State RegulationsFL specificDifficulty 3/5
An agent uses the cash value of a client's existing life insurance policy to purchase additional coverage from the same insurer, without the client making an informed decision, to the client's detriment. Under Florida law, this is
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Why D is correct
Under Fla. Stat. 626.9541(1)(l),(aa), churning is the use of an existing policy's cash value or other benefits to purchase additional insurance with the same insurer without the policyowner's informed decision, to the owner's detriment. Unlike twisting, which induces replacement with another insurer through misrepresentation, churning keeps everything inside the same contract and quietly erodes the owner's values.
Why the other options are wrong
- A) Twisting involves inducing a replacement through misrepresentation; here the original policy was kept and mined for its cash value.
- B) Nothing of value was given back to the client as an inducement; the client's own policy values were consumed.
- C) Coercion requires threats or physical force; this client was simply kept uninformed.
Memory hook
Same policy, stripped for parts: that's churning.