View Full Version : reserves for n-yr term insurance
04-22-2002, 06:11 PM
I know that the reserve for a fully continuous whole life insurance is zero, under constant force. It also seems that the reserves for fully continuous n-yr term insurance is zero, under constant force. But I can't seem to find this stated any where.
I think I have proven it to myself, but am looking for assurance I haven't done something wrong.
edited for stupidity. What you can't read my mind!
04-22-2002, 07:27 PM
Saucy, I think you repeated yourself where you didn't mean to. I don't understand your question.
Been There Done That
04-26-2002, 10:32 AM
The reserve is the difference between the actuarial present value of future premiums and the actuarial present value of future losses.
In the case of a fully continuous life policy with constant mortality, the premiums paid are instantaneously equal to the instantaneous mortality, so there is never any reserve.
Things would be different if there were an endowment, as you would need to start accruing for it. Also, if there were a mismatch between when premiums are paid and when the death benefit is paid, you would need a reserve to correct for the mismatch.
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