Ethics in Business
Table of Contents
1. The Universal Nature of Ethics
2. Is Professional Ethic Important?
3. Promoting Ethics
4. Can I Be An Ethical Person?
5. Living Ethically Everyday
6. Is Ethics Easy?
7. What It Takes
8. Defining You, The Individual And Discovering Why
9. The Importance Of Education
10. Agent Presentation
11. Replacing A Policy
15. Communication Beyond
16. Deciding What Is Ethical
17. Discovering And Investigating
18. Setting Goals
19. Ethical Spending
20. Money Management
21. Using Ethics In Insurance
22. Being Your BEST
Ethics in Business
Whether at work or in the home, all individuals face ethical issues on a daily basis. Generally ethics is viewed as
what is right and what is wrong. However, what defines right and wrong is not the same for all individuals.
Ethic(s) is defined as:
eth·ic ('e-thik) Function: noun Date: 14th century
1 plural but singular or plural in construction: the discipline dealing with what is good and bad and with moral duty
2 a: a set of moral principles or values b : a theory or system of moral values c : plural but singular or plural in
construction: the principles of conduct governing an individual or a group d : a guiding philosophy
Now that we have defined ethics can you answer the question, what are ethics? How can one determine what is
ethical behavior? Does religion determine ethical decisions? Is it possible for businesses to make money while
remaining ethical? These are all important questions. The study of ethics is complex, having many different
meanings between right and wrong. In life there are few absolutes and many varied definitions of what is ethically
right and wrong. Even those who study ethical behavior often do not come up with the same answers.
Ethics play a vital part in every aspect of our lives, especially in the professional realm. Ethics shape our values
and play an important role in the decisions that are made every day. Whether these ethics or values are
recognized or understood, they are present in our lives. These daily decisions that we make have a weighty affect
on our own lives and the lives of others, whether or not ethics play a role in the decision.
Many professions base their business decisions on what is best for their customers. Others use financial aspects
when making a decision. But every company uses ethics to form the foundation on which the decisions are made.
Many people use experiences from their past to incorporate into their business and help them make "ethical"
decisions. Someone who has formed a strong ethical nucleus in early life will continue using that base in making
decisions everyday, most without even knowing it. An example of this cannot be overlooked. A businessperson
who forms their business presentation on the basis of honesty and ethical conduct will, over time, make a habit of
presenting things in a certain manner.
As time passes, this business presentation will become routine with little variation. Eventually, the businessperson
may well forget how they formed the original presentation, but if ethics were present in the original presentation,
they will continue to be as time goes by. This is also true of many other things such as: riding a bicycle, driving a
vehicle, or other habits that we originally had to learn, but then became routine.
From the beginning of time, when humans began living together, ethics was society’s system of unwritten rules
that were necessary for survival. The strong took everything from those who were weaker and survival within the
society could not continue in this manner. Because men were generally physically stronger than women, these
unwritten rules were established so everyone would benefit from each other.
Every country has ethics that are exclusive to their people as well as ones that are common with people in other
countries. In America, there is a great variety of ethical behavior because our country has a large population with
vast cultural differences. In America, work ethic was formed early on because it was through work that people
were able to obtain wealth. Farming, for example, was strenuous labor, but it produced rich lands that could be
sold or passed onto children. Hence, hard work brought rewards and rewards were a reason to work hard. Even
today, many people find fulfillment by following a good work ethic.
America was founded on the values of individuals who questioned the actions of the place where they came from.
These individuals were searching for total freedom; the freedom to own land, make decisions and worship as they
deem appropriate are examples of a few of the reasons people came to America. You will often read or hear of
people coming to America to "follow their dreams".
Many Americans, at least partially, arrive at their code of ethics through their religion. The Bible is the best known
source of sound ethical advice. The Bible discusses many instructions for ethical behavior. Many people came to
America searching for religious freedom, without regard to conditions of the New World. Many people in the New
World viewed this religious freedom as a cherished opportunity. Because ethics are used to make important
decisions, religious freedom must be considered an ethical viewpoint. The people who traveled to the New World
brought with them Christianity, the religion of their choice. Puritans had a great influence on early American
values and beliefs because they believed work was their most useful way of giving to God, so the work ethic had
a prominent influence in their lives. Therefore, Puritan ideology strengthened the importance of working in all
business fields. The Puritans also incorporated religion with their business.
Immigrants have brought other ethical values to America, both past and present. One value is education. Many
people do not realize that obtaining education is an ethical viewpoint. It is not always easy to become educated
because it requires concentration and hard work, like so many ethical values. In countries where education is only
given to a select few, immigrants see the American education system as an opportunity. Many immigrants often
take advantage of education more than Americans who, at time, miss the value of education and the opportunities
a good education bring, because it is so widely accessible.
It is debatable whether people are either all good, all bad or a combination of both. As a society we are always
learning new ideas, new thoughts, and living new experiences. But, every person is a product of past
experiences. Every individual is affected by the past and the ever-changing future. We can learn a great deal from
our past. Ethics plays an important part of shaping who we are. How we live is a manifestation of what we enjoy
or do not enjoy? It may be difficult to comprehend present ethical issues without having an understanding of the
past and how it affects the present.
In order to better understand how we have developed, we need to look at the accessibility of education and the
effect education has on people. Conventional values generally were satisfactory in a fixed society. Today,
however, society is changing so quickly and many of these changes have opened up education to more people.
Education fosters critical thinking and questioning. It is this thinking and questioning that has brought about many
beneficial changes in America. Americans, including men, women and children of all races, cultures, and various
other differences, have benefited from critical thinking and questioning.
Ethics involves inquiring about the certainty of why things are the way they are and whether or not they could be
made, or done, differently. Socrates, Plato, and Aristotle, developed the philosophy of ethics. Many say that their
philosophy on ethics was so insightful and complete that nothing new has been developed since.
In the sixties, civil rights and antiwar sentiments swept America. Though mainly led by the American youth, the
majority of churches and other organized groups backed them. Many of these groups fought for what they
believed was right. Martin Luther King, Jr. helped led groups of protesters in standing up for what they believed in.
The break down, or deterioration, of many of our moral and ethical issues was best seen in the seventies. To this
day, thanks to the availability of seeing world events practically happening before our eyes through television,
radio and print material, we are extremely aware of the growing problems in the world and the necessity for
change. Every day we are faced with high crime rates, drug problems, environmental issues, national debt,
unemployment, homelessness, inflation, energy issues, and many more issues that affect each of us on a daily
basis. This causes many people to struggle with the question of: "What is right and what is wrong?". Although this
seems like a simple question, it has no simple answer.
Working in the insurance industry doesn't automatically give us all the answers, but we often model behavior that
happens around us. For example if we surrounded ourselves with people who are concerned about the
environment and recycling, chances are we will model this behavior and in turn recycle. So, if an agency in which
we were trained stresses sales, without other information, it is likely we will lose sight of the whole picture and
how ethics should play a role in business. When our peers and people around us do not consider ethics
important, we will eventually lose site of ethics and its importance.
Setting goals for ourselves is an important part of life. Ethics help us set realistic goals that we can take pride in
achieving. Ethical behavior is a formula for living that doesn't require first hand experiences, and offers guidance
in every aspect of our lives. Even those who have experienced terrible circumstances in their life can have a code
of ethics. Your personal code of ethics gives you a set of rules or guidelines, which help determine the choices
you make each day. These choices affect not only you, but the people around you as well.
Ethics comes in many different forms. Some parts of ethics help us know how to behave. For example, being kind
to the environment is the right, or ethical, way to act. Others aspects of ethics tell us what we should not do. For
example stealing is wrong, or unethical, so one should not do it. Furthermore, there are ethics that take us past
basic moral obligations. Virtues are going beyond what we SHOULD do - and is often known as ethical
greatness. Such ethical or moral greatness would include those who have no legal duty to someone or
something, but are willing to go to the limits to help them at any cost. An example would be someone who gives to
a stranger, or does something extraordinary, and expects nothing in return.
