Definition of Yearly Renewable Term Plan of Reinsurance (YRTPR)
Yearly renewable term plan of Reinsurance is a form of proportional reinsurance in which the death/mortality risks are ceded by a primary insurance organization to a reinsurer. It is basically a one-year life insurance policy; YRTPR gives policy holder a quotation/estimate for the year the insurance is bought. The amount quoted is for the policy holder at the given year. And same time next year a policy holder will pay a premium for a person in his/her exact position but one year older. This cycle continues and after two years a policy holder will pay for a person but two years older.
Explanation of Yearly Renewable Term Plan of Reinsurance (YRTPR)
The ceding organization and reinsurer decide that how the risk associated with the policy will be shared among them. A plan of the total amount at risk each year is then prepared by a ceding organization. The reinsurer prepares a plan for yearly renewable term premium rates. Then, the ceding organization pays the insurer the predetermined premiums for the suitable net amounts at risk every year. In case of a claim, the reinsurer would remit the amount paid by the ceding organization for the anticipated portion of the policy’s net amount at risk.