Glossary

Churning

Replacing a client's policy or annuity with a new one, often from the same insurer, mainly to earn fresh commissions rather than to help the client.

Churning is a sales abuse in which an agent persuades a customer to replace an existing life insurance policy or annuity primarily so the agent earns a new commission. The term most often describes internal replacements, where the old policy's values are used to buy a new policy from the same insurer; twisting usually refers to replacing a policy with a competitor's product through misrepresentation. Some regulators use the words interchangeably.

Hypothetical example: an agent tells a 68-year-old that her 10-year-old annuity is "outdated" and moves the money into a new contract from the same company. Her old contract is past its surrender period, but the new one starts a fresh seven-year surrender schedule, and the agent collects a full first-year commission. Unless the new product is clearly better for her, that is churning.

Warning signs include repeated replacement pitches, a new surrender period, the loss of an older policy's guarantees or lower charges, and a new contestability period on life coverage. State replacement rules require written disclosures comparing the old and new policies, and annuity sales fall under suitability and best interest rules. Complaints go to your state insurance department. See twisting and churning: replacement sales abuses and replacing a life insurance policy: when it makes sense.

Last reviewed October 4, 2026

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Related terms

Twisting Persuading someone to drop or replace an existing policy by misrepresenting or leaving out key facts, an unfair trade practice under state law. Policy replacement Buying a new life policy or annuity while dropping, surrendering or borrowing heavily against an existing one, a sale states regulate closely. Surrender charge A fee deducted from a policy's or annuity's value if you cancel or withdraw too much in its early years, usually shrinking each year. Suitability The requirement that an agent recommend an annuity or other product only after gathering enough information to judge that it fits the buyer. Best interest standard A conduct rule requiring agents and advisers to recommend products that serve the customer's needs without putting their own pay first.

Related guides

Elder financial abuse involving life insurance How older adults lose money through life insurance: forged beneficiary changes, drained cash value, pressured sales. Warning signs, safeguards and reporting. How life insurance agents are paid Agents are paid by the insurer, mostly a large first-year share of premium plus smaller renewals. How it works, why it matters and what to ask. Replacing a life insurance policy: when it makes sense Replacing a policy can save money or fix a poor fit, but it restarts clocks and can cost you coverage. The NAIC replacement rules, the risks and a checklist. Twisting and churning: replacement sales abuses Twisting and churning are misleading replacement sales that benefit the seller. What the NAIC models require, warning signs and how to check a replacement.