Revised 11/2005

Selling Ethically

Mountain Church

I went to the church on the mountain,

The one the forest Gods attend,

Where spirits of lake and rivers

Come to make amends.

The mighty sun God in the sky

Led us all in prayer;

I heard the angels singing

As I was kneeling there.

Storm Gods ceased their moaning;

All nature was in accord;

In the church upon the mountain

A little nearer to the Lord.

By Purdy J. Conrad

Introduction to Ethics

  Ethics, as applied to insurance, is defined as "formal or professional rules of right and wrong; a system of conduct or behavior."  Ethics are standards to which an insurance agent or broker must aspire to, feeling a commitment to each client.  Every type of profession generally has an informal "code of ethics" which may sometimes be more understood than written.

  As someone once said,

"If you have chosen to live your life as if there is no God,

you had better be praying you're right."

  The literal meaning of ethics is:

  eth'ics (eth'iks) n. pl. (1) the principles of honor and morality.  (2) accepted rules of conduct.  (3) the moral principles of an individual.

The New American Webster dictionary

  There is no set standard of ethics; they are determined by the standards of each culture.  Even within each culture, there can be different views of what is ethical.  This is especially true in countries like ours that are made up of a wide mixture of backgrounds.

  Codes of ethics, while having many variances, are basically simple: behavior, thoughts, and opinions are either right or wrong according to someone's perception.  It must be understood that ethics are purely about perceptions.  If one is acting according to what he or she perceives to be ethical they are acting ethically, even if the rest of the world disagrees.  Even though that person is acting ethically based on their own set of values that does not mean that the rest of the world must accept their behavior.  Consequently, governments mandate behavior in the form of laws.  It is this conflict of belief that often pits individuals against the government.

  For centuries, probably since man first emerged, individuals and even countries have argued over what is and is not ethical.  Wars have been fought over disagreements.  In our own country, the civil war was fought over a disagreement about ethical conduct.  Ethics involves the questioning of why certain things should or should not be done.

State Mandated Ethics

  It has been said that it is impossible to mandate a code of ethics; only actions may be mandated.  In other words, a person who wishes to lie to their clients may always wish to do so.  However, they may refrain from lying to avoid prosecution. Therefore, the state has successfully controlled the agents behavior, but not necessarily their code of ethics.

Can ethics be taught?  The first problem with this question has to do with "teaching" a belief.  Perhaps it would be better to say that ethics can be influenced rather than taught.  Ethics must be something that can be believed.  There was a time when people thought the world was flat, not round.  When it was discovered that our beliefs of the earth were mistaken, simply pronouncing this could never have changed all the perceptions people already had.  Rather it was necessary to influence them by providing the new facts that had been discovered.  Some people accepted these new facts and others did not.

  Since ethics are entirely about beliefs rather than facts, ethical debates can be quite frustrating.  We often feel the facts back up our personal beliefs, but facts are a moveable entity.  Facts can be used to back up multiple views.  This is especially true when a few facts are pulled out from many, presenting a partial picture of the situation.  Hate groups are experts at presenting partial pictures of reality.  They use partial facts or distorted facts from nearly every part of our life, including the Bible.  There have been many instances, including the killing of the Jews by Nazi Germany, that presented their view as ethical, backed up by partial facts taken from multiple sources (again, even the Bible).

  Ethical views are moveable; they change as perceptions change.  As reported by Susan Neiburg Terkel in her book titled Ethics, when Mahatma Gandhi, India's leader in their struggle for independence from England, was asked why he had changed his views over the course of a week, he replied, "Because I have learned something since last week." 

  So, the question remains, is it possible for ethics to be influenced?  It is more possible than we usually realize.  Parents influence their children's ethics every day.  Not by what they say necessarily, but certainly by their actions.  Some learn ethics by watching; some learn their ethics by listening.  Whichever way ethics become part of our lives, we do learn them.  It is important to realize that we learn unethical views as easily as we learn ethical ones.  The child who sees his parents cheat on their taxes, take advantage of another business or client, or criticize the neighbor is learning a code of ethics.  The code of ethics they are learning just isn't what the parent may be intending to teach them.

  Most of us consider the term "ethics" to only encompass good motives, but ethics are neither good nor bad; ethics contain both sides.  The thief or liar has a code of ethics; they just aren't the code we would consider desirable.  The term ethics does not automatically mean good; it simply means the code or recipe for life that is followed - good or bad.  Each of us has a code of ethics whether we realize it or not.

  It is generally understood that only behavior may be mandated.  Simply passing laws does not mean a person will change their beliefs or their actions.  The laws do mean that consequences are in place should the person go against the mandates.  For example, a person who would like to steal may not do so because he or she does not want to suffer the consequences.  That does not mean that they don't still want to steal; they simply refrain from doing so for now.

  Even stealing may have shades of right and wrong.  While most of us would generally consider stealing to be wrong, who wouldn't steal in order to feed their child or themselves?  If a person is hungry, is it still wrong to steal food or money to buy food?  Legally, it is.  Is it wrong morally (especially if the hunger involves a child)?

  Legal authorities hope that by passing laws forbidding certain actions, they will change the course people or businesses follow.  This has been largely successful.  As it applies to insurance, the companies and their agents do tend to follow what the states and federal government have mandated.  It is further hoped that the agents will begin to adopt the philosophy that they are following.  Behavior is often a matter of habits.  When an agent consistently follows the same course of action, even though he or she is doing so only because it is mandated, the consistent action becomes a habit.  Since morality is about the way one lives their life, habit is likely to be part of that behavior.

  Some states mandate ethics as part of their CE requirements.  Those states include, (but are not limited to) Arkansas, Colorado, Delaware, Florida, Georgia, Kansas, Kentucky, Nebraska, New Mexico, North Dakota, Oregon, Texas, Utah, Washington, and Wyoming.  Certified Financial Planners must have a specifically designated ethics course called CFP Code of Ethics.

Why would a state try to control the ethics of an agent?  Some professionals feel the states would be wiser to simply exclude those agents whose conduct seems questionable.  Since ethics involve perceptions, however, this can be a long and complicated legal matter.  Certainly those agents who break the law may be excluded.  It is those agents who never actually break the law, but seem to bend it continually that the states are most concerned about.

Principles Versus Rules

  There are two distinct and separate sides to ethics: principles and rules.  Principles are the statements expressed in desired conduct, though not actually mandated by law.  Rules are those actions and non-actions that are mandated by law.  Rules often start out as principles but become rules as more and more agents seem to violate them.

  Those states that have chosen to either make ethics part of the renewal education cycle, or as part of punishment when ethical conduct rules have been broken, hope that exposing agents to ethical concepts will impress upon them the importance of high professional standards.  Since many professional educators do not feel that ethics can be taught, there is disagreement about the concept.  Even so, it seems to most of us in the educational field that it is better to expose a person to the expectations of ethical standards than ignore them entirely.  At least by exposing individuals to ethical standards, there can be no excuse for not following them.  The old "I didn't know" excuse can't be accepted if the agent has repeatedly had to take education that did specifically educate them.

Meeting Educational requirements

  Most states do now require agents to obtain some amount of education.  Your state must or you probably would not be reading this text.  This required education is usually referred to as CE hours, for continuing education hours.  We like to think that most agents understand the reasons for this, and would be continually educating them with or without this requirement.  We realize that experience is a valuable source of education and a necessary part of our lives.  However, when it comes to some professions, who wants to be the one that the learning experience came from?  Would we want a doctor learning from his mistakes at our expense?  Would we want an attorney, who had never tried a criminal case, learning how from a member of our family who was accused of a crime?  Would we want the appliance repairman tearing our refrigerator apart to learn how it works?  Probably not.  It shouldnt surprise any agent to realize that their clients do not want agents learning the trade at their expense either.  No matter what the profession, we all want someone who is educated helping us.

  Most consumers want those they deal with to be educated on a continual basis.  We expect the man who repairs our cars to be up on the latest technology.  We expect the attorney who handles our estate planning to be well versed in the newest laws.  We expect the surgeon who will operate on us or a loved one to know the most recent medical breakthroughs.  Why shouldnt our clients also expect us to know the latest in insurance designs?

  As every agent knows, the only way to stay on top of things is to continually learn.  This is done in multiple ways.  Reading company literature and industry brochures is an excellent source of new information.  Insurance companies are probably a better source than any other for new trends or updated information on existing policies.  However, every agent must be aware that insurance companies are selling not only to consumers, but also to the agents themselves.  They are always needing new blood to market their products.

  Mandated education can also be valuable.  Agents often complain that courses seem repetitious.  This can be a problem if the agent tries to order only subject matter that they are already familiar with.  Some areas of insurance do not see great change, so courses will be similar to each other.  Mandated education, in some states, are also structured by state regulating authorities which limits the course content to subjects the states feel are relevant to the industry. 

  Agents who live in a state requiring mandated education must take responsibility for their requirements in a timely manner.  No agent should wait until the last hour before seeking it out.  It is true that time can easily get away from us, but there is a simple solution.  The agent should simply write him or herself a note and insert it in their appointment calendar.  Then education can be ordered in a timely manner.  Of course, ordering it is simply the first step.  It must also be completed and returned to the providing company.

  Education providers are not responsible for an agents time requirements.  Nor are education providers required to keep a list of previously taken CE courses.  It is the agents responsibility to begin their education and complete it well before the actual due date.  Some providers do keep records of previously taken courses and will alert the agent if they are repeating.  However, this is a courtesy and not a state requirement.  Agents should keep a file with a copy of each Certificate of Completion in it.  The most recently taken course should be on top and the oldest on the bottom.  Many agents also prefer to tab the edges by year.  That way, an agent can see at a glance the year in which each course was taken.  If an agent is audited by the state, the agent must provide proof of all courses taken. That means they must have copies of their certificates accessible.

  Why would an insurance agent be audited by the state?  There are many reasons.  If the company they purchased their education from felt that unethical behavior existed in completing the test, the state may be notified.  Some states actually require that the education provider notify them when suspected cheating occurs.  Seldom will the state tell the agent that the educational provider has reported them.  The state will simply request all records and begin an audit.

  The state might also simply audit on a hit-or-miss basis.  In other words, periodically agents are pulled from their records at random and then audited.

  Often audits will occur because consumers have been complaining about an agents activities.  In this case, an audit of the agents education is simply a part of the overall investigation.

  Agents are not the only ones who can be investigated.  Education companies can also be investigated if wrongful activity is suspected or reported.  Usually this would involve a company who did not follow required procedures, such as reporting suspected cases of fraud.  More likely, however, it would be because the state suspected that the education company was providing the answers to the test questions in an unethical manner.  Because of this, companies seldom let cheating go on among agents.  They are better off not doing business with the agent at all than risking the loss of their license with the state.

  When an agent does copy someone elses test or cheat in some other manner, they will find that the state is not sympathetic with their reasons.  No matter how compelling the reason may seem, the state will expect agents to act ethically.  Would consumers want it any other way?

  States do change educational requirements periodically.  Not all states will notify agents individually.  Luckily insurance companies do a fairly good job of printing changes in their newsletters.  Of course, this means an agent must read them!

  Insurance agents are not the only professionals who must complete mandated education.  Medical professions generally are required to complete education, as are accountants, real estate agents, and attorneys.  No matter what the profession happens to be, education is an important part of keeping current.

Who Makes the Determination of What Is Ethical For Insurance?

  As we know, ethics is all about perception.  Even so, when it comes to a public occupation, such as insurance and financial planning, the state is often the authority for what is and is not ethical.  Anything that would harm the public is automatically considered to be unethical.  This would include such things as revocable living trusts that were sold inappropriately, replacement business (especially in some parts of the insurance industry), and over selling, often called excessive selling.

  When the individual state insurance departments determine that an action is harmful to the public, they typically hold public meetings and eventually pass legislation.  In nearly every circumstance, the legislation is aimed at protecting the consumer.

Competency

  Sometimes ethics involves something as simple as competency.  There are several types of incompetency: the inability to adequately perform one's job, lack of necessary education, or a mental deficiency that does not allow proper job performance.  There may be additional types of incompetency, or multiple shades of those stated.

  Although few people would consider themselves incompetent, it is not unusual for a person to state or imply that he or she has more education or knowledge than actually exists.  To mislead a potential client in such a way is unethical and may lead to a lack of competency.

