Definition of "Twisting"
Most generally, twisting in insurance is regarded as an unfair trade policy or practice. Twisting means a life insurance policy holder’s misrepresentation on behalf of an insurance broker or agent. Through manipulative persuasion, the latter intends to convince their client to cancel and buy a new insurance policy at their company. On the other hand, churning in finance implies that the switch to a new policy occurs at the same company. Yet, it still doesn’t serve the client’s interests.
The definition of twisting in layman’s terms
Think of twisting as a “bait and switch” tactic. As the word indicates, we deal with a distorted aspect of reality or a dishonest strategy to achieve one’s objectives. An agent strives to sway you to move your insurance over to them by nullifying your existing policy and transferring the new one to their agency. However, they will resort to misinformation, fraud, and lies. In fact, the recent insurance coverage barely differs from the former.
These crooked agents’ attitude is questionable and highly unethical. To combat misinformation, institutions adapted the following preventive measures. Once a customer intends to change their life insurance, it’s standard procedure to fill out a form stating and acknowledging the pros and cons of why they chose that particular new policy.
Measures against twisting
First and foremost, twisting is illegal. For this reason, most US states adapted laws outlining full disclosure of applicable comparative information on existing insurance policies. These laws may notify the insurance company that issued the existing policy to allow it to respond to the agent’s proposal. The Insurance Fraud Prevention Act offers protection for clients against financial wrongdoings. In addition, they require agents to provide transparency when trying to persuade their customers to switch policies.
Conclusion
The insurance industry can have certain pitfalls in store, just like the miscellaneous labyrinth of real estate finance. Don’t fall victim to twisting! Before leaving your present insurance company in favor of a brand new policy at another firm, learn about its advantages, benefits, and disadvantages!
Popular Insurance Terms
In insurance, individual with rightful possession of an insurance policy, usually the policyowner. ...
Procedure for offering reduced auto insurance rates to drivers with good records, and imposing higher rates on bad drivers. Typically, premiums are weighted under a system that assigns ...
Account established by the insurance company specifically for beneficiaries of a life insurance policy where the beneficiary has the choice of leaving the death benefit on deposit in the ...
Early life insurance that provided benefits only to survivors who lived to the end of a certain period of time. In the mid-17th century, Lorenzo Tonti, an Italian, devised a scheme to raise ...
Claim (lien) of the pension benefit guaranty corporation (pbgc) against an employer's assets upon termination of a pension plan for the amount of an employee's unfunded benefits. ...
Situation in which parties agree to take part in a structured settlement negotiation through the guidance of a neutral expert. By participating in this process, the parties do not agree ...
Means of projecting the costs of pension plans on a level basis over a specified future period of time. The actuarial value of each employee's future benefits to be paid at retirement is ...
Additional Living Expense Insurance is a type of coverage present on several types of Homeowner’s Insurance that reimburses additional costs caused because of the insured’s ...
U.S. government agency (formerly the Atomic Energy Commission) responsible for regulating the nuclear energy industry. The commission also provides supplemental insurance for nuclear ...
Have a question or comment?
We're here to help.