Maryland Life and Health Insurance License Practice Exam

What action is an insurance producer committing when replacing an existing policy with false statements?

1. Falsification

2. Twisting

3. Misrepresentation

4. Fraud

The correct answer is: Twisting

The action of replacing an existing policy with false statements is identified as "twisting." This term refers specifically to a deceptive practice where an insurance producer persuades a policyholder to replace their current policy with a new one by providing misleading or false information about the benefits of the new policy, or about the drawbacks of the existing one. Twisting is particularly concerning because it impairs the integrity of the insurance marketplace, as consumers are often unaware of the true implications of the switch, which may include loss of benefits, increased premiums, or additional waiting periods. This practice can result in policies being sold that are not in the best interest of the consumers, highlighting the ethical responsibility of producers to provide accurate and honest information regarding both new and existing policies. The other options have distinct meanings related to dishonest actions in the insurance context but do not specifically encapsulate the act of inducing replacement through deception as twisting does. Falsification generally refers to the act of altering documents or information to mislead. Misrepresentation involves providing untrue information, but it does not necessarily entail the act of replacing one policy for another. Fraud encompasses a broader range of dishonest activities for personal gain, not limited to the nuances of policy replacement. Thus, twisting distinctly defines this specific unethical action