Simple English definitions for legal terms
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A mean reserve is a term used in insurance to refer to the average of the beginning and ending reserves of a policy year. A reserve is a fund of money set aside by a bank or insurance company to cover future liabilities. For example, an insurance company may set aside a mean reserve to cover potential claims from policyholders. This helps ensure that the company has enough money to pay out claims when they arise.
Definition: Mean reserve is a term used in insurance to refer to the average of the beginning reserve and the ending reserve of a policy year. Reserve, on the other hand, refers to something retained or stored for future use, such as a fund of money set aside by a bank or an insurance company to cover future liabilities.
Examples:
For instance, an insurance company may calculate the mean reserve of a policy year by adding the beginning reserve and the ending reserve and dividing the sum by two. This helps the company to estimate the amount of money it needs to set aside to cover future claims. Similarly, a bank may maintain a required reserve to ensure that it has enough cash on hand to meet the demands of its depositors.