Ethics is not separate, or apart, from the rest of our lives - but rather a part of everything we do and say. Ethics
shapes the manner in which we treat people whether we know them or not. Ethics belongs in every profession
and helps guide our actions in financial and public matters. Since ethics is so complex, it is often divided into
various sections such as: personal, professional, business, religious, legal, and medical, to name a few. Ethical
impartiality is not possible, but may be seen as a way to avoid a certain ethical problem.
In today's society, a wise insurance agent or broker will follow state regulations to the letter, however we hope
that this module has shown that ethical behavior and thinking goes far beyond what is written in the law and helps
defines how we think and act. Someone who steals is seen as a thief, one who cheats is considered a cheater, if
you lie you are seen as a liar - and an insurance agent who acts in an unethical way will earn a reputation for
being unethical and untrustworthy.
Laws mandate certain behaviors, but there aren't laws for every aspect of life and that is why ethics are important.
A person who is tempted to steal may not, because of the consequences stealing would bring upon them. As a
result, their behavior is controlled. Controlling a person's behavior may bring them to their own code of ethics. It is
not uncommon for an individual to become someone they pretend to be. Someone who acts ethically may
eventually mirror this ethical behavior and in turn actually becoming ethical. In fact, since ethics is about the way
we live and it requires us to actually experience and live in this way before we really learn it. In reality, someone
who is not ethical today could grow to be ethical in the future, or vice-versa.
Still, it seems true that our ethical behavior is learned in our childhood. This is why ethical parenting is an
essential part in shaping children’s lives. Children learn from their parents, not only by what they say, but how
their parents' act. Children are excellent at seeing things and people the way they truly are. Children also tend to
mirror behavior they see, especially from their parents. So parents who live ethically, will teach their children to
live ethically as well. Regrettably, the opposite is also true. If parents live unethically, their children will often do so
as well. Children learn from parents and what they see, whether it is good or bad. Children will follow in the
footsteps of those they look up to and initially this is their parents.
Many people in the professional realm believe that toughness is necessary. Many people feel that ethics and
toughness do not go hand-in-hand, but this is not true. As many religions believe, toughness is a vital part of
ethical behavior. Children often realize this early because peer pressure often lowers ethical behavior.
Undoubtedly, a child that can resist peer pressure is exhibiting toughness. To some extent, toughness is
necessary to succeed in business. The insurance agent or broker that has difficulty dealing with rejection often
will not remain in the insurance industry.
Ethics is not just a matter of how we think and act, but also a matter of our character. So many factors - together -
form our character that they must all be taken into consideration. Culture, background, values, morals, passions,
and many other factors all contribute to shape who we are. Who we are is also influenced by others around us.
Nevertheless, we must take responsibility for our actions. All of us have the power to shape and change our
character - for better or worse. Our character is also built upon our own code of ethics. No one act defines or
builds our character and who we are but rather the many actions and decision we make each and every day
shape who we are.
Is Professional Ethics Important?
No profession can exist without a set of guidelines and rules. Large and small businesses of all kinds function this
way. These include a set of written and unwritten rules. Employees are aware of what is considered "ethical" in
their business. Every business informs their employees what actions are right and wrong. It may be as
straightforward as stating that overtime will not be paid unless properly cleared, or it may be as complicated as a
manager who forges a signature on a document. Ethical decisions are made daily in the professional field. These
decisions have an effect on the quality of work and the people in the profession.
In business, managers and others, must be conscious of the fact that without ethical employees, the only
limitation is the law. It would harm a business if their employees could not be trusted. In addition, business would
also suffer if employees cannot trust their employer to be ethical. Sometimes, as well, it is the business owners
themselves that turn out to be unethical. Unethical behavior may also lead to illegal acts as well.
Sometimes the reason given for illegal and unethical conduct comes under a different name. Corruption, price-
fixing, and lack of product and worker safety, may frequently come about in an effort of trying to create fast
Many people may compromise their ethical beliefs to achieve success in business under pressure. Unfortunately
an honest and ethical individual can be influenced by unethical pressures. This can be especially be true when it
happens in the workplace. In today's society, many people work and need two incomes to support their family and
feel that if they lost their job, they would be unable to survive financially. Due to this pressure, many people are
more inclined to participate in an unethical act just to keep their job. In addition, unethical behavior is often more
prominent in professions in which the atmosphere is highly competitive.
This competitiveness may be why some insurance agencies promote competitive contests and turn their head
when unethical behavior occurs. In businesses where unethical behavior is reprimanded it is less likely to
continue, and likewise, when unethical behavior is rewarded it is more likely to continue.
Those who study ethics have shown that the following are required if one wants to maintain ethical behavior. One
must have a sensitive and educated conscience, one must have the ability to make ethical decisions as an
individual, and be a part of a business that rewards ethical behavior and penalizes unethical behavior.
Most people believe that the more complex our society becomes, the more we need to educate the general
population about ethical behavior. In the past, ethical behavior was taught to children primarily by their parents.
Currently, with so many families needing two incomes in order to survive financially, there isn't as much time to
teach children ethics and parents are counting on them to learn it elsewhere.
Even so, many people see a decline in our overall wish to promote ethical behavior. Additionally, there seem to
be other factors in the decline of ethical behavior. When individuals deal on a face-to-face level with people, there
is less likelihood that unethical behavior will occur. However, these days where people frequently deal through e-
mail or on the phone, unethical behavior may increase because there is no face-to-face contact.
Ethical behavior is not only about you as an individual, but is also about other people too. Not only is ethics about
what you know, but what you understand, and how you use this understanding.
Making ethical decisions involves four basic ideas:
What does ethics encompass?
What defines a person as ethical?
Can ethical behavior be taught?
How is an ethical person connected to other ethical people?
Ethics are values which all business people must try to achieve. These ethical values must lead to a strong
commitment to each client. Every type of profession has an informal, unwritten code of ethics. Ethics help
generate values within a profession and advance its reputation. It is a means of assessing performance and
recognizing exceptional, ethical individuals. Ethics are a way to present priorities and build traditions based on
trust and honesty.
Why would you want to do business with someone you know to be unethical? Would you do business with
someone who knowingly lied to others simply to make a profitable commission? Would you use an insurance
broker who was dishonest and misrepresented his or her clients?
Ethics adds trust to many relationships in all areas of life. Ethics comes from within an individual and challenges
them to do the best job they can and helps them maintain high ethical standards with others.
No matter what we do, we face simple and complex ethical dilemmas in business and in our personal lives daily.
The answers to these dilemmas may come from many different sources. Some individuals may turn to religion in
search of answers. Some individuals may turn to others for answers to their ethical questions. Some ethical
questions are answered with facts, while some are answered with emotions. At times, determining what is
ethically right may come from within us. We all know what "feels" right to each of us and that feeling comes from
the ethical education we received while growing up. Even though we may not remember certain situations, we
remember the lessons we learn. Ethical situations often have many, many different answers. This does not mean
that one answer is right or wrong. Occasionally, it is a choice between a good answer, a better answer and the
Professions often examine if ethics can and should be taught in business. In order to determine whether or not to
teach ethics on the job, employers have to answer the following questions. First, does the employer want to teach
its employees what they believe to be ethical behavior? Does the employee want to become ethical according to
their business? Unfortunately, most people’s ethics are not questioned when they are being hired for a job.
One of the first lessons a child learns, at home and in school, is the importance of sharing. This lesson helps
shape our code of ethics from an early age. As we grow, sharing helps us give up things and make sacrifices.
This is an idea that is especially true in insurance. Sacrificing a commission to be honest with a client, is one
It is vital to understand that ethical individuals take into account other people and the effect their decision will have
on others. Although we do look out for our own interests, this does not mean that we are making unethical
decisions. What it does mean is we take our own interest and apply our ethical values and choose what is best for
both. Many people who work on a commission compensation plan make a financially stable income while
maintaining high ethical standards. Many maintain high-quality relationships with clients because of good
communication and people skills. Our interests are joined with the interest of others. Most people feel good about
themselves when they know deep down that they have done the right thing.
