Funds set aside for a benefit plan’s expenses by estimating data of the claims system and the plan’s prior history.

Accounting method that requires business organizations to report income in the period earned and to deduct expenses in the period incurred.

1. When a right is vested in a person, that right is said to accrue (to go) to the benefit of that person. 2. To report a transaction in the time period to which its effect relates.

Earnings on a stated sum of money that continues to increase until the money is paid out.

One factor used when calculating life insurance reserves. The formula is the accumulated cost of insurance equals the net single premium paid at the end of the term of coverage by the surviving insureds to give death benefits on the insureds who died during the term.

Accrued funds payable to policy owners but left with life insurance company to build up and earn interest.

Amount by which a qualified pension plan fails to meet the minimum funding legal standards. A plan with an accumulated funding deficiency is subject to a penalty tax and enforcement provisions. Also called funding deficiency.

Amount of money invested plus the interest earned.

Option under which a life insurance policy dividends are retained on deposit with the insurer to accrue interest. Also called accumulation option.