  The courts have determined that agents are considered to be "contract specialists."  While that sounds like a good thing, it leads to many lawsuits against agents who presented and sold insurance contracts inappropriately.  When these agents ended up in court, the "I didn't realize" defense won't work in their favor.  By merely possessing an insurance license, agents are assumed to be able to read and understand a policy, which is a contract.  Most agents report, however, that they have never read the very policies they are selling.  They commonly read only the brochures and rely upon them to determine which products they sell to the public.  This can be a very costly mistake for the agents.  We have all told our clients to read their policies, yet the selling agents have not bothered to read them themselves.

  Probably everyone has ran into a person who was not competent to do the job they work at.  When it comes to the insurance industry, such incompetence can affect not only the agent, but also his or her clients in severe ways.  Like accountants, insurance agents can be found negligent and financially liable for that negligence in very broad areas, including health insurance, life insurance, long-term care protection, and retirement planning issues.  In fact, in the book written by Cheryl Toman-Cubbage, titled Professional Liability for Financial Planners, she writes, "Negligence is the broadest area of exposure for an insurance agent.  It involves errors and omissions made by him or her.  The most typical are failure to place necessary insurance, failure to obtain proper coverage, failure to properly advise of the company's rejection or lack of coverage, failure to cancel a policy at the insurer's request, and failure to fully disclose the nature of the risk."[1]

  There are other areas that can cause an agent legal problems.  An agent can be liable for giving unauthorized instructions, especially if they prove to be wrong or even if the insured or their family disagrees with them (rightly or wrongly).  In addition, property/casualty agents might be expected to suggest flood insurance in certain areas of the country.  Certainly, a property/casualty agent would be expected to suggest umbrella liability insurance to those clients who have financial assets at risk.  Failure to inform them of this possibility can lead to lawsuits.  For the life and health agent who practices financial planning (with or without the proper credentials), courts have ruled that they have a responsibility to suggest a long-term care insurance policy, especially if their client has large financial assets at risk.  Suggestions for these additional coverages, while producing a commission for the agent, should really be done for a much greater reason: self-preservation.  By suggesting coverage that protects the assets of the client, the agent is also protecting their own hard earned assets.  Of course, there must be proof that such suggestions were made.  The agent would be wise to have a disclaimer signed when the policyholder refuses to accept suggested insurance policies.  Many lawsuits are not brought by the insured, who knew what the agent had suggested, but rather by their families, who had no knowledge of past conversations.

  For example:

Ralph King was seventy years old when his agent, Jose Moralez suggested that he purchase a nursing home policy.  The cost was more than Ralph was willing to pay, so he declined the coverage.  Luckily, Jose had Ralph sign a form stating that such coverage had been offered.

When Ralph suffered a stroke, his family found it necessary to institutionalize him in a local nursing home.  Ralph's son blamed Jose Moralez because his father had no coverage for this very expensive care.  He hired an attorney to force Jose to pay for the care out of his own pocket.  However, Mr. Moralez was able to produce the signed disclosure form, which freed him from any financial liability.

  There are many situations that pose a liability for the agent when their clients are underinsured or not insured at all for risk exposures.  Agents often feel that they cannot win: if they try to sell too many products, they are accused of greed; if they fail to sell enough they are accused of incompetency.  The educated agent will offer all the necessary products and leave the final decision up to the client.  Whatever decision is made, however, it should be noted and signed and filed away indefinitely in the client's file.

Liable to the Company As Well

  Agents can also be liable to the insurance companies they represent.  Generally, agents are considered to be representatives of the insurance company, and therefore liable to the insurance company.  These agents may be called "Captive Agents."  Brokers are considered to be representatives of the insured.  The brokers primary allegiance is to the individual clients, whereas the agent's primary allegiance is intended to be to the companies they represent.  Legally, knowledge of the broker is not considered to necessarily be knowledge of the insurance company, whereas the agent and the insurance company are deemed to have the same knowledge.  That means that it is assumed that the insurance agent has shared all knowledge (such as for underwriting) with the company.  The broker, who may not have had any contact with the insured, is not deemed to necessarily have the same facts as the agent would (having had personal contact).  This legal distinction is critical if someone decides to sue both the agent and the broker, along with the insurance company.  In most cases, if the broker is sued, the insurance company can escape liability.  If the agent is sued, the insurance company is often considered to be liable along with him or her.  This is true even if the agent has been found to have overstepped their express authority.  The term, "express authority" refers to the powers given to the agent in the agency agreement or contract.  In many states, the agent also has implied powers.  This might cover anything that the consumer could reasonably have expected the agent to be able to do.  This is often referred to by the courts as "ostensible authority".  

  For example:

Sheila Fields wanted to purchase a life insurance policy.  Her health was not exceptional, so she urged the agent to write her up immediately.  Her agent, Brenda Bar, was fairly new and obviously inexperienced.  The company that Brenda chose did not allow any premium to be accepted until underwriting had been completed.  Even so, Brenda did accept the premium, and issued Sheila Fields a receipt.  Before underwriting had been completed, Mrs. Fields suffered a heart attack and died.  Her family found the receipt and argued in court that it implied acceptance.  The court agreed and held the insurance company liable for the death proceeds even though their procedures had not allowed Brenda Bar to accept the premium payment.  Sheila Field's family won because it was reasonable for the consumer to believe that the agent had the authority to accept the premium payment.  This premium acceptance could be considered a "binder" of the contract.

  Even though it seemed obvious that Brenda Bar was not an experienced agent, any agent or broker is expected to act with reasonable care and diligence.  Therefore, it is in the insurance industry's best interest to expect their agents to be trained.  That is precisely why many of the country's largest insurance companies have favored state mandated education.  It is also why expanded education, especially in the long-term care insurance field, has been backed and promoted by the insurance companies writing the products.

Due Diligence

  Ethics often involves due diligence, a term familiar to insurance agents.  Diligence involves doing what was required in a reasonably prompt manner.  It also means knowing enough about the companies represented to feel comfortable about their financial strength.  Due diligence implies that the agent has "done their homework", so to speak, before replacing policies, issuing new policies, or making financial recommendations.

  Due diligence can be as simple as returning client telephone calls, or as complicated as understanding the financial ratings of the companies being represented or replaced.

Confidentiality

  An area of ethics often overlooked is confidentiality.  It is very easy, in the excitement of selling, to tell some bit of information about someone else that should not be told.  While we might assume that one client does not know another, this is not always the case.  Especially in small communities, people often know each other for miles around or simply through the local grange.  If a client discovers that an agent is sharing information they consider private, that agent is sure to experience problems.

Conflicts of Interest

  Ethics may also involve conflicts of interest.  While this is less likely to happen in the insurance field, it does still apply in some cases.  Some actions could border on fraud or perhaps even actually be fraud.  For example, if an agent were to draft some type of legal paper or contract giving him or herself or any member of their family an interest in a client's estate or assets, that would most certainly involve a conflict of interest.  In many cases, it would also be illegal.

Ethics and Risk Control

  One of the most compelling reasons to be ethical is to control the amount of risk we face professionally.  Businesses need ethical agents to avoid financial loss due to lawsuits.  Insurers need their agents to be responsible from an ethical standpoint.  Knowing this, companies often try to do their part to ensure that agents are aware of their responsibilities.  For example, the New England Life Insurance Company requires their agents to view a half hour video.  This video contains various situations of potential professional liability and gives possible solutions.  Although this is merely exposure to ethics and cannot necessarily change or motivate perceptions, it does tell the agent what is expected of them professionally.  If a lawsuit then follows, the video also demonstrates legally that the company is attempting to promote ethical business practices.

  Agents are encouraged by virtually all insurers to purchase Errors & Omissions insurance.  Some companies will not contract with an agent who does not own such a policy.  In a career such as insurance, having E&O protection is a must.  Errors and Omissions coverage protects the agent from errors they have made in a presentation or upkeep of a policy and from omissions of statements that should have been made or omissions of policies that should have been placed.  Most errors and omissions are made due to sloppy business practices.  E&O policies reimburse the injured party for direct financial loss and may, in some cases, also cover defense and court costs.  Exactly what is covered will depend upon the policy language of the E&O policy.  Many E&O policies are purchased through group plans offered by insurance companies (typically life insurance companies).

  Liability insurance, which is what an E&O policy basically is, means insurance agents have joined other professionals in their exposure to financial risk directly related to the job they perform.  For example, doctors have carried liability insurance for years as protection against lawsuits for mistakes they have allegedly made.  Although doctors were the first to need such coverage, they were followed by attorneys, then accountants, and now finally insurance agents and financial planners.  Although costs have continually gone up for the coverage, primarily due to lawsuits filed, the mounting fear of agents is that eventually no coverage will be available at any price.  Even though expensive, professionals realize that the price of E&O insurance is simply part of the cost of doing business.

Company Insolvencies

  In the past, agents merely had to worry that they practiced good sense personally.  Now they must also consider the solvency of the companies they represent.  This was demonstrated in 1987 in the Higginbotham case in Texas.  It began when an insurance company bounced a $429,000 claim check for a fire loss.  A jury awarded the policyholder $752,000 from the agent because they agreed with the theory that the agent had not fulfilled his obligation to "obtain the best possible insurance for the best possible price so that the client was adequately insured at all times."  One very important point: the award came from the agent, not the insurance company.  Even though the appeals court reversed the decision, this Texas award still established the principle that an agent has a duty to inform their clients of a carrier's financial strength (or the lack of it).  Having established this principle, every agent would be foolish to represent any company that could cause a client to collect a verdict due to a company failure.  It should be noted that as long as an agent correctly disclosed a company's financial strength (or lack thereof) and can prove disclosure, he or she would probably be clear of liability.

  In the past, there was little or no liability as it pertained to third parties.  That has gradually changed as court cases have produced new decisions.  Usually this would apply to situations where use by third parties was foreseeable.  The agent would not generally be liable to the third party himself or herself; only for results that affected their client or the client's beneficiaries.

  There are always hidden costs when litigation happens.  Sometimes hidden costs can have a larger and more long-range effect on the agent and his business than does the settlement itself.  An E&O policy will not cover loss of field time, for example.  If the agent is not free to pursue new or additional business (commissions) his income may suffer.  Loss of reputation is also certainly a consideration.  If the suing client has contact with other clients of the agent, there will almost certainly also be a loss of other business and the perceived injured client spreads the news of their unhappiness.  It might even result in additional lawsuits if the unhappy client influences others to follow his or her lead.  In fact, if the client receives a large settlement, others may easily follow with lawsuits in hopes of also receiving a settlement.

  The defensive attitude adopted by doctors, attorneys, accountants, and even architects must now be adopted by insurance agents as well.  Obviously all current laws and company policies need to be followed, but the agent also needs to begin to document their interactions with clients or potential clients much more fully.  Most importantly, agents must begin to stay within their areas of expertise.  This is not as easy as it might seem.  Many insurance companies have recently begun to require their agents to move into new areas of insurance.  For example, many traditionally property/casualty companies have started to move into the life insurance field.  Some life insurance companies have started requiring their agents to begin selling securities.  Such moves place their agents into potential liability claims.  The good news is that the insurers may be forced to share the blame if lawsuits happen.  This would especially be true if agents are smart enough to keep all documentation regarding this forced spread of expertise.

  When an agent sells a product, if he or she is not fully educated in the product, misrepresentation can easily occur.  There is a term often used for verbally expanding what a policy can accomplish for the consumer; it is called "puffing."  When an agent claims a policy or security will do more than it actually will, this is generally not grounds for a lawsuit, primarily because it cannot be proven one way or the other what was actually stated.  However, in circumstances where an agent assumes additional duties, has a special relationship of trust with the buyer, or holds him or herself as having more expertise than actually exists, then a special "duty" is present.  When an agent gives assurance of proper coverage and that turns out to be wrong, the agent is legally liable for negligent misrepresentation.  The insured is not legally required to independently verify the accuracy of the claims or representations made by the agent; he or she can accept them at face value.  Therefore, the weight of accuracy bears directly on the agent.  Even if the agent told the facts as he or she understood them at the time of presentation, if the agent is wrong, they are legally liable.  That is why it is so distressing to consumer advocates when insurance companies pressure agents into fields they are not qualified to deal in.

Unwritten, Invisible and Implied

  Every insurance contract contains an unwritten, invisible or implied term referred to as the covenant or promise of good faith and fair dealing.  This promise exists because it is imposed by law upon the insurance company to always act fairly when handling matters involving the consumer.  Even if such a clause is not put directly into the policy, it still exists according to law.  Judges know this and will act as though such a clause were part of the policy.  Legally it is understood that insurance companies must act in good faith and fairly towards consumers.  Insurance companies are required to meet the reasonable expectations of the policyholder.  Of course, this does not mean that every risk must be covered by the policy.  It does mean that the policy is expected to perform as indicated.

