Insurance agents must always be careful not to engage in “twisting.” Twisting is a felony and in most states, punishable by a large fine, revocation of your license, and possibly a prison sentence. Often the level of punishment will depend upon the intent of the insurance agent. If it can be shown that the agent intended to mislead, the sentence can be severe.
Twisting is when an insurance agent tricks the customer into replacing their current life insurance policy with one sold by the agent. For example, let’s imagine an agent trying to convince a leery prospect to change policies. The agent tells the prospect that the agent’s policy is a better policy or pays out more in benefits than her current company, even if the agent knows it doesn’t. The result though is that the customer believes the agent and changes policies, dropping her original policy, and possibly losing valuable benefits. The main reason twisting is wrong is due to the potential financial loss to the consumer.
So the question for insurance agents is: “How can I compare policies without engaging in twisting?” This is actually simpler than you might think. Here are three tips:
1) Be honest always. If you follow this rule all the time, you will never have to worry about a potential “twisting” charge. Remember that twisting got its name because it is the financial equivalent of “twisting someone’s arm” to get them to change their mind on one insurance company and go with yours instead. And it is done under questionable circumstances, whereby you are comparing one policy or company to another, and “stretching the truth.” If you are always straight with your clients, and are honest with all customers at all times, you’ll be much less likely to run into legal problems.
2) Compare policies very carefully. Comparison is not wrong, but the danger of “twisting” or distorting the facts may become easier in this situation. For this reason, some agents are so scared of twisting that they don’t compare at all. While this is definitely the safest method, it doesn’t help your customer if they really want to know how the two policies stack up. So compare the policies side-by-side, allowing your customer to do the comparing, deciding whether their current policy is best, or the one you’re offering. Remember that you’re more likely to be accused of twisting if you got the person to drop their current policy and take yours instead. This opens up a customer to vulnerability due to the fact that they may not be covered during the time between their purchase of your policy and the time the policy is actually issued. So if you must compare, do it carefully, and answer any questions the client has with caution. Advise them to call their current insurance company to get their perspective.
3) Forward questions to other authorities. It is better to not answer at all than to give what could later be interpreted as a misleading answer. This is where agents can get into a lot of trouble. Twisting is a crime because it is the deliberate misleading of a client in order to get the sale, at the expense of the client’s well-being. So be careful and care about your customer. If you don’t know an answer, forward them to someone who does.
Remember twisting is intentional misleading and in court, the prosecutor or plaintiff would have the burden of proof. But you don’t want to have that risk. So decide now to always do the right thing, even if it means losing a sale. Put the customer’s needs first, as though they were a friend or family member, and you should never be accused of twisting.