CARD T288
Twisting
Using misleading statements or comparisons to induce replacement or change of insurance. The problem is deceptive inducement, not every replacement.
How it works
Twisting uses false statements or misleading comparisons to induce a policyholder to lapse, surrender, exchange, or otherwise change insurance. A legitimate replacement can be appropriate after an accurate comparison and required disclosures. The deceptive inducement is central. Review lost guarantees, new surrender charges, restarted limitations, and the customer’s needs. Terminology and enforcement details depend on state law. [32]
A producer falsely says an existing policy has no cash value to persuade the owner to surrender it for a new policy.
Replacement alone is not proof of twisting.
CARD T289
Churning
Improperly using existing policy values to generate new coverage and compensation without justified benefit to the customer. State definitions and requirements must be checked.
How it works
Churning commonly describes using an existing policy’s values to fund new coverage primarily to generate compensation without a justified customer benefit. It often involves replacement or financing new premiums with loans or surrenders, and may involve the same insurer. State definitions vary. A policy-value transaction is not automatically churning; examine purpose, suitability, disclosures, lost benefits, and new costs. [32]
A producer repeatedly moves a client’s cash value into new policies, creating charges and commissions without a defensible benefit to the client.
The presence of commission alone does not establish churning; the improper transaction is the issue.
CARD T290
Sliding
Adding coverage or charges without properly informed consent. A producer might mislead someone into thinking an optional product is required or free.
How it works
Sliding involves adding coverage or charges without properly informed consent, or misrepresenting an optional product as required or included at no extra cost. A signed application does not justify concealed charges or false explanations. Clearly distinguish requested coverage, optional additions, their prices, and the customer’s acceptance. Exact statutory definitions differ. [32]
A producer adds an accident policy and says it is required with the health plan when it is actually optional and costs extra.
An optional product must not be disguised as mandatory or free.
CARD T291
Defamation
Making false damaging statements about another insurer’s financial condition or business. Truthful product comparisons are a different matter.
How it works
Insurance defamation includes false statements about an insurer’s financial condition or business that are intended to injure its reputation, as defined by applicable law. Statements may be spoken, written, or circulated through advertising or online posts. Truthful, supported comparisons are different. If false comparisons also induce replacement, more than one prohibited practice can be implicated. [32]
A producer knowingly spreads a false claim that a competitor cannot pay claims to damage its reputation.
Defamation concerns false reputational harm; twisting focuses on misleading inducement to change coverage.
CARD T292
Unfair Discrimination
Treating similarly situated applicants or insureds differently on a basis prohibited by law. Legitimate risk classification is subject to legal limits.
How it works
Unfair discrimination involves prohibited differences in treatment among applicants or insureds. Insurance can use lawful risk classifications, but distinctions must comply with the applicable product and jurisdiction rules. Life underwriting and ACA-compliant individual major medical underwriting do not follow identical standards. An actuarial explanation does not automatically override a statutory prohibition. [32]
A life insurer may distinguish lawful risk classes, while an ACA-compliant individual health insurer cannot increase the premium solely because the applicant has diabetes.
Different treatment is not always unlawful; the governing rule and classification matter.
APPLY THE TERMS
Practice questions
Select an answer, then check it to see why each option is right or wrong.
T288 · Twisting
0 of 3 answered
T289 · Churning
0 of 3 answered
T290 · Sliding
0 of 3 answered
T291 · Defamation
0 of 3 answered
T292 · Unfair Discrimination
0 of 3 answered
Sources & further reading
Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.