DEFINITION
Commissioner’s Reserve Valuation Method

A method of computing policy reserves to allow for some of the higher first-year expense on a policy. A lesser part of the first year’s premium paid by the insured is used for reserve purposes than in later years. The maximum difference between first-year and renewal premiums at any age is equal to the difference between a 19-paid life insurance policy issued at one age higher, and a one-year premium at the issue age. The difference in premiums (expense layouts) is gradually made up over the premium paying period of the policy.

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