In what type of insurance plan is a network of doctors and hospitals created to provide services at reduced costs?

The correct answer relates to a Preferred Provider Organization (PPO) plan, which is designed around a network of healthcare providers. In a PPO, insurance companies establish relationships with a range of doctors, specialists, and hospitals to create a network. Providers within this network agree to offer services at reduced rates in exchange for the volume of patients that the insurance plan brings to them.

Members of a PPO have the flexibility to receive care from any healthcare provider, but they will pay lower out-of-pocket costs if they choose from within the network. This approach encourages patients to utilize the network's providers, which are often subject to negotiated rates, hence leading to lower costs for both the insurance company and the insured.

While Health Maintenance Organizations (HMOs) also operate on a network basis, the key distinction is that HMOs typically require members to select a primary care physician and obtain referrals for specialist services, limiting flexibility compared to a PPO. Personal Injury Protection (PIP) primarily covers medical expenses and lost wages resulting from accidents, while term life insurance is unrelated to service networks as it pertains to providing a death benefit to beneficiaries.