Interpolated terminal reserve (ITR) is a valuation method used to approximate the fair market value of a life insurance policy for gift, estate, or transfer purposes when no reliable market quote exists. ITR adds a proportion of the policy's reserve at the valuation date to unearned premium, adjusted for outstanding loans, to estimate value. It is commonly used for policies without significant marketability or when carrier-provided values are required for tax reporting and compliance. Documentation should reflect carrier calculations and applicable IRS guidance.

Advisors request ITR values from carriers when gifting or selling policies. The number supports Form 709 reporting and helps avoid valuation disputes with the IRS.