  When a case does go to the jury, the jury is always asked to decide whether or not the insurance carrier performed as would be reasonably expected.  This would also apply to the agent who represented the insurance product.  A company's or agent's business practices or common course of conduct is routinely admissible to show motive, opportunity, intent, plan, knowledge, or the absence of a mistake, or an accident in the manner in which it dealt with the insured party.  Intent is not an issue.  In other words, even though an agent may have had no intent to misrepresent a policy, if they did in fact do so, they are still liable financially.  The policyholder only has to show that misrepresentation happened.  The reason it happened is not relevant to the courts.

  Time limits on filing claims against agents and insuring companies will vary from state to state.  These time limits are called statutes of limitations.  In most states, there is a two-year limit, but it is important to know the laws of your own state.  Some states have only one year to file a claim against an insurer or agent.

  There are policies that actually state the statute of limitation in the policy, regardless of what the state might impose.  This policy limitation is called a contractual obligation.  This contractual obligation may override any state time limit.  As always, it is necessary to seek legal council to determine what applies to each individual circumstance.

Professional Ethics

  In many industries (including insurance), the professionals have knowledge that other individuals do not have.  As a result, those individuals who seek out these professionals must rely upon their honesty and integrity.  As a result, a feeling of ethical standards must exist.  It was this potential for abuse of power that provided a set of rules or what is commonly referred to as ethical behavior.  Sometimes, ethics are written standards; they may even be in the form of legislation or laws.  The premise upon which practical ethics must be based, according to Stephan R. Leimber of the American College where he is a professor of taxation and estate planning, is that power must be exercised in the interest of the clients who seek the professionals out and may not be exercised solely in the best interest of the professional themselves.

  Professional ethics are a means of creating standards within any given profession to upgrade it and give it honor.  It is a means of measuring performance and, in some cases, acknowledging outstanding individuals.  Ethics often are a means of providing priorities and building traditions based upon integrity.

  Every person wants to deal with professionals that have high professional standards.  That includes attorneys, medical personnel, accountants, salespeople and insurance agents and brokers.  Ethics add an element of trust to any industry.  Some industries just seem to need that element more than others.

Real Life Ethics

Just Simple Honesty

  Most often, ethics simply involve being honest.  It is representing each client without regard to personal financial gains, keeping the client's welfare in mind.  It is the act of full disclosure on all products represented.

  Most people probably don't spend much time thinking about honesty.  Each of us certainly expect those we deal with to be honest; we may even think some industries are never honest.  Some years ago, dishonesty in the insurance profession didn't seem to have many consequences, but that is no longer true.  Attorneys always need new industries to conquer, and the insurance field is next in line.

  In the late 1970's, insurance regulatory changes and high interest rates brought about products that seemed ideal for those interested in financial planning.  These included such things as universal life products, along with some other types of products.  Permanent life insurance, rather than term products, became part of investment portfolios.

  Computer software also became the insurance agent's best friend.  Such software allowed an agent to print assumptions based on interest rates that were unrealistic.  These printouts looked very professional to the consumer and influenced sales of products that made promises, which would prove impossible to achieve.  Some of the exaggerated printouts came directly from companies, but many more came from the agents themselves.  Percentages as high as 19% were common.

  These high interest rate illustrations gave the impression that the life insurance premiums could "vanish" entirely in as little as four or five years.  While many policies do allow the policy to pay premiums after a length of time, these illustrations were not realistic.

  Normally, premiums vanish because the dividends, in whole life policies, or the interest in universal life policies, are high enough to allow the premium payment from these earnings.  The premiums are paid from the cash buildups.  Universal life policies were especially sold on the basis of vanishing premiums because the policy contract allowed the owners to pay more than required, less than required, or no payment at all.

  When the interest rates of the 1970's and the 1980's began to fall, the results had the opportunity to be disastrous from the policyholder.  Those who purchased policies on the basis of disappearing premiums actually found they had to pay premiums years longer than promised or loose the coverage entirely, as it devoured itself.  A properly illustrated policy can eventually pay for itself without collapsing as it uses cash values to keep the policy going.  This usually requires a minimum, at current interest rates, of 15 to 20 years of premium payments.  If these policies had been sold honestly, insurance agents might have avoided the current reputation that exists.

Policy Replacement

  Replaced policies are often referred to as "churned policies."  Agents who churn policies convince policyholders that their policy is more advantageous than the one currently in force.  This may well be true, since newer policies often give benefits that older policies do not.  Unfortunately, too many agents churned policies that should have been left in place.  This was often especially true when it came to life insurance policies that needed duration to provide full benefits.  These older policies contained large cash values, which were used to buy replacement policies.  The newer policies typically had a much higher death benefit, although they may not have cost more in monthly premiums since the cash value in the old policy offset the cost.  Many policyholders reported that they were told, on the basis of illustrations using higher interest rates than were actually realistic, that they would only have to continue paying premiums for a short time.  In fact, they used up their cash value in the old policies, yet still had to continue paying premiums for much longer.  If these clients actually desired higher death benefits, the change in policies may have been warranted, but often this was not the desire of the policyholders.  What they really wanted was a paid up policy.

  What was the result of these policy replacements?  Many consumers contacted their attorneys and lawsuits followed.  There was even talk of a class action lawsuit which would have involved thousands of policyholders who considered themselves financially injured.  Such a class action lawsuit would potentially include:

         Those who purchased a policy and then let it lapse because of cost.

         Those who cashed in one permanent life insurance policy, using the cash value to purchase another, unless there was a valid reason for doing so.

         Those who received an insurance illustration using unrealistic interest rates, which assumed premium, would vanish.  Today, an unrealistic illustration almost certainly would come from the agent rather than the company.  Today's companies are careful not to get caught up in such legal danger.

         Those who bought permanent insurance policies between 1979 and the mid 1990's.  These consumers may automatically qualify for some amount of restitution, even if they were not visibly victimized.  That is because class action lawsuits generally do not argue their case on the basis of individual claims or circumstances, but rather as a group.  As a result, those who fit the general profile may automatically be included whether or not any unlawful or immoral practices were present.

  Individuals may be both part of the class action lawsuit and file for individual recourse as well.  Although the courts do not always allow both legal actions, it is not uncommon for both to exist.  In most cases, the individual will need to choose between a group legal action and an individual legal action.  Generally, only those who can show individual fraud or egregious behavior by the agent will do well individually.

  A class action lawsuit does not necessarily hurt those who caused the problem initially, which would primarily be the selling agents in this case.  The insurance industry is an ever-changing field.  The turnover rate of agents is exceptionally high.  It is likely that the majority of agents who used the outlandish interest rates and replaced policies that should not have been replaced are no longer even in the insurance business.  Not only do many agents voluntarily walk away from the insurance industry, but when companies feel uneasy about an agent's selling practices, they also terminate them.

  Many companies have already settled to avoid a class action.  When stockholders own companies, those who were insured by them come out well.  On the other hand, when companies are mutual companies, they are actually owned by the policyowners themselves.  In that case, they are, so to speak, suing themselves.  As a result, the lawsuit, while benefiting individuals, also harms individuals.  Some mutual companies that have settled include Prudential, Sun Life of Canada, John Hancock and Metropolitan Life.

  Some insurers have absorbed huge losses.  They must pay some individuals large amounts to compensate for the financial harm that was done to them.  What the policyowners may not realize is that the multiple payouts to the consumers will also affect the policyowners that remain with the companies.  These losses will affect the amount of dividends or interest paid in the future to current policyholders.

  When publicity makes insurance companies and their agents appear unethical, it is bound to affect the industry as a whole.  Even those companies who employed good ethical people and made a point of overseeing the actions of their agents will be hurt.  Many companies, who seemed to have an overall good reputation, have settled lawsuits quickly simply to avoid adverse publicity.  Class action lawsuits always hurt the perception people have of the industry and this does show itself in the marketplace.  Prior to the 1970's, the life insurance industry held a good reputation.  Those who were in the industry prior to that time enjoyed a respect for their career that is no longer present today.

  The extreme results of restitution, as well as the penalties that resulted, have been staggering.  Prudential, as of 1999, had paid out, or agreed to pay out, $410 million to policyholders and more than $60 million in fines and other costs.  John Hancock paid out settlements to policyholders of $350 million.  Their settlement included 3.7 million affected policies.  Equitable of Iowa agreed to pay $22 million in settlements.  Metropolitan Life, which was the first company that agreed to settle, paid around $70 million in restitution and fines.  Sun Life of Canada agreed to pay $65 million to their Canadian policyholders, which amounts to approximately 400,000 policyowners.  Their affected policies were sold between 1980 and 1995.

  These are not the only companies involved, but they are some of the best-known names in the industry.

  The industry analysts believe that insurance industry lawsuits will continue for some years to come as more and more injustices (or even simply perceived injustices) come to light.  Most consumers believe insurance companies are rich beyond imagination and there are enough bad practices that opportunity exists for attorneys to make a good living doing nothing more than suing insurance agents and their companies.  It must be noted that the individuals who bought policies or had their old policies replaced have not received big fat checks in the mail.  Typically, they have a variety of options including (though not necessarily limited to): extra dividend or interest payments, a low-interest rate loan to pay off debt incurred by borrowing from the policies, the waiver of premiums on all future policies, and additional cash value put into their current policies.

  There is not a great amount of good that comes from class action lawsuits.  Even so, one "good" that does result is a tightening of control by companies over their agents.  It forces insurance companies to monitor to a greater degree the actions that happen in the selling field.  In the past, most companies seemed only to consider the amount of business sold, with little regard for the process that happened prior to the sale.  They now realize that supervision must be there if they are to avoid future problems.

  While there are measures that can be taken by insurers to monitor their agents, they are right when they argue that there is only so much they can do.  One thing most companies do now require is a copy of the illustrations used attached to each policy application.  Of course, agents can still give one copy to the applicant and a different copy to the company.  This, of course, is the point that many insurers are trying to make.  In the end, they must depend upon the ethics of the individuals they contract with because there is no way to supervise the face-to-face activities of their agents.

Corporate Ethics

  Corporations also display ethical conduct.  Corporate greed, lack of concern for environmental issues, and misconduct are not limited to individuals.  It should be noted, however, that corporations are entities rather than people.  When corporations are accused of misconduct or unethical behavior, it is really a reflection of those in charge of the company.  Since the employees are most likely following corporate policy, it is further likely that it is those individuals at the top that make these errors in ethical judgment.

  Lately the topic of ethics has become very popular.  Americans want ethical representatives in Congress, consumers want ethical repairmen and financial planners.  Who would want any representation of any kind to be unethical?  Does this recent focus on ethics promote the behavior?  Of course, only time will tell, but it does seem likely that at least people will be aware of the choices that must be made.

Making Ethics A Business Concern

  As we have seen from the class action lawsuits, ethics not only involves individuals, but businesses as well.  Every business, individual insurance agency and brokerage has a responsibility to develop a code of ethics for themselves and their employees or agents.  If a code of ethics is not applied consistently with the company's employees and agents, then that business cannot expect their employees and agents to apply ethics to their business contacts either.

  Any industry that affects the public suffers when scandals occur.  Public confidence is eroded and business is affected.  Therefore, it is actually in each insurance agent's best interests to promote ethical activities within the industry.

  Those who study ethics all seem to say one major thing: the individual who makes a specific decision to be ethical considers such behavior to be a way of life.  They don't choose an ethical path to impress their friends; they don't choose it for financial gain; they don't choose ethics for career advancement.  Those individuals who choose ethics choose it for themselves.

  Such specific choices in life may also define other life goals.  While financial security would probably still be a life goal for an ethical person, how they obtained it might be very different from a person who had no ethical agenda.  A specific ethical goal is, simply stated, a recipe for living.  Ethics set specific pathways that are acceptable and also those that are not.  It is important to make note that ethics determine not only what path may be taken, but those that may not be as well. 

  The choices made by an individual not only affect them personally; they also affect those around them.  It is not surprising that their spouses and children would be affected, but it might surprise many to realize that their choices also affect coworkers and even strangers.  Many ethical stands affect entire countries.  The civil war certainly fits this category.  People fought, suffered and even died to free strangers. 

  We are not the only country to die for those we have never met, but we do seem to be the country that does it most often.  America usually does so under the heading of "freedom".  That heading has covered not only conflicts that the general American public agreed with, but also conflicts that they did not.  The Vietnam era marked a so-called freedom war that was not popular with America.  In fact, many Americans considered it completely unethical.  As we have said, there are no "set" formulas for ethics.  Ethics are determined by the individual's beliefs.

