Dictionary of Insurance Terms: terminal reserve
terminal reserve
life insurance reserve at the end of any policy year. Insurers are required by state regulatory authorities to set up reserves to pay for future claims. The initial reserve is the reserve at the beginning of the policy year; the mean reserve is the average of the initial reserve and the terminal reserve for that year. The terminal reserve is used for dividend distributions and to set nonforfeiture values for cash value life insurance. The terminal reserve for one policy year is the initial reserve for the next policy year.
