Would you sell life insurance to Donald Sterling?Article added by Steven Kobrin on May 2, 2014
Steve Kobrin

Steven Kobrin

Fair Lawn, NJ

Joined: August 21, 2010

My heart goes back to the days when I was attending LUTC classes to get my designation as a fellow. As you know, the instructors of these classes are themselves life insurance producers. We students therefore benefited from their tales of sales triumphs and disasters.

I remember one particular teacher bragging about all the commissions he made from “gentlemen of questionable criminal status” paying for gigantic life insurance policies with huge sums of cash. He was literally speaking of paper bags filled with money. Certainly, with restrictions against money laundering and suspicious dealings in general, such a client wouldn’t get past the front door these days.

Yet one wonders why it would take increased government regulation to force life insurance salesmen to not do business with bad guys. It goes without saying that many brokers steer clear of people with “questionable criminal status” and prospect on more wholesome grounds. Why get pulled into murky ethical and legal waters just to make a buck?

Yet production pressures push hard, and the temptation is always there. People say, "Who am I to judge? If there is no clear criminal violation or financial impropriety, why not do business with the guy? Besides, I can always pull out of the deal if things start getting dirty. I can turn down the request (demand?) for a rebate. I can refuse to do favors like holding onto a 'small amount' of cash for a while. I can bypass referrals to people who are obviously bad."

But what, exactly, makes somebody “bad”? That is the crux of the matter. How can you tell if someone will be more trouble than he is worth? We are talking about gray areas of character. We may not exactly love all our clients, but personality differences are not deal breakers. Are there questionable attitudes and behaviors — maybe even reprehensible ones — that could still fly through underwriting? Should we take those cases anyway?

That brings up the case of Donald Sterling. On the face of it, he could be quite an attractive life insurance candidate. He could probably use quite a bit of life insurance, and the premium for that policy would probably be very high. His net worth is $1.9 billion. The Los Angeles Clippers basketball team is worth $430 million by itself. These factors, plus his age (80), would in all likelihood lead to a jumbo case, to say the least.

But would you take the app? Let’s examine some of the more reprehensible qualities of the man and see if they could pose underwriting challenges.

Cheating on his wife and patronizing prostitutes

He did this in full view of his wife of now 50 years. As a matter of fact, earlier this year, she sued his girlfriend for the return of gifts purchased with community property without her permission. She knew all about his deviance. Unfortunately, his opinion of her probably was no better than his opinion of the prostitutes. (Warning: the article referenced includes offensive language).

Any underwriting red flags here? STDs maybe? Complications of Viagra overuse? Legal entanglements from all the suing and counter-suing? Stress-induced maladies from a bitter, hostile marriage? Probably could still get an offer.
Discrimination and prejudice against minorities

He has been sued by the Department of Justice, as well as by Elgin Baylor, for racial discrimination in his business dealings. His private remarks to girlfriend V. Stiviano were bigoted. His wife seems to share his hate.

From an underwriting point of view, it looks like we have more hits on his legal record. Also, hateful people often get all kinds of medical ailments, which could, of course, affect their insurability. Heart problems? Headaches? Digestive issues? An offer could still be possible.

Associating with spiteful, conniving gold-diggers

Guys like him really don’t pick the most upstanding citizens as associates. His girlfriend baited him in private, taped his obscene rantings, and then made them public. In her state of residence, she did so illegally. More than that, she totally betrayed whatever trust he may have had in her. There’s no way she should have done that, but as they say, if you lie with dogs, you will get fleas. He should have expected no better.

Therein lies the moral of the story for us financial professionals: Bad people make bad girlfriends, bad boyfriends, bad wives, bad husbands — and bad clients. Life teaches us this rule, and we shouldn’t need a compliance department to enforce it. The business would be bad, and no underwriter worth his salt would take it.

Postscript: I am reminded of an incident that took place in a captive agency a number of years ago. A bigoted Assistant District Manager made a disparaging remark about an ethnic group behind closed doors. His words were leaked to an agent who was a member of that ethnic group. That fellow was so incensed, he went on a crusade to dig up dirt on the ADM. He found so many unethical and illegal dealings that the ADM was fired, the District Manager demoted, and the Agency Manager penalized. Case in point.
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