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All Or Nothing At All

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If ever an idea was misbegotten, it is the proposal floating around the regulatory arena and some state legislatures to establish a limited license so that producers could sell only term insurance.

At the recent spring meeting of the National Association of Insurance Commissioners, the Producer Licensing working group passed by a unanimous vote a resolution opposing such limited term licenses.

That should have been the end of the matter. Unfortunately, however, it was not.

It seems that the working groups parent committee, the Market Regulation and Consumer Affairs (D) committee, decided to postpone moving the resolution along. Pressure from some legislators, among other things, appears to be behind the postponement.

The real force behind the push for limited term licenses seems to be coming from a company which has earned its reputation in the term business. This is no other than Primerica, descendant of the old A.L. Williams organization, long a bete noire of the life industry.

Many people in the life insurance business cannot be rational about A.L. Williams and, by extension, Primerica. With its buy term and invest the difference sloganeering and its rampant replacement activities, A.L. Williams in its time drove many agents up the wall. Even now, the very mention of the name has the power to start some of these producers foaming at the mouth.

Since it is not likely that Primerica is unaware of its reputation among other companies and producers, the company is pushing the limited term license proposal with a positivenay, an altruisticspin. A limited term license, it says, would bring new producers into the business who would get to that huge segment of the population that has no life insurance at all and that is being poorly served by the rest of the business.

This is indeed a weak point for the business as a whole and it is very clever of Primerica to home in on it. But while its true that a large swath of Americans are not being well served by the business, it does not automatically follow that a limited license to sell one product would alleviate that situation very much or in the best way. This is especially true if, as was the case with many in the A.L. Williams organization, these agents end up selling a few policies to friends and acquaintances and then leave the business.

Another positive spin, found in a bill being pushed in the Alabama legislature, says that those producers with limited term licenses would not replace one term policy with another term policy. However, as regulators noted, the bill did not say that different types of life insurancethink universal life or whole lifecouldnt or wouldnt be replaced.

Now, Im sure that Primerica has only the good of the American public at heart; however, I cant help but think how much easier and profitable things would be for the company if it could license these limited term producers. But as it stands now, agents are required to learn a wide range of products and solutions for good, time-tested reasons. Thats the way it should stay.

I know its a stretch, but if I could nominate a theme song for life insurance licensing it would be “,” not “Dont Know Much.”

Steve Piontek


Reproduced from National Underwriter Edition, April 1, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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