Last reviewed: 15 September 2026

Home › The Library › Churning and twisting

Insurance churning and twisting, explained

"Churning" and "twisting" are specific, defined terms in insurance regulation — not just informal complaints about a pushy agent. Both describe a producer persuading a policyholder to replace an existing life insurance or annuity contract in a way that benefits the producer's commission more than it benefits the client, and both are addressed by a real NAIC model regulation most states have adopted some version of.

The two terms, defined

Twisting means failing to make a complete, fair comparison between an existing contract and a proposed replacement, in order to persuade a policyholder to cancel the existing one and buy the new one instead — typically by overstating the new policy's advantages, understating its costs or waiting periods, or omitting that surrender charges or a new incontestability period will apply.

Churning means persuading a policyholder to use an existing policy's accumulated cash value or dividends to fund the premiums on a new, often higher-death-benefit policy — generating a new round of commission for the producer — without the replacement being genuinely in the client's interest.

Both practices are regulated because both undermine the same real protection: a life insurance policy or annuity typically loses financial value in its early years (through surrender charges, new underwriting, and a fresh contestability period), so an unnecessary replacement can quietly cost a policyholder real money even when nothing about the transaction looks obviously wrong on its face.

The regulation behind it

The NAIC's Life Insurance and Annuities Replacement Model Regulation (Model #613, most recently updated in 2015) assigns responsibility to both the producer and the insurer for identifying when a transaction is a "replacement" and for following specific disclosure steps when it is — including providing the client a formal comparison of the existing and proposed contracts and notifying the existing insurer that a replacement is being considered, so that insurer has a chance to respond directly to the client. Most, but not all, states have adopted some version of this model regulation; the specific disclosure forms and timelines can vary where a state has modified it.

What this actually means for you

If an agent proposes replacing an existing life insurance policy or annuity with a new one, you're entitled to a clear, written, side-by-side comparison before you sign anything — not just the agent's verbal assurance that the new policy is better. A pattern of an agent's book of business skewing heavily toward replacements, rather than new coverage, isn't proof of misconduct by itself, but it's a real, checkable signal regulators and researchers (including our own standard's tenth point) look at alongside any specific complaint or disciplinary finding — never as a substitute for one.

If you're ever asked to replace an existing life insurance policy or annuity, ask directly for the required comparison disclosure in writing, and take time to review it — including checking for a new surrender-charge period and a new incontestability period — before agreeing to anything.