Which term refers to the amount of life insurance coverage stated in the policy, excluding any cash value?

Which term refers to the amount of life insurance coverage stated in the policy, excluding any cash value?

• A. Cash value
• B. Death benefit
• C. Premium
• D. Face amount

Answer: (D)

The key idea is the face amount. This is the policy’s stated amount of life insurance protection—basically the base coverage the policy promises to pay out if the insured dies, and it’s the amount shown in the policy before considering any cash value. Cash value is a separate savings component that grows in permanent policies and can be borrowed against, but it doesn’t change the face amount. The death benefit is the amount paid on death, which is typically the face amount unless loans or riders modify it, while the premium is simply the ongoing cost to keep the policy in force.

The key idea is the face amount. This is the policy’s stated amount of life insurance protection—basically the base coverage the policy promises to pay out if the insured dies, and it’s the amount shown in the policy before considering any cash value. Cash value is a separate savings component that grows in permanent policies and can be borrowed against, but it doesn’t change the face amount. The death benefit is the amount paid on death, which is typically the face amount unless loans or riders modify it, while the premium is simply the ongoing cost to keep the policy in force.