Twisting is the unethical practice of making a misleading statement about an insurance policy to induce a person to buy a policy with another insurer. Which term describes this practice?

• A. Defamation
• B. Implied authority
• C. Twisting
• D. Liability

Answer: (C)

This question tests understanding of an unethical insurance sales practice where misleading statements are used to persuade a customer to switch to another insurer. The term for this behavior is twisting. Twisting involves presenting false or misleading information about a policy to induce a lapse, surrender, or replacement with a different company’s policy. It’s considered deceptive and is illegal in many jurisdictions because it exploits the consumer to benefit the agent or insurer.

Defamation would involve false statements about a person or organization that harm their reputation, not about a policy itself. Implied authority concerns what an agent is presumed to be able to do on behalf of the insurer, not deceptive sales tactics. Liability refers to legal responsibility for harm or damages, not the act of steering a customer through misrepresentation.