What Does Tabular Plan Mean?
A tabular plan is a strategy for calculating insurance premiums in which a table is used to help determine what a policyholder's premiums should be, relative to their level of risk. The table includes the maximum and minimum rates for the particular policy. It is up to the underwriter to refer to the figures, apply any discounts or additions, and use their judgment to generate the final premium rate.
Insuranceopedia Explains Tabular Plan
To come up with the appropriate premium rates, an underwriter must take into account risk as well as discounts and a tax multiplier to arrive at a number between the minimum and maximum. In terms of risk, premiums for different policyholders vary because different people carry different risks. For example, in the context of health insurance, someone who has smoked cigarettes for 40 years carries a higher risk than non-smokers. Therefore, a lower risk policyholder may be eligible for more discounts, and because higher risk means a higher likelihood of loss for the insurer, it typically means higher premiums. In sum, tabular plans hedge an insurer's premium rates against risk.