Insurance Information
Mail Order Insurer
Type of insurance company that sells policies through the mail or other mass media, eliminating need for agents.

Manual Rate
A loose-leaf manual, periodically updated or revised, that contains rules, rates and other information prepared by an insurance company or rating bureau to develop premiums for insurance policies. Hard-copy manuals have been supplemented or replaced by electronic data (CD-ROMs, computer disks, electronic networks).

Manuscript Policy
An insurance policy designed or tailored for a large commercial insured; a unique coverage written at the request of a broker or a risk manager.

Marital deduction
A reduction of an estate for estate tax purposes, which is available if the decedent is survived by his or her spouse, can be as large as the administrator or executor elects so long as it does not exceed the value of qualifying property passing to the surviving spouse.

Market Price
The price at which a security can be bought or sold at any particular time.

Master Policy
An original, complete insurance policy contract that is issued by an insurer with the understanding that certificates of insurance or underlying policies will be issued to others; for example, a master group health policy is issued to an employer while certificates are given to the employees. A master policy and underlying policies may be issued to a property owner to comply with requirements of a mortgage holder.

Material Damage
Insurance against damage to a vehicle itself. It includes automobile comprehensive, collision, fire and theft. Material damage and physical damage are terms that often are used inter- changeably.

Maximum family benefit
The largest amount in Social Security benefits that will be paid to any family unit.

McCarran-Ferguson Act
Federal legislation (U.S. Code Title 15, Chapter 20) enacted in 1945 to permit the states to continue regulating the insurance business after the Supreme Court, in U.S. v. South-Eastern Underwriters Association, overruled the decision in Paul v. Virginia, declaring insurance to be interstate commerce and therefore within Congress's constitutional authority to regulate. Under the Act, insurance is exempt from some federal antitrust statutes to the extent that it is regulated by the states. The exemption primarily applies to gathering data in concert for the purpose of ratemaking. Otherwise, antitrust laws prohibit insurers from boycotting, acting coercively, restraining trade, or violating the Sherman or Clayton Acts.

Medicaid
A state medical benefit program for persons, regardless of age, whose income and resources are insufficient to pay for health care. As of January 1, 1966, federal matching funds were provided to the states under Title XIX of the Social Security Act.

Medical Examination
The examination given by a qualified physician to determine to the insurability of an applicant. A medical examination may also be used to determine whether an insured claiming disability is actually disabled.

Medical Payments Insurance
A coverage, available in various liability insurance policies, in which their insurer agrees to reimburse the insured and others, without regard for the insured's liability, for medical or funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.

Medicare
A federally administered program of hospital insurance (Part A) and supplementary medical insurance (Part B) primarily for people over 65, created by 1965 amendments to the Social Security Act. It also covers people of any age with permanent kidney failure and certain other disabilities. The Health Care Financing Administration in the U.S. Department of Health and Human Services reimburses hospitals and physicians for services to qualified patients. Part A (hospital insurance) coverage is automatic for all eligible people and is financed by a payroll tax on employers and employees. Part B (supplementary medical insurance) is a voluntary program of government-subsidized insurance requiring participants to make premium payments.

Medigap
Private insurance purchased by Medicare participants on a voluntary basis that is designed to fill the gaps in Medicare, such as coinsurance, deductibles and noncovered services (e.g., hospital stays beyond a certain length).

Minimum Benefits
A provision that a minimum amount of annuity will be paid if the regular benefit formula produces less. This minimum is usually payable only if certain service requirements are met at retirement.

Minimum Group
The minimum number of persons required to form a group insurance program under state law; the minimum number that an insurance company requires to issue a group policy.

Miscellaneous Expenses
Expenses involving hospital care other than room, board and doctors' fees, such as lab tests, drugs and radiology. Most hospital policies limit coverage for these expenses by scheduling the amounts covered or combining them for a an aggregate limit.

Misrepresentation
A false, incorrect, improper, or incomplete statement of a material fact, made in the application for a policy.

Moral Hazard
Circumstances of morals or habits that increase the probability of a loss from an insured peril. Example: An insured previously convicted of arson.

Morbidity
The frequency of the incidence of disease, illness or sickness.

Morbidity Tables
A table showing the number of individuals exposed to the risk of illness, sickness, and disease at each age, and the actual number of individuals who incurred an illness, sickness, and disease at each age.

Mortality Table
A table that indicates the number of individuals within a specified group of individuals (males, females, airline pilots, etc.), starting at a certain age, who are expected to be alive at succeeding ages. It is used to derive the "natural premium" for an individual life policy.

Motor Vehicle Records
The record maintained by a state motor vehicle department of a driver's accidents and traffic violations.

Motor Vehicle Report
Report that lists the moving violations and accidents that a driver has had in the past several years.

Multi-Peril Policy
A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line.

Multiple Employer Trust (MET)
A legal trust formed by a health benefit plan sponsor to combine a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or group self-insured basis.

Mutual Insurance Company
An insurance company that has no capital stock, but is owned by its policyholders, who elect a board of directors or trustees through whom business is conducted. Any earnings belong to the policyholders and may be distributed to them as policy dividends or educed premiums.

Insurance Information (cont'd)
Salvage
Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.

Self- Administered (Trusteed or Directly Invested) Plan
A plan funded through a fiduciary, generally a bank, but sometimes a group of individuals, which directly invests the accumulated funds. Retirement payments are made from the fund as they fall due.

