What is meant by the term "face amount" in a life insurance policy?

What is meant by the term "face amount" in a life insurance policy?

• A. The total premiums paid over the life of the policy
• B. The sum paid to the beneficiary upon insured's death
• C. The cash value available during the life of the policyholder
• D. The additional benefits added to the policy

Answer: (B)

The term "face amount" in a life insurance policy refers specifically to the sum that is paid to the beneficiary upon the death of the insured. This is fundamentally the main purpose of life insurance: to provide financial protection or support to the insured's loved ones when they pass away. The face amount is determined at the time the policy is issued and is stated clearly in the policy documents. This amount does not change unless the policyholder makes alterations to the policy, such as increasing the coverage or making rider adjustments. The other options highlight different aspects of life insurance policies but do not pertain to the definition of the face amount. The total premiums paid over the life of the policy represent a cost incurred by the policyholder, while the cash value reflects any accumulated savings component in permanent life insurance policies, which can be accessed during the life of the policyholder. Additional benefits added to the policy may enhance coverage but are separate from the core face amount that is payable upon death.

The term "face amount" in a life insurance policy refers specifically to the sum that is paid to the beneficiary upon the death of the insured. This is fundamentally the main purpose of life insurance: to provide financial protection or support to the insured's loved ones when they pass away. The face amount is determined at the time the policy is issued and is stated clearly in the policy documents. This amount does not change unless the policyholder makes alterations to the policy, such as increasing the coverage or making rider adjustments.

The other options highlight different aspects of life insurance policies but do not pertain to the definition of the face amount. The total premiums paid over the life of the policy represent a cost incurred by the policyholder, while the cash value reflects any accumulated savings component in permanent life insurance policies, which can be accessed during the life of the policyholder. Additional benefits added to the policy may enhance coverage but are separate from the core face amount that is payable upon death.