Which term describes the amount of money that insurance does not cover and must be paid by the insured?

The term that describes the amount of money that insurance does not cover and must be paid by the insured is the deductible. A deductible is a specified amount that an insured party is responsible for paying out-of-pocket before the insurance coverage takes effect. For example, if a policy has a $500 deductible, the insured will need to cover the first $500 of any claim before the insurance company starts to pay its share. Understanding the role of deductibles is crucial for insured individuals as it affects their overall out-of-pocket expenses when they file a claim.

In contrast, the premium refers to the amount paid periodically to maintain the insurance policy, coinsurance involves the proportion of costs that the insured must pay in addition to their deductible, and policy limits define the maximum amount an insurer will pay for a covered loss. Each of these terms relates to the insurance process but represents different financial responsibilities in the context of coverage.