Seems to me like the competing agent is walking a slippery slope here, but I could be wrong. Is it allowed by law to tell the client they could be harmed because they are insured by a fraternal? Obviously the state guaranty fund cannot be brought up, but it's ok to mention that they could pay more later because it's a fraternal? Doesn't seem right (or legal) to me.
Guaranty Fund cannot be mentioned during the sales presentation but certainly allowed to mention it in an insurance review since a written disclosure is included with the policy (at least in TN). There is no prohibition that I know of that prevents a discussion of the differences in a Mutual Certificate and an insurance policy.