What does it mean when an insurance policy is described as "twisting"?

When an insurance policy is described as "twisting," it refers specifically to the practice of misleading a client into switching policies, typically from one insurance provider to another. This unethical behavior can involve exaggerating the benefits of a new policy while downplaying or omitting critical information about existing coverage. This tactic aims to persuade clients to abandon their current policies without providing a clear understanding of the potential drawbacks or consequences, ultimately jeopardizing their financial protection.

The concept of twisting is significant in the insurance industry because it can lead to negative outcomes for consumers, such as lapse in coverage or increased premiums. It is condemned by regulatory bodies and often carries penalties for agents or brokers who engage in such practices. Understanding this helps consumers recognize the importance of making informed decisions based on comprehensive information rather than being influenced by misleading claims.