An ethical agent, as most are, will certainly make sure that the client fully understands the hazard involved with the Temporary policies.
It simply is not possible to discuss ways to "stay out of trouble" with insurance companies, clients and regulatory bodies without a discussion of Ethics. Insurance Departments usually require some basic courses in Ethics for Continuing Education, but these courses generally address only Ethics. Some may resent having to study about “Ethics” because they consider themselves tremendously ethical, and besides - doesn’t everyone know the difference between right and wrong and everyone knows that if they cheat their clients, they are unethical?
They may have a point inasmuch as in many cases, one can determine whether a particular action is ethical or not, just by using good judgment.
F The greatest tool for ethical conduct is just good sense.
But, if every situation that arises were clear-cut, then this book would not be necessary (and the world would be a better place…). Often given as an example of “everybody knows,” “everybody knows” that if a life insurance agent talks a client into cashing out an existing policy and replacing it with another like or similar policy, but which pays a new first-year commission, that is wrong, a real no-no, end of discussion.
OK. But, how can you explain an agent that defrauds his clients in this manner? This brings up the point of whether there are bad agents who sometimes do good things and/or good agents who sometimes do bad things. The point (yes there is one) is that
F for some agents, what is right and what is wrong is not as apparent to them as it is to others.
The story of Equity Funding is a true and actual story of company ethics gone haywire and insurance executives completely ignoring ethical behavior. One of the interesting sidelights of Equity Funding was that the agency force apparently had no actual knowledge of misdeeds, but there is little doubt that some of their large general agents had an inkling of something going on as they had a hard time believing that the company was writing as much business as it was claiming. When they asked about it at the home office, many of them were never completely satisfied with the answers.
RULE: IF THE INSURANCE COMPANY THAT IS REPRESENTED IS WRITING MORE OR LESS INSURANCE THAN OTHER SIMILAR COMPANIES, FIND OUT WHY.
On April 2, the Wall Street Journal headlined “A Scandal Unfolds – Some Assets Missing, Insurance Called Bogus at Equity Funding Life. Allegedly Phony Policies Sold to Reinsurers for Cash – Firm Declines to Comment.”
(Quoting from Wall Street Journal) “From Beverly Hills, California, comes the story of the one of the biggest scandals in the history of the insurance industry, breaking around Equity Funding Life Insurance Corp. of America, a financial services concern with a “go-go” growth record in insurance sales. This scandal centered on the life subsidiary, Equity Funding Life Insurance Co. This company had four subsidiaries, and they reported total life insurance inforce of $6.5 billion at the end of 1972” (a substantial company in those days) and Equity Funding Life accounted for about half of that.”
“An unknown ‘but sizeable’ hunk of this insurance did not exist, apparently bogus business put on the books and then ‘sold’ to reinsurers for cash. Known in the company as the ‘y’ business, it was conceived and operated by several managers and executives of the subsidiary and parent company and treated as a big joke.”
This story contains many ethical questions, particularly accounting ethics, but it involved more than just “accountants.” It also involved company underwriters, policy issue, actuaries, and policyholder service personnel that were aware of what was going on to some extent or other. Agents, for the most part, were kept in the dark. However, there undoubtedly were large General Agents representing Equity Funding that claimed no knowledge of wrongdoing all the way to the bank. While they did not participate directly in the funds illegally obtained through fraud from the reinsurers, they had the most lavish agent conventions in luxurious hotels and rewarded their agents better than similar companies.
The point is that it had to be obvious to those participating in this gigantic fraud, they HAD to know that they were not only operating in total violation of any ethical code created by man, and of course, it was stealing so it was also illegal. What is interesting is that in interviews with some of the persons involved, to most it was just a “big game.” Actually, it was certainly more than that because those involved in falsifying thousands of policies, were paid extremely well.
“Ignorance” of ethics has universally been understood to start at early childhood. This is obvious in those situations where the parents have been involved in unethical and/or illegal activities as the child soon learns to accept such action as the “norm.” If they are exposed to such activities, not only from family but also by others with whom they associate, they will soon develop the attitude that “it must be right because everyone does it.” Obviously, a child that grows up in such an environment will not know what’s right or what’s wrong.
