initial reserve

  • The fund on hand at the beginning of the policy year just after the premium has been received is called the initial reserve. In mutual life insurance the initial reserve plays an important part in the calculation of dividends paid to policyholders. For example, the initial reserve of the ninth year is equal to the terminal reserve of the eighth year plus the net premium payable at the beginning of the ninth year. See Terminal Reserve, Mean Reserve.

    Internal Revenue Service 1
    See also mean reserve

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).