Definition

• The insurance face amount is the sum that a life insurance policy will pay upon the occurrence of a qualifying event. The name comes from the fact that this amount is typically shown on the "face" or top sheet of the policy.
  
  

Qualifying Events

• Most commonly, death of the policyholder is the "qualifying event" that triggers payment of the face amount. In the case of a whole life policy, the maturity date (typically when the insured person reaches age 100) can also be a qualifying event.
  
  

Disability

• Some life insurance policies pay all or part of the face amount if the insured person suffers total disability.
  
  

Dividends

• Dividends paid to policyholders are not included in the policy's face amount.
  
  

Variable Face Amount

• The face value of indexed life insurance policies varies with the performance of the financial index the policy follows. Also, some life insurance policies provide a face amount that decreases over time (usually to cover a mortgage or installment loan) in exchange for a lower policy premium.