Tuesday, April 26, 2011

Dumbing down tests for insurance agents

About 80% of Primerica recruits don't actually become insurance agents, often because they flunk state licensing exams, according to filings and interviews....
So Primerica recently came up with a novel solution: Make the tests easier. It asserted to state regulators that the exams aren't only too hard in some places, but might also be racially biased, putting African-Americans and other minorities at a disadvantage.
After reviewing its licensing test, Virginia made it easier.  A handful of other states have looked at their tests, with particular attention to the possibility of racial bias.

Insuring Fairness?
Primerica and the American Council of Life Insurers say the alleged racial bias in licensing exams has to do with such issues as whether questions are overly complicated and if they gauge a person's test-taking ability rather than his or her knowledge of insurance products. Below is a question from a Florida study guide, which the ACLI says is typical "of how answering a basic insurance question can be made hard merely because of how the question is phrased."
All of the following statements regarding basic forms of whole life insurance are correct EXCEPT:
A) generally, straight life premiums are payable, at least annually, for the duration of the insured's life
B) the owner of a 30-pay life policy will owe no more premiums after the 30th year the policy is in force
C) limited payment provides protection only for the years during which premiums are paid
D) a single-premium life policy is purchased with a large one-time only premium"
(The correct answer is C.)
Primerica and the ACLI say a better question for assessing a test-taker's knowledge of whole life insurance might be:
Which policy is designed to mature at age 100?
A) term policy
b) whole life policy
c) annuity
d) endowment policy
(The correct answer is B.)
Shouldn't we expect good reading comprehension skills from our insurance agents?  From the comments section of the story:
The test questions may be convoluted, but certainly no less so than the insurance documents the agent candidates will have to be able to understand. Ever tried to read your policy?
...
If you cannot pass a basic insurance licensing test you have no business selling insurance.

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