Amount At Risk

Updated: 17 January 2025

What Does Amount At Risk Mean?

The amount at risk refers to the portion of money a life insurance company must pay out in death benefits if the policyholder dies, after accounting for the cash value. This value is typically determined by subtracting the accumulated cash value of the policy from the total death benefit provided to the policyholder.

Insuranceopedia Explains Amount At Risk

Many life insurance policies accumulate cash value over time because a portion of the premiums is often invested to increase the policy’s value. However, the cash value usually does not grow large enough to exceed the death benefit owed by the insurer upon the policyholder’s death. As a result, the insurer remains responsible for paying the remaining amount after the cash value is provided to the beneficiaries. This remaining amount is referred to as the amount at risk. For instance, if a life insurance policy has a cash value of $50,000 and a death benefit of $200,000, the amount at risk is $150,000.

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