New Jersey Life Producer Practice Exam

What is twisting in the context of insurance practices?

1. High-pressure sales tactics

2. Misrepresentation

3. Policy manipulation

4. Premium denial

The correct answer is: Misrepresentation

Twisting refers to the practice of misrepresentation in the context of insurance, where an agent persuades a policyholder to switch from one insurance company to another by providing false or misleading information about the benefits, terms, or costs of the new policy compared to the old one. This misleading approach often exaggerates the advantages of the new policy while downplaying or distorting the value of the existing policy, potentially leading the client to make decisions that are not in their best interest, or that they would not have made if they had accurate information. Understanding the implications of twisting is critical, as it is considered unethical and can result in significant penalties for agents who engage in such practices. It protects consumers by ensuring they are not misled when making important financial decisions regarding insurance coverage.