What is 'twisting' in the context of life insurance regulations?

TWISTING is one of the specifically named UNFAIR TRADE PRACTICES prohibited under virtually every state's insurance code.

Definition: Twisting occurs when an agent induces a policyowner to REPLACE an existing insurance policy with a new one through: misrepresentation of the facts; incomplete, misleading, or inaccurate comparisons; deceptive illustrations that make the new policy appear superior; omission of important information. WHY IT'S HARMFUL: Replacing insurance policies can harm consumers through: new suicide clauses and contestability periods resetting on the new policy; new surrender charge periods on permanent policies; loss of accumulated cash value or paid-up additions; potentially higher premiums if health has changed; the policyholder may be underinsured during the transition period; TWISTING vs.

Legitimate replacement: Not all policy replacements are twisting — sometimes a replacement genuinely benefits the client (better rates, improved benefits, new features). The distinction is whether the agent used misleading representations to induce the replacement. CHURNING (related): When an agent persuades a policyholder to replace policies primarily to generate new commissions, repeatedly and often with the same insurer — also illegal.

Replacement regulations: Most states have specific replacement regulations requiring: disclosure to the applicant that replacement is occurring; comparison documents; notification to the existing insurer; a free-look period for the new policy.

Consequences: License revocation or suspension; fines; civil liability to the harmed policyholder; E&O claims.