Twisting

Twisting is a word with negative connations in the insurance industry which refers to the actions of an agent to persuade a policy holder to cancel a policy, or allow it to lapse, and sign up for a new one so as to earn sales commissions.

The types of policies that are often twisted by rogue insurance agents are health and life insurance policies.

Depending on the type of policies sold and the insurance company, agents generally earn the most commission during the initial years of a new sign up.

And as time goes by, agents would make lesser commissions on a sign up that are known as renewals or trailing commission.

In some cases, agents would only receive commissions for new policy sign ups only for a specified number of years from the commencement of a policy.

All these indicates that agents have every incentive to sign up new clients or sell new policies to their existing clientele to boost their sales commissions.

While ethics is one of the most valuable trait that the insurance industry try to instill onto insurance agents, sometimes people looking for a quick buck can be tempted to practice twisting.

How twisting can occur

The first question people who see the term twisting for the first time might be that why any person would cancel a policy and sign up for it again.

This is really down to the selling skills of an agent, and the lack of knowledge of clients about their policies.

Sometimes, life insurance policies are discontinued and the insurer conceptualizes a new one to market to consumers.

As those who have sign up for the now-terminated policies years before still have their old policies intact, they might be receptive to signing up to the new one as the perception is that the newer they are, the better they must be.

This might not be the case as older policies can often offer better benefits and coverage than newly created ones.

This can present an opportunity for twisting.

For example, an agent might call up a client in the pretense of wanting to conduct a review. And in the meeting, he or she starts telling the insured why the old policy is bad and out-of-date in meeting the needs of the modern world when it is not true. The client, from the advice provided that he thought was from an agent he can trust, terminates the current policy and signs up for the new one. The agent then cashes in on the commissions for a newly underwritten policy.

The victim can’t even describe the difference between the two policies or why they matter.

And the new policy might even make the client worse off as the old one might have a lower co-payment requirement than the new one.

It must be added that one of the key elements for twisting to be successful is that the victim is often just an average consumer who is not informed or does not fully understand the old policy that would be canceled and the new policy that would be purchased.

People often purchase insurance from sales people because of trust and mutual respect.

They know the key benefits of policies but are less attuned to the intricate details of various benefits, features, terms and conditions that come with each policy.

It is this lack of knowledge, which is common for those outside the insurance industry, that makes some people prime targets of agents with a dark agenda.

It’s not uncommon for policy holders who have terminated a policy and signed up with a new one to even realize that they have become a victim of twisting.

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