modified preliminary term reserve

  • A policy reserve computed to allow for some of the higher first-year expense on a policy. A lesser part of the first year’s premium paid by the insured is used for reserve purposes than in later years. There are various methods for arriving at the difference between first-year and renewal net premiums. The Illinois standard method and the commissioner’s reserve valuation method (CRVM) are both modified preliminary term valuation methods.

    Internal Revenue Service 1

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).