AD Banker Comprehensive Practice Exam

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What does "twisting" in insurance refer to?

  1. Making false statements on an application for insurance

  2. Making derogatory remarks about another insurance company's financial condition

  3. Policy replacement

  4. Offering a gift in exchange for the prospect to purchase

The correct answer is: Policy replacement

Twisting in insurance specifically refers to the practice of policy replacement, where an agent persuades an insured to replace an existing policy with a new one, often misrepresenting the advantages of the new policy or downplaying the benefits of the existing coverage. This practice can harm consumers, as it might lead them to lose valuable benefits from their previous policy or incur additional costs without sufficient justification for the change. The focus on policy replacement underscores the importance of ensuring that clients fully understand the implications and potential drawbacks of replacing their insurance policies, ultimately emphasizing ethical standards in insurance practices.

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