Definition - What does Face Amount mean?
Face amount is the gross total amount of cash quantified in an agreement or insurance policy. It is used for life insurance policies. The cash value is often stated on the top sheet of the policy, hence the name face amount. In other words, it amounts to the total value paid once the policy matures, the policyholder passes on, or if the holder of the insurance coverage becomes completely disabled.
Insuranceopedia explains Face Amount
The face amount cannot be altered as it is dependent on the value available and agreed upon when the policy was acquired, thereby ensuring that all named beneficiaries receive the cash value as stated, regardless any kind of change in the investment policies. The face amount is a promissory note of the agreed policy, no matter the market value. When connected with the insurance policies, it is worth much more than it seems in the end as it is an accumulation of the interest as well as the original investment.
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