Definition of "Twisting"

Lois Briesemeister real estate agent

Written by

Lois Briesemeisterelite badge icon

US Southwest Real Estate & Leasing

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! 

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Return of a percentage of premium paid by a business firm if its loss record is better than the amount loaded into the basic premium. ...

Same as term Excess of Loss Reinsurance: method whereby an insurer pays the amount of each claim for each risk up to a limit determined in advance and the reinsurer pays the amount of the ...

Type of inland marine insurance that provides coverage for jewels, watches, gold, silver, platinum, pearls, precious and semiprecious stones. Property can be owned by the insured jeweler, ...

Monetary fund established to pay for claims that the insurance company is aware of (claims incurred or future claims) but that the insurance company has not yet settled. This reserve is ...

Assets, such as furniture and fixtures, that are not permitted by state law to be included in an insurance company's ANNUAL STATEMENT. ...

Same as term Tabular Plans: retrospective rating system with basic, minimum, and maximum premium rates listed in manual tables. Calculation of an individual premium involves adjusting the ...

Group that monitors government health insurance programs. Authorized by the 1972 amendment to the Social Security Act, PSROs were set up to cut costs and minimize abuses by checking on the ...

Prospective insured who completes and signs a written form containing personal statements about himself/herself. ...

Same as term Ceding Company: insurance company that transfers a risk to a reinsurance company. ...

Popular Insurance Questions