F Bad ethics are often taught by example.
So how does that apply to an insurance agent? Consider the following situation:
John joins the Acme Insurance Agency after selling siding for several years. He is trained by an experienced agent designated as a “trainer” because he has the highest production (not highest ethics), a rather typical situation. John is a good student, and one of the things that he learns is that there always are several forms to be signed by the client. If he turns in a form that is not signed, he does not get paid for it until he goes back and gets the required signature.
One of his early sales was for a substantial policy and he was looking forward to his commission check until he discovered that the applicant had not signed one form. Remembering that the applicant was not a particularly pleasant individual and had been a rather hard sell, plus the fact that the applicant had stated he was going on vacation for 3 weeks, brought John close to tears. In admitting this to his “trainer” who lent a sympathetic ear, the more experienced agent offered to “get the signature.” John could not believe it, but when the agent came back to his desk in a couple of minutes with a signature that matched the other signatures on the application, John was introduced to the practice of “windowpane signatures” - holding a signed form to the window, and then tracing the signature onto another form at the proper place.
Assume that John knew that forging a signature was wrong (and illegal, to boot). What has he learned? He has learned that it is OK to “windowpane” a signature when necessary, because that is not really “forging.” Besides, if his trainer does it with all of his experience, then it must be OK.
Unfortunately, this is how many agents learn their “ethics.” Taking this one step further, assume that John moves to another agency where he is put in charge of training of new agents. Assume further that John teaches “windowpane signatures” to a new agent, and John is proud when the new agent brags on how his trainer had saved a case for him. Further assume that the owner of the new agency was highly ethical and besides, the agency owner knows he will lose his license if one of his agents is caught forging an application with his knowledge. The result would be obvious – John would go back to selling siding and not fully understanding why he lost his good job as a trainer.
F Sales ethics are the hallmark of the marketing entity.
F If a person’s early training taught that one could get away with wrongful acts and make money; then the individual needs re-training and re-education as to what is right and what is wrong, and WHY it is right or wrong.
While some people act only out of ignorance when making ethical decisions, the ugly green monster, greed prompts others. The demon that perches on everyone’s shoulder is more active with some than with others. Nearly everyone will admit to having done a “wrong” at some time or other (or else they are lying) and psychologists have discovered that people respond positively to rewards but negatively to punishment – no startling discovery, even Adam in the Garden of Eden knew that, or should have.
In business, and insurance is a business (yes, it is), companies will reward the high producers with bonuses, gifts, commission increases, trips to exotic places, and whatever other rewards seem to ring the bells of the producers. Productivity is rewarded, often regardless of how it was achieved. It is no shock to discover that persistency of insurance is worse on business sold during a company promotion, “President’s Club” qualification period, or some other such contest period.
F If only productivity is rewarded, any sales with any business suffer in quality when increasing in quantity.
No one is perfect – even Mother Theresa admitted to imperfections and recently some of her diary entries were discovered where she questioned some of her beliefs. Often quoted in these types of discussions is the situation when Abraham Lincoln threw a man out of his office for attempting to bribe him. When he was asked as to why he had thrown the man out, Lincoln replied that the man “was getting too close to his price.” This simply points out that nearly everyone has his price.
F Since realistically we probably all have our “price,” the smart person will simply not put themselves in situations where they are tempted.
We have all heard the word “character” in referring to certain individuals. Some seem to have it, and some don’t. Actually, those who have overcome temptation tend to have developed a stronger character as a result. So – what is character? The dictionary has about 50 lines (in small print) of definition, but the most applicable would be: “one of the attributes or features that make up and distinguish the individual.” Therefore
F the goal of an ethical individual is to develop a strong character.
Many scholars, authors, and others, consider virtue as the telling factor in a strong character. Simply put, virtue is like a habit to do good things, such as “honesty is a virtue.” Virtue is not something that anyone is born with, but it must be developed. Children go through a phase when they come up with some “whoppers” and while this upsets many parents, it is a natural part of growing up and it is the responsibility of the parents to teach honesty (a virtue) to the child.