Not everyone believes it is in their best interest to uphold ethical behavior. Some reject the idea of other's
interests and desires. Some people believe that one should act in what they see as their own perceived best
interest. Some argue that people should act in their best interest at all times because it is good for the general
economy. In the stock market we try to buy stock when the cost is low and sell when the value high, thus making
a profit. This is an attempt to follow our own self-interest. Although we do look out for our own self-interests, many
individuals still do take into account others around them. If faced with a tragedy some people would do whatever it
takes to help another person, becoming a hero. Heroism occurs everyday among people. Food donations,
volunteer work, or stopping to help someone change a flat tire are all acts of kindness that someone does without
reward to help someone in need.
So, can we teach others ethics? If by example you think you are teaching others, then the answer is "Yes". An
example would be, a broker who has no prior ethical code and may develop one if the business and individuals he
or she works with have a strong ethical code. However, the opposite is also true. A broker who has a no ethical
code may continue to act unethically even in the presence of ethical people. Regardless of the type business, it is
vital that ethics be placed as a high priority among everyone.
Many aspects of the insurance profession have been labeled as lacking ethical standards. Some insurance
businesses may be unethical but obviously not all are - unfortunately the few "bad apples" cause people to think
the whole industry is unethical. This is true in many professions. All around the world people disagree on what is
"ethical." What one society may view as ethical another may not. Even people within a society may disagree on
ethics. This challenges us to discovering what is inside each and every one of us and making sure it is good and
ethical. If we discover that it isn't - having the courage to change is the good and ethical first step.
All people have some amount of greediness and self-centeredness within them. The ethical person recognizes
this and acts accordingly. Since ethics are values that help us make the right decisions, an ethical person will
suppress their own greed and self-centeredness and do what is best for all. We are faced with continual
alternatives when it comes to decision-making. It is not easy for everyone to decide what is best. However,
without a set of ethics, our choices would be even harder to make. Religion, background, culture, and how we
view others comes into account in determining what is ethically correct.
Can I Be An Ethical Person?
What does it take to be an ethical person?
Most individuals know the difference between right and wrong. Many individuals do, however, differ on what they
perceive to be right. As long as a person acts on what they believe to be right, then they are acting ethically.
The ethical person knows right from wrong and simply chooses the right thing. Ethical individuals believe in doing
what is best for all involved. In the insurance industry the ethical broker will work to do what is best for their client
whether or not it provides him with a commission. Though insurance is something that all people need for
themselves and for their families for safety reasons, many people do not realize the importance of insurance and
therefore don't purchase it. It is important that those working in the insurance business go the extra mile to help
others realize the importance of insurance. These insurance individuals use their education and communication
skills with their clients and do what is ethically right.
When questioning ethical standards and code, one might ask: "What kind of person am I? What standard do I set
for myself at work? And what do I hope to accomplish in my life?".
We are all defined by how we live our lives every day and what affect we have on those around us. Sometimes
we may live our lives one way but others perceive us differently. Exactly how do we want to define ourselves?
How do we want others to perceive us? These important questions help us discover who we are and help each of
us develop our own code of ethics. Who we are is also defined by the people around us. Our spouses, children,
coworkers and those we interact with every day, impact who we are.
The standard you set for yourself at work affects the quality of work you do. Helping others, making a difference,
keeping promises, and doing the right thing, all determine the quality of work you hope to obtain. Many individuals
feel that their integrity is worth more than any commission they could make. However, everyone makes mistakes.
Nevertheless, what is important is that the mistake is corrected and a lesson is learned. If this doesn't happen it
can be a direct reflection of who you are and the work you do.
"What do I hope to accomplish in my life?" This is a question that each of us ponders in our own lifetime. This is a
direct reflection on how people will remember you and what you do with your life. Many of us hope that long after
we are gone, people will remember all the good qualities and good things we did. Would you want to be
remembered for all the mistakes you made?
High-quality business requires education. It is important that you truly understand the product and services that
you are selling. This education continues past high school, college, and even graduate school and happens on a
daily basis. This continual learning is extremely important in the insurance industry. Those who feel that education
is important will be better equipped to meet the needs of their clients. Continual education also helps us maintain
an interest in what we are doing. Learning new and exciting ways to do things is important.
It is also important to know why you are doing what you do. For insurance brokers, this means understanding
what you do and why your products and services are important. We all know someone who goes to work every
morning with no desire to be there, but rather is simply "going through the motions". Many people work in jobs
they do not enjoy because of financial rewards and sacrifice other things that do matter and are of value to them.
Whether a person is an insurance agent, a teacher, janitor, or political official there usually needs to be some
enjoyment resulting from your work. If there isn't, often the job is not done as well as it could be. Many of us would
have trouble doing an exceptional job if we aren't happy with the work we are doing. Often, an agent does not
enjoy their job because they do not understand why they are doing it. If your employer isn't doing business in an
ethical manner, frequently you, as an agent, will not see how important your job and responsibilities are beyond
personal financial reward.
Though we need to consider who we work for in conjunction with our behavior we have to take responsibility for
our own actions and decisions. If our employer is only interested in obtaining new business and increasing profits
it makes it difficult to maintain a high ethical standard. When we feel that we are only there to making money
without any consideration as to how the money is made, ethics is pushed aside.
How do you maintain good ethical behavior if your employer doesn't? Though it is not easy, it is not impossible.
We work in an industry that is heavily regulated by the state in which we do business. Each state has direct
measures that a business must follow that for the most part prevent unethical behavior.
Ethical behavior can begin at this very moment regardless of what your employer does.
Living Ethically Everyday
Discovering who we are in life is not an easy task. We make many choices daily that indicate to others who we
are. Though often there are things that occur that are outside of our control, how we respond reveals much about
who we are. Reason is a basic means of survival, therefore we have the ability to form who and what we are.
Who we are is formed by two basic aspects: our thoughts and our actions. To be an ethical person, we must not
only think ethically but must also act in this manner.
If some people do not choose to make ethical choices, they may be motivated to change by mirroring the actions
of people around them who do. This is why it is imperative that businesses make ethical behavior a priority in the
work place. Individuals who repeat what others do around them rarely make an attempt to consider their own
work. Consequently, one bad example can cause poor behavior in others who are not considering the importance
of ethical behavior. Those who do choose to think out their actions and work productively towards a goal are the
people who are most likely to be mirrored by others.
So how do we live ethically everyday? Many of us feel that we have little control over others and what they do.
However, each of us does have more control then we may realize. Our control stems from choosing our own way
to live. What we do everyday does affect others around us and likewise what others do affects us.
Many people do not realize that ethics often extends beyond us to the relationships we have with others. When
we choose our own actions and goals we are faced with many different decisions. We must adapt our choices
based on the situations we face daily.
What a person does is a better indication of how they are than what they say.
Actions DO speak louder then words. How employees behave speaks louder than the company’s slogan. Clients
want agents to follow through, to act on what they say they will do.
How we treat others around us is also an expansion of our ethical code. We seem to only connect ethical
behavior with what WE do, like being honest and truthful. However, ethical behavior extends beyond just us.
Ethical behavior is associated with how we treat others. Ethics is a set of standards and values that help us make
decisions everyday. We must also take into consideration others when we are making ethical decisions. When we
choose our own actions we are faced with decisions and options. We must be able to adapt our choices based on
the situations we encounter daily.
In order for an individual to make different choices everyday, they must have an established code of ethics.
Everyone possesses a hint of selfishness. Selfishness means that one is driven by self-interests. This applies to
individuals and businesses. Unfortunately, it is often thought that insurance agents tend to act upon only self-
interest at times. Selfishness is a result of choice. Ethics is hard work. Most people would love to receive an extra
bonus for work they didn't do alone, or a large commission for a quick sale on a product that isn't exactly what the
client needs. This is self-interest at its worst.
