Analysis Of Ethics In Insurance

Ethics case discussion - Full disclosure for insurance

Synopsis of the case - Full Disclosure for Insurance

You have a family and want to take out a life insurance policy for yourself so that your family will be financially stable in the

unfortunate event that you pass away. However, you have a heart defect that, if disclosed to the insurance agent, will prevent

you from obtaining the insurance policy. Furthermore, the disclosure of the heart defect may prevent you from ever attaining a

policy, because the information will be reported to a central agency that all insurance groups use. If you do not disclose the

heart problem and obtain a policy, the policy can be canceled within the first couple of years if the problem is found. If nothing

is found within the first two years and you pay the premiums, the policy can never be canceled as long as you keep it open

and pay the premiums.

Issue: Should you disclose the information?

I will analyze the case against each of the three laws of Ethics. Here since there is a constraint on the space, I will restrict

myself to exploring only few of the many scenarios that are possible1.

Be consistent with my goals

Let me assume that my goal is to avoid hardships to my family in the event of my death. Let me also assume that the only way

to expedite the hardships is through taking an insurance policy.

Scenario 1 - I do not disclose the facts. I do not 'get caught' in the next two years. I die! My family gets the benefits.

Subcase 1 a - My family getting benefits will not deprive other families from getting their 'rightful share' of the funds. This

means that the insurance company has unlimited funds. i.e. even in the unlikely case of all parties taking insurance policies

claim their insurance money due to whatever circumstances, the company is in a position to pay them all out.

Under all these assumptions, it may seem that the case passes the utilitarian test. Let us examine this case more in detail

when discussing the second law.

Subcase 1 b - My family getting the benefits deprives other families from getting their rightful share of funds.

That is under the case where because I die and the company has limited funds and is unable to meet the demands of all

parties, then it is clearly violating the utilitarian law. That is all are not benefitting equally. The distributive justice is not

applicable in this case. Therefore, it would be clearly unethical to do this.

Scenario 21 - I take the policy. The insurance company is also a stakeholder. Insurance company also has people working for

it, the people also have families. Assume that a share of the money not given out as policies each year is paid out as a

salary/commission to employees.

In this case, my act immediately fails the utilitarian test as the insurance company paying my family will have an adverse

impact on the insurance people and their families. Hence it is clearly unethical on my part to pursue the insurance option.

Also considering the Kantian's veil of ignorance, I would not want to be at the receiving end of someone else's deception.

Have a consistent rationale

Let