Long Term Care Certification Practice Test

An agent persuades a prospect to purchase a long-term care policy by indicating the premiums will increase if he has to return at a later date to complete application. The agent is guilty of which of the following?

1. Churning

2. Twisting

3. Fraud

4. Coercion

The correct answer is: Twisting

In this scenario, the agent's behavior aligns with the concept of twisting, which involves misrepresenting or persuading a client to replace an existing insurance policy with a new one for the agent's financial benefit, often leading to unfavorable outcomes for the client. By suggesting that the premiums will increase if the prospect doesn't act immediately, the agent is creating a false sense of urgency and misleading the prospect about the potential costs associated with delaying the decision. This tactic is unethical as it manipulates the prospect into making a hurried decision without fully understanding the implications of the long-term care policy being offered. While other terms like churning, fraud, and coercion involve different unethical practices within the insurance industry, they do not accurately describe the specific behavior of misrepresentation and pressure applied in this situation. Churning typically refers to the practice of an agent encouraging clients to replace policies repeatedly, while fraud involves deliberate deception for financial gain. Coercion implies a direct threat or pressure, which is different from the misleading urgency created by the agent in this case.