Was It Really Motivated by the Reason Stated?

  People often state a reason for their actions to sound good (who would want to sound bad?).  Probably everyone has, at some time, tried to justify actions or words to shift blame.  Companies might say that they didn't know a chemical was polluting when, in fact, they did know it.  People might say they didn't know an action was wrong even though they did.

  When slavery was legal in America, the rationale given was that the Africans were "child-like" and not capable of running their own lives.  Slavery, they said, was for the slave's own good.  Not everyone tried to use this excuse.  Some simply said it was for the country's economic good.  These people believed economics justified enslaving others.  Of course, those saying that were financially benefiting themselves, too.

  Economics is often the reason given for actions or words that seem unethical.  Environmental issues especially seem to see this.  If an industry could suffer from environmental reform, it usually involves a loss of money to some group or industry.  Probably any one of us would resist an action or change that would take away from us financially.  However, ethics would dictate that we follow the path that created the most good for the most people.

  It would be hard to imagine anyone openly stating that they intended to be immoral or unethical.  Generally people say what others expect to hear, but that doesn't mean they actually plan to follow ethical guidelines.  Regardless of the topic, it is the natural course of man to want to appear in the right light.  Therefore, it is common for people to rationalize their actions.  Rationalization is not the same as ethics. 

  Ethics are about perceptions, so if a person truly believes they are doing right, they are being ethical.  However, if a person is merely rationalizing their actions for the approval of others, no ethics are involved.  Rationalization is about social acceptance; ethics are about a true belief in particular actions or thoughts.

Choosing To Be Ethical

  Why does a person choose to be ethical?  It would seem unlikely that any person would purposefully decide to be otherwise.  However, each person makes choices about their activities on a daily basis.  Those choices are deciding whether or not the person chooses to be ethical.  Most people probably feel they are ethical even if a lie just passed through their lips.  Perhaps our denial of the consequences of our actions is a way of justifying ourselves.  I lied because it was necessary.  I took that from my employer because I was entitled to it.  And so forth.

  Most people do not make a conscience choice to be or not be ethical and that, sadly, is often the problem.  By not purposely making a choice to be ethical, they allow themselves to be moved by whatever force currently surrounds them.  There was a song with the words Youve got to stand for something or youll fall for anything.  In many ways, this is true.  A person who has considered what is ethical and right for them will be prepared when a questionable situation arises.  Of course, anyone can be taken by surprise occasionally, but without any ethical evaluations at all, nearly every situation will be one of surprise.

  Although we routinely hear individuals say they did not realize they were making a wrong (unethical) choice, the fact is, most of us do know right from wrong.  We know it is wrong to accept something that is not ours; we know when we are speaking incorrectly; we know when we should feel guilty about our actions.  Therefore, every day we do make choices about whether or not to be an ethical person.  We just do not label it as such.

  Although every person needs to have a sound moral base from which they operate, this is perhaps especially necessary in some industries, such as insurance and financial planning.  Of course, we would like to have all industries to be ethical.  Wouldnt it be nice to know that the car repairman would always be ethical?  Certainly we need ethical attorneys.  To really stretch the imagination, just think if our politicians could be counted on to be ethical!

  It is a sad fact that we have actually come to regard some industries as perpetually unethical.  Many industries have fought hard to change these perceptions by the public; others do not seem to care as long as they can continue their lives and actions as they wish.  President Clintons administration spent as much energy combating public perception as it did running the country.

  Why is it important to be perceived as ethical?  For some types of professions it is financial.  When police and sheriff departments are perceived to be unethical, for example, lawsuits often follow.  Citizens who feel they have been wronged sue for mental and physical damages.  They have often won!  Some types of industry and service organizations routinely settle out of court to keep such things out of the public eye.  Of course, the few representatives that have built this bad public image hurt all the agencies that do a good job.  This is true of any industry, but especially those such as insurance, because there is a public concern.

Practical Ethics

  It is actually unfortunate that the topic of ethics so often is put in the context of philosophers and philosophy.  While it is true that they were the first to really study the need for moral behavior (another way of saying ethics), the topic itself is for the common man.  For it is the common man (and woman) that lives it on a day to day basis. 

Practicing fundamental ethics is really nothing more than following rules that are functional, showing respect for other people, respecting the rights of other people, virtues, and giving justice to all people equally.  Of course, each of these elements are not always simple, but the rules of ethics that apply to them are.  In simple terms, what is right for one is right for all.  As we know, while this sounds very simple, it is most difficult to carry out.

  Our justice system is an excellent example of the difficulty in delivering equal justice.  Even though it was set up with that in mind, the delivery depends upon the expertise of the people involved.  If the attorney representing one side is considerably better than the attorney representing the other side, justice may not be delivered equally.  The fault does not necessarily lie in the system itself, but rather in those delivering the justice.  The most well meaning, ethical person may not be able to deliver equal justice to all.  There are simply too many players (people) involved. 

Accepting Responsibility

  Americans have been raised on excuses.  Its not my fault.  My dog ate my homework.  No one told me my CE hours were due next week.  I wasnt taught as a child.  I grew up in poverty.  Its not fair that I have to do education on top of my busy schedule.

  The excuse really does not matter.  The fact that an excuse exists at all is the point.  Our society began allowing the transference of responsibility about 20 years ago.  Some professions seem to thrive on the theory that no one is responsible for anything they do.  Initially, the desire was to help those who really did need help.  There were certainly situations where people were abandoned for deeds they could not help.  Unfortunately, somewhere along the way our society began to believe that no one was responsible.  We allowed individuals to shift the blame at every opportunity.  Whether the blame goes to our childhood, our friends, or our parents, every bad thing we do experiences the shifting of blame.  The old adage The buck stops here seems to have been transformed to The buck belongs to that other guy.

  No person can be ethical if they do not also accept responsibility for their decisions.  Each person has free choice.  They can go left or right.  They can continue on or stop and sit down.  Every thought and every move is a personal choice.  Yes, there will be motivating factors involved, but there is still free choice.  The only thing in our lives that does not involve choice is where we are born and who our parents and family are.  Past that, once we are adults, it is all up to us.

  It is true that some people seem to have life stacked against them.  Some people are born poor and experience fewer chances to be exposed to education.  Some people have parents who give little or no love to them as children.  Some children loose their parents entirely, living in foster homes that may not give love.  Some people experience terrible physical or mental handicaps.  Accidents and illness may take those we love from us.  All of these things can happen but that still does not remove free choice from our lives.

  There are hundreds of examples of people who have made the right moves despite poverty, lack of education, lack of families who love them and despite physical, mental and emotional problems.  Most of us do not have any great hurtles to leap; we must merely take responsibility for our own lives and our own decisions.

Viewing Others Before Ourselves

  Why would someone decide to simply do the right things?  Why would a person pass by monetary rewards in favor of doing what they perceive to be right?  Why would an individual think of another above himself or herself?

  There are as many answers as there are people.  For some, they are simply happier when morality is part of their lives.  They experience a deeper sense of worth by giving than they do by receiving. In fact, it is common for those who give to say they receive more in their gifts to others than they do when they themselves are the recipients.  What they receive is an inner peace, an inner satisfaction that feeds them mentally and emotionally.

  For others it is a simple sense of duty.  A feeling of responsibility to some entity, whether it happens to be their country, their spouse, their children, or even themselves.  These people are motivated by some internal need to produce something positive in some way.  Those with this sense of duty often experience a driving desire to meet specific goals.  Their personal code of conduct includes following specific rules for their own lives.

  Religion undoubtedly plays a part in the lives of many ethical people.  They have a strong belief in their own personal God.  Part of this belief involves doing what is right, not only for themselves, but also for others.  Mainstream religions are based on ethical or moral attitudes.  The Ten Commandments, or similar teachings, are generally the basis of what is considered right and wrong.  For those with a strong religious belief, nothing less than personal responsibility would be acceptable.  Religious beliefs have been the foundation of ethical behavior for centuries.  It has often been the strongest motivational force for social change.  These changes, pushed by religious beliefs, have affected the lives of millions, improving the quality of life even for those who do not believe.

  For many, love of others is the motivating force.  Parents want their children to grow up happy and successful.  Children want their parents to be proud of them.  Husbands and wives want to demonstrate their love for each other.

  These are not the only reasons that a person chooses to be ethical, but they are perhaps the most common.  It should be noted that the term ethical may be replaced by words such as moral, character, or principled.  Politicians love such words when they make speeches, but the actual situation only exists when actions demonstrate a true belief in performance.

  Most people talk the talk, but as they say, to be actually ethical, they must also walk the walk.  In other words, talking ethics and actually being ethical are not necessarily the same thing.  Only actions equate into ethics.

Where Do We Get Our Ethics?

  Most of us probably get the majority of our beliefs from our parents - good or bad.  If our parents believed that the government was corrupt, we are likely to believe the same thing.  If our parents hated a specific group, we are likely to follow in their footsteps - even without good cause.

  Religion often plays a major role in any belief that has to do with ethical behavior.  While it is not necessary to be religious in order to be ethical, it is probably impossible to be religious without also being ethical.  The Bible is probably the best known (and most followed) code of ethical conduct.  This does not mean that everyone has agreed with what the Bible states.  Karl Marx, the father of communism, called religion the "opiate of the masses."  Even Sigmund Freud, the father of psychology, regarded organized religion as institutional "wish-fulfillment."  Despite their beliefs, religion has motivated more positive thought and action than any other organization in the world.

  It is doubtful that any person is either totally good or bad.  Each person is made up of multiple factors adopted over their lifetime.  Each person has shades of so-called "good" and "bad."  We continue to adopt views and actions based on what we are exposed to; based on what we feel to be "truth." 

  No single act defines anyone's personal character.  Each person has likely participated in some act that was not ethical, just as each person has likely participated in some act that was.  One single act does not define the total character.  Rather, it is the combination of our acts that define us.

  It is true that one single act can have an impact on our lives, however.  A kind word or action from another at a low point in our lives can have far reaching results.  For example, a young girl and her mother were involved in an accident in a strange town.  The mother was seriously injured while her daughter was unharmed.  A woman who witnessed the accident took her own children home, then went to the hospital to sit and wait with the young girl.  The woman stayed with her until family members arrived several hours later.  Although the young girl didn't even get the name of the woman, she felt a love and warmth for her years later.  That single act from a stranger had a life long effect on the young girl and probably shaped how she would react to others.

Making Ethics Part of the Job

  Most parents want their children to have what we term a work ethic.  What this usually means is getting a job and being willing to put worth the energy and loyalty that will keep the job.  Although the word, ethic, is part of the term, the actual meaning seems to have been lost.  Work ethic is more than just showing up for work every day and putting forth the required effort to please the boss.  The original meaning included honesty as well.

  As members of the human race, each of us faces ethical or moral issues daily.  Most are relatively small (should I tell my boss what I really think of her dress?), but some will be large and significant.  This is probably truer in the insurance industry than many others.  Insurance agents deal with the public trust and certainly their futures.  Every insurance contract and annuity has the option of changing the future for those involved.  A policy that is poorly fitted to the client can cause severe financial difficulty in the future.

  Some types of ethical decisions have no clear-cut lines, while others do.  Some have clear-cut lines because of laws or state regulations.  Some decisions are individual opinion.  Where there are no clear state or federal regulations, consumers depend upon their agents to be well trained so that they can offer the correct advise.

Tribal Survival

  It may be easier to be unethical than ethical.  If we never have to consider another person first, our choices are easy: "What is best for me?" is easier than "What is best for everyone?"  Considering this, why would anyone decide to be ethical?

  In man's earliest days, it was necessary for the tribe's survival to consider the group over individuals.  In that context, what was best for the group was also best for the individual, if they wished to survive.  The worst thing that could happen was to be alone.  It took a group to hunt for food, to keep warm, to find and maintain shelter.

  In some ways, it is still in man's best interest to consider the group first.  That is why we instituted laws: to enable the group to survive, including the weaker members.  If we must survive only as individuals, survival would go only to the strongest, which could eliminate many members and perhaps eventually the tribe itself.  We just don't think of it in "tribe" terms anymore.  We call it consumer law, we call it family law, we call it whatever seems to fit, but it still comes down to considering the group over the individual.  Consumers, as a group, are considered over the individual who sells insurance to them.  The family, as a group, is considered over the desires of the parent who would like to neglect the children.  Our code today is designed to protect members of the group who may not be able to protect themselves individually.

  Why do we care if the group survives in today's society?  Because each of us represent a part of that group.  It could be ourselves that would not survive if the group as a whole were not considered.

