Policy reserves are amounts set aside by the insurer out of their assets at the beginning of the policy period. What is the correct term used for these reserves?

The correct term for the amounts set aside by the insurer out of their assets at the beginning of the policy period is "policy reserves." These reserves are crucial for insurers as they represent the funds needed to pay future policyholder claims. By setting aside these amounts, insurers can ensure they have adequate financial resources to fulfill their obligations to policyholders as they arise over time.

Policy reserves are a key component of an insurer's financial stability and are meticulously calculated based on actuarial projections of future liabilities. This term specifically denotes the reserves associated with individual policies, highlighting the relationship between the policyholder and the insurance contract.

Understanding the concept of policy reserves is essential for anyone involved in the insurance industry, as it illustrates how insurers manage their capital and liabilities to maintain the promises made to their clients.