There are many grey areas in law and ethics that do not lend themselves to clear cut answers, particularly in the complex area of finance. It is easy in a classroom to tell you just say no. Real life situations, however, often do not lend themselves to simplistic answers.
One fact that should be stressed here is the importance of supervision. Your supervisors are there to provide guidance for you. They in turn have access to the resources of the firm to address problems for which there is no clear cut answer. Those resources include the compliance department and legal counsel.
If you are an independent insurance agent or independent registered representative you have resources outside of your firm that you can go to for help. For example, the compliance department of an insurance company is more than willing to help you solve problems or questions you may encounter while in the field. Moreover, the NASD has established a question line which one can call for advice, anonymously if desired.
All of these resources should be considered prior to making a recommendation that an FA feels might cause a problem. Remember, it is easier to deal with a problem up front rather than waiting till someone is harmed or damaged irreparably financially.