Unfortunately, ethics is hard work because being unethical can often be more financially rewarding. It may also be
difficult if we feel intensely about a concept but keep our opinion to ourselves because no one else agrees. We
become followers instead of leaders. Many individuals act contrary to their beliefs because it is hard for them to
voice their opinion. For most people it is simple to state that you should do what is right all of the time, no matter
what others are doing or thinking. Though this is good advice, it is sometimes easier to say it than to do it.
Realistically, we are shaped by what we do. Even when we let ourselves be defined by following the actions of
others, we are still making a choice. Not only are we defined by the things we do, we are also defined by the
things we do not do. Who we are evolves over time. Though at times people, and the essence of who they are, is
shaped by one life-changing experience, for most people their character is steadily changing and evolving over
time. Often people are not aware of the changes they have gone through until later in life. Unfortunately, almost
without notice, a person can fall into a model of poor behavior, which becomes how they are perceived by others.
Each of us must establish a good code of ethics with values and goals that we will strive to consciously follow
everyday. Some of these values may alter slightly with time.
In America, society's values change almost on a daily basis. The value of saving money and living frugally - the
way our parents or grandparents were raised - is no longer seen as important. Often living for today is more
important then financial stability in the future. This is a very common view in today’s society. Many people would
rather have something now then wait until later. Many people do not look beyond the present time to what the
future holds for them. This reasoning permits them to spend today not concerning themselves with tomorrow.
Self-fulfillment and material objects have taken over restraint and self-control. This applies to businesses as well.
Businesses have fallen into material spending. Many individuals and businesses want more today and do not
realize the long-term benefits of ethical behavior.
It is important for all of us, no matter what profession we are in, to be truthful and honest with ourselves, our
families, clients, and anyone else we interact with.
Some people in the business world take on the role of "actor" telling clients what they want to hear without any
intention of ever actually doing what they commit to their clients. Needless to say, this tactic eventually will catch
up with you, causing damage to your reputation and will have a negative long-term effect on you and your
business. However, it is important to say that you can always stop unethical behavior at any time and start acting
in an ethical manner and slowly repair any damage that has been done. We do need to be honest and admit
when we are wrong. This will help us grow and maintain a higher code of ethics.
Certainly, the most important reason to live ethically is not difficult to recognize. We define much of our lives
through our work, our families, children, and community. Our jobs expect us to produce, our children look to us for
guidance and to be an example of how to live, our families rely on us, and our communities look to us for help. All
are affected by our actions. We must live with who we are in the past, present and future.
Everyone in our lives is affected by our ethics and values. When you think about who you are and what others
think of you, you want to feel like you have acted ethically and take pride in that. This pride comes through in daily
behavior and actually helps build good behavior which in turn leads to a better self-confidence, which benefits you
in countless ways, including financially. Personal integrity and confidence are very important and we all would
prefer to deal with people who know what they are doing and believe in themselves.
Along with integrity and self-confidence there are many other valued traits of ethical individuals that are listed
below. These traits are valuable in all professions and can lead to both self-rewards and financial rewards. The
traits are as follows:
Setting high goals and standards for yourself and your work
Never compromising on standards or principles of excellence
Leading, not following
Lead by actions, not with words
Associate yourself with ethical people
Believe in yourself and others around you
Address wrong doings and mistakes and attempt to correct them
Bring out the best in others
Many people tend to lose track of their goals and let daily work take over their lives. They lose sight of what is
most important to them. At times this means the sacrifice of time spent with family. It is very important that we
keep our values and goals a top priority in life and not pursue a path that we wouldn't normally choose. We often
concentrate on goals that are secondary to our most important goals. Everyone wants to provide an excellent
financial living for our families, but are we willing to make that money at the expense of our personal goals and
our family relationships?
In an effort to move up the corporate ladder, we occasionally lose track of why we do things and what we are
doing. Why are we in the insurance business? Why do we work for this company? Do we and the company we
work for, have the same goals? Is it only to make money? Are we sacrificing our principals to those of others?
We must ask hard questions like these in order to discover the role that ethics or values play in our work. Clear
and distinct goals are crucial so that we don't lose sight of what's really important in our lives and our work.
Often individuals feel their job is not secure enough to question the practices of their employer. They may simply
feel that they have not earned the right to speak out because of their status in the workplace. The truth is that
ethical behavior is an option for every employee, not just those in upper management.
It is often said that feeling good about our work and performance will carry us. This is true. Those who have a
high self-esteem and self-worth feel good about themselves. High self-esteem and self-worth help build client
relationships in business. Would you want to buy insurance from someone who did not feel confident about what
they were doing? Self-esteem and self-worth are very important in all aspects of life, though unfortunately they do
not guarantee success.
It is now common for companies to bestow material rewards on their employees for meeting a certain
predetermined goal. Often companies think their employees will work harder for material gratification. These
companies believe that a financial reward given to employees will in turn create a successful and financially
profitable company. These practices can occasionally cause problems. Employees may do their work for the
wrong reasons and their normal code of ethical behavior may become lost. When work volume is joined to
financial rewards the goal becomes volume and not necessarily determining the best product for your client.
Financial rewards are important and can increase productivity, but when ethical behavior is not built into the
predetermined goals, harmful situations can arise.
Totally fulfilling work may just be an ideal. For many people commissioned sales is something to be feared. It is
probably safe to say that those who enter the commissioned sales field have a healthy amount of self- esteem. A
person must feel that they can succeed before they enter into such work. This brings us to another area of ethics
- those who recruit commissioned sales staffs.
As we mentioned, there are few jobs, if any, that are totally fulfilling. Most of us want to find work that is the most
fulfilling. What many of us forget it that life is a combination of many pieces that together create a full life. Though
at times a job may seem tremendously fulfilling - and thus provide us with the satisfaction we long for, at other
times the job may be difficult.
Every type of work, even jobs that seem incredibly desirable, generally carry a number of negatives as well. No
job is perfect. Sometimes people see the glamour and thrill of certain jobs and do not see the hard work and
disappointment that also come with the position. This is exactly what some people in the business of recruiting
commissioned sales staff want - to glamorize sales commissioned positions without showing, or mentioning, the
negative aspects of the jobs. Determining what is important to each of us takes time and the willingness to look
inwardly at our motives and making the necessary changes if we are not responding and acting in an ethical
Is Ethics Easy?
We have now established that being an ethical person is hard work, though it should be noted that there are a few
who find ethical behavior to be effortless. The majority of us must make a continuous effort daily to maintain
ethical behavior. Those who view ethics to be a top priority in all aspect of their lives also value others who are
ethical. In all types of work people feel that honesty and caring for others are an important part of their job -
though that isn't always the way we act.
No matter what type of business, a caring attitude towards others can, and will, motivate them to do a better job.
Often people will go the "extra mile" to help their client get what they want, even when it does not reap any
financial rewards. This trait of going the "extra mile" when there is no financial gain, may come from within the
individual, or, it may develop over time. Wherever it comes from, it is a strong motivator for business people to do
a better job than the average person.
When ethical individuals care for others, kindness may become a quality they bring to all areas of their work. They
begin to think about how their decisions and actions are going to affect the people around them. Though this
sounds like a good thing, at times this attitude may cause problems.
Here's an example where trying to be kind can actually hurt someone.
An individual within your company is about to lose their job due to poor performance. In order to spare their
feelings, their manager decides to lie to them about the reason for letting them go - maybe suggesting budget
constraints - to make it easier for them to accept. However, if this individual is never told the real reason why they
were let go, they are never given a chance to change and grow. If certain behaviors are never brought to their
attention, they may repeat work patterns over and over and have trouble finding and maintaining future jobs.
Though it is important to be kind, being honest is always best!
If someone does not know something is broken, how can they fix it? The same goes for change. If an individual
does not know change needs to be made, they won't change. Unless we fix what's broken or change what needs
to be changed, mistakes will continue to be made. Although one may be attempting to be kind, withholding useful
information and the truth is ultimately harmful and actually unkind. Though we have described someone who truly
wants to be kind, there are individuals who use kindness towards others in a self serving way.
