ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The face value of life insurance is the dollar amount equated to the worth of your policy. It can also be referred to as the death benefit or the face amount of life insurance. In all cases, life insurance face value is the amount of money given to the beneficiary when the policy expires.

Detailed explanation-2: -The face value of a life insurance policy is the coverage amount you purchase. The cash surrender value in a life insurance policy is the cash value minus any loans, surrender charges, and any other fees the insurance company may charge.

Detailed explanation-3: -Withdrawals from the cash value are usually nontaxable until the cash value exceeds the total premiums paid into the policy. The law considers a death benefit to be reimbursement for a beneficiary’s loss, and not income. Beneficiaries rarely have to pay income or inheritance taxes on a life insurance death benefit.

Detailed explanation-4: -As mentioned, a payor benefit provision is designed to protect the child of the policyholder in the event the policyholder becomes disabled, dies, or is no longer able to pay for policy premiums.