Final answer:
A deductible is the maximum amount that the policyholder must pay out-of-pocket before the insurance company pays the rest of the bill. Copayment is a flat fee paid by the policyholder before receiving services. Coinsurance requires the policyholder to pay a certain percentage of costs.
Step-by-step explanation:
Many insurance policies have deductibles, copayments, or coinsurance. A deductible is the maximum amount that the policyholder must pay out-of-pocket before the insurance company pays the rest of the bill. A copayment is a flat fee that an insurance policy-holder must pay before receiving services. Coinsurance requires the policyholder to pay a certain percentage of costs. Deductibles, copayments, and coinsurance reduce moral hazard by requiring the insured party to bear some of the costs before collecting insurance benefits.