1. 3485 POINTS
    J Scott BurkePRO
    President, Newbury Inc., Evansville, Indiana
    The face amount means the amount the policy isinitially based on. It doesn't always equal the death benefit because during the first two or three policy years, some policies will only pay a % of the face amount. 
    Other policies will grow and pay higher amounts as the policy grows.
    Answered on April 21, 2013
  2. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    The face amount of the policy represents the  face amount the policy is scheduled to pay out.  In the case of a graded death benefit the policy will pay a reduced amount for the first 2 or three policy years before going to the actual face amount.  Some companies pay dividends.  These dividends can be used to buy additional insurance thus increasing the death benefit.  But dividends are not guaranteed  Should you die the beneficiary would receive the Face amount of the policy plus any paid up insurance accumulated by the dividends.  In the case of a Universal Life policy, the policy would pay the face amount plus if you choose you can have the death benefit increased by any cash value accumulated in the policy.  Because of the nature of Universal Life you need to make sure you are paying sufficient premium to keep the policy in force, otherwise the policy would lose the death benefit entirely.  Always read your annual statement if you have a Universal Life policy.
     
    Answered on April 22, 2013
  3. 110 POINTS
    Bryan McCloskey, CASL®
    Old Security Trust, West Chester, PA
    Two great responses so far! The other angle I would put on the question is that the "Face Amount" is the amount the insurance company promises to pay based on the contract that the insured or owner of the policy agreed to or entered into with the insurance company.

    For example, based on a term policy contract, if the insurance company promises to pay $250,000 of death benefit if the insured dies while still covered by the insurance, the beneficiary will receive $250,000 when the claim is paid. The "Face Amount" is $250,000.

    Based on a permanent policy (for example), the the insurance company promises to pay $250,000 of death benefit minus any outstanding loans against the policy. If the insured dies while still covered by the insurance, but had utilized(borrowed) $25,000 from the policy, the beneficiary will receive $225,000 when the claim is paid. The "Face Amount" is still $250,000, but the contract has wording that describes how much the beneficiaries are paid. (In some cases it can be "more" than the "Face Amount" based on gains in the contract and/or dividends.)

    There are numerous examples that could be listed, but between all of our answers, I sure do hope that helps you understand a bit more, and highlights the assistance that a qualified licensed insurance professional can offer you!
    Answered on April 22, 2013
  4. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    The face amount in life insurance means the amount of insurance you buy. The death benefit is the amount that is actually paid to the beneficiary when death occurs.

    The face amount almost always equals the death benefit in term insurance. In permanent insurance, the death benefit may be higher or lower than the face amount, depending on if the policy had strong growth, if there was a loan on the policy, and other reasons.
    Answered on February 11, 2015
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