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One is for the sole purpose of protection so that the dependents of a person can be supported after the demise of the insured person.

Such policies are known as term insurance policies.

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However, a person may make anybody the beneficiary of the policy.

The insurance policy is a legal contract between the insurer and the insured.

He or she knows that his family or dependents won’t have to bear any hardships even if he dies.

In most cases, the dependents include the spouse, children, and parents.

The objective of this limitation is to prevent misuse of the policy and give insurance cover only to the deserving parties.