life insurance illustration

A life insurance  illustration shows financial projections for each year you own the policy—including, but not limited to, premium amounts owed, cash values, and death benefits.

 Life Insurance illustration Basics

For a term policy, the projections extend to the end of the term. With a cash value policy, projections extend past your 100th birthday.

Your actual costs and benefits could be higher or lower than those in the illustration because they depend on the future financial results of the insurance company. However, when figures are guaranteed, the insurance company will honor them regardless of its financial success. Ask your agent which figures are guaranteed and which are not.

A policy illustration can be complicated. Your agent or financial advisor can explain information you don’t understand.

Life insurance illustration Guide

When you make research into your life insurance illustration, Study the policy illustration to answer the following:

•  Is my classification (i.e., smoker/nonsmoker, male/ female) correct?
• When are premiums due—monthly, annually, or according to some other schedule?
• What amounts are guaranteed and which are not?
• Does the policy have a guaranteed death benefit or could the death benefit change depending on interest rates or other factors?
• Does the policy offer dividends or interest credits that could increase my cash value and death benefit or reduce my premium?
• Will my premiums always be the same? Could premiums increase if future interest rates or investment returns are lower than the illustration assumes?
• If the illustration shows that I won’t have to make premium payments after a certain period of time, is there any chance I would have to start making payments again at any time in the future?