700 70 500

What is Face Amount in Life insurance? Everything you need to know.


The face amount in life insurance is the sum equated to the life insurance policy's worth, also known as the death benefit or the face value of life insurance. In short, the face amount is the sum of money owed to your chosen beneficiary when the policy expires.

In this article, we will cover face amounts in life insurance.

What is face amount in life insurance?

Your face value, or face amount, is the sum of money your beneficiaries will be owed at the time of your death. Face value is sometimes used interchangeably with a death benefit, coverage amount, or face amount. When you buy life insurance, this coverage is what you’re paying for.

You might be wondering how to calculate face amount of the life insurance policy you have. If you haven’t used any cash value, you don’t need to do any mathematics to find out.

Your face value should be listed as a specific sum on your policy benefits. If you’d like to find your face amount, have a read of your policy. It should be easy to find the face value, but call your insurer if you have any trouble.

If you’re paying for a life insurance policy, you want to know all the details. Specifically, you want to know the sum your loved ones will get when you pass away.

Which type of life insurance policy pays the face amount?

Permanent life insurance, including whole life and universal life, have a face value and a cash value, while term policies, that are less expensive up-front, only carry a face value.

You should choose a policy you can comfortably afford that will allow your beneficiaries to continue living your current lifestyle and the one they’re accustomed to.

You should consider your coverage needs in terms of your current expenses. You need to include rent, mortgage, or card payments into your budget and things such as groceries, bills, child-care, and tuition.

Then, consider any future expenses you expect to pay for, like college tuition or medical fees. You ideally want to take out a policy to match the figure you end up with.

How do I determine the face value of a life insurance policy?

As mentioned previously, face value is also known as the death benefit. As a policyholder, this is the amount that your beneficiaries will receive if you pass away.

Permanent life insurance has a face value, and the cost is directly proportional to its face value. Essentially, the higher the premiums paid, the larger the death benefit.

The proforma face value of an insurance policy will be stated on the policy itself, but this is subject to change if any changes are made. Any scheduled changes will appear in the policy details.

The face value can also change if you buy additional insurance, increasing its value, whereas it will decrease if you take out some cash value. Therefore, the policy’s death benefit can change over time as the cash value rises or falls.

The face value, which can be found in the benefits statement, determines the monthly premiums that will be owed.

Additional benefits, such as riders, can be included in a life insurance plan. Some riders specify that the face value of a policy doubles if the insured dies due to a specific kind of accident.

The face value plus the value of any additional benefits, such as riders, constitute the policy’s total face value and death benefit.

What is a good face amount for life insurance?

Your life insurance policy’s face value is the death benefit amount you purchase. You should buy a policy with a face value that is, per average, 13 times your income and has some cushion for unexpected costs.

For example, if your annual income is 100,000 dollars, then you can buy life insurance for 1,300,000 dollars. The yearly income includes salary, bonuses, pension, dividends, profits from selling financial assets, etc.

It is important to stress that insurance companies do not give you coverage for an amount that your annual income cannot justify.

What is a death benefit?

As a policyholder, the death benefit is the total sum of money an insurer pays to beneficiaries upon your death. The death benefit amount is determined at the time of purchase, and typically, it’s equivalent to the face amount of insurance.

However, the amount of coverage you bought, or the face amount, doesn’t guarantee that your beneficiaries will receive that exact death benefit upon your death.

To extrapolate, the face amount is the initial death benefit on a life insurance policy. However, over time, as the cash value of the policy changes, it can either increase or decrease the total death benefit either above or below the face value.

What is the difference between face amount and cash value for life insurance?

There are a number of differences between the face amount and cash value in life insurance.

The face amount is the initial sum of money stated on the life insurance application and is intended to be a death benefit. This is subject to change if your policy changes. The death benefit is the actual sum of money the insurance company pays your beneficiaries.

Both universal and whole life insurance are permanent types of life insurance policies that have a face value and a cash value, and both are two distinct values.

To summarize, the face value is the death benefit. In contrast, the cash value is the amount you would receive if your insurance was terminated early in return for money upfront if you give up the death benefit.

You should typically see the face value printed on your monthly statements, and the cash value may also be referred to as the cash surrender value.

In most circumstances, the face amount of life insurance is exempt from taxes, and we will cover the face amount and tax next.

Is the face amount of life insurance taxable?

In short, no, the face amount of life insurance is not taxable. The death benefit owed to your beneficiaries will not be subject to taxable income.

Take, for example, if you died, as a policyholder, with $300,000 in death benefit, your designated beneficiary will not have to pay income tax on the amount.

The death benefit isn’t taxable, regardless if you paid all the premiums or if your employer paid for part or all of the premiums under a group life insurance.

However, suppose the life insurance beneficiary chooses to receive the funds in portions over the years instead of one lump sum. In that case, the interest on the original amount will be taxable while the principal portion is tax-free.

How can a face amount help the policyholder?

Your death benefit will help to protect your loved ones when you are gone.

While no amount of money can make up for the emotional distress of grief, your life insurance death benefit aims to reduce the financial burden on your loved ones. The face amount will help your chosen beneficiaries to get back to life and support them financially.

That’s why it’s you must secure the right life insurance coverage for your specific circumstances and understand all the details before you obtain your policy.

We have listed a few examples of how a death benefit can be used.

A partial income replacement

Your beneficiaries may choose to use the death benefit as a partial income replacement. This way, they can supplement the lifestyle you once had. This sum can be used to pay outstanding mortgage loans or pay tuition fees, for example.

The burial costs and final expenses

Usually, small whole life policies cover some of the final expenses or costs that are related to death, such as cremation, funeral arrangements, and final medical bills.

Charitable acts

The death benefit can also be used to support causes that are important to you, such as giving money to charities that you supported or to charitable causes or hospitals.


The death benefit is the primary reason for buying life insurance; this is where all your hard-earned money will finally be put to use. This is helpful for your peace of mind and to protect your loved ones.

Understanding how your beneficiaries can use your life insurance death benefit once you are gone is for your own peace of mind. It’s essential you plan ahead to take the stress out of the equation. In this instance, there is such a thing as doing it too late.

Life insurance cost

The average cost of life insurance is dependent on numerous factors.

The following factors define the cost of life insurance:

  • Required insured amount.
  • Personal details such as age and gender (male policies are typically more costly).
  • Medical history, pre-existing conditions, previous medical operations, and whether the applicant takes medication at the moment of the application.

Life insurance quote

Applying for and purchasing term life insurance is usually straightforward if you apply for quotes with a trusted insurer.

How to apply for a quote

In a few steps, you can use an insurance company’s online quoting system, such as ours, and get an initial quote. Or, you may choose to speak to our advisors in person.

Why choose life insurance with Pitsas:

  • Considerable financial income for your family members
  • Coverage of expenses for your children’s education fees
  • Immediate mortgage payment coverage
  • Beneficial tax benefits and deductions
  • Save up to 25% and connect the policy with your medical insurance

To get a quote you can complete the questionnaire.

After receiving your quotes, you can gauge the varying levels of coverage based on your needs and budget, and if you decide to proceed, you will go into the application process.

The whole process is straightforward and speedy, and after you receive your quotes, it’s up to you whether or not to proceed. We are here to guide you in this process.

Please contact us with any questions you have.


Pitsas Insurances


Pafos, Cyprus

Ready to talk to us? Interested in visiting?
Contact [email protected] or
call us on 700 70 500