An ethical person is happy in the success of others and doesn't feel envy or jealousy. Although we can't control
how others react to us - we do have control over the way we react to others. Simply letting someone in your
workplace know they did an outstanding job can have large and often unseen benefits.
What Does It Take?
Assertiveness is often considered an admirable quality in the business world. Imagine an insurance salesperson
who is timid by nature and then imagine the type of job they would do. They wouldn't likely be your top
salesperson! Most companies want assertive, take-charge personality traits in their employees. Many even say
success has a "look" and a lot of us strive to get this "look". We often try to attain this "look" with our hairstyle,
manner of dress and other factors.
Although many of us strive for the "look" and companies want employees who are assertive, we also want
employees who possess modesty. Often ethical behavior and modesty go hand-in-hand. If you were new to an
agency and had a question about something, whom might you model your behavior after: 1) a modest person or
2) an assertive, showoff type of person? Not to say that an assertive, showoff type of person can't be ethical. But
the very nature of an ethical person is often that of building up others and not self. Where as a showoff type of
person is striving to have others hear and see THEIR accomplishments.
If asked, most people would respond that they don't deem themselves better than other people. An attitude that
says, "I am better than you" is one that leads to broken relationships and causes problems in business. Ethical
people treat others with a sense that they are valued and respected. This promotes honest communications and
strengthens relationships with clients and others. No one likes being around someone who looks down on them.
Though someone who feels they are better than us often will not openly say so, it is often apparent in their
actions, choice of words, body language and facial expressions.
Respect and politeness are part of ethical behavior. Certain people are unconsciously courteous, but this is likely
a result of their upbringing. Courtesy is a trait that is intentionally developed. Have you ever noticed how people
are more inclined to be courteous to others who they believe to be wealthy or significant in stature? These people
can make a late entrance, be impolite to others or be unskilled and those around them remain courteous. They
may be thinking negative thought about the person, but they remain courteous outwardly. The courteous attitude
often is in hope of gaining something - money, connections - from the person of wealth and standing. Though
some people are simply ALWAYS courteous.
Words, like "please" and "thank you" can make routine tasks more pleasant. Many managers do not realize the
importance and power of these simple words. They feel that their stature would be lessened if they ask an
employee to perform a task and say "please" and "thank you" and so simply order an employee to do the work.
Often in the end, the manager does not get the desired results from their employees because of the lack of
common courtesy that most of us take for granted.
Too often we have been brainwashed into thinking that material rewards are the goals that we need to achieve in
life in order to be happy. We are told that through acquiring things we become better at our job. However the truth
is that it is only through honest hard work, following our words with actions and a desire for knowledge that we will
As noted, acquiring material things does not make us better at our job, though this belief is often reinforced in the
insurance industry. Since businesses usually have a good amount of time and money invested in their agents it is
important that they succeed. The future of the business relies on its employees. However, exclusively promoting
materialistic goals will cause frustration for the employees, and may prevent them from gaining additional
knowledge and achieving long-term goals.
Encouraging financial gain exclusively is also a disservice to clients because it implies that their function is to
provide the money necessary to meet the company's material goals. When there is no thought given regarding
whether the client can afford the service being provided or if the client will benefit from the product, then the
company is not behaving ethically.
At times greed is portrayed as something necessary in our capitalistic society. Greed is seen as the fuel to the fire
that drives the business. Greed is also seen as the motivator that drives businesses to sell and make money.
Though there is some truth to these generalizations as with most, they fail to tell the whole story.
No one wants someone else to fail financially. However, an individual who is motivated by greed often will not
survive in the long run. Greed is a desire that is never satisfied and can eventually cause destruction. All of us
have desires, but greed goes beyond what is fulfilling and motivating. Greed and ethics cannot exist together.
There are few that think we could have social order without respect for authority. Some go so far as to argue that
we should follow authority at all times in order to care for society. Though we can look back through history and
see many times when following authority was actually detrimental to society (Germany under Hitler's reign for
example), imagine what would happen if most people disregarded the law. Consider the consequences of
someone deliberately ignoring a red light while driving - the results can be tragic.
We all agree that order, laws and the authority to enforce them in our lives are necessary. Even a business needs
rules and order. Still there are times when laws and authority must be questioned. It is vital to question decisions
and actions that do not follow the same code of ethics you do - and if you don't - you must take responsibility for
the actions and consequences.
Most of us are average Americans trying to provide for ourselves and possibly a family. We are also trying to put
enough money away to ensure we can meet the needs of the future. For us, daily transactions are made that will
benefit not only ourselves but our clients too. Though we all struggle with a hint of greed and at times try to make
a quick extra dollar - when this type of behavior typifies the way we conduct business it becomes extremely
dangerous, not only to others, but to ourselves as well.
When an individual is serving only their own interests with no regard to the interest of others then greed has
gotten out of control. It is inexcusable for this type of behavior to be allowed in the work place. Unfortunately, it
does happen and many do not realize the long-term effects when such an individual is promoted within the
company. The true motivator in any profession should be: trying to serve the client to the best of your ability,
continuing to further your own knowledge in all areas, bettering communication, and personal satisfaction from
knowing you have done your best for your client AND your company.
Unfortunately, it is all too easy for someone, especially those whose income is based on commission, to lose sight
of the value in providing the product that best fits the needs of your client, at the best possible price. Because the
temptation is so great, it is important that we help others maintain proper ethical goals and not lose sight of the
real goal, providing excellent products and service.
Humor can often be found in everyday life. Doctors have actually determined that laughter is an important piece in
maintaining physical and emotion wellness. However, humor can too often be used in a cruel manner. There are
many jokes that are offensive to others. Often these jokes are geared towards a certain ethnic or cultural groups,
or towards individuals of a certain sex or sexual preference. This type of humor is extremely unethical and has
absolutely NO place in the work place. One should not tolerate this behavior in the work place. It is important that
we sustain high ethical standards and treat others the way we wish to be treated.
Communication is key in all types of professions. Often problems arise because a simple misunderstanding grows
into a huge problem and can actually cause distrust between people and seriously damage relationships. With
this in mind it is important that we work on our communication skills and place high priority on communicating with
clients, coworkers, and all others we have contact with.
Learning about Ourselves
All of us have goals - whether consciously thought through or not. We spend time and money attending school,
but may end up in jobs that we find un-fulfilling yet continue working simply to provide for our needs. Some of us
are unsure of the direction we want to go with our careers yet spend no time trying to find out what is important to
us. Our feelings of dissatisfaction and unhappiness often cause us to ask ourselves, "Why?".
Why do we dread going to work in the morning some days?
Why do we dread meeting clients face-to-face and prefer to discuss business over the phone?
Why do we often take our time when answering e-mails and sometimes totally ignore phone messages?
Why did we choose this type of work? Would we do it differently if we could?
Though our profession provides us with a means of making a living and paying our bills, it does not define us.
Rather we are defined by our words and actions - and through our words and actions, our thoughts and feelings
are revealed. Children are often better judges of character than adults. Words are often meaningless to them, so
they focus on the feelings or thoughts behind the words. Adults often only hear the words and are focusing on
their own response before an individual finishes speaking and never listen to the thoughts or feelings behind the
words. If we took the time to REALLY listen to others - as well as to ourselves - we would learn much about
others AND ourselves.
Again, we are not defined by our work. If you lost your job, you, the individual would not be "lost". The individual
still remains. We each have a choice in determining who we are and what we want to become. Though it may
take time, we determine our values, and actions. Many people become so engrossed in their work that they lose
track of who they truly are and allow themselves to be defined by others' thoughts, values, and actions instead of
their own. In order to begin to understand who we are and why we do certain things, we must take responsibility
for our thoughts, values, and actions and not simply reflect on others.
Once we take responsibility for our own thoughts, values and actions - it gives us tremendous freedom in the
choices we make. When we feel that we do not have free choice, we feel we are not responsible for our actions.
Ownership, or responsibility, is key in choosing and maintaining ethical behavior. Unfortunately it can be an
extremely scary thought, because it means we have no one else to blame for our failures and mistakes.
