Sometimes, traditional insurance may not the most appropriate way to manage risk. When that is the case, a healthy alternative is parametric insurance. Parametric insurance will pay the policyholder based on certain measurements/indices whereas traditional insurance compensates the policyholder if a covered loss (as defined in the contract) occurs. To illustrate this contrast, in a certain parametric policy covering property, a different amount could be paid for each level of a severity index for the hurricane in addition to other criteria being met such as relative location to the storm.