Expanding Our Ethics

  When we consider a person who seems willing to listen to alternative viewpoints, we might use the term "open-minded."  This means that the person is willing to consider the views of others.  Those who have this trait often are constantly in transition in their own personal beliefs because they are constantly learning something new.  They tend to consider the interests, desires and needs of others as well as their own. 

  Our own interests are tied to the interests of others.  Our forefathers learned this and followed it in order to survive.  In fact, many species of animals band together for the interests of themselves and their group.  Animals that learn to hunt together, protect their young together, and work for the group will survive easier as a species than those that do not.

  Doing that which benefits the group often benefits the individuals as well.  Plato argued that immorality, which is unethical behavior, was ultimately self-defeating. Of course, the con artist probably wouldn't believe Plato's view.  We have also seen some very successful dishonest people in our communities.  Whether or not the ethical person is more satisfied with their life than is the dishonest person is hard to say.  The Bible says we will reap what we sow.  When we see the wealthy continue to live unethically, we may question that statement, but it probably is true that those that are happy with themselves are also happier with their lives.  We cannot "see" loneliness, despair, or depression in most cases.  It still exists, but we don't recognize it unless we are very close to the person.  We may not realize that the person we perceive to have it all has nothing emotionally. 

Day-To-Day Heroism

  There is more day-to-day heroism than most of us realize.  This might be as simple as a child who shares their lunch with another child or as complex as the man who gives up his own life to save another.  Why does such heroism exist?  Obviously, it would be easier to think of oneself first and the "other guy" last.  There is no clear answer.  It is most likely a multitude of reasons that are as individual as people themselves.

  If we were to fully believe in the theory called psychological egoism, which states that humans automatically act in their own perceived best interest, such acts of heroism could not logically exist.  The scope of ethics is a massive subject that some strive a lifetime to understand.  Most of us simply live from day to day hoping that we do a decent job with our lives and for our families.

Ethical Living in a Culture of Materialism

  Having possessions certainly does not mean that anyone is unethical.  Even so, it is more difficult to maintain an ethical foundation when everything around us screams "more, more and still more."  The March 2001 issue of Child magazine noted: "in a post-boom economy that has produced a record number of wealthy families, many parents are trying hard to teach their children that money isn't everything." 

  Money is not the root of all evil, as we have often heard.  Rather, most feel greed is the root of evil.  Money and greed just seem to go together.  Some wonderful things have been accomplished with money.  It is the combination of wanting everything we see and the need for money to obtain it that seems to warp our thinking.  "It's too reductionist to think that having money and spending money are all bad," says Betsy Taylor, executive director of the Center for a New American Dream, a nonprofit organization that promotes responsible consumption.  "But this isn't just an age of affluence, it's an age that celebrates the millionaire." 

  It does seem that our society puts more value on accumulated wealth than it does accumulated knowledge or accomplishment.  We seem to be telling people that they are what they buy.  Our children do not overlook this materialism.  They are experiencing tremendous pressure to "measure up" to the other children through the clothes that they wear, the toys they have, and the places they get to go to.  From the children to the parents, it's about buying status; the ability to buy, and show that we can buy, just about anything we want to.

Ethics Simply Make Sense

  Not too surprisingly, many people say they believe in ethical behavior for a very logical reason: if no one behaves morally, they themselves will become a victim in some way.  It might be their water that is ruined by chemicals, their land that is soiled by garbage, or their money that is taken in a financial scam.  These people believe that everyone and every company needs to be ethical as a means of self protection.  Believing this, they also feel that they themselves must be ethical.

  It is not surprising, either, to realize that no one person or controlling group can state what is ethical for each person.  Ethics are not always the same for every person or business.  Ethics are more often tied to beliefs than to laws, although laws often reflect the morals of the time.  Our goal is not to define what is ethical, but rather to offer tools which the reader may use to define their own ethical paths.  Any ethical concept we might suggest would have flaws, anyway, depending upon the persons personal point of view.

Putting Ethics to Work in the Workplace

  In the past business worked on six basic principles:

1.      set goals and establish policy and procedures

2.      organize, motivate and control workers

3.      analyze situations and formulate operating plans

4.      respond to change through new strategies

5.      implement new policies & procedures

6.      produce the desired profit line

  While these basic principles still apply some new skills are also desired, including:

1.      creativity

2.      acknowledgment of workers needs

3.      versatility

4.      focus on future trends

5.      integration of skills

6.      the ability to listen effectively

Asking The Right Questions

  We often admire people for their skills with others, often referred to as people skills.  What we often fail to notice is a simple procedure these successful people follow: they seem to know the right questions to ask.  This is true both professionally and socially.  This ability is often called insight.  Such people seem to instinctively know how to get others talking and feeling comfortable with themselves.

  While asking the right questions is important, it would do little good if a second quality did not follow: the ability to listen.  There is no skill more important in todays world than the ability to listen to others.  Listening does not simply mean keeping quiet while another talks; it means absorbing what the other person says.  Many professionals like to state back what was said in their own words.  This allows them to retain important information.  The ability to retain is especially important to the salesperson that must focus on the desires and needs of their clients.  In the book Creating Excellence by Craig Hickman and Michael Silva, they state, executives lacking insight see either the forest or the trees, but never both. 

Listening Our Way To Success

  For the salesperson, listening is the only route to success.  Without it, the salesperson might hang on for a period of time, but he or she will never really experience the thrill of success.  Not all great listeners are sales people, of course.  Oprah Winfrey is one of the greatest listeners of all time and this skill has made her rich as well as famous.  She took the art of listening (and sensitive response which only happens because she listens) and built a television show around it.  Although she is gifted in many ways, it is her ability to listen and understand that has made her best known among the talk shows.

 Salespeople are often taught a specific format which they are supposed to follow during their presentation.  Too often the salesperson concentrates so hard on following this format that they simply shut out everything else.  The salesperson is so afraid that they will make a major error in the words they themselves say that they forget to listen to the words of their potential client.  Certainly it is important to follow a format for the presentation.  It is important legally to do so, in fact, since that sets a pattern which can be relied upon if a lawsuit is filed.  However, the presentation must leave room for the clients needs as well.  Only by listening to these needs will the presentation ultimately be successful.

A salesman once said in exasperation I hate it when I have spent time explaining what Im offering and the client says It sounds great, but I have to think about it.  What is there to think about?  Its a great product!

  Many professionals would have had a chuckle at his expense.  This salesman had spent so much time listening to himself (his presentation) that he failed to listen to the potential client.  Since his presentation had satisfied his needs, he saw no reason to satisfy the needs of the client.  What are the clients needs?  No one can answer this question except the client.  Only by listening will the agent know.  Each clients needs are individual and only by listening when they speak can you discover them.  These needs are labeled many things.  Needs are often called objections by sales promoters.  How often have you heard the statement that an objection is merely a way of telling you the consumer needs more information?  While this may be true, the truest statement is simpler than that.  An objection is the client speaking.  Are you listening?  Are you asking the right questions?  Unless you listen, it is impossible to ask the right questions. 

Patience, Preparation, and Time

  Sales is always about patience, whether we like it or not.  It is true that, for some, sales are a natural thing.  For these individuals no struggle is apparent from the first day in the selling field.  For most, however, building a career in sales means doing many necessary things, including obtaining product education, establishing a client base, and learning how to serve existing clients.

  No matter what profession a person is in, it must be considered for the long term.  Otherwise, it is not a profession, but simply an occupation for today.  Long term planning has to do with many aspects, including planning for oneself in retirement.  It is amazing the number of people who sell retirement planning packages and yet have put nothing in place for themselves.

  Sales seminars often tell us to picture in our minds what we want for our futures.  This can be a valuable tool, but it should never allow us to loose sight of what we must do for ourselves.  Simply wanting, wishing, and hoping (which this picture technique can turn into) will never take the place of strategic planning.  If sales were easy, everyone would be doing it.  Therefore, it stands to reason that building a successful sales career is difficult, demanding, and sometimes downright frustrating!  Any type of excellence, whether it is in sports, business, or personal relationships requires effort.  That is why it is so important that ethics be a part of the plans.  Without a direct decision to be ethical, it would be very easy to get caught up in all the other aspects.

  Ethics can often be forgotten when quick fix solutions are sought. While some things may have a simple fast solution, if the solution is not based on fundamentals of right and wrong, the solution is anything but permanent.

Word Selection 

Everyone knows that words have different meanings.  What we may not realize is that words also can calm or incite.  Of course, its not just the words themselves, but also voice tone and body posture.  This combination can be used to calm situations or inflame them.

 

In any situation, a warm friendly voice is calming.  It is difficult to define a warm voice, but we know one when we hear it.  It is the feeling that the person at the other end of the line is happy to be helping us that makes us feel more cooperative.  Some customer representatives do all that is necessary to help us, but they have an edge of irritation to their voice that is unmistakable.  Of course, we do not know whom they just dealt with.  If it was someone difficult, then the negativity of the previous conversation was brought into the next, like a line of dominos falling one by one.

 

  There are some things one can do to ease tension and bring a better voice to the conversation, whether by telephone or in person.  Deep breathing exercises definitely helps.  The act of breathing in, holding it momentarily, and then letting the air out slowly, will release tension.  Once that tension is released, your voice will appear calmer.  Physical exercise also works, but that is more difficult to do in some situations.

 

Some words seem to be calming.  When someone is requesting a service, it is always better to say I will than it is to say Ill try.  Of course, it is important not to make false promises.  Never tell a client that a claim will be paid when you know it wont be.  That is a false statement and false statements are never the answer.  Even if an immediate answer cannot be given, let the client know that you will investigate the situation and call them back.  Make sure you follow through in a reasonable time period.  Using the words I will also sets your own pace because you have told both yourself and the client what you will be doing.  It is important that you follow through on any I will words.  Otherwise, the next time the words are used, there will not be any confidence in them.

 

 

Do not use words that blame, even when blame seems called for.  The fact that someone did not call on a timely basis is obvious, so telling him or her that does not help.  Rather than say, You should have it is better to say will you? and offer a solution or a possibility.  Any words that begin with you should have . . puts the person on the defensive.  A defensive person quickly becomes irritable and difficult.

 

In business, the goal is always to solve.  Therefore any words that help this process make sense.  Sometimes it is necessary to tell a person no but there are many things that can follow that negative word that will soften the context.  For example, No, Mr. Johnson, we are not able to fax that to you, but you can have it sent overnight.  Would that help you out?  Even though Mr. Johnson was told no it was followed with a possible solution.

 

If the word no can be eliminated entirely, that is even better.  For an example:  Lets see what we can do, Mr. Johnson.  How about sending it overnight to you.  That way, even though it cant be faxed, you would still have it tomorrow. Would that help you out?  Everyone, including us, respond better to what can be done than to what cannot be.  Anytime the words you can or I can are used, the image is positive whereas no is always negative.

 

Successful salespeople quickly understand the importance of words.  The right words can take a person from impatience to cooperation.  People always want to know the reasons behind an action or thought.  Simply saying no is closed and negative, but giving a reason often opens up new possibilities.  Those new possibilities may turn a no into a new solution.

 

Finally, simply letting a client know how things are progressing will keep tempers down.  Even if no news has come forth, a telephone call will put a client at ease because he or she knows you have not forgotten them.  It is a wise professional that keeps in touch when a solution is being formulated.  In fact, clients are more likely to refer an agent who solved a recent problem for them.

Honoring Our Family Values

  There are many reasons for deciding in favor of morality, but perhaps the strongest reason is our families.  What we do, say, and believe reflects far into the lives of our children.  The father who leaves his young son will affect both their lives forever.  The father who is active in his childs life will also affect their lives, but very positively.  The mother who is too busy to let her children know they are important will impact the way they relate to their own children.  The loving parent will also affect how their child relates to their own children.  The parents actions will teach the children whether or not it is all right to steal, cheat or lie.  Notice we said actions.  A parent can say anything they want, but the child will notice actions as much as words.  Perhaps the greatest legacy of all is love.  No matter what other mistakes may be made, love will erase most problems.

  Most people hope others will remember them.  Those most likely to remember them will be family members.  Our families are our legacies.  Rich or poor, thoughts of us will remain far past our deaths in the minds and hearts of those close to us.  Love and hate are strong reasons to remember.  For many, the desires to have love carry our memory on is reason enough to remain strong, ethical people throughout our lives.

