Preliminary term

{
  "id": "MLC-T-INS-002632",
  "term": "Preliminary term",
  "field": "Insurance and risk management",
  "definition": "An initial period of a life insurance policy, usually one year, during which the coverage is treated as term insurance for reserve valuation purposes. This method allows the insurer to establish lower first-year reserves than would be required under a net level premium valuation. The lower reserve requirement frees up more of the first-year premium to cover the high initial costs of issuing the policy, such as agent commissions and underwriting expenses.",
  "url": "https://mlchart.com/terminology/insurance/preliminary-term/"
}