Question

Selling expensive insurance policies

Ahmad works for a life insurance company as a sales representative. He has been working in that company for more than five years. He has got good communication and presentation skills. He has attended several workshops on sales and marketing to enhance his skills. The company is happy with his performance and gives good salary and commission on the policies he sells.

Ahmad has several plans to sell. One of the insurance products is a plan that is a combination of savings and insurance both. Ahmad is convinced and focused more to sell that plan because company also appreciates and encourages more to its sales representatives by giving handsome commission on its sales. The product promises to protect the family in case of premature death as well as a good return on investment after retirement.

The language used in the agreement paper is hard to understand. Usually, clients do trust on Ahmad and do not read the agreement thoroughly. Ahmad knows the facts very well. The product is expensive and provides a little protection in case of premature death. Another disadvantage of having that product is a low return on investment after its maturity. The company pushes its sales because it is more profitable. Ahmad has other cheaper products to sell that can give more benefits to his clients including greater protection and return but the commission on sales by the company is too low.

Ahmad cannot earn more if he sells products considering consumers’ benefits. His family will suffer if he thinks good for others and the management frowns on cheaper policies being sold.

Questions:

1. Identify the main stakeholders in this case?
2. Is this ethical for insurance companies to promote expensive policies hiding the facts? Justify?
3. Can Ahmad justify himself by saying that hiding the facts doesn’t mean lying?
4. What is your recommendation for Mr. Ahmad? Be creative in this.

Answer 1

1. The main stakeholders in this case are, the company, the employee, the customers and their families, regulatory authorities that govern the sale of isurance products, and any other individual or organisation that is affected in some way or the other by he sales practices of the company.

2. It is grossly unethical to sell a product to unaware and unsuspecting customers who have little knowledge of subject matter, and rely upon the information provided by the salesperson. They, as customers believe that every information given by the salesman is true. If a product is claimed to have very high protection to the customers in case of adverse events like premature death, and this fact is not true, the practice is not only unethical but immoral also, because the customer ( his /her family to be precise) will come to know after the event has occurred. It will be breach of contract of highest severity, when the customers will know that the reliance and assurance they were banking upon is actually false, misleading and unjust.

3.Ahmad can't justify himself, because the act of hiding the fact is as good as lying, because both of them are leading to the same outcome- breach of customer's reliance. People buy insurance to protect themselves against untoward situations and unexpected events. This is what a policy is meant for. If it does not protect the person against it, the entire process convincing the customers of benefits that don't actually exist,  is a fraud. Hiding the facts and lying in this case have not much difference.

4. Ahmed must leave this company if it forces him to sell the expensive policies that are useless, Not only because such practices can land the company into deep trouble at any time, but also deteriorate the customers' trust and belief in him as well. Stigma of a person working with a fraud company or someone who is known for hiding and distorting the facts is not going to do any good for Ahmad, if he wants to stay in the business as a salesperson and wants to grow. It is because such practices are often not long lived, and the company is bound to doom, tomorrow if not today, once regulators comes to know of it. The best piece of advice is to be a part of ethically run company that can provide him a sustainable growth and teaches something that can bee of value for him in his career.