Maryland Life and Health Insurance License Practice Exam

The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as?

1. Twisting

2. Churning

3. Fraud

4. Deceptive advertising

The correct answer is: Twisting

The act of using misrepresentation to convince an insured person to terminate their current insurance policy and purchase a new one is known as twisting. This unethical practice often involves an agent providing misleading information about the existing policy's benefits and features to persuade the policyholder that they would be better off with a new policy. Twisting is considered a violation of insurance regulations because it can lead to unnecessary losses for the policyholder, who may incur costs associated with the new policy while losing valuable benefits from the old one. Understanding twisting is essential for maintaining ethical standards in insurance practices, as it highlights the importance of transparency and honesty in client interactions. Ensuring that clients are well-informed about their options is critical for their financial well-being and trust in the insurance profession.