Who determines what is ethical and what isn�t? Why has it become a very important buzzword in our business lives? If we were to ask these questions of thousands of people, we would get many different answers, all of which could be correct. Therein lies the dilemma: Our ethics are determined by our individual set of moral standards. There is no fixed standard to cover each situation.

Americans are blessed (not everyone would use this word) with an extensive legal system which is challenged to keep us within the letter of the law. If we steal and we are caught, we can expect to be punished. If we injure someone and the damaged person decides to sue, we know the consequences. This is because law is precise: Specific acts lead to specific consequences.

Ethical principles, however, aren�t specific and in most cases there isn�t anyone enforcing our moral codes. So ethical behavior is the result of individual choice. Let�s take a look at some ethical issues in the insurance industry and see how many choices there are.

Assume that we have a young couple with two small children. One of the adults works and provides for the family while the other adult manages the home. This couple has $400 to spend on life insurance. One life insurance agent will show this couple a $25,000 whole life policy which will give them some monies towards future needs. Another agent will show this same couple $200,000 of term insurance to protect the stay-at-home adult and the two young children. Which agent�s advice is correct?

I offer to you that they may both be correct. Depending on our own personal biases, each of us will choose one of the two options above. However, regardless of our own opinions, only the client can determine which need and solution is most important to him or her.

The whole life product will allow the young couple to stop paying premiums at some point in the future and still retain the coverage. It will allow them to begin a savings program for their children�s education or their own retirement. It will provide immediate cash for the family should something happen to the income provider.

What will term insurance do for this couple? It will provide a much larger death benefit for the couple should the income partner die too soon. This might permit the nonworking spouse to stay home until the young children are in school full-time. It will also allow the family to convert to a permanent plan sometime in the future, even if the insured becomes uninsurable.

What is more important to this young family? Which agent is the most right? If the salesperson is most concerned with the protection of this young family, he or she will suggest the term insurance. If the salesperson is most concerned with long-term planning, he or she will recommend the permanent policy.

Let�s complicate the issue even more. What if the adults in the above case went to a seminar and first heard about the term insurance option only after having already purchased the whole life policy? They then spoke with the agent who was giving the seminar and told her that an immediate death benefit was much more important to them than the savings feature. They want to make sure that their current lifestyle can continue even if something should happen to the working adult. If this agent replaces the permanent policy with term, will the replacement be wrong? If the clients are committed to the need for the high death benefit, then how can anyone say the agent was wrong in replacing the whole life policy with term insurance?

In forty years, if this young family happens to be one of the lucky ones, then in hindsight the term insurance probably wasn�t the best choice. But some agents aren�t willing to gamble on that many years of someone�s life and so choose a different way. Who can say one is more right or wrong than the other? Isn�t the right or wrong determined when we discover that the clients were only told of one plan and not the other? The first agent�s error was made when the clients weren�t given the opportunity to select among alternative solutions and decide what helps them the most.

Let�s look at a different kind of ethical question. What should we do when a prospect asks for a proposal from a company that we know little or nothing about? The assumptions here are that the agent is selling for a number of companies and thus doesn�t find it unusual to show two or more proposals to a prospect. A prospect has read advertisements about the great results a particular company is achieving and wants to buy the product from them. The agent does research and decides that he or she would not purchase a product from this company.

What are the choices the agent has to make? (1) Simply state: "I don�t sell that company. You will have to buy from someone else." (2) Explain why the agent believes this is an inferior company and attempt to sell another carrier. (3) Sell the product and hope for the best.

In my opinion, it is imperative that we commit ourselves to never selling anything that we would not purchase for our own financial needs. I believe that the Professional Pledge of The American College leads us to this conclusion. The Pledge states: In all my professional relationships, I pledge myself to the following rule of ethical conduct�I shall, in the light of 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.

If I�m selling to a young couple, I know that if I were in their place I would want to have a lot of death benefit so I would recommend the term insurance. If they want to buy a small permanent policy, I have to deal with the fact that, if I sell it and if there is a death claim, I will have to deliver the smaller amount to the survivors. Can I live with myself if I sell the smaller death benefit? If I were asked to sell or at least quote a company that I wouldn�t buy myself, I could not do it. I can�t justify in any way selling such a product to someone who understands less than I do about how insurance companies and their products work.

The tough, but ethically irrelevant, issue here is the need for regular commission income. In my first example, we are dealing with small commission differences, but in the second we may be dealing with many thousands of dollars. Can any of us honestly say we have never been lulled into rationalization by a big commission? Can any of us say that we are so pure we can stand in judgment of someone else�s human frailty?

Our need to be compensated is a legitimate right. But if we claim to be professionals and advisers to our clients, our needs must be subservient to the needs of our clients. Our Society�s Code of Ethics provides: "In a conflict of interest situation, the interest of the client must be paramount."

Your Society is taking action to help all of us address issues such as those listed above. These two were chosen to give very different examples, but there are many other ethical issues that we all must wrestle with daily. I believe ethics is treating others as we wish to be treated. The American Society exists to build our business into a respected profession that the general public trusts.

Let�s join together in helping all of our associates arrive at conclusions that are good for the industry and for the public. If we don�t, I suggest that there are governmental units who will be helping us in the not too distant future. Now is the time to set policies which make sense to the people we are serving�the buying public.