In short, your face value is the amount of money your beneficiaries will receive from your insurance company at the time of your death. You might hear it called your death benefit, coverage amount or face amount. So when you buy life insurance, this is what you’re paying for.

What does face amount of insurance mean?

death benefit
The face value is the death benefit. This is the dollar amount that the policy owner’s beneficiaries will receive upon the death of the insured. The cash value is the amount you would receive if you surrendered the policy early, forfeiting the death benefit in return for cash up front.

What happens to the cash value of a life insurance policy?

Any remaining cash value left once the insured dies either gets added to the death benefit or is forfeited to the insurance company. The death benefit of a life insurance policy represents the face amount that will be paid out on a tax-free basis to the policy beneficiary when the insured person dies.

What is the face value of a whole life insurance policy?

The amount of money that your insurance provider put toward the policy is known as the face value and is the amount that will be paid out to your beneficiaries when you pass away. The face value of a whole life insurance policy is also known as the death benefit of the policy.

What is the cash value of whole life?

The amount of money that has accumulated is known as the cash value of the whole life policy. Only permanent life insurance policies, such as whole life and universal life, have a cash value account.

How does a paid up life insurance policy work?

The cash value is built up through the amount paid, in which if you pay $5, then you also accrue $5 in cash value. Paid-up additions also offer a death benefit and earn dividends/interest from the insurance company, which are then put into your cash value.