The amount of money payable to a policyholder upon discontinuation of a life insurance policy is called the face amount. True or false?
Understand the Problem
The question is asking whether the statement that the amount of money payable to a policyholder upon discontinuation of a life insurance policy is called the face amount is true or false. This requires understanding of insurance terminology.
Answer
False, it is the cash surrender value.
The statement is false. The amount of money payable upon discontinuation of a life insurance policy is called the cash surrender value, not the face amount.
Answer for screen readers
The statement is false. The amount of money payable upon discontinuation of a life insurance policy is called the cash surrender value, not the face amount.
More Information
The face amount typically refers to the death benefit payable at the time of the insured's death or policy's maturity, whereas the cash surrender value is what a policyholder receives if they terminate the policy early.
Tips
A common mistake is confusing the face amount with the cash surrender value; the former is the death benefit, while the latter is the received payout upon policy discontinuation.
Sources
- What is the Cash Surrender Value of Life Insurance? | Guardian - guardianlife.com
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