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What does face value mean on a life insurance policy? |
What does face value mean on a life insurance policy? The previous answer is the most correct. The "face value" of a life insurance policy is the death benefit. However it's subject to other clauses in the policy. Examples: If the policy has a "double indemnity" clause, the beneficiary receives double the face value in case of accidental death. Not all life insurance earns interest or dividends and some term policies have a "decreasing face value" clause or payout based on the aging of the insured each year. Many policies have a drastic cut in payout based on the insured reaching an "attained age clause". Don't confuse "current coverage or "current value" with "face value". The face value is usually written on the "Schedule of Benefits" page in a life insurance policy and is the amount the policy was originally written for factoring in any debts and/or earnings and any other material clauses as previously mentioned. It means the total value of the life insurance policy if the insured dies. Face value is the amount the beneficiary(s) receive when/if the insured dies. The previous answers are partially correct; it is the amount that the policy would pay if nothing changed from the time it was taken out. But lots of things can change: the policy may accrue dividends, which increase the total worth, or loans may be taken against the cash value of the policy, which will decrease the size of a payout. The face value doesn't change, but the net payout can easily be more - or less. How much they pay out if you die. agent, 21+ years The face value of a life insurance policy is the "death benefit". In the case of so-called "double indemnity" life insurance policies, the beneficiary receives double the face value in case of accidental death. It is the amount assured on the insured against death. It is also known as "Sum assured". |
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