What is the term for the initial amount a policyholder pays before coverage begins?

The correct answer is the deductible. A deductible is the specific amount that a policyholder must pay out-of-pocket for covered healthcare services before the insurance plan starts to pay. This concept is crucial in insurance as it establishes the initial financial responsibility of the policyholder when they seek care.

For example, if a health insurance policy has a deductible of $1,000, the policyholder needs to pay that amount for medical services before the insurance begins to cover additional costs. This structure helps to manage both the costs for the insurer and encourages policyholders to be more judicious in their healthcare spending.

In contrast, a copayment refers to a fixed amount the insured pays for specific services at the time of the visit, while the premium is the amount paid periodically to keep the insurance policy active. Coinsurance involves sharing the costs of a service between the insurer and the insured after the deductible has been met. Each of these terms plays a distinct role in the insurance framework, but the deductible specifically represents that initial out-of-pocket threshold before coverage kicks in.