  One of the first things a young child begins to realize is how to socially interact with others.  When a child grabs a toy from another, he or she may be rewarded with a thump on the head.  That thump on the head teaches the child the potential results of a greedy act.  Of course, the child may simply resort to being more cunning, but if the parent reinforces sharing, the two together will begin to form a way of living that will follow into adulthood.

  On the other hand, if the parent does not reinforce the need to share, but instead coaches the child on how to manipulate other children, that too will follow into adulthood.  The shift from securing our own interests to sacrificing for another is the first step in learning to make ethical decisions.  No parent wants their child to be timid and afraid of others so that giving is not an ethical decision, but rather born of fear.  Learning to share should not be about fear of another head thumping; it should be based on a desire to do the right thing.  Morality is the shift from self-interest to majority interest.  That is true for socializing children and ethical theory.

  Some feel that a selfish person is not able to habitually make moral decisions.  Not all agree with this theory.  All too often these types of theories allow individuals to shift the blame off of themselves and on to others.  If the theory says a selfish person is not able to be moral, then why would such a person even try to be ethical?  It allows a person to say Its not my fault.  I cant help doing what I do.  Perhaps allowing people to pass blame from themselves to another is unethical in itself.

Free Choice

  All of us must make choices every day.  They range from simple ones, such as what to eat for lunch, to the complex, such as whether or not to continue a marriage.  These choices have many factors.  One factor may have to do with what is ethical; what is right or wrong.

  Most people want free choice in their lives.  It would be hard to imagine that anyone would want to loose free choice.  Wars have been fought over this right.  With free choice, however, comes responsibility.  From the simple to the complex, there are always some measures of responsibility in any decision we make.  Sometimes the responsibility is merely personal (is there too much fat in what I have chosen for lunch?); sometimes the responsibility is much larger (how will a divorce affect my children?).  Whatever the issue, if a feeling of how our choices will affect others is not present, then the full measure of the responsibility is not felt.  Moral points of view must always have a willingness to look at the interests and needs of others.  That does not mean that a person cannot also consider his or her own interests.  Often the two can be successfully combined (its called compromise!), but the interests of others must at least be considered.  The hope, of course, is that each person will consider others as well as themselves.  If that were the case, our lives would run quite smoothly.  We know that wont happen.  Some people will consider others and some wont.  Should that change how we make our choices?  Not if we are moral people.

  Plato, one of the best-known western philosophers, believed that a human being was composed of appetites, will and reason.  To be happy, he further believed that an individuals reason must control his appetites and will.  An immoral person was one who had allowed reason to loose control.  Plato believed when will and personal appetites gained control unhappiness resulted.

  Are immoral (unethical) people happy?  Some very unethical people certainly seem to have happiness.  Of course, it would be hard to know if they are actually happy or not.  Simply being wealthy does not insure happiness although, given the choice, most of us would prefer wealth over poverty.  While wealth does not insure personal values, it does insure a full belly and a warm home.  It should also be pointed out that what one person views to be unethical are not unethical to another.  Even so, we have seen some national leaders who were unethical by just about anyones standpoint.  They were in a position to do great harm, even to their own people, and choose to do so.  Were these people happy?

  History has shown that prominent people, both ethical and unethical, often do not gain happiness although they may have gained wealth and power.  Power seems to be their undoing more than wealth.  Powerful people have often experienced depression, anxiety, feelings of paranoia, and isolation.  Of course, even the non-powerful can experience these emotions, but it is interesting to note the significantly higher proportion of powerful people who become paranoid, depressed and isolated.

  We often believe that the poor will be more ethical than the wealthy, but there does not seem to be any correlation.  Politicians like to make their poor childhoods known.  However, it is not the possession of money that forms ones ethical views.  Ethical views come from many sources, but seldom money.  The confusion probably comes from the fact that unethical people often seek out wealth.  Even so, wealth has virtually nothing to do with ethics.  The ethical wealthy person is likely to donate thousands of dollars to worthy causes.  Obviously, their wealth had nothing to do with their ethical foundation.

  Greed is often associated with unethical behavior.  Not a surprising fact, since greed is an unethical quality.  It has been said: Money is the root of all evil.  Not so.  Without money many good charitable projects could not be completed.  No matter how good we are, if we have nothing financially to give we have no ability to help others financially.  The true statement would be Greed is the root of all evil.  Greed has been the motivating factor behind much of the environmental damage that has occurred; it has been a factor behind corporate mismanagement; and a factor behind many social injustices.  Greed is the selfish and grasping desire for possession, primarily of money.  Perhaps all of us have some measure of greed, especially in the right circumstances, but when greed becomes a consuming part of ones life, it truly can become evil.

Natural Self Interest

  In many ways, each of us has a natural self-interest, which is beneficial to each of us.  For example, in the marketplace we try to buy low and sell high.  The buyer does not worry about the seller nor does the seller worry about the buyer.  This has an orderly and productive result.  Even though we buy and sell for our own self-interest, the effects are positive.

  Political economist, Adam Smith, believed in ethical egoism.  He felt society benefited and moved forward because of individuals pursuing personal interests.  Smith felt that economic conditions were created and expanded when people acted in their own behalf.  The Bill Gates of America largely pursued their own interests, but in the process provided jobs and technology that benefited each and every one of us in some capacity.

  Pursuing our own interests does not necessarily mean that we are against others.  Bill Gates and his wife have donated millions of dollars in cash and technology to schools and libraries, which in turn benefits other individuals.  He may still be following his own interests, though, even while donating money and technology.  Those individuals that he benefits may eventually work for Microsoft, earning more profit for him and his company.  In this scenario, even though Bill Gates is donating to others, it is possible that the end result will benefit him and his company.  We are not stating this to be his motivation, but it is an excellent example of how one can be motivated by self-interest while still helping the economy and other people.  This example also explains why Adam Smith believes that economic conditions are created and expanded when people act on their own behalf.

  Ethical egoism does not explain why we see acts of heroism.  People often do things for others, even at their own detriment, that are certainly not for their own benefit.  There was the man who survived the airplane crash in the Potomac River only to eventually drown because he repeatedly handed the rescue rope to others rather than use it himself.  This repeated action on his part certainly was not in his own self-interest.  Since self-interest has to with perceptions, we could argue that he did not realize that he was slowly freezing, which led to his drowning.  Perhaps he fully expected to eventually be pulled out of the water and survive.  Even if that is true, it is hard to understand why he would risk his life to save others when he could have been pulled free of the freezing waters.

Ethical Egoism, A Theory

  Not all modern philosophers believe as Plato did.  Some feel it is not necessary to consider the needs of others when making choices.  Some who feel this way are egoists (not to be confused with egotists). 

 There are multiple types of egoism, presented as theories.  One theory is ethical egoism.  This theory maintains people ought to behave in their own best interest at all times.  Even so, this theory also recognizes that people do sometimes act contrary to their perceived best interests.

  It would be hard not to recognize that people do not always act for themselves.  Love for another often explains generous acts, but often such actions are directed at strangers.  Who could forget the man, following the plane crash in the Potomac River, who continually passed the rescue rope to another.  Time and time again he watched someone else pulled to safety, while he eventually drowned leaving behind a wife and children.  Why would he help so many other strangers before himself?  The true believer in egoism theories might offer the fact that people often do not recognize that their self-interest is factually flawed.  In other words, they may not recognize that they have a false picture of the facts.  For example, perhaps the heroic man in the Potomac River did not expect to drown.  Instead he pictured himself becoming a hero and getting lots of public attention, which in turn would help his business, which in turn would bring him greater wealth.  Although he was acting in his perceived own best interest, under this theory, his facts were flawed.

  Not surprisingly, many philosophers do not agree with ethical egoism.  It is often called contradictory, despite attempts to rationalize it. 

Psychological Egoism

  One type of egoism is psychological egoism.  It maintains that people always act in their own perceived best interest.  Psychological egoism is about how people do act; not about how they should act.  Therefore, some do not consider this an actual theory.  Even though it may not be a theory, it is an interesting concept to philosophers because it is often the basis of other actual theories.

  Psychological egoism maintains that people are always motivated to act in their own perceived best interest.  As we said, this is not an actual theory, but rather more of an explanation of human behavior.  Psychological egoism does not tell people how to behave, but it does attempt to explain why people behave in certain ways. 

  The other side of psychological egoism is the version called ethical egoism, which maintains that people ought to act in their perceived best interest because it is good for the general economy, providing industry and resulting in jobs.

  It is important to realize that, while similar, ethical egoism and psychological egoism are separate and distinct.  Even so, they are often meshed together by writers and speakers.  Psychological egoism is an explanation of behavior, while ethical egoism is a theory of behavior.  This practice may work sometimes, but when individual interests collide with the interests of the group, concessions must be made.  To be ethical, the greater good must be considered.  Ethical egoism does believe in following state and federal laws, because it is not desirable to pay fines or receive penalties.

Objectivist Theory of Ethics

  Another theory is that of objectivist ethics.  This theory takes a survivalist approach to ethical conduct.  Under it, good or evil is determined by a persons life.  Since reason is the basic means of survival, whatever brings thinking and productive work is good.  Anything contrary to that is evil.  To state it another way, if an action produces or conserves life, it is good; if it prohibits life, opposes it or negates it, then the act is evil.

  It should be noted that thinking is the prime element in objectivist ethics.  Those who merely follow, while conforming to the basics of the theory, are not actually following it.  A person who merely follows will not necessarily follow the right person.

  In addition, those who use brute strength to prey off of others are not acting according to reason, or thinking.  Therefore, they oppose that which is good.  When brute strength is used to take away from others, it is considered evil under this theory (and probably most others) because they are not adding to life, but rather taking from it.  Reason and thinking are the only ethical forms of conduct under this philosophy.  It should be noted that this theory does not state what must be thought, only that it must relate to producing or continuing life.  Any persons life is the standard of value with ones own life being the ethical purpose. The standard value is a measuring stick, but continuing ones own life is the specific purpose.

  Under this theory, all life is to be continued, but a person would specifically work to continue his or her own personal life before others.  It also states that some type of productive work is the central purpose of each persons life.  Rationality is each persons basic virtue.  Therefore, one might say that objectivist ethics is the thinking mans theory of ethics.  Preserve all life, but preserve your own first.  The book Making Ethical Decisions states in part regarding objectivist ethics that man must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself.

Cultural Ethics

  What is or is not ethical is not the same for all cultures.  As we have said ethics is not a set of rules.  Since ethical behavior is based on what an individual perceives to be right, ethical conduct does not require agreement from others.  In fact, ethical conduct does not even require that it follow the established laws of a culture.  It merely requires that the individual do what they perceive to be the right thing.

  With the mobility we have today, there is the potential for moral standards to clash.  As people move from one country to another, it is not unusual for behavior to become misplaced.  In other words, a person from one culture may be living in another culture causing their perceived moral conducts to clash.  In the US we have had instances where men were prosecuted for beating their wives.  The prosecution confused these men because it was accepted behavior where they came from.

  One could easily argue that hurting another person is never ethical, but remember: ethics involve perceptions of what is right.  They do not demand agreement.  That is why reason and logic are so important in determining ethical behavior.  America does not condone injury to another person.  Therefore, our role becomes one of changing the perceptions of those who come to America from different backgrounds.  We must either change the ethical standpoint of people from other cultures or create an atmosphere that prohibits certain actions (fear of prosecution) for those who come here.  There are not likely to be any other choices since such violence cannot be legally tolerated in our society.  That is not to say that America does not have violence because, as we know, we do.  In fact, some countries consider America to be very violent.

  Differences in culture will always bring about differences in perceived ethical behavior.  These differences are not only concerning beliefs; they also involve such things as economic development, literacy, scientific advancement, and health related issues.  Western cultures often have the mistaken belief that parents in poor countries are glad to have their children adopted out, due to the poverty experienced there.  We fail to recognize that poverty does not stop the love of ones child.  The parents may voluntarily give up their children so that they may have a better life, but it does not mean that they feel it morally right to do so.

  Technical advancements may alter how we view morality.  The ideal example of this has to do with the sexual revolution America experienced.  When birth control became easily available and primarily effective, people began to form new moral judgments.  Did our perceptions of right and wrong change or did we merely justify our actions since it became safer to sexually interact? 

  Sexual interaction is once again being perceived as morally wrong outside of marriage.  It is interesting to note that this reversed view came with the sweeping tide of AIDS.  As the medical community gains new insight into technology that might some day bring this dreadful disease to a halt, it is likely that freer sexual activity might again be perceived as morally acceptable.  As previously stated, society often bases what is considered ethical according to the code we desire to follow.

