Home Forums Life Cash Value vs Reserve


Viewing 10 posts - 1 through 10 (of 10 total)
  • Author
  • #1489
    ikhlef lounis

      Hello all,

      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 🙂

      Chuck Ritzke

        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.


          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.


            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.


            Random Critic

              I think best decision is 50/50

              john betts

                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.

                Rick Udawash

                  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.

                  Rick Udawash

                    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.

                    James Whetzel

                      Good day! All you need to know is the information.

                      henrry richerd

                        Cash Value and Reserve are two important concepts in insurance, particularly in life insurance.

                        Cash Value refers to the portion of a permanent life insurance policy that builds up over time as the policyholder pays premiums. It acts as a savings component, growing tax-deferred and can be borrowed against or withdrawn by the policyholder. The cash value increases as the policy ages, provided premiums are paid.

                        Reserve, on the other hand, is the amount that insurance companies set aside to ensure they can meet future policyholder claims and obligations. It’s a liability on the insurer’s balance sheet, representing the funds reserved to pay future benefits. Reserves ensure the insurer’s financial stability and compliance with regulatory requirements.

                        While cash value benefits the policyholder, reserves are crucial for the insurer’s solvency and ability to meet its long-term commitments.

                      Viewing 10 posts - 1 through 10 (of 10 total)
                      • You must be logged in to reply to this topic.