What is the term for the set amount of money that the insured must pay out of pocket before the insurance coverage begins?

The term that describes the specific amount of money an insured individual is required to pay out of pocket before their insurance begins to cover expenses is known as a deductible. This payment is typically related to various types of insurance, including health and auto insurance, and is designed to share the risk between the insurer and the insured.

When a deductible is established, it ensures that the insured has a personal stake in the healthcare or claim decision-making process, as they will need to pay for a portion of their expenses upfront before the insurance provider takes over and starts to cover additional costs. This arrangement serves multiple purposes, such as reducing the number of small claims made and helping to keep premium costs lower.

In contrast, a co-payment refers to a fixed amount paid by the insured for specific services or prescription drugs, while exclusions are specific conditions or circumstances that are not covered by the insurance policy. Coinsurance refers to the percentage of costs that the insured must pay after meeting their deductible, rather than a set amount, further distinguishing it from the concept of a deductible.