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WATCH OUT FOR INSURANCE AGENTS WHO WANT TO `CHURN’ YOUR POLICY

SHARE WATCH OUT FOR INSURANCE AGENTS WHO WANT TO `CHURN’ YOUR POLICY

Finally accumulated some cash value in your life insurance policy? That makes you a potential victim of "churning," according to insurance regulators who are investigating alleged sales abuses in 27 states.

Some insurance agents persuade policyholders to use the cash value in one policy to finance the purchase of another - supposedly for no extra cost. When the real goal is to generate a commission for the agent, the switch is called churning.How will you know if an agent is trying to churn you? Look for these signals:

- CRITICISM OF THE OLD POLICY. If a new agent suggests your current policy is a bad risk because the insurer is on the brink of insolvency, demand proof. Ask for the financial ratings of three of the five firms that rate insurers: A.M. Best Co., Duff & Phelps, Moody's Investors Service, Standard & Poor's Corp. and Weiss Research.

- PROMISES OF NO EXTRA COST. If you're being churned, the agent won't tell you how the new policy will be financed - probably by borrowing from the cash in your original policy, or by canceling the first policy and rolling the cash into the new one.

- REQUESTS TO SIGN BLANK DOCUMENTS. An agent may also ask you to sign pages that include his address where yours should be. That can prevent you from learning about the full terms of the transaction and cause loan and cancellation notices to be sent to the wrong address.

Although replacing a policy rarely makes sense, there are exceptions.

For more information, send a self-addressed, stamped envelope to the CFA Insurance Group, P.O. Box 12099, Washington, D.C. 20005.