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Tuesday, December 13, 2011

Effects churning and twisting insurance

Effects churning and twisting insurance : Some life insurance agents may engage in unethical practices to earn high commissions. One common practice is twisting, which is the same thing as churning, and involves replacing an existing policy with another.

Definition
Twisting or churning is the process of using the cash value of one policy to purchase another policy with a larger benefit. Life insurance agents earn commissions on the purchase of the new policy and the policyholder may see little or no increase in her premium.

Effects churning and twisting insurance

While the policyholder may acquire a policy with a larger death benefit, churning often uses up the cash value that has built up in the original policy over the years. In some instances, the policyholder could be starting over regarding the accumulation of cash.

Considerations
Be wary whenever a life insurance agent tries to get you to switch from one cash value policy to another. If you need morel insurance, you may be better off purchasing an additional policy instead of replacing an existing one. For the latest updates PRESS CTR + D or visit Stock Market news Today

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