Assessment Plan

What Does Assessment Plan Mean?

An assessment plan is a type of insurance policy where the insured may be required to pay an additional premium if losses exceed the premiums collected.

This type of policy is also known as assessable insurance, natural premium insurance, or stipulated premium insurance.

Insuranceopedia Explains Assessment Plan

Assessment plans can be utilized for both life insurance and property insurance products. Most policies sold today work differently, with standard life insurance and homeowners coverage charging a set premium that does not change after a loss. Shoppers who want fixed-rate options often look at the average cost of life insurance or rankings of the best homeowners insurance companies, where the price is set when the policy starts. Under these plans, the insured pays an initial premium to the insurer. However, if the risk increases or the cost of losses exceeds the premium paid, the insurer may require an additional premium payment to cover the shortfall.