Yearly Renewable Term Plan of Reinsurance


DEFINITION of 'Yearly Renewable Term Plan of Reinsurance'

A type of life reinsurance where mortality risks are transferred to a reinsurer. In the yearly renewable term plan of reinsurance, the primary insurer (the ceding company) yields to a reinsurer its net amount at risk (the difference between the face value and the cash value of a life insurance policy) for the amount that is greater than the retention limit on a life insurance policy to a reinsurer. If the insured dies, the reinsurance pays the portion of the death benefit that is equal to the net amount of risk.

Also called yearly renewable term (YRT) or risk premium reinsurance basis.

BREAKING DOWN 'Yearly Renewable Term Plan of Reinsurance'

Reinsurance allows insurance companies to reduce the financial risks associated with insurance claims by spreading some of the risk to another institution. A yearly renewable term plan of reinsurance allows the primary insurance company to spread some of the risk involved in a life insurance policy to another institution. The premium paid by the ceding company for the reinsurance varies based on the policyholder's age, plan and policy year.

  1. Ceding Company

    An insurance company that passes the part or all of its risks ...
  2. Death Benefit

    The amount on a life insurance policy or pension that is payable ...
  3. Life Insurance

    A protection against the loss of income that would result if ...
  4. Actuarial Risk

    The risk that the assumptions that actuaries implement into a ...
  5. Reinsurance

    The practice of insurers transferring portions of risk portfolios ...
  6. Insurance Underwriter

    A financial professional that evaluates the risks of insuring ...
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