Final answer:
The payment made periodically to keep an insurance policy active is known as a premium. The correct answer is option b).
Step-by-step explanation:
The payment made periodically to keep an insurance policy in force is called a premium. Insurance policies employ various cost-sharing mechanisms such as deductibles, copayments, and coinsurance to reduce moral hazard by having the insured party share in the financial burden of their covered expenses.
A deductible refers to the amount that policyholders must pay out-of-pocket before the insurance company contributes to the bill. A copayment is a fixed fee that the policyholder pays typically at the time of receiving a service.
Coinsurance involves a percentage that the policyholder pays for covered services after meeting their deductible. Collectively, deductibles, copayments, and coinsurance ensure that policyholders are engaged financially in their healthcare, which can lead to more careful utilization of services and thus help contain costs.