The members of the American Society are bound by a formal Code of Ethics which is based upon the pledge taken by all holders of the CLU and ChFC designations. The pledge states: "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."

The purpose of the Code of Ethics is to provide a series of standards against which Society members may measure their business and professional activities. The Code contains two ethical imperatives which mandate that a member provide competent advice which is in the client�s best interest and that a member shall act in a manner that will enhance the public regard for the professional designations held by members.

Laws exist to set a minimum level of behavior. Actions which do not conform to that level will result in the imposition of fines and penalties. Our legal systems set a line which separates acceptable from unacceptable behavior. That behavior which crosses the line is unacceptable outlaw behavior. Laws are not concerned, for the most part, with one�s distance from the line. A shoplifter and a murderer are both outlaws. The magnitude of their crimes is relevant to the victim and the punishment, but not to the fact that both shoplifting and murder are illegal activities. Each has equally crossed the line into outlaw behavior when the theft or murder occurs. Further, insofar as the law is concerned, there is no distinction between a saint and a sinner, if neither has violated any temporal laws. A person cannot be acting more legally than another person who is also acting legally. There are no gradations of legal behavior. An act is legally acceptable or it is not.

Ethical codes, however, begin with the assumption that all of one�s actions are acceptable; that is to say, all illegal activity is by definition unethical. If one accepts the principle that all ethical behavior is contained within legal behavior, then there must be some legal behavior which is unethical. If not, there is no distinction between law and ethics and we have no need for one term or the other.

But there is a distinction between the two. Ethical codes exist to elevate the behavior of men and women above the level of those who merely obey the law. The law may merely require that a person not tell a lie. This legal standard may permit one to give less than a complete answer.

For example, suppose I am trying to sell you an insurance policy and you ask me if it�s a good idea. My answer may be, "I have a policy just like it on my own life." If that statement is true, it is a legal response. If the statement is true but I intend to replace the policy, then the legal response is unethical.

If ethics requires one to affirmatively disclose the truth, it may thereby require the disclosure of unsought information which, if revealed, may be adverse to the interest of the seller. Such a result should not be unexpected. The Code of Ethics provides that a member shall provide advice and service which are in the client�s best interest. This means that a member has an obligation to use his or her professional expertise for the client�s benefits and shall avoid taking advantage of that knowledge to the detriment of the client. It unavoidably follows that whenever a conflict arises between the interests of the client and the member, the interests of the client shall be paramount.

A violation of the Code of Ethics would expose a member to sanctions which range from a reprimand to revocation of membership in the Society. A member is in violation of the Code when a final judgment has been made that the member has failed to adhere to one or more of the specific guides listed in the Code. In most cases, a legal violation would automatically include our ethical breach. However, in the narrower field of business and professional ethics some infractions of the law�such as a parking ticket�would not be thought generally relevant to one�s ethical business behavior. This does not mean that a member must have violated a civil law in order to be charged with a violation of the Code. It is entirely possible for a member to be acting legally and still be in violation of the Ethical Code. To make the pledge and the Code of Ethics meaningful, we must be willing to apply the Code so that the gap between acceptable behavior in the eyes of the law and ethical behavior according to the professional pledge is maintained and enforced.