6. Insurance and Annuity Reserves

  1. S. David Promislow

Published Online: 13 JAN 2011

DOI: 10.1002/9781119971528.ch6

Fundamentals of Actuarial Mathematics, Second Edition

Fundamentals of Actuarial Mathematics, Second Edition

How to Cite

Promislow, S. D. (2010) Insurance and Annuity Reserves, in Fundamentals of Actuarial Mathematics, Second Edition, John Wiley & Sons, Ltd, Chichester, UK. doi: 10.1002/9781119971528.ch6

Author Information

  1. York University, Toronto, Canada

Publication History

  1. Published Online: 13 JAN 2011
  2. Published Print: 17 DEC 2010

ISBN Information

Print ISBN: 9780470684115

Online ISBN: 9781119971528



  • insurance and annuity reserves;
  • reserve, no calculations - premiums and benefits, not being actuarially equivalent;
  • computing net cash flow vector - best for spreadsheet calculation;
  • endowment insurance - pure endowment, amounts same as final death benefits;
  • general pattern of reserves - insurance reserves, positive or negative;
  • negative reserves, on policies - insurance benefit costs, decreasing each year;
  • nonforfeiture values, and policyholders - withdrawal or lapse, or surrender;
  • recursion formulas - for making slight alterations in notation;
  • workings of insurance policy - risk–savings decomposition;
  • insurance policy, interest and survivorship investment - universal life and variable annuities


This chapter contains sections titled:

  • Introduction to reserves

  • The general pattern of reserves

  • Recursion

  • Detailed analysis of an insurance or annuity contract

  • Interest and mortality bases for reserves

  • Nonforfeiture values

  • Policies involving a ‘return of the reserve’

  • Premium difference and paid-up formulas

  • Universal life and variable annuities

  • Standard notation and terminology

  • Spreadsheet applications

  • Exercises