M – Glossary of Insurance Terms
This page provides a glossary of insurance terms and definitions that are commonly used in the insurance business. New terms will be added to the glossary over time.
The definitions in this glossary are developed by the NAIC Research and Actuarial Department staff based on various insurance references. These definitions represent a common or general use of the term. Some words and/or phrases may be defined differently by other entities, or used in a context such that the definition shown may not be applicable. naic.org
Major Medical – a hospital/surgical/medical expense contract that provides comprehensive benefits as defined in the state in which the contract will be delivered.
Malpractice – alleged misconduct or negligence in a professional act resulting in loss or injury.
Managed Care – system of health care delivery that attempts to influence the utilization, quality, and cost of services provided.
Mandated benefits – insurance required by state or federal law.
Manufacturers Output Policies – provides broad form coverage of personal property of an insured manufacturer including raw material, goods in process, finished goods and goods shipped to customers.
Margin Premium – a deposit that an organization is required to maintain with a broker with respect to the Futures Contracts purchased or sold.
Market Value – fair value or the price that could be derived from current sale of an asset.
Mechanical Breakdown Insurance – premiums attributable to policies covering repair or replacement service, or indemnification for that service, for the operational or structural failure of property due to defects in materials or workmanship, or normal wear and tear. (May cover motor vehicles, mobile equipment, boats, appliances, electronics, residual structures, etc.)
Medicaid – policies issued in association with the Federal/State entitlement program created by Title XIX of the Social Security Act of 1965 that pays for medical assistance for certain individuals and families with low incomes and resources.
Medical & Hospital Expenses (Benefits or Claims) – total expenditures for health care services paid to or on behalf of members.
Medical Malpractice – insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured’s misconduct, negligence, or incompetence, in rendering or failure to render professional services.
Medical Only – line of business that provides medical only benefits without hospital coverage. An example would be provider-sponsored organizations where there is no coverage for other than provider (non-hospital) services. Does not include self-insured business, FEHBP, Medicare and Medicaid programs, or dental only business.
Medical Professional Liability – insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured’s misconduct, negligence, or incompetence in rendering professional services. Medical Professional Liability is also known as Medical Malpractice.
Medicare – a state assistance program, passed under Title XVIII of the Social Security Amendments of 1965, to provide hospital and medical expense insurance to those over 65 years of age.
Medicare + Choice – a major initiative in the Balanced Budget Act of 1997 (also called Medicare Part C), under which Medicare beneficiaries may select from among several managed care options or a Medicare system.
Medicare Advantage Plan – an HMO, PPO, or Private Fee-For Service Plan that contracts with Medicare Advantage Prescription Drug Plan also includes drug benefits. The plan may provide extra coverage such as vision, hearing, dental, and/or health and wellness programs. Medicare pays a fixed amount for insured’s care every month to the companies offering Medicare Advantage plans.
Medicare Cost – contract with Center for Medicare and Medicaid Services (CMS) for Medicare coverage. These contracts with CMS provide reimbursement through pre-determined monthly amount per member based on a total estimated budget. The beneficiary may use providers outside the provider network. Does not include stand alone Medicare Part D Plans.
Medicare Part D – Stand-Alone – stand-alone Part D coverage written through individual contracts; stand-alone Part D coverage written through group contracts and certificates; and Part D coverage written on employer groups where the reporting entity is responsible for reporting claims to the Centers for Medicare & Medicaid Services (CMS).
Medicare Supplement – Insurance coverage sold on an individual or group basis to help fill the “gaps” in the protections granted by the federal Medicare program. This is strictly supplemental coverage and cannot duplicate any benefits provided by Medicare. It is structured to pay part or all of Medicare’s deductibles and co-payments. It may also cover some services and expenses not covered by Medicare. Also known as Medigap” insurance.
Medigap – supplementary private health insurance products to Medicare insurance benefits.
Minimum Premium Plan – an arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group. The employer self-funds a fixed percentage (e.g. 90%) of the estimated monthly claims, and the insurer covers the remainder.
Mobile Homes – Homeowners – homeowners insurance sold to owners occupying the described mobile home.
Mobile Homes under Transport – coverage for mobile homes while under transport for personal or commercial use.
Modified Guaranteed – an annuity that contains a provision that adjusts the value of withdrawn funds based on a formula in the contract. The formula reflects market value adjustments.
Member – A person who has enrolled as a subscriber or an eligible dependent of a subscriber and for whom the health organization has accepted the responsibility for the provision of health services as may be contracted for.
Moral Hazard – personality characteristics that increase probability of losses. For example not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen.
Morale Hazard – negligence or disregard on the part of the insured which could lead to probable loss.
Morbidity – the frequency or severity of disease or illness within a subset of the population.
Morbidity Risk – the potential for a person to experience illness, injury, or other physical or psychological impairment, whether temporary or permanent. Morbidity risk excludes the potential for an individual’s death, but includes the potential for an illness or injury that results in death.
Morbidity Table – a statistical record of the rate of illness among the defined age groups.
Mortality Table – chart that shows the death rates of a particular population at each age displayed as the number of deaths per thousand.
Mortgage – a note used to secure a loan for real property.
Mortgage Guaranty – insurance that indemnifies a lender for loss upon foreclosure if a borrower fails to meet required mortgage payments.
Mortgage Insurance – a form of life insurance coverage payable to a third party lender/mortgagee upon the death of the insured/mortgagor for loss of loan payments.
Mortgage-Backed Securities – a type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution.
Multi-Peril Insurance – personal and business property coverage combining several types of property insurance in one policy.
Municipal Bond Guarantee Insurance – coverage sold to municipalities to guarantee the principle payment on bonds issued.
Municipal Liability – liability coverage for the acts of a municipality.
Municipal obligation bond – any security, or other instrument, including a state lease but not a lease of any other governmental entity, under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project servicing a substantial public purpose, and 1) Payable from tax revenues, but not tax allocations, within the jurisdiction of such governmental unit; 2) Payable or guaranteed by the United States of America or any agency, department or instrumentality thereof, or by a state housing agency; 3) Payable from rates or charges (but not tolls) levied or collected in respect of a non-nuclear utility project, public transportation facility (other than an airport facility) or public higher education facility; or 4) With respect to lease obligations, payable from future appropriations.
Mutual Insurance Company – a privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated.
Mutual Insurance Holding Company – a company organized as a mutual and owning a capital stock insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry.