This month, I’ve been thinking a lot about the phrase “contempt prior to investigation.”

This phrase is attributed to William Paley, a British Christian apologist and philosopher, who used it in “A View of the Evidences of Christianity” in 1794. In the Rev. William H. Poole’s 1879 publication of “Anglo-Israel or, The British Nation: The Lost Tribes of Israel” Paley was later quoted as saying, “Here is a principle which is a bar against all information, which is proof against all argument, and which cannot fail to keep a man in everlasting ignorance. This principle is, contempt prior to examination.”

You see contempt prior to investigation (or examination) all the time in the objections you hear from clients and prospects. Sight unseen, they assume that whatever you’re trying to sell them – disability income insurance, long term care insurance, critical illness insurance – is just a scam, something they don’t need, or something they can’t afford. They base their opinion of your products and services on secondhand tales passed around by friends, relatives, and acquaintances. Somebody knows somebody who was bilked by an unethical annuity agent, and all of a sudden annuities are God’s punishment to investors. And so on.

Now, did you realize that you may be committing the same offense as an insurance advisor?

Of course there are certain markets you tend to specialize in. But there may also be markets that you shun just because you think they don’t live up to the essence of your profession. It’s not that you simply choose not to specialize in these fields. Rather, you avoid them like the plague.

Take, for example, life settlements.

Life settlements are often mentioned in the same breath as stranger-originated life insurance, in which a third party takes out a life insurance policy on a person that they usually don’t have an insurable interest in. Often, the purpose of doing this is to sell a life settlement on the secondary market – hence the relation to life settlements.

But just because you’ve heard these concepts intermingled in the trade and popular press does not mean that they’re the same thing. And I have news for you: They’re not the same thing. While STOLI does involve life settlements, a life settlement is not necessarily a STOLI.

And by the same token, advisors who encourage senior clients to unload life insurance policies that they genuinely need … well, that’s terrible. But you’re not them. And life settlements are not intended to be used in cases such as these. According to the experts we spoke with for our 2010 Life Settlement Market Study, life settlements are a financial planning tool that should only be used in appropriate circumstances.

What are those circumstances? Check out our coverage on prospecting for life settlement clients and a primer on what life settlements are all about anyway.

You wouldn’t want your clients engaging in contempt prior to investigation. So why would you?

Christina Pellett is the editor of the Agent’s Sales Journal.