There are commonly two ways to do the licensing system. One is what you described and other is the way this plugin works. For this plugin to work you need a license key. This plugin offers a 30 days money back guarantee with no questions asked. Not all the plugins does that. So it all depends upon the policy (main concern being digitally delivered products are non-tangible).
If you are/has a developer, you are supposed to get a Developer license. But WPFront usually do not enforce that. You can get more information from the FAQ page on that.
Support and updates are for one year. But the license key/plugin will continue to work even after expiration.