What characteristic of an insurance contract is described when an insured pays a $100 premium for coverage of $10,000?

The characteristic being described is aleatory. In insurance, aleatory contracts are those where the values exchanged by the parties involved are not equal, reflecting an element of chance or uncertainty. In this scenario, the insured pays a relatively small premium of $100 in exchange for a potential benefit of $10,000, which showcases this imbalance. The outcome of the contract depends largely on uncertain future events—namely, whether the insured event occurs or not. This unequal exchange exemplifies the concept of aleatory contracts where risk and reward are aligned with uncertainty.

In contrast, a conditional characteristic of an insurance contract requires certain conditions to be met for coverage to be valid. Indemnity relates to a principle of restoring the insured to their financial state prior to a loss, ensuring they do not profit from the insurance but are compensated fairly for their loss. Contractual implies the agreement's enforceability and mutual obligations but doesn’t capture the essence of chance inherent in this particular situation. Thus, the focus on the unequal exchange in the context of risk highlights aleatory as the correct characteristic.