Which term refers to the amount that the insurer pays out when a policyholder dies?

The term that refers to the amount the insurer pays out upon the death of a policyholder is known as the face value. This is the predetermined amount outlined in the life insurance policy that beneficiaries will receive when the insured individual passes away. The face value represents the total death benefit the insurer agrees to pay, ensuring that the policyholder’s beneficiaries have financial support in the event of their death.

In the context of life insurance, understanding the face value is crucial for policyholders when considering the financial protection for their loved ones, as it defines the financial security provided through the policy. Other terms like premium, net worth, and present value do not pertain to the payout upon death; instead, they relate to different aspects of insurance and financial concepts, such as the amount paid for the policy, overall asset value, and the current worth of a future cash flow, respectively.