Twisting

What Does Twisting Mean?

Twisting occurs when an insurance agent persuades a life insurance policyholder to replace their existing policy with a new, similar one from the agent. For the act to qualify as twisting, the agent must use misleading or false information to convince the individual to switch.

Typically, replacing a policy is not in the client’s best interest. The agent must “twist the truth” or deceive the client into purchasing the new policy. While this can occur with any type of insurance, it is particularly common and harmful with life or health insurance policies.

Although replacing existing coverage is a common practice, convincing clients to change coverage based on misrepresentation or misleading information is both unethical and illegal in most states in the U.S. Even in states where twisting is not explicitly illegal, this practice can still be prosecuted under general fraud statutes.

Insuranceopedia Explains Twisting

In simple terms, twisting is when an insurance agent convinces a policyholder to replace their existing insurance coverage with one from a different insurer based on misrepresentations (for example, replacing coverage from Carrier A with coverage from Carrier B). Twisting harms clients financially but benefits the agent, who earns a commission for each life insurance policy sold. The more expensive the policy the agent sells, the higher the commission.

Twisting is not only misleading, but it can also waste the policyholder’s time and money, as holding a policy for a longer period can increase its value. Replacing a policy may only make sense if there is a significant change in the client’s family or financial situation.

In states with anti-twisting laws, penalties for agents found guilty can range from civil fines to criminal penalties, including the loss of the agent’s insurance license.