The Financial Modernization Act of 2002, also known as the Gramm-Leach-Blily Act, limits the ability of financial institutions to share non-public financial information. When a testimonial refers to benefits received under a policy for a specific claim, the specific claim data, including claim number, date of loss, and other pertinent information shall be retained by the insurer for inspection for a period of four years.įederal law requires financial institutions, including insurance companies, banks, brokerage firms, etc., to safeguard the privacy of client financial information. If the spokesperson is compensated for the testimonial or endorsement the phrase "Paid Endorsement" must also be included. The financial interest of the spokesperson, or his or her capacity as a representative of the insurer must be disclosed. A spokesperson is anyone who has a financial interest in the insurer, is in a policy-making position or is in any way directly or indirectly compensated for making a testimonial or endorsement. Agents should be sure that the illustrations used in their presentations are complete and balanced, so the prospect can properly assess the product and its suitability for meeting his or her need.įlorida regulations require testimonials and endorsement by third parties to "be genuine, represent the current opinion of the author, be applicable to the policy advertised and be accurately reproduced" Is the person endorsing the insurance product is considered a "spokesperson"", the spokesman most likely must be licensed as an insurance agent.
Regardless of its intent, the important ethical principle is the same: the information provided must be such as to enable the prospect to make an informed decision. The illustration may be intended to show the possible growth of cash values, dividends and death benefits of a life insurance policy, or it may show the historic growth of a security. Unfortunately, the use of illustrations provide opportunities for ethical lapses. Many agents use these illustrations as the center of their sales presentation. As a result, computer-generated policy illustrations, detailing policy performance under a handful of scenarios, were developed. With the development of interest-sensitive and variable policies, however, that is no longer possible. In the past, fixed-value policies could be explained with one or two pages showing guaranteed valued. One of the best ways to explain policies clearly and completely is to use policy illustrations. If you choose to use testimonials or endorsements, they must be genuine and reflect the endorser's current opinion, and any financial interest held by the endorser - for example, that it is a paid endorsement - must be disclosed. In addition to graphics, agents also use testimonial letters from satisfied clients. When using these graphics, it's important to make sure that they do not mislead the prospect when presented without accompanying descriptive text and that the material match the prospective client's level of understanding.
In order to disturb the prospective client, the opening interview will sometimes include graphics typically, these graphics will depict marginal income tax brackets through the years or some other relevant statistics. Any effort to outline risks (premature death, outliving one income, etc.) should be balanced and represent realistic scenarios. There is a fine line, though, between rousing a client's interest and scaring them. Often the prospect needs to be disturbed about his or her present situation before taking any steps to improve it.