A producer group and a large life insurer are debating whether regulators should develop a special license for agents who sell only term life insurance.[@@]

The National Association of Insurance and Financial Advisors, Falls Church, Va., is opposing the proposal, and Primerica, a unit of Citigroup Inc., New York, is supporting it.

NAIFA “is opposed to the proposals primarily because they don’t serve the best interest of the consumers,” says NAIFA President C. Robert Brown. “Rich or poor, consumers need to understand the wide range of insurance products available before making a buying decision. A fully licensed life insurance agent can help find a solution that best suits that individual’s needs and circumstances. An agent licensed to sell just one product can’t. Consumers deserve better.”

The American Council of Life Insurers, Washington, has not taken a position on the issue, a spokesman says, but Peter Schneider, Primerica’s general counsel, says his company believes the license would help low-income and middle-income consumers.

“The reason they are not purchasing insurance is that there are no life insurance agents in their neighborhood,” Schneider says.

The number of agents is falling, and the remaining agents are focusing more on high-income consumers, Schneider says.

Schneider argues that a simple term-only license would help agents get into the business of selling term life coverage to consumers who are seeing no life agents at all.

Because education about term life now makes up only a small portion of conventional life agent education requirements, a term-only program might produce agents who actually know more about term life products than agents who go through the full life agent licensing process, Schneider says.

NAIFA Chief Executive David Woods says he objects to the idea of states lowering agent standards.

Moreover, “the proposed term life license works against the uniformity we have worked so many years to achieve,” Woods says.

Schneider notes that different levels of licensing exist in other fields, such as mortgage lending.

Some states already have limited insurance agent licenses for certain types of products, such as the property-casualty insurance sold along with rental cars.

So far, only Alabama is considering a proposal that would create the kind of license that Primerica is seeking, but Primerica is encouraging other states to pass bills similar to the Alabama bill, Schneider says.