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What 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 experience.

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 alternatives.

It is important to keep in mind that an illustration is not a legal document. Legal obligations are spelled out in the policy itself.

Here are additional questions to ask about the policy illustration:

  1. Is the illustration up to date? Is it based on current experience?
  2. Is the classification shown in the illustration appropriate for me (ie., smoker / non-smoker, male / female)?
  3. When are premiums due - annually, monthly or otherwise?
  4. Which figures are guaranteed and which are not?
  5. Will I be notified if the non-guaranteed amounts change?
  6. Does the policy have a guaranteed death benefit, or could the death benefit change depending on interest rates or other factors?
  7. Does the policy pay dividends or provide for interest credits? Are those figures incorporated into the illustration?
  8. 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?
  9. 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?
  10. Is the premium level illustrated sufficient to guarantee protection for my entire life?