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16 June, 22:31

When values of an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions, this practice is called

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  1. 16 June, 22:33
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    This practice is called Churning.

    Explanation:

    Insurers are usually entrusted with large sums of money from their clients when the clients buy the policy. This means that the insurers through their agents need to be regulated in such a way that their actions are ethical. There are different ways that insurance agents can practice in a way that is not ethical, one of these ways is churning.

    Churning is the practice by an insurance agent of using an insurance policy to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions. This act always goes on without the knowledge or permission of the policy holder, thus the policy holder does not gain anything from it.

    This is one of the most serious unethical practices in the field of insurance. In reality, most state laws do not allow this practice. It is therefor punishable once the accused is found guilty in a court of law.
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