The National Association of Insurance and Financial Advisors (NAIFA), the nation’s largest member association of insurance agents and financial advisors, announced yesterday it will oppose any state legislation that would create what it calls a “second-class” license to sell term life insurance.

“NAIFA is opposed to the proposals primarily because they don’t serve the best interest of the consumers,” says NAIFA president C. Robert Brown, CLU, LUTCF. “Rich or poor, consumers need to understand the wide range of insurance products available before making a buying decision. A fully licensed life insurance agent can help find a solution that best suits that individual’s needs and circumstances. An agent licensed to sell just one product can’t. Consumers deserve better.”

NAIFA is working with its state associations to defeat term life insurance legislation introduced in Alabama, Illinois and Mississippi. NAIFA will oppose any proposals “as they arise in other states,” according to Mr. Brown. While they vary, the proposals generally create an easily obtainable license to sell only term insurance without a license examination (or with a simplified test) and with reduced education requirements.

“NAIFA objects to these proposals because they lower the standards for agent education and qualification,” echoes David F. Woods, CLU, ChFC, LUTCF, NAIFA’s chief executive officer. “Since its inception, NAIFA has supported the highest educational and ethical standards for agents. And NAIFA doesn’t feel these proposals meet those standards.”

Mr. Woods points out that such a term-only license would also “complicate the agent licensing system at a time when industry and government are working to simplify it.”

NAIFA has worked closely over the years with the National Association of Insurance Commissioners (NAIC) to streamline the agent licensing system so that it is more efficient and less burdensome to agents and insurance regulators. With NAIFA’s support, the NAIC has worked to reduce the number of different license types and to bring uniformity to the pre-license and continuing education requirements among the states.

“The proposed term life license works against the uniformity we have worked so many years to achieve,” says Mr. Woods. “Less uniformity in agent licensing adds complication and cost to agent licensing requirements – which is bad for insurance regulators, agents and ultimately the insurance-buying public.”

About NAIFA: NAIFA is comprised of 800 state and local associations representing the business interests of 225,000 members and their employees nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. The NAIFA umbrella includes three specialty organizations: Association for Advanced Life Underwriting (AALU), the Association of Health Insurance Advisors (AHIA) and GAMA International.