What Is The Difference Between Life Insurance Face Amount And Cash Value?

A very good friend lives in Fayetteville, Arkansas and she recently asked me a question about her life insurance policy. She needed clarification about “What the difference between a life insurance face amount and cash value?”

Fayetteville by the way is a part of Northwest Arkansas, Centrally located to everything the state’s fastest-growing area has to offer, Fayetteville has so much to do, one may never need to leave the city limits.

Answer to Readers Question: The face value of a life insurance policy is the $ amount your beneficiaries will collect.

The cash value is the excess of insurance premium payments over the cost of the life insurance. When your premium payments are more than the cost of insurance, the excess goes into a cash value account and draws interest. It is the “savings” portion of a life policy.

The actual amount depends on many factors, including:

1. The lifeinsurance policy’s face amount.
2. How long you’ve owned the lifeinsurance policy.
3. Length of the premium payment period.