Face Value of Your Policy

There are two major types of life insurance. One type is called "term insurance," which lasts up to a certain number of years. The other type is called "whole life insurance," and that lasts for your entire lifetime. Both types of insurance pay out a set amount to your beneficiaries upon your death.

Face Value Life Insurance

A never ending life insurance policy contains two parts. One is the face value, which is the amount of cash your beneficiary will receive. For example, if you buy a million dollar policy, your beneficiaries will get one million dollars when you die. This is also called the "death benefit amount." In order for your beneficiaries to get this money, you will need to hold the policy for a certain number of years (that varies with insurance companies). You will also have to pay every premium each month without fail.

There may be other restrictions that are unique to your policy. For example, an insurance company will probably pay the death benefit amount if your death was ruled accidental or from natural causes. However, suicide is rarely covered by a company. Know what the stipulations are for your policy payout. If you do not follow all the rules for your insurance policy, that doesn't necessarily mean that your beneficiaries won't get anything. It just means they might only get a partial payment. If you want to cancel the policy early, you might be able to get some of the face value amount. You can do this by giving the policy back to the company and accepting only a small percentage of your face value amount.

Cash Value Life Insurance

The other component of a lifetime insurance policy is the cash value. This cash value of your whole life policy is like an investment account that you can use to borrow against. When you pay a premium each month, some of that money will go into your cash value account. Your monthly premium depends on your face value. Obviously, if you have a higher face value, the premium will be higher. The cash value accumulates over time. While you can use the cash value of the policy to take out outside loans, these will not affect your face value. However, you will need to pay interest on any money you borrow from your cash value account. If you cancel your account as a senior before the policy ends and you still owe money, that amount will be deducted from the benefit payment.

Death Benefit Payment Amount

If you live to the age of 100, you just might be able to receive your "death benefit amount." This is because many whole life insurance policies are set to end at your 100th birthday. Of course, you can give the money to a beneficiary or have the money put into an estate or trust account instead. You can choose to give your death benefit amount to a person, several people, a company, a non-profit or an estate or trust fund. Just let your agent know where you want the face value to go and they will arrange it. Some companies have restrictions on where you can gift the death benefit amount.

Compare and Find Policies

Having a permanent life insurance policy is a good choice if you want your family to be completely covered. Not only do you get the face value of your policy, but you get aadditional cash value to play with. It's an extra measure of protection you can use in your lifetime. You can choose how much you want your family to receive, get quotes for rates online, and make monthly payments accordingly.