Life Insurance: Selecting the Right Face Value

Life insurance is something we all need. The question then becomes how much is the right amount to have.

The value of an insurance policy is referred to as the “face value.” This is also known as the death benefit. Either way it means the amount that the policy will pay out in the event of the policyholder’s death. When you are considering life insurance, understanding all the expenses involved is crucial to determining how much you will need. Then from there you can determine how much above that amount is needed by reviewing your life needs. This will vary from person to person and situation to situation.

Face value is entirely a matter of financial needs, preferences, and your budget. With the numerous life insurance products in the market, it is easy to find one that suits your needs. If you find it difficult to determine how much life insurance you need, it is important to get the counsel of an insurance expert.

To get you started, we have come up with the following pointers to help determine what face value is best for you.

Choosing the right face value

Factors that can help you determine how much life insurance you need include:


  • Immediate expenses: These expenses can include hospital bills, estate taxes, and funeral costs. Most insurance policies help cover these expenses. The severity of the illness, the complexity of the policy owner’s estate, and how elaborate the funeral will all determine how much is needed.

 When you know your family medical history, you can somewhat plan for the costs of any specific illness you are predisposed to. You can consult with a financial expert to determine your assets and the estimated cost of your estate, and you can plan your funeral costs even years in advance of your passing.

  • Funds to cater for the readjustment period: Even when the death is expected, there is going to be a period of time where the family needs to adjust. Planning and executing a funeral and recovering emotionally will take time. And a family member may need to take time off work to help settle family matters. It helps if a death benefit includes extra funds to help family members during this time of emotional recovery.
  • Short and long-term financial expenses: It is always beneficial to include long-term obligations, such as a mortgage, in your face value. Insurance policies such as Decreasing Term, also known as Mortgage Protection coverage, are designed for this purpose. Other expenses such as credit card bills, college fees, and any loans should also be considered.
  • Leaving a legacy: This value will vary based on personal preference. A policyholder can generally leave as much as they are willing to pay for. It is always wise to determine the other factors before determining a legacy amount as the above expenses will most likely be paid first and lessen the overall policy death benefit.

Less Common:

  • Business expenses: If the policyholder owned a business there might be outstanding expenses associated with their company. Business loans, outstanding invoices, and employee relations need to be dealt with.
  • Building a Trust fund: This is a bit different than leaving a legacy. Leaving a legacy generally is an immediate release of funds. A trust is usually what happens when your beneficiary is a minor. Those funds are placed in trust until the child is 18. You can also establish a trust within the outline of a will. Consult with a financial expert if this is a plan you will consider.
  • Charitable Contribution: Sometimes a person wants to leave one final contribution to a favorite charity or a cause. This can factor into how much a face value should be.

Final Thoughts

As you see a life insurance face value is determined by many factors. Choosing the right face amount should not be taken lightly. If you have any concerns or doubts, it is important to seek advice from a professional insurance advisor. They can help you choose a policy and face value that suits your budget, financial needs, and preferences.

To learn more about life insurance and determining face value, contact the professionals at  at (850) 942-7760. Our licensed insurance experts will be happy to answer any questions you have.




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