Tabular Plan
What Does Tabular Plan Mean?
A tabular plan is a method for calculating insurance premiums, where a table is used to determine the appropriate premium based on a policyholder’s level of risk. The table lists the maximum and minimum rates for the specific policy. It is the responsibility of the underwriter to refer to these figures, apply any discounts or adjustments, and use their judgment to determine the final premium rate.
Insuranceopedia Explains Tabular Plan
To determine the appropriate premium rates, an underwriter must consider both risk factors and any applicable discounts, as well as a tax multiplier, to arrive at a final amount between the minimum and maximum rates. Premiums vary based on risk, as different individuals present different levels of risk. For instance, in health insurance, someone who has smoked for 40 years poses a higher risk than a non-smoker. As a result, lower-risk policyholders may qualify for more discounts, while higher-risk individuals typically face higher premiums, due to the increased likelihood of a claim. In summary, tabular plans help insurers adjust their premium rates to account for risk.
