does my policy illustration show?
An illustration shows policy premiums, death benefits,
cash values and information about other items that can affect
your cost of obtaining insurance. Some of the items listed in
the illustration are used by the insurance company to reduce your
costs if its future financial results are favorable.
Your policy may provide for dividends to be paid to you as either
cash or paid-up insurance. Or it could provide for interest credits
that could increase your cash value and death benefit or reduce
your premium. These items are not guaranteed. Your costs or benefits
could be higher or lower than those illustrated, because they
depend on the future financial results of the insurance company.
With variable life, your values will depend on the results of
the underlying portfolio of investments.
Ask your agent for an explanation of the illustration; some figures
are guaranteed and some are not. Remember that the insurance company
will honor the guaranteed figures regardless of its future financial
If your policy is a variable life policy, be sure that the interest
rate assumed is reasonable for the underlying investment accounts
to which you choose to allocate your premiums. For example, some
investment advisors suggest that a higher interest rate assumption
may be warranted if you plan to allocate your premium to a stock
account, while a lower rate should be assumed for more conservative
It is important to keep in mind that an illustration is not a
legal document. Legal obligations are spelled out in the policy
Here are additional questions
to ask about the policy illustration:
- Is the illustration up to date? Is it based on current experience?
- Is the classification shown in the illustration appropriate
for me (ie., smoker / non-smoker, male / female)?
- When are premiums due - annually, monthly or otherwise?
- Which figures are guaranteed and which are not?
- Will I be notified if the non-guaranteed amounts change?
- Does the policy have a guaranteed death benefit, or could
the death benefit change depending on interest rates or other
- Does the policy pay dividends or provide for interest credits?
Are those figures incorporated into the illustration?
- Will my premiums always be the same? Is it possible that the
premium will increase significantly if future interest rates
are lower than the illustration assumes?
- If the illustration shows that, after a certain period of
time, I will not have to make premium payments, is there a chance
I could have to begin making payments again in the future?
- Is the premium level illustrated sufficient to guarantee protection
for my entire life?