On the flip side, people can develop habits of doing “bad” things – this would then be called a “vice.” People usually don’t state doing “bad” things all at once - like virtue, it must be developed. Normally it is not taught by parents, but by others in the environment, associates, friends and those to whom a child respects. This usually starts with something small, like a “little white lie” that gradually develops into falsehoods so rampant that people simply no longer believe them. Unfortunately, it is easier to develop “vice” than it is “virtue,” as virtue demands continual attention and it must be exercised frequently. Since it is harder to be virtuous, virtue is praised more by others.
People, nearly all people, at some time in their life face situations where they can easily succumb to temptation to do something that they know is wrong, even though they know that another action would be right. Unfortunately, many people take the low road. The importance of ethics training comes into play here, so that the person will do what is right and will be therefore, working towards building a strong character.
When a “What to do, what to do?” situation arise, it is called “a quandary, dilemma, or just “a gray area.” This situation comes into play when it is just not clear as to what is right and what is wrong.
F A quandary or dilemma occurs when in a certain situation, the person is not sure as to what to do, as there are good reasons for the action and good reasons against it.
Recently, the CEO of the New York Stock Exchange decided to cash in his retirement funds for estate planning purposes accumulated over the past 16 years. This totaled some $120 million and caught the eye of the press, making the headlines for a couple of days. He maintains that it has all been collected legally and under the provisions of his contract with the Stock Exchange, and at this point, there is no evidence to the contrary. But it is obvious that with the hue and cry of the self-appointed guardians of the press, his days are numbered. It may have been legal, but was this ethical?
He evidently found himself in a quandary as to how to collect these funds, and one must suppose that there were good reasons for taking it in one lump sum as he did, or to spread it out in some fashion so that it could be more easily understood. Was it ethical for him to take it in one lump sum, considering the fact that during his reign, the stock market (probably through no actual fault of his) had fallen drastically and many investors, including retirees, who had invested in stock handled by the NYSE - lost their nest eggs. Was this right, or wrong, or just in a “gray area?”
It is quite easy to find oneself in a quandary in the insurance business. Assume for instance, that a client is an elderly widower, decides to disinherit his children because they are objecting to his wanting to leave most of his money to a nursing home that had taken care of his late wife and is now taking good care of him. You are a financial planner so you are familiar with his situation and he respects your advice. But when asking for up-to-date financial information, you discover that the person who has been making his investments is the son of the owner of the nursing home, and he has informed your client that his investments have tripled in worth since he took over – which is dubious, to say the least.
What should you do? Following the professional code of ethics, should you investigate this further, or should you simply do as he asks, and change the beneficiaries of his estate (and policies) to reflect his desire to name the nursing home?
Or, should you perhaps contact his doctor to make sure that his mental condition is good enough to make such an important decision? And even “stickier,” understanding the need for confidentiality, do you contact his children (assuming that you know them well as decent human beings)?
A good illustration of a dilemma is the situation where a financial planner was working with a woman who had inherited some money and wanted to do some planning for retirement. During the initial conference, the lady provided detailed confidential financial information to the planner as he requested. She and her late husband owned a large day care center where she still worked. During the interview she stated that she had to pause for her "medication" as she was terribly distraught over her husband's sudden death (auto accident) and she had relapsed into a state of paranoia and manic depression.
After gathering her financial and personal information, the planner was going to give the woman a quote and information on what he could help her with in regards to her financial future as she wanted to make sure that everything was OK and wanted to run it by her lawyer. The next day the planner had to take his daughter to dance practice and stopped by on the way to give the draft of the financial plan to the woman. She happened to be outside when he pulled up and his daughter saw the woman.
When the planner returned to his car, his daughter said, "That is Mrs. Manning, I didn't know that you knew her." When asked who "Mrs. Manning" was, the daughter informed him that she ran the daycare center where she went when she was not in school and her mom and dad were at work, along with the children of several close friends.
Dilemma! All information obtained from a prospect is confidential information and the planner could get into trouble if he passed this on to anyone else or if he made it public that the lady was paranoid and delusional. On the other hand, he did not want his daughter to be around this lady when he and his wife were at work. He could send his daughter elsewhere, but then what should be tell his friends, if anything, about her mental condition. Does he owe the same protection to his friends as he does to himself? Or does the confidentiality override any personal concerns for the safety of his child and/or the safety of other children? What would YOU do?
