Full Preliminary Term Reserve Calculator
Calculate the full preliminary term valuation: the first year funds only a one-year term cost leaving zero terminal reserve, and later years use the renewal valuation premium.
Description
Illustrate the first-year zero terminal reserve and renewal valuation premium under a simplified full preliminary term method.
Full Preliminary Term Reserve helps you illustrate the first-year zero terminal reserve and renewal valuation premium under a simplified full preliminary term method.
Use this calculator to understand the defining first-year treatment of full preliminary term valuation. The first valuation premium funds one-year term insurance, leaving a zero terminal reserve for survivors, and renewal valuation begins afterward.
When to use Full Preliminary Term Reserve
Use this calculator to understand the defining first-year treatment of full preliminary term valuation. The first valuation premium funds one-year term insurance, leaving a zero terminal reserve for survivors, and renewal valuation begins afterward.1
How the calculation works
The initial premium is set equal to the discounted expected first-year death claim. After premium accumulation and claims, the fund per survivor is therefore zero. Under the tool's constant renewal mortality assumption, the renewal net premium simplifies to discounted mortality times benefit.2
V1 = 0; renewal valuation premium = v × qrenewal × B 1Inputs and interpretation
Enter initial and renewal annual death probabilities, benefit, and annual effective interest. The simplified renewal premium assumes constant mortality in all later years and annual end-of-year death benefits.
Limitations and assumptions
This is a teaching implementation, not a complete statutory reserve calculation. It excludes age-varying mortality, expenses, policy values, deficiency reserves, minimum standards, product-specific benefits, and jurisdictional rules.
References
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Supplementary Notes for Actuarial Mathematics for Life Contingent Risks — Society of Actuaries
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Loss reserving — Wikipedia contributors
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