Often we are not aware of the influence that our jobs, and those we work with, have on the way we think and act.
We think we are capable of maintaining our identity without allowing others to influence us. Even though many
thought patterns and work habits are formed over time and may be difficult to change, we are constantly
influenced by others, just as we are constantly influencing others. That is why we must be careful in every
thought, word and action.
Should we find ourselves in a position that is contrary to our core values, we need to make the hard decision to
change our environment. This change may be simple or complex, however it has the impact of creating a positive
difference in our lives.
We have already discussed how we are influenced by those we work for and with, the insurance profession is no
exception. We may be shown sales techniques and tactics that do not have the client's best interest at heart, but
rather are intended to increase sales. We see others rewarded for volume, perhaps without regard to quality of
service, which puts a tremendous amount of pressure on us to behave ethically. Add to that the fact that our
paycheck may be based on commissions from sales and you have an environment that can cause even the most
ethical person to be tempted to behave unethically in order to make a commission.
Are we saying you have to be unethical in order to make it in the insurance industry? Nothing could be further
from the truth. We have already discussed that we have the freedom to chose how we behave on a daily basis.
Granted, we can't choose how others behave, but we can, and must, take responsibility for our own actions. With
freedom and assuming responsibility, comes a feeling of control over our lives that is a source of strength,
happiness and helps define who we are.
So, how do you know if a particular company is right for you? Unfortunately, there are no set guidelines that will
guarantee your success and happiness. However, here are a few simple questions and thoughts that could help
Does the company want you to succeed or are they more concerned with their own success?
Is there room for advancement?
Do the relationships between coworkers and workers and supervisors seem one of mutual respect and
Do others that currently work for the company feel like their opinions are important in decision making
and are valued?
Be careful to take the time to observe and REALLY listen to the attitudes and thoughts behind the words
during any and all encounters with current employees. Most companies put on their best "face" for a
possible job candidate. If you are uncomfortable during this process, things are probably NOT going to
improve once hired.
Unfortunately we may make a job decision based solely on the salary or commission plan offered. Though we
need to pay our bills, this is when we may get greedy and ignore certain attitudes and "gut" negative feelings
about a possible employer and think that a large paycheck will provide the job satisfaction and happiness we all
long for. Stepping back and taking a good, long look at what it important to you will help in making this decision.
Bottom line, our actions speak louder than our words and choosing to be an ethical person is our testimony to
ourselves, our families and everyone we meet. Maintaining our personal code of ethics, not only at work, but in
every part of our lives, is our statement that we value, not only those around us, but ourselves as well. Ethical
laws, rules and authority - whether imposed on us from the outside OR from within, provide important boundaries
that help us grow and help us to answer many of the "why" questions in our lives.
The Importance Of Education
We have discussed how important it is for an agent to be ethical, honest, and truthful in the insurance business.
But we all know that having all of those traits simply is not enough. An agent must also be knowledgeable and
skillful in their trade to be successful. Education plays an important role in making an ethical sale.
But why is education important? You will often hear agents or agencies complain about the continuing education
requirements of their state and will frequently look for the shortest and easiest methods of obtaining the credits
they need. However, we need to ask ourselves this. "Would I feel comfortable doing business with someone I
knew who received a degree years ago and has not taken any courses since that time?" How much confidence
would you have in such a person? The same attitude holds true for insurance agents. Though actual work
experience is important, keeping current on changes in insurance laws as well as policy changes within your
company are equally as important.
After you have been working in the insurance industry for a while, most likely you will have attended a seminar or
class where you already have a thorough knowledge of the topic being discussed and will find yourself extremely
bored. Though it is partly the duty of the course provider to make the material as interesting and well organized as
possible, it is also the duty of the agent to keep an open mind and attitude and to challenge yourself to find
something new that you were unaware of prior to the course.
Some agents today feel they have been in the business too long to learn something new. While attending
continuing education classes, it is inappropriate to converse with others during a course, to read, sleep, or work
on personal business. Some agents may simply stay until attendance is taken and then leave. Certainly, the
agent who signs in and then leaves for an hour or two is not learning anything. We are ultimately responsible for
our education and this will be reflected in the future work we do.
Most states, and the District of Columbia, require that licensed agents obtain a specified number of continuing
education hours prior to the agent's license renewal date. How many hours of continuing education required
varies from state to state. It is the responsibility of each agent to know and understand their state's requirements.
Each agency is responsible for stressing the value of education for their agents. A company may put a mandatory
time limit on how long it takes an agent to complete their courses, however, it is the agents responsibility to
acquire the mandated credits prior to their license renewal date.
So what is a reasonable time frame? It is difficult to gain much out of a course if the agent must rush through it.
The agent gains nothing and the value of the course is lost. Continuing to learn, regardless of the number of years
in the profession, characterizes a true professional - with an open mind who realizes that there is always room for
Some agents even choose to go beyond the education that is required by the state. These agents are not
restricted by their state mandated hours, but rather desire to take whatever courses are necessary in order for
them to do their personal best at their jobs. Regardless of the number of continuing education hours an agent
may take, what is really important is taking charge of our education. We must take responsibility for our own
educational needs and not rely on someone else to do it for us.
Once a client makes a decision to listen to your presentation, you, as the agent, have full control over what
information to disclose on the insurance policy and how to disclose this information. Insurance policies are often
complex and difficult to understand. Most agents’ presentations include some "stock" information regarding
premiums, benefits, agent services and information regarding the company. Usually premiums are the biggest
concern of the consumer while important, is only a part of what they really need to know. Often the discussion
concerning premiums takes up a majority of the agent’s presentation.
Obviously this is an important part of discussing an insurance policy and agents are doing an excellent job
disclosing this information since an errors and omissions claim has never occurred because of the quoted
premium. However, the majority of the E&O claims filed against an agent are related to the policy benefits, and
how these benefits were disclosed to the client. This is one area where most agents need to do a better job.
Again policies, benefits, and premiums can be very confusing to the consumer. It is important that the agent
discusses all options with the client and makes sure the client totally comprehend the concepts discussed.
The insurance contract is also intimidating to most clients. It is technical, complex, and rarely read fully by the
insurance agent or their client. This is where many misunderstandings take place. It is important for the agent and
client to both totally understand the contract prior to the client signing it. Agents need to stress to the client that
the policies are not only about what claims the company is willing to pay, but also the conditions and limitations
that go with the policy.
Of all the various types of insurance policies, life insurance is probably the easiest to understand, because it is a
matter of life and death. If while the policy is in force, the insured dies, a promise of a payment is kept. A medical
policy may have several limitations and conditions within the policy that the client may have difficulty
understanding. Some terminology that people often have difficulty understanding are: stop-loss provisions, co-
payments, and elimination periods. Unless the agent is careful about explaining these terms, the client may
become frustrated and question their agent's thoroughness as well as the agent's motives for selling them the
policy. Clear communication is extremely important and is a skill an agent should continually improve upon.
The following steps can help an agent decrease misunderstandings between agent and the client:
An agent should be slow to replace an existing policy. It is important for the agent to completely
investigate the current policy in force and compare it to the possible replacement policy. The agent
should be notified of any health conditions, new or pre-existing, that may affect the policy. Health
problems of any dependents may apply and should be reviewed as well.
Full disclosure is necessary for any type of policy being suggested to a client. The policy is the final
contract on a specific policy. An agent should base their information on what is in the policy instead of a
brochure or handout Clients should be encouraged to read the entire policy and discuss questions with
Health questions for any type of policy need to be clearly understood and correctly answered.
Corrections to an existing policy or future policy need to be made by the agent once they are made aware
of the health conditions of the client. Some agents have been known to "forget" to document the client’s
health conditions to guarantee types of coverage. This is clearly illegal.
Sometimes an agent is not aware of a client’s health conditions. If the client does not understand a health
question, it may be answered incorrectly by no direct fault of the agent. It is however, the responsibility of the
agent to inform the client and present the material in such a way that the client can understand. A policy may be
canceled because information was incorrect or unrevealed.
