What term describes the practice of replacing an existing insurance policy with a new one, often not in the best interest of the policyholder?

The correct term for the practice of replacing an existing insurance policy with a new one, often to the detriment of the policyholder, is known as twisting. Twisting involves misrepresenting the benefits of a new policy compared to the existing one, usually to earn a commission from the new sale. This deceptive practice can lead policyholders to incur unnecessary costs, lose valuable benefits, or face new waiting periods.

Churning, while related and often confused with twisting, specifically refers to the practice of an agent encouraging a client to cash out or surrender a current policy to purchase another, primarily for the agent's financial gain. Reinstatement refers to the process of restoring a lapsed policy to active status, and underwriting is the assessment of risk to determine premiums, which is not related to the issue of replacing policies. Understanding these terms helps clarify actions taken in the insurance industry and the importance of protecting policyholders' interests.