Defined terms for the annuity market and lifetime income landscape.
Modified coinsurance is a reinsurance structure in which the reinsurer assumes a share of premium, claims, and reserves, but the assets supporting the ceded reserves remain on the ceding carrier's balance sheet, with investment income paid through to the reinsurer.
Monte Carlo simulation is a stochastic modeling technique that generates many possible outcomes by repeatedly drawing random values from specified probability distributions, then summarizes the resulting distribution to characterize what could happen.
Monthly sum crediting is an indexed annuity calculation method that measures the index's percentage change in each month of a crediting period, applies a monthly cap to each positive month, leaves negative months uncapped, and sums the twelve resulting figures to produce the period's index gain.
Moral hazard is the change in a participant's behavior that occurs when entering an insurance or pooling arrangement alters their exposure to a particular outcome, such that their actions affect the outcome's probability in ways the arrangement's pricing may not have anticipated.
