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.

RELATED TERMS
  1. Reinsurer

    A reinsurer is a company that provides financial protection to ...
  2. Reinsurance Credit

    An accounting entry made by an insurer for premiums ceded to ...
  3. Reinsurance Ticket

    A notification made by an insurer which discloses the different ...
  4. Reinsurance Assisted Placement

    Insurance business that is developed with the help of a reinsurance ...
  5. Portfolio Reinsurance

    A type of reinsurance contract in which an insurer has a large ...
  6. Excess Of Loss Reinsurance

    Excess of loss reinsurance is a type of reinsurance in which ...
Related Articles
  1. Insurance

    When Things Go Awry, Insurers Get Reinsured

    Guru Warren Buffett is making this sector popular. Learn more here.
  2. Insurance

    Facultative vs. Treaty Reinsurance: Differences and Examples

    Reinsurance companies offer insurance to other insurers in case the traditional insurer does not have enough money to pay claims against its written policies.
  3. Tech

    The Reinsurance Industry: An Inside Look (BRK.A)

    Warren Buffett has a major influence on the global reinsurance market, which has seen momentum in 2016 for higher revenue.
  4. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  5. Insurance

    Third Point Reinsurance Notes Largest Profit in Years

    Third Point Reinsurance saw a tripling of net income in the second quarter of 2016 over last year.
  6. Taxes

    2 Ways Hedge Funds Avoid Paying Taxes

    Learn about two strategies hedge funds use to minimize their tax liabilities. Read why some hedge funds are in the reinsurance business in Bermuda.
  7. Insurance

    World's Top 10 Insurance Companies

    These are the 10 largest insurance companies in the world.
  8. Financial Advisor

    Advising FAs: Explaining Life Insurance to a Client

    Life insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death.
Hot Definitions
  1. Risk Tolerance

    The degree of variability in investment returns that an individual is willing to withstand. Risk tolerance is an important ...
  2. Donchian Channels

    A moving average indicator developed by Richard Donchian. It plots the highest high and lowest low over the last period time ...
  3. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, ...
  4. Moving Average - MA

    A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out ...
  5. Stop Order

    A stop order is an order to buy or sell a security when its price increases past a particular point in order to limit losses ...
  6. Inflation

    The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of ...
Trading Center