December 19, 2020 at 6:53 pm #1489ikhlef lounisParticipant
First thanks to anyone who contributed to get the AO back! Much appreciated!
Ver basic question for me today, maybe someone could shed a bit of light for me today. What is the difference between reserves and cash values on a whole life policy?
Thanks 🙂January 2, 2021 at 8:20 pm #1678Chuck RitzkeParticipant
Not entirely sure what you’re asking spefically…
Purpose? = Cash value intended to provide a fair value to surrendering policyholder. Reserve intended to define the amount(s) company must “reserve” to ensure they’re able to pay future benefits. Of course, that’s all an oversimplification.
Method of Calculation? – Is at a high level, often much the same but with different assumptions (if we’re talking about the traditional seriatim net reserve values per policy and not company level reserves based on cash flow testing and PBR, etc). Interest earning and expense allowance assumptions are generally more conservative for reserves (ie lower). Also you said “whole life” and not “universal life”. The latter has methods that vary from traditional. And as referenced parenthetically above, reserves are often calculated at the company (or line of business) level because the purpose is ensuring the company can pay future benefits.
Assumptions? – Generally (see purposes above as to why – also often somewhat prescribed by regulations) may differ (mortality, interest, expense allowances).
Hope this helps.March 26, 2021 at 6:35 am #3486williamramirezParticipant
I understand that monetary value is the amount of money you need for a month or a year’s stay. And the reserve is your reserve of money that you can set aside as an investment.March 28, 2021 at 3:04 pm #3520williamramirezParticipant
I understand that monetary value is the amount of money you need for a month or a year’s stay. And the reserve is your reserve of money that you can set aside as this investment.
Or invest in your own business or real estate.May 23, 2021 at 1:23 pm #4491Random CriticParticipant
I think best decision is 50/50June 9, 2021 at 10:29 am #4888john bettsParticipant
I think cash value is for daily expenditures, needs and even for your daily refreshment. While reserve money is for your future use and for your coming difficulties.August 3, 2023 at 1:42 pm #24376Rick UdawashParticipant
Think of it this way: reserves are like a rainy day fund for the insurance company. They set aside money to cover potential future claims and maintain financial stability. On the other hand, cash values are more like a savings account for you, the policyholder. As you make premium payments, a portion goes into this cash value, which grows over time. You can access this money or even take out a loan against it if needed.August 3, 2023 at 1:52 pm #24377Rick UdawashParticipant
And speaking of financial matters, if you’re ever looking for mortgage advice, I’d recommend checking Mortgage Broker in Northampton. They’ve got experts who can help you out.October 7, 2023 at 7:58 pm #24508James WhetzelBlocked
Good day! All you need to know is the information.
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