Putting this in very simple terms, it is a contract between the policy holder and the insurer where insurer agrees to pay the sum insured as per the contract to the beneficiary in the unfortunate event of death of the policy holder during the policy term, AND the policy holder agrees to pay the insurer a premium amount in one go or at regular intervals as per the contract.

This arrangement is plain and simple life insurance which is not something really popular as the policy holder does not get anything in return if this is plain and simple life insurance and he survives the policy term. Now what we need to understand here is that this was not an investment by the policy holder as this was a protection only plan and the premium paid was only to cover the risks by the insurer.