Churning is another sales practice in which an existing in-force life insurance policy is replaced for the purpose of earning additional first-year commissions. Also known as “twisting,” this practice is illegal in most states and is also against most insurance company policies.
Often times, abusers of this practice will change their beneficiaries on their existing policies or close them out and open a new policy in order to generate even more commissions. The beneficiaries are generally unaware that they have been removed from the old policy, which causes additional problems for everyone involved when benefits are claimed.
What is churning in insurance?
Churning a life insurance policy is a practice that generates additional commissions for an insurance agent or broker by replacing an existing policy with a new one for the purpose of generating more first-year commissions, which could be against state laws and company policies. This often times involves going into someone’s existing policy and changing the beneficiary to generate additional commissions. In addition, churning often involves ghostwriting, which is when an insurance agent gets himself added as a beneficiary on someone’s existing policy so he can generate more first-year commissions for himself.
This practice is illegal in most states and also against company policies
Write a response in which you discuss what specific evidence is needed to evaluate the argument and explain how the evidence would weaken or strengthen the argument.
The article states that churning often involves ghostwriting, but this is not always the case as it also could involve changing a beneficiary on their existing policy for more first-year commissions. If a company policy or state law explicitly stated that those practices would be against the rules, those two things should never happen. In addition, if it’s happening often enough for there to be a problem, then someone should report it as abuse without needing more evidence that those things are actually happening. If it wasn’t happening then there wouldn’t be a problem. But this is not always the case as it also could involve changing a beneficiary on their existing policy for more first-year commissions. If a company policy or state law explicitly stated that those practices would be against the rules, those two things should never happen. In addition, if it’s happening often enough for there to be a problem, then someone should report it as abuse without needing more evidence that those things are actually happening. If it wasn’t happening then there wouldn’t be a problem.
The company or state law would be the most reliable evidence needed to evaluate the argument. Since these things are against policy and laws, they should not be happening if there isn’t a problem, but it depends on how often these things are actually happening whether they need more evidence or not.
What specific evidence is needed to evaluate the argument and what would this evidence do to either weaken or strengthen the argument?
The company or state law would be the most reliable evidence needed to evaluate the argument. Since these things are against policy and laws, they should not be happening if there isn’t a problem, but it depends on how often these things are actually happening whether they need more evidence or not.