What Does Derivative Contract Mean?

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What does Derivative Contract mean? Read on to discover the definition & meaning of the term Derivative Contract - to help you better understand the language used in insurance policies.

Derivative Contract

Derivative Contract

A financial contract (i.e., a promise to pay an amount to the holder of the contract at a specified time or under specified conditions) where the value of the contract is based on certain variables, such as an index of commodity prices.

We hope the you have a better understanding of the meaning of Derivative Contract.

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