What type of contract states that one should not profit from their response to the policy?

An indemnity contract is designed specifically to ensure that a party is compensated for loss or damage but does not profit from the insurance policy. This principle is fundamental in insurance, as it aims to restore the insured to the financial position they were in prior to the loss, without allowing them to gain financially from their claim.

In practice, if the insured incurs a loss, the indemnity contract will provide compensation equivalent to the loss sustained, up to the policy limit, but will not pay out more than the actual financial detriment experienced. This helps to uphold the ethical standard of insurance, ensuring that insurance is used for protection against loss rather than as a means for profit.

The other options do not convey this principle. A beneficiary contract focuses more on the rights of the beneficiaries under a life insurance policy, a mutual benefit contract relates to arrangements that benefit both parties in a transaction, and a standard contract is a generic term that doesn't specifically address the nuances of indemnity in the context of insurance.