Upon the death of the person whose life was insured by the policy, Life Insurance will pay out the face amount of the policy.
If Term Insurance, the policy will not pay anything if you have missed over one month of payments or if the policy Term has ended and you have not renewed or converted your policy. If death occurs during the years that a Term policy is in effect, the beneficiary will receive the face amount for which the policy was taken out.
If Whole or Universal Life and you decide to end the policy early, you could get a payout of the surrender value of the policy. This amount is approximately the same amount as the cash value of your policy, minus surrender charges. Or you could borrow from the cash value of the policy, or do a partial surrender. If you keep your policy in effect until death, it will pay out at least the face amount of the policy, possibly more.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
If you consider the “payout” to be the death benefit, the average person receives much more than the sum of premiums paid and has enjoyed peace of mind through the process. If someone lives to life expectancy they will discover that the cheapest life insurance was not the one with the lowest premium rather it was the one with the highest premium because if became paid up long before death and resulted in a payout far greater than the sum of premiums.
That is a great question! The amount that your policy pays to the beneficiary is called the face amount, or death benefit. It is the stated sum on the policy , ( the large number) and there will also be a smaller number called the surrender value. If the insured passes away, the company pays the face value ( minus any loans, or unpaid premiums) to the beneficiary. If you decide to cash the policy out early, the surrender value (minus loans, fees, and unpaid premiums) are paid to the policy owner. Thanks for asking!
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If Term Insurance, the policy will not pay anything if you have missed over one month of payments or if the policy Term has ended and you have not renewed or converted your policy. If death occurs during the years that a Term policy is in effect, the beneficiary will receive the face amount for which the policy was taken out.
If Whole or Universal Life and you decide to end the policy early, you could get a payout of the surrender value of the policy. This amount is approximately the same amount as the cash value of your policy, minus surrender charges. Or you could borrow from the cash value of the policy, or do a partial surrender. If you keep your policy in effect until death, it will pay out at least the face amount of the policy, possibly more.