These quick notes are part of our new CE series on the top 100 Insurance Agent Blunders. Knowing the legal and ethical mistakes made by others is a practical way to avoid the same blunders in your own business.
Some live by the popular sales motto, “ABC: Always Be Closing.” But we recommend a safer motto: “Know your product.” The agents in these cases did not have enough product knowledge to ethically conduct their business, which resulted in a lot of trouble for themselves and their companies.
Benton v. Paul Revere Life – Blunder #96 Agent sold a disability policy to his client on basis that coverage could be extended for life for an additional premium, when in fact, the policy and rider required a higher level of disability to occur before life benefits would be awarded. The court was clear to point out that any agent who does not have the product knowledge to understand the differences between two products he is selling is subject to liability for fraud.
Lott v. Metropolitan Life – Blunder #95 Client’s employees were sold life policies through a “cafeteria plan.” Agent mistakingly represented to employees that they must buy life insurance in order for the plan to be granted tax savings. Clearly this was a case of an agent lacking product knowledge and a company that did not appropriately train or assess their agents’ product knowledge. As a result, agent and company were found liable for undisclosed damages and fines.
Read about these cases and more in our Preferred Practices Course # 171.