Some areas of common misunderstanding relate to the following:
Sometimes owners/employers may not be enrolled in and paying premiums for worker's compensation coverage.
While this does not typically apply to the senior clients you will encounter, more and more older age people are
still working and it might need consideration.
When replacing an existing policy the eligibility of an applicant (and their dependents) is always a concern.
Continuity must be taken into consideration when replacing any type of policy. The existing plan should not be
replaced until the new one is in force. The new policy should be put under a final review before the existing plan is
The presentation of a policy is also important, since many consumers do not understand the insurance business
and the terminology involved. The agent needs to present the policy so that the client can understand all aspects.
This is why communication skills are extremely important in the insurance industry.
Also, an agent needs to present the policy so the client can understand, but to do so in a way that is not
excessively technical. Sometimes when trying to impress a client an agent may use technical details that are
unnecessary. Although these agents may be exceptionally well informed, they cannot present the information in a
way that others, who are not in the insurance business, can understand.
An ethical agent's main concern will be for their client and they will have the necessary education and
communication skills to fully explain the insurance policy and thoroughly answer their client's questions in a
truthful and straightforward manner.
Replacing A Policy
It is fairly common practice for agents to replace existing policies to make commissions and generate business.
Even ethical agents realize that this is part of their daily work. Some states have now placed consumer laws into
effect because of the many problems that have arisen from agents replacing policies.
It would be incorrect to say that it is always unnecessary to replace an existing policy. However, it is important
that the two policies in question be compared fairly. Most states require policies be compared precisely and by a
method which is fair to both policies. There are frequently forms that have to be completed when replacing an
existing policy. Many agents complain that it is very difficult to compare policies when the two do not have much
in common. No matter how different the policies are, an ethical agent will find a way to compare them fairly. This,
in the end, benefits the consumer and may save the agent and company from an unwanted lawsuit.
Most consumers realize that agents are competing for their business. Though this gives the consumer an
advantage, many people may end up choosing an insurance agent based on their feelings instead of comparing
policies. Once a client has chosen an agent they will rarely question if their agent wants to replace their policy.
They feel "good" about their agent and often don't understand the technical aspects of the policies and simply
trust their agent whom they perceive as an "expert".
Though we have established that sometimes it is necessary to replace a policy, sometimes the replacement is
done so that the agent gains a commission. Often replacing one policy for another means a higher commission
from the new policy. This is not an acceptable reason to replace a policy.
Another reason an agent might replace a policy has to do with the fact that at times agents will change employers.
When an agent chooses to move to a different company they often feel like the clients that they served in the past
"belong" to them. As we mentioned, since insurance policy decision are often made on the perceived trust a client
has in an agent, an agent might feel that the client doesn't belong to their former employer but to them. Whether
this is ethical is a difficult question to answer and since the new agency likes the new business that this tactic
generates, they usually never question where business is coming from. Again, the client's interests should guide
any decision to replace an existing policy.
Company stability is a third reason for policy replacement. If an agent feels that a company is experiencing
financial troubles, they may wish to change the client's policy from that company to try and protect their client.
Replacing policies occurs frequently. Whether it is done for ethical or unethical reasons the consumer has some
peace of mind knowing that insurance laws exist to protect them and not the agent.
The majority of agents do not use deception when selling an insurance policy to a client (it's not only unethical,
but illegal to do so). However, often polices are sold because the client incorrectly assumes something about the
policy. Most consumers do not have the knowledge and understanding of the policies to the extent an agent does.
Therefore, it is crucial that we attempt to present policies in a clear manner, with no misconceptions. When we
take the time to fully, explain ALL parts of the policy, everyone benefits. Trying to explain a misconception once a
policy has been issued is not only difficult to do, but is damaging to the agent's reputation since the client often
thinks that the agent was trying to mislead them.
Another source of confusion and misconception can occur when policy premiums are discussed. Premiums can
be falsely stated to the client in order to guarantee a sale - though obviously an ethical agent would never do this.
At times agents simply make an honest mistake. We are all human and therefore we all make mistakes.
Misquoting a premium may come from making a mistake, a lack of education, or even inexperience.
Obtaining client signatures on all of the necessary applications and forms is anther important part of an agent’s
job. There are many reasons why signatures might not be obtained from the client. Every so often an agent
simply forgets to obtain a signature from the client. Though this is often simply an oversight on the agent's part,
when it occurs regularly it might show that an agent needs to work on their organization skills. Whatever the case
may be, many agents benefit by highlighting or marking with an "X" each of the places where clients' signatures
An unethical agent may purposely "forget" to obtain a client’s signature to save themselves time and an
explanation to the client. This may lead to the agent forging the client’s signature. Forging a client’s signature is
much more common in business than most people realize. Forging a signature is not only unethical, but also
The hardest policies to replace are those belonging to an agent who is in constant communication with their
clients. However since companies push for new business and have specific sales goals that must be reached,
agents often struggle with finding the time to communicate with existing clients.
Further communication after a sale often depends on what the agency has agreed upon with their agents. Some
agencies have agents whose job it is to make the sale and other employees who then follow up with the client.
Some agencies expect their agents to do ALL the work personally. It is always beneficial to an agent's book of
business if they keep in close contact with all clients. When an agent and their clients have good communication
with each other there is a connection that is hard to break.
So, how does communication play a role in ethical behavior? Many agents truly want to provide the best possible
service to their clients. But some agents simply do not want to do the extra work involved after the sale. Are these
agents unethical? Truthfully, some are. However, sometimes an agent simply doesn't understand the benefits of
maintaining a relationship with existing clients. Existing clients are already sold on you and the company you work
for and so are more likely to turn to you when they have additional insurance needs. Some agents fall into the
category of simply being too lazy to maintain contact with clients. Many states now have service requirements for
insurance agents and when agents are not meeting these requirements the agency will step in and handle the
Deciding What Is Ethical
Determining whether a company is ethical can be very challenging but well worth the time you invest in your
research. Taking the time to learn whether a company has the same core values as your own helps you gain
confidence in the company, the product they sell and the service they provide. This is true whether you are
researching a company as a possible employer or doing research for personal ethical investing. Our own ethical
look should lead us to take the time to go beyond simply the "look" of an company or person and try to learn their
true motives and values.
The following questions might help us make this determination:
Do the employees have good things to say about others they work with and management?
Have there been any disputes between them?
How is management paid?
Do they receive additional money from commissions?
How are the employees paid compared to management?
Have employees ever been asked to take a salary cut while management made no sacrifices in salary?
Has the business purchased any shares from individual or corporate investors higher than market price?
Have there been any consumer complaints against the company?
Do minorities and women employees hold policy-making positions? How many?
Does the business promote job safety?
Have there been any job related illnesses experience by the employees during the past year?
Does the company make contributions to charities? If so, which ones?
Does the business contribute to Political Action Committees?
Are there any lawsuits pending? If so, regarding what?
Has there ever been an audit discrepancy?
These are just a few questions that you might ask when researching a company and the product they offer.
Questions should also be aimed at ethical issues you are personally concerned about.
Ethics on a larger scale can intersect with politics. Although true ethical standards should not be connected to
personal gain, this often happens. Many justifications are used to clarify why such things are right or wrong.
Usually, in areas of financial gain or money, self-interests are frequently seen. Finance, politics, culture, societal
values and daily life all affect the financial world.
Discovering And Investigating
Information is everywhere. We are bombarded by information that we receive in our mailboxes, on billboards, TV,
books, periodicals, newspapers, and via the computer. Though we can't possibly read everything that we
encounter on a daily basis, when doing research for determining ethical investing, or the value of a company, you
will find information to be a valuable resource. This does not mean that every publication will contain pertinent
information. But you will find many sources that are beneficial to the ethical investor.
The library is another wonderful resource for ethical investors. Libraries are usually equipped with many sources
available for the consumer. Look for articles that discuss specific businesses or products that interest you. Realize
that many times the article's view will differ from the brokerages view. Differing views are important to help you
understand different views on a given investment.
