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)
Rate
The pricing factor upon which the insurance buyer's premium is based.

Rated Policy
Sometimes called an "extra-risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.

Ratemaking
The statistical process by which insurers determine risks and pricing for the basic classes of insurance.

Rating Territory
A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.

Reasonable and Customary Charge
A charge for health care, which is consistent with the going rate or charge in a certain geographical area for identical or similar services.

Rebating
Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Rebating is prohibited by law.

Recurring Claim Provision
A provision in some health insurance policies which specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.

Recurring Clause
A provision in some health insurance policies, which specifies a period of time during which the recurrence of a condition is considered a continuation of a prior period of disability or hospital confinement.

Reduced Paid-up Insurance
A form of insurance available as a nonforfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount.

Regulation
Supervision of business practices by a governmental entity.

Rehabilitation
(1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.

Reimbursement
The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.

Reinstatement
The resumption of coverage under a policy which has lapsed.

Reinsurance
Assumption by one insurance company of all or part of a risk undertaken by another insurance company.

Reinsurance Facility
An alternative mechanism to service those insureds that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.

Renewal
Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.

Renter's Policy
A package type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.

Replacement
The substitution of health insurance coverage from one policy contract to another.

Replacement Cost
The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)

Replacement ratio
The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.

Representation
Statements made by an applicant in the application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.

Rescission
Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.

Reservation of Rights
An arrangement whereby an insurer defends a case without commitment to provide coverage in the event that the facts disclosed during the trial reveal that the occurrence is not covered.

Reserve
(1) An amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.

Residual Disability
A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss.

Residual Disability Benefits
A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.

Residual Market
A system through which insurance is made available to buyers that represent unusually high risks.

Retention
The net amount of risk retained by an insurance company for its own account or that of specified others, and not reinsured.

Retrocession
The process by which a reinsurer obtains reinsurance from another company.

Retrospective Date
The first date for which claims will be paid under a claims-made policy of liability insurance.

Retrospective Rating
Rating procedure which allows adjustment of an insured's final rate on the basis of the insured's own loss experience.

Revocable Trust
A trust that can be terminated or revoked by its creator.

Rider
A special policy provision or group of provisions that may be added to a policy to expand or limit the benefits otherwise payable.

Right of Survivorship
At the death of one co-owner of property, that person's interest in the property automatically passes to the surviving joint tenant or tenants.

Risk
The chance of loss. Also used to refer to the insured or to property covered by a policy. A term used to refer to a person or the peril insured.

Risk Classification
The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications. (See - Underwriting)

Risk Control
Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.

Risk Retention Group
An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.

Robbery
The taking of property from a person by force or threat of violence.

Rollover
Transfer of IRA or other qualified pension funds from one financial institution (trustee) to another.