What Is the Value of a Life Insurance Policy Called?
The value of a life-insurance policy is called the "face value." It's also referred to as the "death benefit." The insured is covered for the face value of the policy.
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Significance
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If the insured passes away, the life-insurance proceeds, or death benefit, is payable to a beneficiary chosen by the insured. The beneficiary has to file a claim to receive the funds.
Considerations
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The face value of the insurance policy is usually determined by the insurance company or agent, based on the specific needs of the insured. Life insurance serves as protection, to cover certain expenses, if the insured passes away.
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Identification
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Beneficiaries don't usually know the value of the life-insurance policy. In many cases, the beneficiary may not know he or she has been named as such.
Benefits
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Some policies are designed so that the death benefit, or face value, increases every year by various increments. The premiums increase as well.
Features
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The insured must continue to pay the premiums to keep the life-insurance policy current. Premiums can be paid monthly, quarterly or annually, depending on the arrangements made with the insurance company.
Types
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Whole life-insurance polices can also have a cash value. According to BankRate.com, the cash value is the amount of the policy you will receive if you cash it in before the maturity date or before your death. This amount can be different from the face amount or face value.
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