Face amount definition

What is the Face Amount on a Financial Instrument?

The face amount is the value stated on the face of a financial instrument. The term usually applies to the amount stated on a bond certificate, which the issuer is obligated to pay when the bond matures. This face amount is usually set at $1,000. A bond can sell at a discount or premium to its face amount, depending on the interest rate that an investor wants to achieve. Thus, paying less than the face amount results in a higher effective interest rate, while paying more than the face amount results in a reduced effective interest rate.

What is the Face Amount on an Insurance Policy?

The amount paid out on a life insurance policy (such as $100,000 upon the death of the person named on the policy) is also termed the face amount, because it is stated on the first page (or “face”) of the policy documentation.

What is the Face Amount on Currency?

Face value can refer to the amount stated on a coin or banknote. Thus, a United States banknote with a stated value of $100 has a face amount of $100.