preliminary term reserve

  • A policy reserve computed to allow for some of the higher first-year expense on a policy. A lesser portion 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.

    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).