Churning a policy

Some unethical insurance agents engage in "churning" their policies. They approach their existing clients and tell them that a new and better policy has been introduced. They advise the client to terminate an old policy and take up the a new policy.

The client is not aware that this is to his disadvantage. By taking up the new policy, the client has to incur the upfront charges once again. About two years of the premium is taken away in these charges.

Some insurance agents churn the policies every five years. A client may be churned several times during their working life. The client does not realise that the premiums that they have saved over the years is used up in paying commission to the clients. The client gets a poor or negative return on the savings over the years.