Which unethical practice involves inducing a policyholder to surrender their insurance?

Which unethical practice involves inducing a policyholder to surrender their insurance?

• A. Quoting
• B. Twisting
• C. Churning
• D. Rebating

Answer: (B)

The unethical practice that involves inducing a policyholder to surrender their insurance is accurately identified as twisting. Twisting occurs when an agent persuades a policyholder to cancel an existing policy and replace it with a new one, often under misleading pretenses about the benefits of the new policy compared to the old one. This practice can harm the policyholder by causing them to lose valuable benefits or incur additional costs, while the agent benefits from the commission on the new policy. In the context of insurance ethics, twisting typically involves misrepresentation or omission of critical information to persuade the client to make a change that is not in their best interest. This highlights the importance of transparency and the ethical duty agents have toward their clients to provide truthful and clear information about their insurance options. While other practices like churning, quoting, and rebating are significant in the insurance world, they pertain to different unethical behaviors. Churning, for instance, refers to the practice of convincing clients to switch policies frequently to generate commissions without a real benefit to the client, while quoting relates to the process of providing price estimates for insurance, and rebating involves offering a part of the agent's commission to the client, which is not typically allowed in many jurisdictions.

The unethical practice that involves inducing a policyholder to surrender their insurance is accurately identified as twisting. Twisting occurs when an agent persuades a policyholder to cancel an existing policy and replace it with a new one, often under misleading pretenses about the benefits of the new policy compared to the old one. This practice can harm the policyholder by causing them to lose valuable benefits or incur additional costs, while the agent benefits from the commission on the new policy.

In the context of insurance ethics, twisting typically involves misrepresentation or omission of critical information to persuade the client to make a change that is not in their best interest. This highlights the importance of transparency and the ethical duty agents have toward their clients to provide truthful and clear information about their insurance options.

While other practices like churning, quoting, and rebating are significant in the insurance world, they pertain to different unethical behaviors. Churning, for instance, refers to the practice of convincing clients to switch policies frequently to generate commissions without a real benefit to the client, while quoting relates to the process of providing price estimates for insurance, and rebating involves offering a part of the agent's commission to the client, which is not typically allowed in many jurisdictions.