Futures insurance refers to the business model that agricultural operators or enterprises buy futures price insurance products from insurance companies to avoid market price risks. Insurance companies transfer risks by buying OTC options from futures operating institutions, and futures operating institutions use the futures market to hedge risks. Futures insurance is a kind of insurance developed on the basis of providing price hedging tools for agricultural operators.

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The price change of agricultural products is one of the important factors affecting farmers' income. Agricultural operators need strong professional knowledge, operational experience and financial guarantee to manage market risks directly through the futures market, which is a great obstacle for ordinary farmers.

Compared with direct participation in the futures market, insurance products are much more familiar to farmers, and they do not need to consider futures rules such as margin occupation and forced liquidation, so they are more easily understood and accepted by farmers. In addition, insurance companies have stronger comprehensive strength and better basic service foundation, and price insurance products are more suitable for protecting farmers' income.

Generally speaking, "insurance futures" provides an operable hedging tool for farmers, transfers the price risks faced by farmers to the futures market, effectively improves the connection mechanism between agricultural producers and operators and the futures market, and is a conveyor belt between the price risks faced by farmers or enterprises and the futures market. Rational utilization and development can give full play to the risk management function of futures market.