These decisions are not easy, and as the world of business become more complex, so do the ethics decisions. But before a dilemma can be solved, there are certain steps to be taken before one can start applying ethical theories or ethical principles.
Every effort must be made to collect all of the information possible that pertains to the “dilemma.” In the situation previously discussed, it would be easier to make the proper and ethical decision if it were known that the client is not incompetent. It may be surprising to learn that
F Many quandaries are solved when all of the information is collected.
F Before it can be determined as to what is fair, all of those involved in the
dilemma must be discovered.
Sometimes this is not easy and will require a lot of “digging,” but as they say, “You can’t determine the program until you know the players.” Sometimes there are hidden agendas discovered when all participants are known. Also, sometimes there are those with “shady” reputations on one side of the question, which would raise red flags and which alone could determine the proper ethical decision.
Some ethics “consultants” maintain that since a dilemma (or quandary) must have at least two options, in order to determine the proper option, a third option is necessary. The reasoning seems to be that if one has not spent enough time and thought to the problem without coming up with at least a third option, then they simply haven’t thought enough about the problem.
In any respect, practically speaking,
F Before a dilemma can be solved, there MUST be another choice, other than just two.
There would not even be a dilemma if there were not two choices – a right choice and a wrong choice – and the dilemma is trying to figure out which is correct. Sometimes the third choice is an acceptable combination of the other two, sometimes it is completely different, but in any case, it usually is not easy to discover.
If the action under consideration is fair to all parties, benefits the client, and is consistent with such actions in other situations, then there really is no reason not to choose that action. Conversely, if taking such action requires that a commitment is broken, it is harmful and unfair, then that action would not be proper.
Of course, it is really not that easy in “real life,” primarily because of the conflict that occurs when an action is beneficial but it still not fair – hence the quandary/dilemma.
STUDY QUESTIONS
1. Two words that should not be used in the insurance industry are
A. sold out.
B. illegal notations.
C. caveat emptor.
D. caveat venditor.
2. People are often tempted to get something that they believe to be worth more than
A. the value they place on remaining correctly and unquestionably ethical.
B. they know they can get for it on E-Bay.
C. what it really is because people are basically stupid.
D. the hassle of doing what is right.
3. If you are not willing to forsake other victories in order to remain ethical, then you
A. must never lose.
B. have already decided that you will do anything to win.
C. will die a rich man.
D. rely too heavily on the legal aspects.
4. The Code of Ethics of the American Society (CLU and ChFC) mandates that the member must
A. never find himself in a situation where he must provide competent advice.
B. have his professional designation engraved on his business card.
C. not air his dirty linen in public but shall so inform his insurance carrier.
D. provide competent advice which is in the best interest of the client.
5. Ethics can be considered as a set of instructions on how to deal on a daily basis with a group and with a community and which revolves around social behavior
A. that is the antithesis of proper behavior.
B. that favors the group over the individual.
C. with those of like interests and station in life.
D. that is only legally correct.
6. Ethics
A. favors the group over the individual.
B. favors the individual over the group.
C. favors neither the group, nor the individual, nor the rich, nor the poor.
D. is extremely "me" centered.
7. Repeated unethical activity will
A. be absorbed by the community to where it will become ethical.
B. in most cases, eventually be made illegal
C. soon be covered by the passing of time and be laughed at later in life.
D. soon become a religious fiat.
8. The greatest tool for ethical conduct is
A. repeated actions.
B. print.
C. formal education.
D. good sense.
9. Since, realistically, we probably all have our "price," the smart person will
A. avoid clichés like the plague.
B. keep his price reasonable according to the value of the object.
C. not put himself in situations where he may be tempted.
D. play games with ethics and operate on the fringe of ethical/unethical.
10. In order to solve a dilemma,
A. there must only be one choice.
B. there must be another choice, other than just two.
C. the dilemma must be studied in all detail, and when the easiest path unfolds, take it.
D. pass it on to another person who has no prior knowledge of the dilemma.
ANSWERS TO STUDY QUESTIONS
1C 2A 3B 4D 5B 6A 7B 8D 9C 10B