Question 80

Shared losses in agreed proportion

Co-insurance in health insurance refers to the arrangement where the insured and the insurer share the costs of covered healthcare services in a predetermined proportion. This means that after the insured pays their deductible, they are responsible for a certain percentage of the remaining costs, while the insurer covers the rest.

A) Comprehensive insurance

Comprehensive insurance is a type of insurance that provides coverage for a broad range of risks, but it does not specifically address the concept of co-insurance. Therefore, this option is incorrect as it does not relate directly to the sharing of costs between the insured and insurer.

B) Stop-loss provision

A stop-loss provision is a feature that limits the amount an insured person has to pay out-of-pocket in a given period, after which the insurer pays 100% of covered expenses. While this is related to health insurance, it does not define co-insurance, making this option incorrect.

C) Shared losses in agreed proportion

This option accurately describes co-insurance, where both the insurer and the insured share the costs of medical expenses according to a predetermined percentage. This principle underlies how co-insurance functions in health insurance policies.

D) Percentage sharing

Percentage sharing is a broad term that could refer to various financial arrangements. While it can describe co-insurance, it lacks the specificity of the term "shared losses in agreed proportion," which more accurately captures the essence of co-insurance. Thus, this option is less precise.

Conclusion

The correct answer, "shared losses in agreed proportion," distinctly defines co-insurance as it emphasizes the collaborative nature of cost-sharing between the insurer and insured. Other options either miss the specific meaning of co-insurance or introduce concepts related to health insurance without addressing the co-insurance mechanism directly.