Another resource for information is a full-service brokerage firm. The brokerage may possess unpublished
research regarding businesses that you may find useful. Brokerage firms can also offer clients investment reports
It is imperative for the ethical investor to develop a research routine. What is true today may not be true tomorrow.
Profitable ethical investment depends on knowledge. It takes time and experience in order to gain this knowledge.
Regardless of the final investment decision, it is crucial that the ethical investor understand a much as possible
about the investment. Simply researching a business or products is not enough. The investor should understand
the broader picture of the investment industry as a whole. Again, though this takes time and effort it is well worth
Though preparing for tomorrow is certainly sound advice, we must also live for today. Many ethical investors
and advisers base their work on this statement. Certainly they want financial gain on their investment funds, but
they also want to live today with their needs and desires having been met.
People don't plan to fail but very often they fail to plan.
A number of investors invest primarily as a source income. They want to use money they already have, to
produce more money for today. Their goal is to provide a steady income for today without necessarily increasing
their net worth.
Income falls into two categories: fixed and variable. Fixed income vehicles are always constant in the amount of
income they pay. These include things like annuities, commercial paper, and bonds. As the name implies,
variable income vehicles vary in the amount of income they pay. These vehicles do not yield a set amount of
regular income, but rather vary according to several factors.
Investment income is not always an option for everyone because it requires that you have available investment
funds. You will often find that individuals who are retired find this type of investing attractive. Often retired people
have accumulated wealth and are able to invest their present money for income in their later years. Though you
may also find younger investors interested in income investments that are low risk.
There are some rules for income investors to follow:
Set a minimum yield and quality to be bought
If stock, check the ten-year dividend record prior to buying
Review your portfolio three or four times every year.
Look at capital gains, reinvesting and selling.
Do not feel that you must have money in the market.
Do not be afraid of new ideas, but do not rush into investment vehicles, regardless of what that vehicle
may be without FIRST doing your research.
Know which types investments are short term and which are long term.
Follow your set of investment guidelines once you have set them.
Historically, investors have connected income investing with low risk. Obviously, this is not always true. Many
investors fail to think about rising rates of inflation and the fact that no vehicle can be considered safe in an
inflationary environment. However, because the income seeker's portfolio is weighted towards higher grade debt,
only the most serious corporate crisis would cause a loss of income.
Income portfolios normally contain less dangerous investment vehicles than do growth portfolios. There are,
naturally, exceptions, but generally more stable corporations pay higher interest and dividends. Many people
spend their time trying to learn the tricks of the trade rather than learning the trade itself. Keep what you do
simple, easy to understand and on track, or it may be difficult to keep your investing within your ethical
There are many views on the ethical nature of tax spending. It is true that many people feel their tax dollars are
being used in an unethical way, but there is little that can be done to change it. If this is a concern for you or your
clients - you should find ways to invest that have tax benefits. The government offers tax benefits for a type of
investment when it encourages one of three things: private investment in public projects, savings, or private
investment in private enterprise. This benefits both you and the government. This may be constructing a financial
safety net, building new schools, or directing investment funds into desired areas specified.
Tax-free investments, like municipal bonds, are investments that offer income in interest or dividends, which are
not taxed. Several types of government investments are partially tax-free, while some investments may be free of
state tax, but not federal tax. It is your job to learn and know the differences.
Given that taxation is broad, there are characteristics that go against the ethical values of some consumers. The
taxing entities however, do not ask for our opinions when it comes to taxation. If taxes are charged, we are
expected to pay them. If they are not paid, stiff consequences are issued. We cannot avoid paying taxes, but we
can hope to achieve a decrease in taxes. This is the goal of the majority of taxpayers, even if they do not have
ethical objections as to how their money is spent.
All of our lives we must learn to balance whatever life brings us on a daily basis. This balance includes managing
many things, including money. Insurance agents are no exception, especially agents whose compensation is
based on commission sales.
Insurance agents who are in commission sales MUST be disciplined in money handling. There is a high failure
rate among those who work in commission sales because they lack the discipline and knowledge necessary
about handling personal finances.
Ethics covers every part of our lives - not just our work environment. This includes simple things like paying our
bills on time. It is important to pay our bills on a regular basis all the time, but in business if we do not, this can
lead to a bad reputation. Because money management is so important in our lives, we must handle money in a
way that instills TRUST - NOT DISTRUST - in others.
Many of us use a bank to help us manage our money. We often choose a bank that is convenient to where we
live or work. Few people will go beyond certain parameters because it creates extra work for us. Unfortunately,
location shouldn't be the only determinate in choosing a bank. Again, we must do some research into the services
each bank offers and the fees they charge and compare these findings with other banks in the area.
Money management is a part of each of our lives and we must learn how to balance this with the rest of our
responsibilities to make sure they are all in line with our core values and goals.
Using Ethics In Insurance
Some people today feel that ethics and business cannot coexist. Unfortunately, these same people often think
this is especially true in the insurance business. This makes it even harder for the ethical agent who has learned
how to accomplish this. Yes, most professions have goals of profiting from their business, however, as long as
these profits are done ethically, ethics and business definitely CAN coexist.
Several professions, including the insurance industry, struggle with a negative perception by the average
consumer that ethics is not given a high priority in their industry. Many of these same consumers feel that ethics
exist in the businesses only because the state mandates it.
Insurance agents face difficult ethical questions everyday, many of which have no right or wrong answer. One of
the toughest questions faced by an agent is: "Whom do I owe my allegiance to, the policyholder or the
business?". The answer is both. In answering many ethical questions it is important for one to remember that
each and every situation is different. The agent must be honest with the company, giving them all necessary
information, but they must also keep their promise to their client. The agent has a duty to both the insurance
agency and the client.
Many people believe that the primary cause for unethical behavior in the insurance industry is the fact that most
agents are paid by commission based on sales. They believe that commission sales make the agents feel that
they must do whatever it take, at any cost, to make the sale. But many other businesses are based on
commissions without receiving a negative image. Commission sales are ethical as long as they are structured
properly. The commission sale system is not the problem but rather the people and companies that abuse the
A goal of all profit driven businesses is to be profitable. Being successful is not an unethical goal. It is obviously
vital for all businesses to be profitable to be successful. However, this success should not alter the ethical
standards within the company. Profits, commissions and ethics CAN all coexist.
Numerous consumers and even some agents ask themselves if insurance companies REALLY value ethical
behavior in their businesses. While most companies do believe good ethics and good business go hand-in-hand,
they don't also acknowledgment or commend ethical behavior.
We have now established that ethics and ethical behavior is important not only in the insurance industry but in
ALL professions. The truth is that most professions could not survive without it. The insurance industry depends
on the agent AND the consumer to act ethically. Many businesses have a written code of ethics within their
company manual, but they may rarely be discussed. This makes it difficult for employees to follow them.
However, there are some companies that go so far as to hold ethic training classes or seminars that teach proper
Sometimes ethical behavior may not be deemed important by anyone in the business. This is especially true
when ethical behavior is not deemed necessary or important by management. Ethical behavior, just like being the
top salesperson of your company should be recognized AND rewarded. This in turn leads to more ethical
behavior which ends up benefiting everyone, including the company.
Though the insurance profession can do much toward helping us become more ethical people, sometimes we
simply need to do the right, or ethical, thing each time we are faced with a decision. Easy? No! Often the benefits
of ethical behavior are not seen until years down the road. Even though the benefits might not be seen
immediately, we still must choose right when faced with a right or wrong way to act.
Recently we have seen society become more demanding when it comes to ethical behavior. Yet at the same
time, we live in a world that admires financial success above almost everything else. Though these two things are
not opposites, striking a balance between them is not easy. But it is necessary to do so in order to live up to the
trust others have placed in us and in our own personal happiness and satisfaction with who we are. We hope this
course has helped you to learn a bit more about who you are and what motivates you. We also hope that you
have been challenged to think and act in an ethical manner in your personal and professional lives, not only to be
more profitable, but because it's the right thing to do.