Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Common to Life, Accident, Health and HMOEasy
A Texas-licensed agent is found to have knowingly misrepresented the terms of an insurance policy to a prospective client to induce them to purchase it. This act is an example of which unfair trade practice?
- ADefamation
- BTwisting
- CFalse Advertising
- DMisrepresentation
Show answer & explanationAnswer & explanation
Correct answer: D. Misrepresentation
Misrepresentation involves making false statements about the terms, benefits, or dividends of an insurance policy to induce a policyholder to purchase it. This is a direct example of an unfair trade practice.
Why the other options are wrong
- A. Defamation involves making false statements about an insurer's financial condition, not policy terms.
- B. Twisting involves misrepresentation to induce a policyholder to lapse or surrender an existing policy for a new one with the same insurer, which is not stated here.
- C. False Advertising refers to misleading public communications, while misrepresentation is direct interaction.
Misrepresentation (Unfair Trade Practice)
Making false statements about the terms, benefits, or dividends of an insurance policy to induce a person to purchase it.
- Involves direct interaction with a prospective client.
- Aims to persuade a purchase through deceit.
- Is a prohibited unfair trade practice.
Memory trick: Misleading words, a dishonest sale, that's misrepresentation's tale.