Policy reserves (intro)
General · Mathematics
Study notes
Q: Policy: A = 0.3, P = 0.02, ä = 14 at time 5 (age 35). Find reserve. Prospective: V₅ = A_35-P×ä_35 = 0.3-0.02×14 = 0.3-0.28 = 0.02. Per ₹100000: ₹2000 reserve! Meaning: insurer holds ₹2000 (future benefits exceed premiums!). Early: V ≈ 0; grows over time! (Reserves: insurer's savings!)