Final answer:
A deductible, copayment, or coinsurance are policy elements that can add or take away coverage in an insurance policy, requiring the policyholder to share in the cost to reduce moral hazard.
Step-by-step explanation:
The term for a policy element that adds or takes away coverage in an insurance policy is often referred to as a deductible, copayment, or coinsurance. These elements are used as financial management tools within insurance policies to mandate that the policyholder bears a portion of the financial risk involved, effectively reducing what is known as moral hazard.
A deductible is the amount that must be paid out-of-pocket by the policyholder before the insurance company begins to pay their share. For example, an auto insurance policy may require the policyholder to pay the first $500 of a claim.
A copayment is a fixed amount a policyholder pays for a service, typically at the time of the service. As an example, a health insurance policy might have a $20 copayment for each doctor's visit.
Coinsurance is a cost-sharing agreement where the policyholder pays a certain percentage of the total cost, while the insurance company pays the remaining amount. For instance, following a house fire, if an insurance policy covers 80% of the repair costs, the homeowner would be responsible for the remaining 20%.