A reserve that is maintained by an insurance company (in connection with life insurance) under a situation where the value of the future premiums exceeds the value of the payable benefits plus any expenses associated with insurance policies. Negative reserve arises whenever the accumulated cost of insurance to date is larger than the accumulated net premiums to date.

Since net premiums are calculated to correspond exactly to the contractual insurance benefits over the total period of a policy, a negative reserve implies that future net premiums have prompted in insurer to borrower the funds required to meet already accrued claim liabilities. Negative reserves are commonplace in specific types of insurance, particularly in connection with risks of decreasing term (e.g., disability benefits, family income and mortgage insurance plans, payor insurance), and accidental death benefits for different age groups, etc.

For an insurance company, a negative reserve is an asset.