Question

Which of the following statements BEST describes the intent of a coinsurance clause in a major medical policy?

A) To limit the overall policy benefits
B) To encourage the insured to use in-network providers
C) To share the costs of covered expenses between the insurer and the insured
D) To exclude certain pre-existing conditions

Answer 1

The intent of a coinsurance clause in a major medical policy is to share the costs between the insurer and the insured, thereby reducing moral hazard and encouraging responsible use of medical services.

Step-by-step explanation:

The coinsurance clause in a major medical policy is designed with the intent of sharing the costs of covered expenses between the insurer and the insured. This is done by specifying that the insured party must pay a certain percentage of the incurred medical costs, while the insurer pays the remaining percentage. Coinsurance is an important cost-sharing strategy that helps to reduce moral hazard by ensuring that the insured party bears a portion of the financial risk. This can encourage more responsible use of medical services and helps prevent overutilization.