Tennessee Life Producer Practice Exam

Which option is NOT considered a fair marketing practice when replacing an existing insurance policy?

1. Provide comparative quotes

2. Reassess client needs

3. Reduce the cost by lowering the commission

4. Inform clients about existing policies

The correct answer is: Reduce the cost by lowering the commission

In the context of fair marketing practices when replacing an existing insurance policy, it is important to focus on the principles that guide ethical behavior and transparency in the insurance industry. The option that is not considered a fair marketing practice is reducing the cost by lowering the commission. This approach is problematic because it may compromise the agent's ability to adequately serve their client. By lowering the commission to offer a lower cost, an agent may create a conflict of interest where their financial incentives do not align with the best interests of the client. Healthy practices focus on ensuring that clients receive comprehensive information and recommendations based on their needs, not just on the financial motivations of the agent. Conversely, providing comparative quotes, reassessing client needs, and informing clients about existing policies are all practices that help ensure clients are well-informed and can make decisions in their best interests. These actions promote transparency, understanding, and the ability to evaluate whether a policy change is truly beneficial, thus supporting ethical standards within the industry.