What is the amount of money that an insured pays out of pocket before insurance kicks in?

The amount of money that an insured pays out of pocket before their insurance coverage begins to pay is referred to as a deductible. The deductible is a key component of many insurance policies, designed to share the financial responsibility between the insurer and the insured. For instance, if a policy has a deductible of $1,000, the insured must pay the first $1,000 of any covered expenses before the insurance company pays anything of the claim.

In contrast, a premium is the amount paid for the insurance policy itself, typically on a monthly or annual basis. A co-pay is a fixed amount the insured pays for specific services, such as a doctor's visit, at the time of service. Excess, in this context, is often related to certain types of insurance arrangements where it indicates the amount above a specified limit that the insured is responsible for after coverage begins. Hence, in this scenario, the deductible is the correct term that defines the out-of-pocket expenses the insured incurs before their insurance policy activates.