Given answer from Mike Scott is correct. I would like to add:
Think about Reserved Instance (RI) like a discount and not like a running EC2 instance. If you purchase a RI for 1 year, the respective discount is available for 365 days.
When you purchase a Reserved Instance, you are billed for every hour or second during the entire Reserved Instance term that you select, regardless of whether the instance is running or not.
For example, if you own three Reserved Instances with the same instance attributes and region (or Availability Zone if applicable), the billing system checks each hour to see how many total instances you have running that match those parameters. If it is three or less, you will be charged the Reserved Instance rate for each matching instance running that hour. If more than three are running, you will be charged the On-Demand rate for the additional instances.
Purchases of Reserved Instances are non-refundable.
How Billing Works