Glossary of Insurance Related Terms

Material fact

A fact that is relevant to an insurance company’s underwriting decision regarding issuing or rating a policy.

Material misrepresentation

In insurance, a misstatement by an applicant that is relevant to the insurer’s acceptance of the risk, because, if the truth had been known, the insurer would not have issued the policy or would have issued the policy on a different basis.

Mature

When an insurance policy's guaranteed cash value equals the initial death benefit, it is said to "endow" or mature. Whole Life contracts typically endow at the insured's age 100.

Maturity Date

The date which the policy endows for its total face amount.

Maturity Value

The amount payable under a Whole Life insurance policy if the insured person lives to the last age on the mortality table on which the values of the contract were based.

McClintock Table

An American morality experience table developed in 1896 by McClinton McClintock from the experience of 15 American insurers and influenced by foreign underwriting experience. (LI)

Medical application

An application for insurance in which the proposed insured is required to undergo some type of medical examination. The results of the medical examination are then reported to the insurance company.

Medical Examination

A medical history and exam completed by a doctor that the insurer may require of the applicant during the underwriting process – typically, paid for by the life insurer underwriting the application.

Medical Examiner

The physician who examines an applicant or claimant on behalf of the insurer and as an agent of the insurer. (LI,H)

Medical Information Bureau (MIB)

A data pool service that stores confidential reports on the health histories of persons who, in the past, have applied for insurance from other member companies. Most insurers subscribe to this bureau to get more complete underwriting information.

Medical report

A report on a proposed insured’s health that is completed by a physician and is based on a physical examination and questioning of the proposed insured. Such a medical report serves as part of a medical application.

Million Dollar Round Table (MDRT)

An association of Life Insurance agents who qualify by selling $1 million worth or more of Life Insurance coverage. The policies must meet certain qualification standards, and applicants must be members of the National Association of Life Underwriters. (LI)

Minimum Deposit Policy

A Cash Value Life Insurance policy having a first-year loan value that is available to borrow against immediately upon payment of the first-year premium. This is not the case with most Life Insurance policies, the main reason being high first-year expenses. (LI)

Minimum Rate Guarantee

The minimum fixed interest rate an insurance company pays on the cash value of a whole life or universal life insurance policy. The minimum rate guaranteed is stated in the insurance policy.

Misrepresentation

(1) A false or misleading statement made to induce a prospect to purchase insurance. Misrepresentation is a prohibited insurance sales practice. (2) A false or misleading statement made by an applicant for insurance. Certain misrepresentations provide a basis for the insurer to avoid the policy.

Misstatement of Age

(1) Giving the wrong age for oneself on an application for Life and Health Insurance or for a beneficiary who is to receive benefits on a basis involving his life contingency. (2) A provision in most Life and Health policies setting forth the action to be taken if a misstatement of age is discovered after the policy is issued. This is one of the uniform provisions for Individual Health Insurance policies. (LI,H)

Misstatement of age or sex provision

A provision that is typically included in life insurance and annuity policies and that describes how the amount of the policy benefit will be adjusted if the age or sex of the insured or the annuitant is incorrectly stated.

Mode of premium payment

The frequency with which premiums are paid (for example, annually, quarterly, monthly).

Modified

This term has several meanings, only a few of which will be mentioned here. (1) Under a modified coinsurance provision in Life Reinsurance, the ceding insurer retains and maintains the entire reserve, with the annual increase in reserve being transferred to the ceding insurer by the reinsurer at the end of the year. (2) Under Preliminary Term Insurance, a modified reserving system permits at least part, if not all, of the first year's net premium on a Life Insurance policy to be used to meet first-year acquisition costs and claim expenses and requires that part of the renewal loading be added to the policy reserve accumulation. (3) Any premium that is altered from the regular premium for similar Life policies, such as the premium for a Modified Life policy. (LI)

Modified Life Policy

An Ordinary Life contract under which the premiums are modified so as to be lower than normal for the first three to five years and higher than normal after that. A special case is a level Term policy, under which no part of the premium goes towards savings, that is automatically converted to a Whole Life policy at a designated time. (LI)

Modified-premium whole life insurance

A type of whole life insurance in which the policyowner pays a lower than normal premium for a specified initial period, such as five years. After the initial period, the premium increases to a stated amount that is somewhat higher than usual. This higher premium is then payable for the life of the policy.

Monthly Administration Fee

In Universal Life insurance, an administrative fee is charged each month to cover administrative expenses. (LI)

Monthly Debit Ordinary (MDO)

Ordinary Insurance the premiums for which are collected at the door monthly in the same fashion as Industrial policies. (LI)

Monthly Debit Ordinary Status Card

An IBM card showing the status of MDO business in force and lapsed. (LI)

Moral Hazard

Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss for instance, bad habits, low integrity, poor financial standing.

Morbidity

Sickness, injury, or failure of health.

Morbidity rate

The rate at which sickness, injury, and failure of health occur among a defined group of people. The premium that a person pays for health insurance is based in part on the morbidity rate for that person’s age group.

Morbidity table

A chart that shows the rates of sickness and injury occurring among given groups of people categorized by age.

Mortality

The frequency of deaths in proportion to a specific population.

Mortality charge

The cost of the insurance protection element of a universal life policy. This cost is based on the net amount at risk under the policy, the insured’s risk classification at the time of policy purchase, and the insured’s current age.

Mortality curve

A line graph that represents the mortality rates as they change from age to age.

Mortality rate

The frequency with which death occurs or is expected to occur among a defined group of people.

Mortality Savings

The remainder, if any, after subtracting experienced mortality from expected mortality. (LI)

Mortality table

A chart that displays the incidence of death among a given group of people categorized by age.

Mortality, Experienced

The mortality that actually occurs to a group of inureds of a given insurance company in contrast to expected mortality. (See Expected Mortality.) (LI)

Mortgage Insurance

In Life and Health Insurance, a policy covering a mortgagor from which the benefits are intended (1) to pay off the balance due on a mortgage upon the death of the insured, or (2) to meet the payments on a mortgage as they fall due in the case of his death or disability. Also called Mortgage Redemption Insurance. (LI,H)

Mortgage Protection Insurance

A type of Term Life policy which pays off the balance of a mortgage upon the death of the insured. Typically, the death benefit decreases according to a schedule that fits the declining payoff requirements of the mortgage.

Mortgage Redemption Insurance

In Life and Health Insurance, a policy covering a mortgagor from which the benefits are intended (1) to pay off the balance due on a mortgage upon the death of the insured, or (2) to meet the payments on a mortgage as they fall due in the case of his death or disability. Also called Mortgage Redemption Insurance. (LI,H).(2) A monthly reducing Term policy used for Mortgage Insurance. (LI,H)

Multi-Year Premium Mode

A premium payment option where future annual premiums are paid in advance at a discount.

Multiple Indemnity

The number of deaths in a group of people, usually expressed as deaths per thousand. It can be the rate for the total population, called the crude mortality rate, or it can be refined by factors such as age groupings or causes of deaths. Same as Death Rate

Multiple Protection Insurance

A combination of Term and Whole Life Insurance that pays some multiple of the face during the period of the Term policy, becoming a regular Whole Life policy after the Term policy expires. The multiple protection period is thus the period during which both the Term and the Whole Life coverages are in effect. (LI)

Mutual Fund

Pooled money from shareholders that is invested in a variety of securities, including stocks, bonds and money market securities. Mutual funds offer the individual investor the advantages of diversification and professional management.

Mutual insurance company

An insurance company owned by its policyowners.

Mutualization

The process of converting a stock insurance company to a mutual insurance company.