What is the definition of Twisting?

Twisting refers to the practice where an insurance agent or broker induces (often by way of misrepresentation) an existing policyholder to surrender his policy and in order to get a new one from the insurance agent. The new policy is usually from another insurance company.

Sometimes, an unscrupulous agent or broker will show impressive projections about how much a new policy will earn, that the new policy present a better offer by way of a quicker accumulation of cash value, a higher death benefit and lower premiums. This may induce the policyholder to cash in his old policy or allow it to lapse, only to find out that the cash value of the new policy is considerably lower than the cash value of the old policy.

This is considered illegal, since surrendering an existing policy will usually be to the policyholder's disadvantage.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage