Final answer:
The term 'Coordination of Benefits' describes the process used to prevent duplicate payments for the same loss under multiple insurance policies. It ensures that the combined coverage doesn't exceed the actual costs incurred, and is often used in healthcare where an individual might have more than one policy. The correct option is 3.
Step-by-step explanation:
The method used to prevent the insured from receiving a duplicate payment for losses under more than one insurance policy is called Coordination of Benefits.
This strategy is part of the insurance policy framework and is designed to maintain cost-effectiveness and ensure that the payment or coverage from multiple insurance policies does not exceed the total of the actual expenses or losses incurred by the insured.
The Coordination of Benefits comes into play in situations where an individual is covered by more than one health insurance plan, such as being under their own policy as well as a spouse's policy.
Policies may include various cost-sharing measures like deductibles, copayments, or coinsurance, which serve to minimize moral hazard by requiring the insured individual to cover a portion of the costs before receiving benefits from the insurance provider.
These measures also work to discourage overutilization of insurance coverage and encourage more responsible use of healthcare and other insured services.