Prospective Reinsurance

See: Reinsurance.

Reinsurance refers to one insurance company providing insurance for another. Like when a cab driver takes an Uber home from work. Meanwhile, perspective reinsurance refers to a reinsurance policy that covers potential future events.

So...you have life insurance with Croakers Mutual. Croakers, in turn, has a reinsurance policy with Backstop Inc. In exchange for a portion of the proceeds (or a regular premium payment), Backstop will cover 70% of any claims made by Croakers' life insurance clients (including you).

However, neither Croakers nor Backstop have any idea when you'll die (unless they send out assassins to get you...in which case, weird business model). Both companies just use actuaries and other math to estimate the likely losses they will have to cover in any given space of time. The agreement between the companies counts as prospective reinsurance, because it covers events that haven't happened yet. Like your death.