The tabular-value reserve method is a means of determining the necessary reserve amounts for certain claims based on data derived from mortality tables. These reserves are set aside to ensure that claims can be satisfied, should they need to be, within a certain amount of time.
Insurance companies must have enough money on hand to pay out benefits when a policyholder files a claim. To prevent themselves from coming up short on these funds, they try to anticipate the necessary loss reserves for each claim. One way to do so is the tabular value method, which relies on data from mortality tables to derive an appropriate reserve amount.
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