Ethics: Personal Fundamentals

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Truth In Action

Truth in Advertising

Obviously, clients are the life-blood of the business; therefore, advertising for new clients is a necessity. The ethical problem that arises takes place in the form of the advertising used.

One should not use false or misleading advertising. While an advertisement may meet the letter of the rules, it may still be unethical if it violates the spirit of the rules.

As a producer, one should not make false or misleading statements about the size, scope or areas of competence of his or her practice. He or she should not distribute materially false or misleading materials to the public. The producer should not use misleading advertising that creates unjustified expectations for the recipient.

Misleading advertising is "unacceptable", as one would expect. We shouldn't make ourselves out to be something that we are not and we need to be careful that we don't overstate the level of our competency. A more subtle aspect of this area is in regard to misstating or overstating the capacity of company where producers and agent work, namely what it can do for the prospects and clients.

"Fake, false, or misleading" advertising or promotion of any product or service offered for sale is illegal. Federal law bans such advertising or promotion in interstate commerce, and most states have laws that deal with intrastate violations. This means that nothing said or implied in an advertisement or a promotion can be deceptive. This includes the price that is presented, and the way the product is described and illustrated.

When advertisers operate according to accepted principles of right and wrong, they make proper ethical decisions. The question is what constitutes right and wrong. Today, ethical relativism is more popular in making ethical decisions about advertising than ethical absolutism, which assumes one true moral code. The middle ground of ethical relativism recognizes that while there may be different value systems, analysis of moral consequences and the establishment of limited moral principles are extremely important.

Truth in Disclosure

Honesty is a key element within integrity. Honesty requires that an agent not only answer client inquiries truthfully, it also requires the agent to truthfully disclose information essential to a client's decision-making process.

Misrepresentation, Deceit, and Fraud

We also need to address the concepts of lying, cheating, and stealing (to use the layman's terms). When in practice, they tend to be quite obvious. When they are outright, they're clear. When they are shrouded in subtle acts they become deceit, fraud, and misrepresentation. Most often, we think about these concepts as applicable to our clients, but they should also be considered in dealings with employees, employers, legal and government officials, and relations with people we come in contact with everyday.

Accurate Record Keeping

A number of situations put our profession in a position of direct financial trust and it is imperative to exhibit integrity in order to maintain accurate records of all financial dealings with clients and in the handling of their assets. We must act in integrity in relation to our professional authorities as well as the instruments that grant us specific legal authority like the power of attorney and trusts.

Promotional Activities

Professional ethical principles also speak to promotional activities and responsibility in promotion- another activity that agent's are engaged in during the course of the year.

Have you ever heard a speaker being introduced where his or her introduction sounds significantly better than what their real qualifications actually are? Some authors of articles, books, and seminar content have been known to make misleading and materially false communications to their audience as well as the general public.

Disclosing & Reporting Fully

Providing reports to our clients, as a matter of course, when requested, is a key ingredient in maintaining full disclosure during the planning and implementation processes.

Not in My Pocket

Not commingling funds of our clients with our own is pretty obvious, but care in commingling several of our clients' money is ok if we keep very detailed records as we go about servicing their collective financial advantage through the services that we provide.

In all cases, a good measure of integrity is to treat our clients money and financial affairs as though it were our own or a close loved one's money, while adhering to all legal regulations in the process.

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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and InsuranceEthics101.com, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.