minimum premium plan (MPP)
A group health insurance
plan that is partially self-insured by the group policyholder but
fully administered by an insurance company. The premium is small
because the group policyholder pays most of the claims itself. See
also administrative services only (ASO) contract and self-insured
group.
minimum service requirement
In pension planning, a
requirement that an employee complete a certain period of employment
(often known as a probationary or waiting period) before being
permitted to participate in the employer's pension plan. In the
United States, an employee who meets minimum age requirements
generally cannot be subject to a waiting period of more than one
year, although a plan with full and immediate vesting of benefits
can require a two-year waiting period. In Canada, a two-year waiting
period is permissible. See also minimum age requirement.
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 provision
Life insurance policy
wording that specifies the action the insurer will take if, at the
insured's death, the insurer discovers that the insured's age was
misstated in the application and the misstatement has resulted in an
incorrect premium for the amount of insurance purchased. In an
individual life insurance policy, this provision specifies that the
policy's benefit amount will be adjusted. In a group insurance
policy, this provision generally specifies that the policy's premium
amount will be adjusted.
mode of premium payment
The frequency with which
premiums are paid (for example, annually, quarterly, monthly).
model bill
Sample legislation developed by the National
Association of Insurance Commissioners (NAIC) in the United States
or the Canadian Council of Insurance Regulators (CCIR) in Canada.
States and provinces may adopt this sample legislation exactly as
written or use it as the basis for developing their own laws.
Model Life Insurance Solicitation Regulation
In the
United States, a regulation adopted by the NAIC in 1976 that
requires insurers to give life insurance consumers (1) information
that will improve their ability to select the most appropriate plan
of life insurance to meet their needs, (2) an understanding of the
basic features of the policy that has been purchased or that is
under consideration, and (3) the ability to evaluate the relative
costs of similar plans of life insurance.
Model Rules Governing the Advertisement of Life
Insurance
In the United States, an NAIC model law which
provides a set of comprehensive guidelines covering nearly all
aspects of advertisements for life insurance policies and annuity
contracts.
Model Unfair Trade Practices Act
In the United States,
an NAIC model law that prohibits unfair trade practices, such as
defamation, rebating, unfair discrimination, and unfair claim
settlement practices; the law contains a general prohibition agahnst
any form of insurance advertising that is "untrue, deceptive, or
misleading."
modified net premiums
Net premiums that are other than
level, generally being lower for the first year than for subsequent
years.
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.
money market fund
A low-risk mutual fund that achieves
great liquidity by investing primarily in short-term securities.
money-purchase pension plan
A type of defined
contribution plan that specifies a rate of contribution to each
participant's account (for example, 8% of annual compensation) and
results in a benefit that is equal to the amount in the
participant's account (including investment gains and losses) at
retirement. Upon retirement, the money that the employer has
contributed, plus investment earnings, is often used to purchase an
annuity which will provide a regular pension benefit.
monthly debit ordinary (MDO) insurance
Ordinary life
insurance that is marketed under the home service system and paid
for by monthly premium payments, usually made to an agent. See also
home service distribution system.
monthly outstanding balance method
In group creditor
insurance, a premium-paying arrangement for contributory plans
whereby, every month, the lender adds to the outstanding balance of
the loan an amount sufficient to insure that balance for one month.
Contrast with single-premium method.
moral hazard
The danger that a proposed insured might
deliberately attempt to conceal or misrepresent information. Moral
hazard is a risk factor that affects the underwriting decision.
morbidity
Sickness, disability, or failure of health.
morbidity rate
The likelihood that a person of a given
age will suffer an illness or disability. 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 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 experience
The actual number of deaths
occurring in a given group of people.
mortality rate
The frequency with which death occurs
among a defined group of people. The premium that a person pays for
life insurance is based in part on the mortality rate for that
person's age group.
mortality table
A chart that displays the rates of
death among a given group of people categorized by age. See also
aggregate mortality table, annuity mortality table, basic mortality
table, select and ultimate mortality table, select mortality table,
and ultimate mortality table.
mortgage redemption insurance
A form of decreasing term
insurance that covers the life of a person who takes out a mortgage.
If the person dies during the term of insurance, the policy proceeds
will approximate the remaining amount of the mortgage loan.
multi-company representation
In Canada, an arrangement
by which a life and health insurance agent is allowed to represent
more than one insurance company.
multi-employer plan
A pension or other employee-benefit
plan involving more than one employer and established by collective
bargaining (negotiation between a union and employers). Coverage
under the plan is portable within the group, which means that an
employee who leaves one employer who is a member of the group and
goes to work for another member of the group may continue coverage
under the plan.
multiple-employer trust (MET)
(1) An arrangement
whereby several employers (often in the same industry) cooperate to
procure group insurance for their employees. (2) An arrangement made
by an insurance company to cover several employers under one master
policy, usually with specific benefit packages and limitations.
multiple-line agency (MLA) system
A personal selling
distribution system that uses full-time career agents to distribute
both life and health and property/casualty insurance products for
groups of financially interrelated or commonly managed insurance
companies. Also known as the multiple-line exclusive agency system
or all-lines exclusive agency system.
mutual benefit method
An early method of funding life
insurance, formerly used by fraternal orders or guilds. Under the
mutual benefit method, the promised death benefit was provided by
charging participating members an equal amount after the death of an
insured member. Also called the post-death assessment method. See
also assessment method.
mutual insurance company
An insurance company owned by
policyowners rather than stockholders.
mutualization
The process of converting a stock
insurance company to a mutual insurance company.
