Governments around the world encourage people to go for insurance.
The insurance company may demand more documents to ascertain the identity of the beneficiary or the cause of death of the insured.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.At the same time, there is a bit of commerce involved in this.The insurance companies insure a person in exchange for regular premiums.In many other cases, premiums do not come under the ambit of taxation laws.
In the US and the UK, by and large, premiums paid for life insurance are not tax deductible.
In simple words, the person who pays the premiums is the policy owner while the person who is covered by the policy is the insured person. Most of the life insurance policies do not cover deaths due to man-made events.
These include riots, commotion, suicide and many other similar things.
There is an accumulation of money in these types of policies and there is a minimum sum assured to the beneficiary at the maturity of the policy. Prima facie, they are doing a good work by insuring people against any untoward incident.
This way, they help the dependents live a normal life despite the demise of the concerning person.
However, a person may make anybody the beneficiary of the policy.