68. The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as
Answer: A
Twisting is the act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy.
Twisting involves misleading an insured individual to cancel their current insurance policy and take out a new one, often to the detriment of the insured. This practice is unethical and illegal in many jurisdictions.
A) twisting.
This option correctly defines the act of misrepresentation aimed at inducing an insured person to terminate their existing policy. Twisting is recognized in the insurance industry as a fraudulent practice that can lead to significant financial losses for the insured.
B) subrogation.
Subrogation does not relate to misrepresentation or inducing policy termination. Instead, it is a legal process that allows an insurance company to recover costs from a third party after paying a claim. Thus, this option is incorrect in the context of the question.
C) a life settlement.
A life settlement refers to the sale of a life insurance policy by the policyholder to a third party for a lump sum payment, which is unrelated to the deceptive act of terminating a policy based on misrepresentation. Therefore, this option does not fit the definition provided in the question.
D) false advertising.
False advertising involves misleading claims about a product or service, but it does not specifically pertain to the practice of inducing policy termination through misrepresentation. While both twisting and false advertising are unethical, they are distinct practices, making this option incorrect.
Conclusion
Twisting is the only option that accurately describes the act of using misrepresentation to persuade an insured individual to terminate their existing policy and purchase a new one. Other options, such as subrogation, life settlements, and false advertising, do not align with the question's context. This distinction reinforces the unethical nature of twisting within the insurance industry.