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Misleading Comparisons of Whole Life and Term

An Examination of IMSA' s Effectiveness
Reviewing the Industry’s Buy Term and Invest the Difference Presentation

Many within the life insurance industry take pride in the industry's efforts to prevent sales practices problems similar to those of the 1980s and 1990s from reoccurring. All leading life insurers have large compliance departments and reevaluated all marketing materials. In 1996, the industry established the Insurance Marketplace Standards Association (IMSA), which promulgated principles of good practice. Principle #1, for example, requires insurers to "conduct business according to high standards of honesty and fairness and to render that service to its customers which, in the same circumstances, it would apply to or demand for itself," often called its Golden Rule Principle. In 1998, IMSA began awarding its seal of approval to insurers that demonstrated adherence to its six principles and many practices. Now (again, this was written in 2001), in anticipation of the IMSA required triennial re-certification, many insurers are currently conducting their own internal audits. Consequently, this seems a good time to evaluate the effectiveness of IMSA and its spawned compliance procedures. To do so, a most popular sales tool, a Comparison of Buying Whole Life with Buying Term and Investing the Difference, is reviewed.


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