Regulatory model created by the National Association of Insurance Commissioners (NAIC) that established standards to prevent fraudulent or unethical practices in the insurance industry (e.g., misrepresentation, false advertising, misappropriation of policyholder’s money, twisting). States that have adopted the NAIC model may impose fines or revoke licenses of agents or brokers.

Trust established to distribute life insurance proceeds. Because insurance companies cannot act as trustees or guardians, the policy proceeds are paid to a trust company and distributed under the terms of a trust agreement creating greater flexibility in distribution of the proceeds. This type of arrangement is an unfunded life insurance trust.