What Is Face Amount? Definition | Epic Life Glossary

Why it matters

If you buy a policy with a $15,000 face amount, that is the starting payout your family can expect. The actual payout can be lower if you have an unpaid loan, or in a graded plan if death occurs early from natural causes. It can be higher with riders such as accidental death. Compare the face amount with your real costs when you choose coverage.

Source: law.cornell.edu

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Related terms

Death Benefit: A death benefit is the money a life insurance carrier pays to the beneficiary when the insured dies. It is usually paid as a lump sum and is generally income tax free to the beneficiary.
Coverage Amount: The coverage amount is the total death benefit you choose to buy. It should reflect your debts, your family's income needs, and final costs such as the funeral.
Graded Death Benefit: A graded death benefit is a payout that is only part of the face amount, or a return of premiums with interest, if the insured dies of natural causes in the first years. Full coverage starts after that waiting period.
Policy Loan: A policy loan is money you borrow from the carrier using your policy's cash value as collateral. The policy stays in force if you keep paying interest and the loan stays below the cash value.
Premium: A premium is the amount you pay to keep an insurance policy active. You can pay it monthly, quarterly, semiannually, or annually, depending on the carrier.

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