Ethical Decision-Making and Case Application
A repeatable framework
Ethical decision-making in life insurance follows a structured path: (1) identify the facts and the stakeholders; (2) identify the ethical issue and the duties in tension; (3) list the options and their consequences; (4) test each option against the law, the code of conduct, and the "front-page test" (would I be comfortable if this were public?); (5) choose, act, document, and review. The framework matters because exam questions reward process over intuition.
Common tensions
Typical cases involve a sales target versus a client's affordability, a client asking the agent to omit a health fact, a family member pressuring for information, or a colleague cutting corners. The consistent answer is to protect the client's interest, follow the law, disclose and document, and escalate when needed. When duties conflict, the hierarchy is generally: law and regulator, then client interest, then insurer/employer, then personal compensation.
Traps to watch
- Choosing the option that preserves the sale rather than the one that protects the client.
- Assuming a client's request to conceal information relieves the agent of the duty to be honest with the insurer.
- Failing to document the reasoning, which makes the decision indefensible later.
- Overlooking the option of declining the transaction or seeking a supervisor's guidance.
Worked example
A client asks an agent to leave a smoking history off an application to get a lower premium. The ethical response is to explain that misrepresentation can void the policy and is fraud, decline to submit an incomplete application, and document the conversation. If the client insists, the agent should decline the business rather than participate.