Glossary

Material Fact
In insurance, vital information required for making an underwriting decision. It involves information that is so important that misrepresentation or concealment would alter an underwriting decision. Examples of material facts include a person's age, the existence of a serious health condition (such as the presence of cancer or a past heart attack) or a dangerous vocation, such as hang-gliding.

Material Misrepresentation
This is a false or incomplete statement or concealment of the truth by an insurance applicant or proposed insured on the application that might cause the insurance company to issue coverage where, if the truth were revealed, the application might be declined or rated.

Mature
(See "Endow.")

Maturity Date
In life insurance, the date upon which the policy endows for its full face value.

Max Monthly Benefit for LTC
The maximum amount of the net death benefit accelerated in a month during which long-term care benefits are payable. The monthly Long-Term Care benefit amount is determined by dividing the death benefit by the number designated in the LTC Benefit Payment Option. The monthly benefit amount at the time of claim is multiplied by the factor on the policy data page to determine the Extension of Benefits amount on policies with the LTC36+ and LTC48+ benefit payment option. Applicable to Asset Preserver Universal Life policies.

Medical Examination
Sometimes required as part of the underwriting process, this is the physical examination of an applicant by a qualified medical professional to determine the applicant's insurability. The finding of this exam become part of the application and, in turn, part of the policy when issued.

Medical Information Bureau
Founded in 1902, the MIB is a fraud protection bureau that serves as a medical information clearing house supported by more than 600 member insurance companies, which share information about applicants. All information is coded to assure confidentiality, and access is strictly limited. Information is used to protect against the omission of significant underwriting information by applicants. Reports do not include information regarding whether or not an application is accepted or declined.

Misrepresentation
In insurance, a false, incorrect or incomplete statement of a material fact, made on the application. (See also "Material Misrepresentation.")

Mode (of Payment)
The frequency and method by which premiums are paid. Standard premium modes are annually, semi-annually, quarterly, monthly and automatic payment (deduction from checking or savings account).

Modified Endowment Contract
Also known as MECs, these are life insurance policies that are considered to be investments by the Internal Revenue Service because the ratio of cash value to death benefit is higher than in typical life insurance policies. As a result, unlike with non-MEC policies, policy loans and surrenders of cash value are generally taxable as income. Additionally, distributions prior to age 59 1/2 are subject to a 10% surcharge tax on any gains. Death benefits, however, are received by beneficiaries income tax-free, the same as non-MEC policies.

Modified Premium Policy
A life insurance policy issued with a built in premium change (either an increase or decrease) in a future year.

Monthly Deductions
With a variable or universal life insurance policy, these are the charges deducted from the cash value to meet mortality and expense costs, as well as premiums for riders and supplementary benefits.

Morbidity
A general term referring to frequency of sickness. As an underwriting concept, it refers to the potential loss of health for a specific population, generally by age.

Morbidity Rate
The ratio of the incidence of sickness to the number of well persons in a given group of persons over a given period of time.

Mortality
The relative incidence of death in proportion to a specific population.

Mortality Charge
The cost of insurance protection in a life insurance policy for a given period of time. In a variable universal life insurance policy, for instance, the mortality charge is deducted from the cash value each month.

Mortality Experience
The rate at which persons insured by a specific company (or under a given policy) have died or are assumed to die.

Mutual Insurance Company
An insurance company which has no capital stock or stockholders, but is instead owned by its policyowners. One key feature of mutual companies is that earnings above those necessary for the operation of the company may be returned to the policyowners in the form of policy dividends.

Mutual Fund
An investment consisting of pooled money from investors which is then invested in a variety of securities (generally stocks, bonds and money market securities) to reflect its particular investment objectives.

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