Which type of insurance policy focuses mainly on protecting against the risk of severe health issues?

The correct answer is indeed Major medical insurance policy. This type of insurance is specifically designed to cover significant health care expenses that can arise from serious medical conditions or extended health care needs. Major medical insurance typically includes benefits for hospital stays, surgeries, preventive care, and other high-cost medical services. It provides financial protection against catastrophic health events, which can be costly and might exceed the capabilities of standard health insurance plans.

In contrast, other types of insurance listed do not primarily focus on health issues. Life insurance, which encompasses both term and whole life policies, is aimed at providing a death benefit to beneficiaries upon the policyholder's death, rather than covering healthcare expenses. Term insurance is a temporary form of life insurance that lasts for a specified period, while whole life insurance provides coverage for the insured's entire life with an investment component. Both of these do not address the financial risks associated with severe health conditions.