Self-Administration
The procedure where an employer maintains all records regarding the employees covered under a group insurance plan.

Self-Insurance
A program for providing group insurance with benefits financed entirely through the internal means of the policyholder, in place of purchasing coverage from commercial carriers.

Senior Citizen Policies
Contracts insuring persons 65 years of age or more. In most cases, these policies supplement the coverage afforded by the government under the Medicare program.

Separate Account
An asset account established by a life insurance company separate from other funds, used primarily for pension plans and variable life products. This arrangement permits wider latitude in the choice of investments, particularly in equities.

Service-Type Plans
Plans that provide their benefits in the form of services rendered rather than cash (for example, Blue Cross and Blue Shield).

Settlement Options
The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.

Short-Term Disability Income Insurance
The provision to pay benefits to a covered disabled person as long as he/she remains disabled up to a specified period not exceeding two years.

Sickness Insurance
A form of health insurance providing benefits for loss resulting from illness or disease.

Skip person
a beneficiary who is at least two generations younger than the person making the transfer.

Social Security Freeze
A long- term disability policy provision which establishes that the offset from benefits paid by Social Security will not be changed regardless of subsequent changes in the Social Security law.

Social Security Option
An option under which the employee may elect that monthly payments of an annuity before a specified age (62 or 65) be increased, and that payments thereafter be decreased to produce, as nearly as practical, a level total annual annuity to the employee, including Social Security benefits when they become due.

Soft Market
That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices (see "Hard market").

Special Damages
Compensation awarded for actual economic losses, such as medical expenses and lost wages. (See general damages)

Special Risk Insurance
Coverage for risks or hazards of a special or unusual nature.

Split Funding
The use of two or more funding agencies for the same pension plan. An arrangement whereby a portion of the contributions to the pension plan are paid to a life insurance company and the remainder of the contributions invested through a corporate trustee, primarily in equities.

Spouse's Benefit
Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor's remarriage or death.

Standard Insurance
Insurance written on the basis of regular morbidity underwriting assumption used by an insurance company and issued at normal rates.

Standard Markets
insurance companies for which the vast majority of people qualify

Standard Provisions
A set of policy provisions prescribed by former laws setting forth certain rights and obligations of both the insured and the company under an individual policy of health insurance. These were originally introduced in 1912 and have now been replaced by the Uniform Provisions.

Standard Risk
A person who, according to a company's underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.

State-of-the-Art Defense
An argument used in product liability cases that the technology needed to avoid the loss in a particular case did not exist at the time of the product's manufacture

State Disability Plan
A plan for accident and sickness, or disability insurance required by state legislation of those employers doing business in that particular state.

State Fund
A fund set up by a state government to provide a specific line or lines of insurance. Some state permit private insurers to compete with the state fund.

State Insurance Department
A department of a state government whose duty is to regulate the business of insurance and give the public information on insurance.

Statutory Accounting
Special accounting practices for insurance companies required by state law and designed to provide greater protection for the public against potential insolvency of these essential institutions.

Statutory Accounting Principles (SAP)
Principles required by statute which must be followed by an insurance company when submitting its financial statements to the various state insurance departments. Such principles differ from the Generally Accepted Accounting Principles (GAAP).

Statutory Underwriting Profit or Loss
Premiums earned less losses and expenses.

Step-Rate Premium
A rating structure in which the premiums increase periodically at pre-determined times such as policy years or attained ages.

Step-up in basis
An increase in the tax basis of property to the value claimed in the taxable estate of a decedent.

Stock Company
A company organized and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders.

Stock Exchange
An organization that provides a facility for buyers and sellers of listed securities to come together to make grades in those securities.

Stockholder (or shareholder)
A person who owns shares of stock in a corporation.

Stock Insurance Company
A company in which the legal ownership and control is vested in the stockholders.

Stock Life Insurance Company
A life insurance company owned by stockholders who elect a board to direct the company's management. Stock companies, in general, issue nonparticipating insurance, but may also issue participating insurance.

Stock Redemption Plan
An entity purchase form of buy-sell agreement within a corporation that involves the corporation buying back shares from a departing owner.

Straight Life Insurance
Whole life insurance on which premiums are payable for life.

Strict Liability
Liability for damages even though fault or negligence cannot be proven.

Subrogation
Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.

Substandard (Impaired Risk)
A risk that cannot meet the normal health requirements of a standard health insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.

Substandard Insurance
Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.

Substandard Risk
An individual, who, because of health history or physical limitations, does not measure up to the qualification of a standard risk.

Supplementary Contract
An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.

Surety Bond
An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfillment of a contract if the contractor defaults.

Surgical Expense Insurance
Health insurance policies, which provide benefits toward the physician's or surgeon's operating fees. Benefits may consist of scheduled amounts for each surgical procedure.

Surgical Schedule
A list of cash allowances attached to the policy, which are payable for various types of surgery, with a maximum amount based upon the severity of the operation.

Surplus
The net worth of a company, i.e. the amount by which assets exceed liabilities. Adequate net worth is necessary for the protection of policyholders against unforeseen losses.

Surplus Lines
(1) A risk or a part of a risk for which there is no normal insurance market available. (2) Insurance written by non-admitted insurance companies.