What happens to a policyholder’s coverage if the agent engages in twisting?

When an agent engages in twisting, it refers to the unethical practice of persuading a policyholder to surrender, lapse, or switch from their current insurance policy to another product, often under misleading pretenses. This action usually involves misrepresenting the benefits of the new policy in order to convince the policyholder that they will gain increased coverage or benefits, often at the expense of their existing policy.

When a policyholder is induced to lapse their current coverage due to twisting, they typically lose their original benefits and protections. This can place them in a precarious situation if the new policy is not as beneficial as represented, or if reliance on the new policy leaves them exposed to risks that they were previously covered for. The intentions behind twisting are often to generate commissions for the agent rather than to provide genuine financial protection or advantages to the policyholder.

Therefore, the implication of twisting speaks to the unethical and potentially damaging consequences of the agent's actions, resulting in the policyholder losing their original insurance coverage. This is a critical reason why insurance professionals are mandated to uphold ethical standards, as the effects of such practices can seriously impact individuals' financial security and peace of mind.