  There are many medical changes that bring up ethical debates.  We have the ability to prolong life, but often no quality of life exists.  Should life be prolonged at all costs?  Should the bulk of our medical dollars be spent on a fraction of our population?  That is currently the case.  Statistically, the majority of our medical budget is spent on a fraction of our population.  The government spends most of the medical care dollars on the elderly population, primarily to care for them in nursing homes.  Children receive much less money, even though they comprise the majority of the caseload.  What is the solution?  The elderly must be cared for.  Should that care continue even if it means that children do not get the care they require?  How long should life be preserved?  Should it be preserved at all costs?

  There are many questions regarding ethics that do not have easy answers.  Therefore, the debates continue.  Both sides feel they have the answers.  Many times, if facts can be clearly seen, debates will be eliminated.  The problem is, facts seem to be on both sides, so whose facts should be accept?

  Philosophers have sometimes maintained that all disagreements about ethical conduct are nothing more than a disagreement about the facts.  Most cultures and groups do seem to agree on basic fundamental elements.  These would include the need to preserve life, feed and cloth people, and provide basic comforts.  Under each basic agreement, though, are multiple areas for disagreement.

  Some governments, cultures, or groups enforce a type of ethical compliance, since agreement cannot be forced.  That is what the militant groups on any issue are attempting.  In effect they are saying Agree with my views or else!  Governments force ethical compliance through laws and fear of prosecution.  Militant groups attempt compliance through terrorist tactics.  As you can see from these examples, some forced compliance might be violent while others might be nonviolent.

Moral Persuasion

  Some changes in ethical convictions come from persuasion.  People who try to persuade others to change their views are called moral reformers.  In many ways, religions are moral reformers.  While there are exceptions, religious moral reformers are nonviolent people who attempt reform through reason or logic.  Sometimes religious moral performers combine their persuasion with social services, such as providing meals to homeless people or providing drug or alcohol treatment programs.

  As we said, there are exceptions to the nonviolent element.  There have been religious orders that used violence to push their religious beliefs onto others.  In fact, there have even been mass suicides in the name of religion.  Most philosophers question whether these examples are really about religion.  It seems likely that they are primarily about power.  It must be the ultimate sign of power if others are willing to die to prove their loyalty.  Obviously these religious leaders were not logical or thinking people, but greed and power are seldom logical.

  Part of the great dilemma in ethical arguments is the clashing of views and whether or not tolerating opposite views is ethical or unethical.  For example, if one feels strongly that it is wrong to kill all human life, then it is unbearable to tolerate murder under any circumstances.  The death penalty in America often brings these concepts out.  Perhaps the primary test of this particular view is the death sentence for a person convicted of killing someone we love.  Would we still be against it?  Ethical convictions are most easily come by when they do not personally affect us.  The real test comes when ethical issues directly affect ourselves or someone we love.

  The same could be said for many of Americas issues (past and present).  America fought a civil war to free slaves, which the North thought to be unethical.  Since the North did not have cotton plantations requiring great amounts of attention, they could easily oppose it.  However, the North did tolerate, even condone, sweat factories, which often employed young children from other countries.  Our railroads were built by immigrants who were barely tolerated, except as cheap labor.  Many historians feel those who kept slaves, ran factories, and built the railroads did not really acknowledge it as a moral issue.  Rather it was an economic issue which was simply rationalized to be moral.  For slavery, Africans were said to be subhuman; for sweat factories it was said that they helped the poor earn an income; for the railroads, it was for national security and development. When greed is involved, there are always rationalizations available.

Relying On Childhood Lessons

  Few of us have time to deliberate moral issues.  Rather we rely on the teachings of our parents, our communities, and our churches.  This is neither good nor bad as long as it is also accompanied by logical personal thought.  If personal thought is not also put into it, the prejudices of our parents and grandparents can be passed through generations.  Communities can mislead us as well by closed thinking.  Even religions can clash with what we would have otherwise done.  During the civil rights movement, many churches were on the side of separation.  Of course, we must remember that people lead communities and churches.  It was not necessarily the religious teachings themselves that believed in separation of the races, but rather the human beings running those churches.

  The variability of moral judgments will always exist.  Even religious leaders often disagree about religious matters.  Lawyers disagree about legal matters.  Doctors disagree about medical matters.  Disagreements do not cause problems.  In fact, they often lead to better education for everyone as various views are brought into focus.  As long as logical fact-finding is the goal, disagreements can be enlightening.

  To some degree, people must be willing to accept varied views.  They must, as the saying goes, agree to disagree.  Although some issues are so explosive that violence is the result, violence is never a solution.  The Southern Poverty Law Center in Montgomery, Alabama has been especially successful in proving this point.  Lead by a Southern lawyer, they have successfully sued people who committed violent or destructive crimes against people and property.  These have primarily been racial hate crimes.  The Southern Poverty Law Center uses the laws and courts to win change.  Winning in a court does not necessarily change personal views, but if acting on personal views has the possibility of loosing great sums financially, modification of actions is likely.  Because of the large sums they are being awarded, it is possible that others who allow hate to rule their reason will think twice before they become violent or destructive.  At least that is the hope.

Influencing the Ethics of Others

  We know that ethics can be influenced, but not necessarily taught.  Some people do feel ethics can be taught if the situation is right.  For example, parents teach their children ethical attitudes from the time they are born.  Those attitudes are taught by the parents words and actions. Unfortunately what is taught is not always as intended.

  Much of what one obtains in ethics is taken from their religion.  Does a person have to be religious to be ethical?  Of course not.  Ethics is not tied to religion.  However, religion is tied to ethics.  Mainstream religions advocate ethical behavior.  Religions keep their ethical teachings fairly pure if they follow the Bible.  In other words, those that believe in following the Bible will be similar from church to church because the Bible is similar from printing to printing.  Of course, different interpretations might exist, but the basic teachings will be the same.  In addition, there are only a few points of the Bible that might not suit everyone.  For example, all people generally believe that it is wrong to kill.  The purist will be against all killing, even when sanctioned by law (such as the death penalty).  People who are against killing may not be against abortion.  This is where different interpretations of the facts exist.  One may believe a fetus is a person from the moment of conception while another believes it does not occur until life outside of the body is possible.  Each side of the issue tries to persuade the other.

The Bible may also be used by those who wish to perpetuate a philosophy of hate against a particular group.  Of course, we know the Bible does not promote hate, but those who do can use sections for their own benefit.  Even when America was trying to end segregation, the Bible was used to support segregation.  As with all things, facts can be selectively used to verify a desired position.

 

  Philosophers often point out that the truly ethical person studies all the facts.  One cannot be ethical and only listen to one viewpoint.  Since ethical standards must be based on logic and reasoning, obtaining all the facts is essential.  A great leader once remarked about a change of belief I have learned something new. It is the willingness to learn something new that is the base of ethical thinking.  Occasionally we may feel that changing our mind is a sign of weakness.  Pride gets in the way of logical thinking and ethical conduct.  In fact, business leaders who are able to accept new ideas and trends are often the most successful.  Salespeople who adapt to new products are routinely the leaders in their fields.  The ability to change and adapt as new facts and technologies emerge is an important quality.  Even views of morality need to be able to change and adapt as conditions, circumstances, and facts change and emerge.

  Variability in moral judgments are often nothing more than different amounts or combinations of knowledge.  We try to make the best decisions possible with the information we have available.  As more information becomes available, views of moral judgment may change.  This is not a bad thing.  Morals must be able to change and form as knowledge is added or corrected.

  When looking at any issue, some facts are bound to be more prominent than other facts.  Even the way an issue is stated can affect how one believes.  For example, what one person considers religion, another may consider superstition.  One person heard the facts from a different standpoint than the other.

  The requirement of knowledge (schooling) is often an attempt to provide additional facts with the end goal being a broader base from which to form opinions.  While it is probably true that ethics cannot be mandated, they may be taught.  That is, a persons view may be broadened or changed due to additional facts.  When a persons view is expanded, their activities will usually reflect this.

Developing A Moral Habit

  Habit: an act or practice so frequently repeated as to become almost automatic; a tendency or disposition to act consistently or to repeat. 

  Funk & Wagnalls Standard Desk Dictionary

  Are morals merely a habit that we continue to follow without thinking?  In many ways, they are.  As children, for example, our parents taught us certain paths they wished us to follow.  Once we had followed those paths often enough, they became the accepted way to go.  Even if we do not fully understand why we believe certain things or dont believe others, what we have done and believed for years becomes part of who we are; they become part of our thinking process.  Such habits become part of our personality.

  Most activity is performed without a thought to the complexities of moral rights and wrongs.  Ethics still play a part in the activities, but not necessarily a conscience part.  In many ways, morals are simply habits.  A person gets accustomed to thinking and behaving a certain way and they continue to do so out of belief and repetition.

  A single act seldom defines who we are, although a single act can affect others around us.  The man who rushes into a burning house and rescues another certainly affects the person in peril as well as their family members.  That one act affects many people.  However, that one act does not define the hero.  It may have been a single act that is essentially out of character for the individual.  Most of us are glad that a single act does not define us.  Probably everyone has committed an act or said some words that they deeply regretted later.  We would hate to believe that one senseless act defined us for our lifetime.  On the other hand, the hero would like others to believe that he is courageous all the time.  Even when we do not admit it, how others view us does affect our actions or even our own opinions of ourselves.

  We tend to especially admire those who seem to do the right thing consistently, even when there will be no recognition or personal gain.  That admiration does not always mean, however, that we desire to follow in their footsteps.  Few people would want to do what Mother Teresa did.  Although we admire her, we do not necessarily want to face the same hardships that she willingly took on.  Mother Teresa is a prime example of being ethical by choice.

  Ethical conduct, while varying from person to person, has some very stable basics within any particular society or country.  France might be different than America, but approved ethical conduct will be basically the same for all Frenchmen and the same for all Americans.  Therefore, all French citizens will have some basic, common ideas, while Americans will also have some basic, common ideas.  However, what the French believe and what the Americans believe are not necessarily the same.  Each countrys belief is correct even though different.  Ethical conduct is always about what is perceived.

  We know in America that it is not condoned to steal, lie, or kill.  That is not to say that it doesnt happen.  In fact, many Americans feel they have a right to do these things.  At least, they rationalize it for their own benefit.  What they do not believe is that everyone has a right to do it; only themselves or their group.  For example, certain hate groups feel they have a right to injure minorities, but they do not believe that minorities have a right to injure them.  A few anti-abortionists believe they have the right to kill doctors or clinic staff members, but they do not believe that the same doctors have a right to kill them.  Our history is full of examples of one group intending rights for themselves, which they purposely deny to others.  Rationalization is a marvelous thing.  It allows a person to believe they are somehow special and deserve special things or special treatment.

  Do such people really believe they have special rights?  It is hard to know.  The human mind is complicated and even the experts disagree.  From a purely logical standpoint, it would seem that such people know they do not deserve special privileges, but hope to convince others that they do.  If they are successful in convincing others, then society might actually let them get away with it.  Children try this with their peers.  If they can convince their playmates to always let them be the hero, they will do so.  Such actions ignore right and wrong in favor of getting power.  For children, it is usually nothing more than getting their way.  In adulthood, it is still about getting ones own way, but it also involves such things as greed, wealth, power, and gratification.

Ethical Violence

  The words, ethical violence, seem to be incompatible.  However, it must be remembered that ethics do not necessary follow the moral judgments of others.  The pure ethicist would never believe that morality (ethics) could ever be compatible with violence.  Indeed, Martin Luther King advocated nonviolence because he was an ethical purist.  He applied the same standards to himself that he applied to others.  Therefore, if it was wrong for another to harm a black person, then it was also wrong for a black person to harm another.

  Our history, unfortunately, is full of violent acts performed in the name of morality.  In the truest sense, if the person believes their actions to be right, then they are personally ethical, even if their actions do not follow the stated laws.  The key word here, is believes.  Rationalizing is not the same as truly believing.

  For the person who does really believe in what they are doing, even if their actions are incompatible with the laws or the majority of the population, they are still behaving ethically.  This happens more than we might realize.  In Nazi Germany, many people hid their Jewish neighbors and friends, even though it was against the law to do so.  During Americas days of slavery, many people worked to help African-Americans escape into Canada.  During the Vietnam war, our own citizens escaped to Canada, even though it was illegal to evade the draft.

  When acts become violent, more is involved than a purity of beliefs.  Ethical actions typically do not involve violence.  No matter whose philosophy is considered, seldom do mainstream philosophies include violence to others.  Of course, there are many philosophies that are not mainstream.  In America, we rationalized slavery by telling ourselves that African people were not the same as us.  This is not a new rationalization.  Violence in the name of ethics can nearly always be broken down, upon close examination, into a form of rationalization.  Why?  Because ethical conduct is a logical, thinking process.  Ethical behavior even involves the ethical treatment of other animal species, so violence cannot be condoned towards any other human species or group.

