How to read a life insurance illustration 

1. Check the inputs before the projected results.

Confirm the proposed insured, policy type, death benefit, underwriting assumptions and premium schedule. A result based on a different risk classification or premium amount may not describe the offer eventually made by the insurer.

Identify how long premiums are illustrated, whether any loans or withdrawals are assumed, and how riders or optional benefits affect the cost. If two proposals use different inputs, ask for a comparison on more consistent terms.

• Death-benefit amount and option
• Premium amount, frequency and payment duration
• Policy charges, rider costs and any illustrated borrowing
• Guaranteed versus current crediting and charge assumptions

2. Read the guaranteed columns and their conditions.

Guaranteed elements describe features fixed under the contract’s terms. They still need to be read with the assumed premium pattern and conditions. A column can show that a policy would not remain in force to the desired age under the illustrated funding and guaranteed assumptions.

Ask which guarantees depend on a specific payment schedule, maintaining a no-lapse provision or avoiding certain transactions. A guarantee about one element is not a guarantee of every illustrated value or outcome.

3. Treat nonguaranteed values as a scenario.

Current or nonguaranteed columns can depend on assumptions about interest credits, dividends or charges that may change. They are not promised returns. Ask for an explanation of the assumptions and a less favorable scenario, not just the most appealing projection.

For indexed universal life, index-linked crediting is subject to contract provisions such as caps, participation rates and other adjustments. An index-crediting floor does not prevent insurance charges or other costs from reducing policy value. The policy is not a direct investment in the index.

4. Separate account value, surrender value and accessible funds.

A displayed account value may differ from the amount available on surrender after charges and outstanding loans. Check when surrender charges apply and how a withdrawal changes the policy. Do not interpret a large future value as money that can be removed without consequences.

Policy loans accrue interest and can reduce the amount available to beneficiaries. If a policy lapses or is surrendered with an outstanding loan, tax consequences may arise. Ask a qualified tax adviser about your situation instead of assuming every illustrated loan is tax-free in every circumstance.

5. Ask what would require a change in funding.

Discuss what happens if crediting is lower, charges change, a payment is missed or borrowing is larger than illustrated. Ask what information would signal that premiums or expectations need to be revisited.

An illustration should support a conversation about tradeoffs, not replace the policy contract. Keep a copy of the proposal you reviewed and confirm that any later revision reflects the terms actually offered.

• Under what assumptions does the policy remain in force?
• Could additional premiums be needed later?
• What benefits are reduced by loans or withdrawals?
• Which illustrated values can change after the policy is issued?

6. Review an existing policy with an in-force illustration.

An in-force illustration reflects an existing policy rather than simply repeating the original sales illustration. Ask the insurer or your broker about obtaining one and how current values, loans and future funding assumptions affect the outlook.

Use it alongside statements and policy documents when reviewing a major change in premium, borrowing or coverage. A fresh illustration is still conditional information, not a guarantee of the future.