FACE AMOUNT Meaning and
Definition
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Face amount refers to the nominal or stated value of a financial instrument, such as a bond or an insurance policy, that is payable at its maturity or upon death or surrender. It is the original amount of principal or the sum assured that is paid out to the instrument holder or the beneficiary. The face amount represents the total value of the instrument at the time of issuance or the maximum amount that will be disbursed upon the occurrence of a specified event.
In the context of bonds, the face amount is the principal that is repaid to the bondholder when the bond matures. It is the amount on which the interest payments are calculated and paid periodically. For example, a bond with a face amount of $1,000 would mean that the bondholder will receive $1,000 at the end of the bond's term.
Regarding life insurance policies, face amount refers to the death benefit or the sum assured that is payable to the beneficiary upon the insured's death. It represents the amount of coverage purchased by the policyholder.
The face amount is an essential factor in determining the value, return, and risk associated with these financial instruments. It serves as a benchmark for calculating interest payments or premiums, and for assessing the potential amount of claims or obligations.
Common Misspellings for FACE AMOUNT
- face aount
- dace amount
- cace amount
- vace amount
- gace amount
- tace amount
- race amount
- fzce amount
- fsce amount
- fwce amount
- fqce amount
- faxe amount
- fave amount
- fafe amount
- fade amount
- facw amount
- facs amount
- facd amount
- facr amount
- fac4 amount
Etymology of FACE AMOUNT
The term "face amount" is derived from the combination of the words "face" and "amount".
The word "face" originated from the Latin word "facies" meaning "appearance" or "to make". Over time, it extended its meaning to refer to the front part of the head containing the eyes, nose, and mouth.
On the other hand, "amount" comes from the Old French word "amounter" which means "to go up" or "to rise". It entered the English language in the 14th century and evolved to represent the total quantity or value of something.
When combined, "face amount" refers to the nominal or original value or quantity of something, such as a financial instrument or insurance policy. It denotes the initial amount stated on the face (or front) of the document, irrespective of any changes, additional payments, or interest that may occur over time.
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