State insurance commissions are responsible for protecting the interest of consumers by imposing penalties upon insurance agents who engage in unfair insurance practices. Among the activities of agents prohibited by these boards is the deceptive practice of twisting.
Twisting occurs when an insurance agent convinces a client to replace one insurance product with a less beneficial alternative.
Insurance agents who engage in twisting are typically motivated by thoughts of commission earned on the fees associated with selling new policies.
Insurance twisting is most common with life insurance policies, in which the cash value of an original insurance policy is used to buy another policy. This results in a lower premium for customers in some cases, but also results in a loss of all or most of the value accumulated in the policy.
Most insurance companies require agents to state whether a new insurance policy will replace another policy so the insurance company can investigate whether the policy is beneficial to the customer.
When shopping for insurance, consumers can avoid twisting by asking what will happen to the existing cash value in a policy, asking what the new interest rate will be for cash accumulation on a new policy and asking what the benefits of the product are, suggests the Military Officers Association of America. Asking an agent to put everything in writing can also mitigate the risk of becoming a victim of twisting.
Those who are victims of twisting should contact their state insurance commission or the National Association of Insurance Commissioners.