Final answer:
Option (c), The term for the amount a policyholder must pay before the insurance company starts paying claims is 'deductible'. It's a measure to reduce moral hazard by involving the policyholder in the cost-sharing of the insured service or benefit.
Step-by-step explanation:
The amount you must pay out before the insurance company begins to pay claims is called a deductible. This is the maximum amount that the policyholder must pay out-of-pocket before the insurance coverage kicks in.
Insurance policies may also have a copayment, which is a flat fee that the policyholder is responsible for before receiving services, or coinsurance, where the policyholder and insurance company share the costs at a certain percentage. These methods are designed to reduce moral hazard by ensuring that the insured party bears some of the cost.