Actuarial Reserve Calculator

No — this calculator is scoped to SURVIVAL-CONTINGENT benefits: a pension payout, a deferred annuity, or a pure endowment, all of which pay out only if the covered life or plan is still in force at maturity. That is why Mortality Rate LOWERS Required Reserve here — a higher death rate means fewer people survive to collect the benefit, shrinking the expected obligation. A death-benefit reserve (term or whole life insurance) works the opposite way: higher mortality means more claims are expected, which RAISES the reserve. Do not use this tool's mortality direction as a stand-in for a death-benefit policy reserve.

Yes. Present Value of Expenses is discounted year by year using the same combined survival-and-lapse persistency factor applied to the benefit obligation, following the standard gross-premium-reserve convention of weighting every future cash flow -- benefits and administrative expenses alike -- by the same in-force decrement, since ongoing administrative cost is only incurred on policies that are still in force. An earlier version of this calculator left Annual Expenses undiminished by either decrement, which overstated the expense reserve; that has been corrected.

PV of Obligations is simply Future Obligations discounted to the present at the Discount Rate, before any mortality, lapse, or expense adjustment. Required Reserve starts from that figure, reduces it for mortality and lapse decrements, and then adds the present value of ongoing administrative expenses -- also decremented the same way -- for the more complete estimate of what needs to be held today.

Yes, for the ranges this calculator operates over -- a higher Discount Rate reduces the present value of both the future obligations and the future expense stream, so Required Reserve falls as the Discount Rate rises. This mirrors real actuarial practice, where a higher valuation interest rate generally produces a lower reserve requirement for the same future cash flows. The Discount Rate input is limited to non-negative values here, since real statutory and GAAP valuation rates are set or floored by regulation and are essentially never negative in practice.

No. Real statutory and GAAP actuarial reserves are built from prescribed mortality and lapse tables rather than a single constant annual rate, use valuation interest rates set or bounded by regulation, and typically net expected future premium income against future benefits -- this calculator has no premium-income input at all. It is meant to illustrate how discounting, persistency, and expenses interact, not to replace a formal actuarial valuation.