Objective Morality

  Many philosophers and ethical writers believe morality is the evolution of continued discovery.  As we discover new things about our society and the world around us, we must draw continually new conclusions regarding ethics.  Fifty years ago, environmental issues were not considered.  As our society grew and progressed, these topics became an ethical issue.  Therefore, our societys morality is, in many ways, linked to education.

  Can a person be objective morally?  In some ways, we must be.  Otherwise we would not be able to deal on a global basis with countries that do not share our views.  In other ways, we can never be.  Otherwise we would be willing to tolerate another Adolf Hitler.  Seem confusing?  Ethics often are.  Perhaps the greatest skill humans have is the ability to tolerate those actions that are not violent or destructive towards others while opposing those actions that are.  Unfortunately, we often do tolerate situations that are unfair or unjust in the name of commerce.

  It has been said that morals are the result of thoughtful and well educated people.  In many ways this is probably true.  One must be thoughtful or all the education possible in ethics will not make any difference.  On the other hand, no matter how thoughtful a person may be, without education they may be unable to fully understand an ethical issue.  Education is to ethics what research is to science.  Each is a necessary part of advancing theories and ultimately society.

  Education does not always bring agreement.  This is true in science and in ethics as well.  Education often has to do with the way in which facts are presented.  There was an exercise that was performed for the benefit of new insurance agents.  Two policies were compared in two different lights.  Under one comparison Plan A seemed the best choice; under the other comparison, Plan B was the obvious choice.  Neither policy changed during the two comparisons, but how the facts were related did change.  When agents saw the two presentations, they often felt confused and sometimes even annoyed.  How were they to know which to present to consumers if both were simultaneously displayed as best and worst?

  The point of the demonstration is true in many situations.  No one item is right for all people.  Facts may change with the point of view presented.  Each person and situation varies, and with those variations comes different applications of the same facts.  We believe it is wrong to steal, yet we would each steal if necessary to feed our hungry child.  We believe it is wrong to lie, but many people lied to protect Jews during the Holocaust.  We believe it is wrong to kill, yet we expect our policemen and military personnel to kill if necessary in order to protect Americas citizens.  It all depends on how the facts are presented and what side of the line we are on.

  Police officers are in an especially difficult situation.  If they must draw their gun and fire, the fact that they wear a badge is not protection from societys view of the facts.  One part of society may feel they were justified and another part of society may feel they were not.  In addition to facing societys opinion, they must deal with their own perceptions of morality and killing another person.  Soldiers in combat face similar ethical conflicts.  Certainly it is important that our police officers be well educated and ethical.  Some might say that the ethical training is especially important for officers.  Why?  Because an officer who is prejudiced, greedy, or looking for power is in a position to do great harm.  At the same time, an honest and well-meaning officer may find himself or herself unjustly treated because they judged the facts differently than a panel of judges who had time to consider all elements.  In the years to come, society will have to make some decisions: are tax dollars more important than the cost of hiring the best men and women?

  The previous illustration regarding police officers could be applied to any profession who has the ability to affect consumers.  An insurance agent who is uneducated is just as dangerous as an insurance agent who in unethical.  Although the motives may be different, the results for the consumer are not.

Final Decisions on Ethical Issues

  Sometimes deciding if an action is actually unethical is not a clear determination.  As we stated, professionals do not always agree on what is and what is not ethical.  Sometimes, it is merely a matter of opinion.  Replacement business is one area where a variety of opinions may exist.  The senior market has seen much news coverage in recent years concerning policy replacement.  If a new long-term nursing home policy, for example, appears to be better, in the agent's view, is it always wrong to replace an existing contract?  The same may be applied to replacing a Medigap policy.  Now that there are standardized forms, replacement will be less of a problem when it comes to Medigap policies, but the problem is likely to be intensified when it comes to long-term care policies (LTC policies).

  Medigap policies may be legally replaced if the new policy would either:

1.      Lower premium rates, or  

2.      Increase coverage (benefits).

  Replacing long-term nursing home policies do not give as clear a choice because there are so many policy variations.  Where replacement is clearly a matter of opinion, it is probably best to simply outline the features, including any additional costs, of both the existing policy and the proposed one.  Hopefully, the consumer will be able to make an informed choice.  Any agent should certainly be hesitant to replace a long-term nursing home policy since age can be such a big factor in price and underwriting.

  Sometimes a simpler method of determining replacement may be asked in this form:  If it were my personal policy and I would not receive any commission at all, would I still replace the policy?

  Most presentations involve a few "set" items, which include premium rates, benefits, agent services and company stability.  Of these, premium rates should be the least important.  However, our clients often do not allow that to be so.  As a result, rates often take up the majority of the presentation.  Yet errors and omissions claims have never occurred due to premium quotes.  Probably 98 percent of the E&O claims filed relate to the benefits of the program and how those benefits were discussed.  Obviously, more time needs to be devoted to this aspect of insurance presentations.  Then, as an agent, you must hope that the client not only understood the benefits, but remembers them as well.  That is why documentation is so very important.  As each segment of the contract is presented and discussed upon delivery, it would be a wise idea to have the client initial it.

Avoiding Misunderstandings

  There are steps that an agent can follow to minimize any possible misunderstandings:

1.      Full Disclosure is always necessary in any type of policy being recommended to a client.  Where different interpretations are possible between a brochure and the actual policy, the policy is always the final authority.  A brochure is simply a selling tool; never the final answer.  The statement the agent received over the telephone from the agency or home office also takes second place to the actual contract.  The policy is the final word every time.  An agent who has not read the contracts he or she is selling is an agent who is waiting for a lawsuit to happen!

2.      An agent should always be slow to replace an existing contract of any type.  This is not to say that an existing policy should never be replaced.  However, to do so without fully examining what is currently in place would be foolish. The agent should first be fully  informed of any new or preexisting health conditions, takeover provisions and limitations that may exist in the new plan.  Health problems of any dependents that may apply should also be carefully reviewed.                                       

3.      It is important to know of existing coverage.  Sometimes owners/employers may not be enrolled in and paying premiums for Workers Compensation Coverage.  While this does not typically apply to senior clients, more and more older age people are continuing to work later and later in their lives.  It is important to know whether they are or are not covered, if still working.

4.      Whether you are dealing with a health program, a disability program or a life program, be sure that health questions are clearly understood and correctly answered.  A term that has come into wide usage lately is "clean sheeting."  It means that an agent knowingly fails to correctly list existing or past health conditions on the application.  The agent is attempting to present a "clean" application to the insurance company so that the company will accept it and issue the policy (and, of course, pay the commission).  This is obviously illegal and will not be tolerated by any insurance company.

  Sometimes an agent simply is not aware of existing health conditions.  If the applicant does not fully understand a health question, it may be incorrectly answered through no intentional fault of either the agent or the applicant.  This will not alter the insurance company's view of it, however.  A policy may be rescinded (taken back) by the insurance company for incorrect or undisclosed information.  This may occur, for example, on a question asking if the applicant has high blood pressure.  Since the applicant is taking a medication that keeps his or her blood pressure under control, they may answer that question "no" when, in fact, it should have been answered "yes."  Since these types of misunderstandings can easily happen, an alert agent will want to closely monitor the questions and the answers given to them. 

5.    Eligibility of applicants is always a concern when replacing an existing coverage.  Do not over look the eligibility of any dependents as well.  An employee's spouse or disabled child may be especially vulnerable.                                                       

6.    Any time one coverage is being replaced with another, continuity must be considered a high priority.  The old plan should never be dropped until the new plan is firmly in place.  The new policy should actually be in and reviewed for accuracy before the old policy is dropped or canceled.

  It can be very difficult for the consumer to sort through all of the various ratings given by the various organizations for insurance companies.  The big question is "Do you, as an agent, understand them?"  It is not unusual for even an experienced agent to feel foggy about much of the financial terminology.

Giving Accurate Insurer Descriptions

  As previously discussed, agents have an ethical obligation to describe accurately to the client the financial strength (or weakness) of the insurance company being proposed or replaced.  They also have a legal obligation to do so.  A lawsuit could be brought against an agent who causes a client to suffer financially as a result of the agent's failure to fulfill these due diligence responsibilities.

  We feel that most agents wish to license with and sell only good quality companies.  Certainly, a career agent would want to do so simply to remain in business.  Often, it is the agent's lack of understanding of, or attention to, some of the technical terminology used in documents pertaining to the financial strength of insurance companies that causes headaches later on.  The agent either does not understand what he or she reads, or simply does not take the time to read the financial data available on the companies represented.

  There are so many things that play a part in an insurance company's financial strength that an agent may sometimes wonder how he or she is supposed to understand weakness' that may exist.  Such things as underwriting standards, how the company sets up reserves, risk spreads, management personnel and reinsurance practices are a few of the things that will affect an insurance company's financial strength.  An agent cannot know all that is involved in a company in many cases.  However, an agent can look past the surface of the brochures put out by the company.  It is important for the agent to remember that any given company is selling itself, not only to the policyholder, but to the agent as well.

Taking The Common Sense Approach

 With this realization in mind, an agent can take a common sense approach to due diligence.  For a busy agent, it can be difficult to follow through on all financial details involved in the technical analysis of a company.  When using the common sense approach, there is often a combination of factors to be considered.  A company that makes one or more obviously big financial mistakes may end up with financial problems.  The companies that invested in junk bonds in the eighties are a good example.

  Watch out also for losses within a company that exceed the gains.  While this may occasionally happen, it is most definitely a warning signal.  Losses eat up capital and surplus funds.  In fact, if money is going out faster than it is coming in (no matter what the nature of the business), a red flag should go up.

  Sometimes, a lack of public trust can cause problems.  If the consumers perceive a problem within a company, they will begin to withdraw funds or quit paying premiums.  A company that is trying to "hang on" may be pushed over the edge when such a condition occurs.  Agents often have a legal obligation to the company they signed a contract with, but they do still also have a moral obligation to their clients.

  Perhaps the best common sense approach is simply looking at the products being offered.  If any given product seems to give much, much more (commissions plus high interest rates, for instance) than other similar products, then it is possible that trouble is waiting down the road.  Product design may also reflect the company's outlook and philosophy.  If gimmicks rather than sound design seem to hold the product together that could well be the philosophy of the company, too.  Is the product set up to "catch and hold" a policyholder rather than benefit them?  Could you find yourself in an embarrassing situation down the road when your client requires use of the benefits in the contract?

  If the company is not a mutual company, then it is often a good idea to know who owns the insurance company.  Many times, people do not tend to think of an insurance company in terms of ownership, but this can be very important.  The company owner or owners will reflect their own values and ethics throughout the company itself.  While it may not be possible to know what the values and ethics are of any given person, the agent can look to their past history for an idea.  Do they come from the insurance field?  What financial education do the owners have?  Does the company seem to be interested in their field force or simply in the amount of business turned in?

  The object of using these common sense approaches is not necessarily to find the best companies, but rather to weed out the worst of them.  An alert insurance agent must keep their eyes and ears open.  Listen to other agents, especially if the agents have been or are experiencing problems with the company.  Follow the service given to the clients from the home office.  Do claims always seem to be paid slowly?  When a claim error is made and brought to the company's attention, is it corrected quickly?  When you call the home office for information or help, is it supplied promptly?  Does the home office listen to you, as an agent, when you voice a concern?  Does the service start out good, but then steadily decline?  The answers to these questions will let you know if the company should be avoided.  While problems may be something as simple as a poorly managed claim department within the company, it may also be something as major as an entire company that is poorly ran.

In Closing . . .

 

Agents do not have an easy job.  They are at once required to recommend a product for every perceived risk and at the same time admonished not to "oversell."  They are required to be contract specialists.  Their insurers may place business requirements on them that they are not equipped to handle.  Agents may be required to meet minimum production standards.  Consumers expect service that may sometimes be hard to meet.  All of these things make this career a difficult one.

 

Despite the problems, insurance is also a fascinating industry.  Agents are often on the cutting edge of new information, new resources, and new financial strategies.  Agents also meet some of the best people in the world - their clients.

 

United Insurance Educators, Inc.

PO Box 1030

Eatonville, Washington  98328-8638

FAX only: (253) 846-7536

End of Chapter 21

[1]Professional Liability Pitfalls for Financial Planners by Cheryl Toman-Cubbage