when setting up a reinsurance agreement the ceding company will prepare a schedule of the net amount at risk for each policy year the net amount at risk on a life insurance policy decreases over time as the insured pays premiums which adds to its accrued cash value 
for example consider a whole life insurance policy issued for a face value of 100 000 at the time of issue the entire 100 000 is at risk but as its cash value accumulates it functions as a reserve account which reduces the net amount at risk for the insurance company therefore if the cash value of the insurance policy rises to 60 000 by its 30th year the net amount at risk is then 40 000 once the ceding company calculates the net amount at risk each year the reinsurer develops a schedule of yearly renewable term premiums for reinsurance based on this schedule the reinsurance premiums paid by the ceding company vary based on the policyholder s age plan and policy year 1 the premiums are renewed yearly under the renewable term reinsurance policy if a claim is filed the reinsurer would remit payment for the assumed portion of the policy s net amount at risk 