What is Face Value?
Face Value, also known as the coverage amount or policy limit, is the initial sum of money that the life insurance policy is intended to pay out to beneficiaries upon the insured person’s death. This amount is chosen when the policy is purchased and is usually reflected in the premiums paid.
Over time, some policies allow for the face value to increase due to accumulated cash value or dividends. However, the face value generally represents the base death benefit amount, making it an important factor in assessing whether a policy will meet a policyholder’s financial goals for their loved ones.