In what scenario might a life insurance policy pay out more than the face value?

A life insurance policy can pay out more than the face value when it includes an accidental death rider. An accidental death rider is an addendum to a life insurance policy that provides an additional payout if the insured dies as a result of an accident. This means that in the unfortunate event of an accidental death, the insurance company pays the face value of the policy plus the additional benefit specified in the rider. This added coverage can significantly increase the total amount received by beneficiaries, providing them with an extra layer of financial protection.

In this context, choices such as surrendering the policy early or taking out a cash value loan do not result in payouts that exceed the face value of the policy. Instead, they typically affect the policy's remaining value or the cash available to the policyholder but do not increase the death benefit provided to beneficiaries. Additionally, while dividends on a policy can enhance the policy’s value or contribute to other benefits, they do not directly increase the death benefit paid out to beneficiaries upon the insured's death.