What is the term used for the illegal practice of replacing an existing life insurance policy solely to earn higher commissions?

The term that accurately describes the illegal practice of replacing an existing life insurance policy solely to earn higher commissions is churning. Churning occurs when an agent or broker convinces a policyholder to replace their existing insurance policy with a new one primarily to generate additional commissions, rather than for the benefit of the policyholder. This practice is unethical and can lead to significant financial detriment for the consumer, as they may end up with less coverage or higher premiums without a real need for the new policy.

In contrast, coercion refers to pressuring a client into making a decision against their will, replacement involves replacing an existing policy but doesn’t carry the implication of unethical intentions, and concealment means withholding information from a client but does not specifically relate to the act of replacing policies for commission. Understanding these definitions helps clarify why churning is the most accurate term for this negative practice within the insurance industry.