Face Amount Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Face Amount, written in plain English, along with examples of how it is used.

What is Face Amount?

n. Original amount due, without interest, on a promissory note or insurance policy.

History and Meaning of Face Amount

The term "face amount" is commonly used in the financial and insurance sectors. It refers to the original amount due without any interest, on a promissory note or an insurance policy. In the case of promissory notes, the face amount is the amount borrowed by the borrower. In the case of an insurance policy, the face amount is the amount payable to the beneficiaries upon the death of the policyholder.

Examples of Face Amount

  1. John takes out a life insurance policy with a face amount of $500,000. This means his beneficiaries will receive $500,000 upon his death.

  2. The face amount of a promissory note taken out by a borrower is $10,000. This is the amount that the borrower owes to the lender, without considering any interest.

  3. Mary invests in a bond with a face amount of $1,000. This is the amount that she will receive when the bond reaches maturity.

Legal Terms Similar to Face Amount

  1. Principal amount - This refers to the amount borrowed or invested, without considering any interest or earnings.

  2. Par value - This refers to the face amount of a bond, stock or other security, as specified in the legal documents.

  3. Sum assured - This refers to the face amount of an insurance policy, which is payable to the beneficiaries upon the death of the policyholder.