What does twisting refer to in the context of insurance?

Twisting refers to the practice of making false or misleading statements about an insurance policy to induce a policyholder to lapse or surrender an existing policy in favor of a new one. This can involve exaggerating the benefits of the new policy while minimizing or misrepresenting the value or benefits of the existing coverage. Such actions can harm consumers by leading them to make decisions based on inaccurate information.

This conduct is considered unethical and is often regulated against to protect consumers. The importance of understanding twisting lies in recognizing how misinformation can lead to poor choices regarding insurance coverage, which ultimately affects policyholders' financial security and trust in the insurance industry.

Other options do not align with the definition of twisting; for example, making truthful disclosures promotes transparency rather than misleading the policyholder. Encouraging modifications to coverage or providing extended policy benefits involves legitimate interactions with policyholders, contrasting with the deceptive nature of twisting.