Put Option

What Does Put Option Mean?

A put option is a contract that grants an investor the right to sell a specific security or investment at a predetermined price within a defined time frame. In the context of insurance, put options also apply to life insurance policies, giving policyholders the option to sell their policies for a set price within a specified period.

Insuranceopedia Explains Put Option

Put options appeal to many investors and life insurance policyholders because they help mitigate the risk of market volatility. For example, if the stock market declines and the value of a life insurance policy drops significantly, a put option allows the policyholder to sell the policy for the pre-agreed amount. In essence, put options for life insurance policies serve as insurance for the policies themselves.