An illustration is a chart that shows how a policy may work over time. It shows what is guaranteed and what is only a guess.
The NAIC says an illustration shows how a policy should perform under certain conditions. It covers premiums, cash value and death benefits year by year.
Look for two kinds of numbers. Guaranteed numbers are set when the policy starts. Non guaranteed numbers depend on how the company does.
California says real results may be better or worse than the non guaranteed numbers. They cannot be worse than the guaranteed ones.
You and the agent sign it. If the illustration changes before the policy is issued, the new one must say Revised Illustration.
Do not use an illustration as your only reason to buy or switch a policy. Ask for the highest premium you might ever have to pay.
- Find the guaranteed columns
- Look at the worst case, not the best case
- Ask the highest premium you might pay
- Ask for a new one each year after you buy
More questions
Is the illustration part of my contract?
No. It is a sales tool. Your policy is the contract.
Can I get an updated one later?
Yes. You can ask for an in force illustration after the first policy year.
Do term policies have illustrations?
Usually they are simple. Illustrations matter most for whole life and universal life.
Words to know
- Agent
- A licensed person who sells insurance for one or more companies. Agents are paid commission.
- Cash value
- The savings part of a permanent policy. It grows over time and can be used for loans, cash, or to pay premiums.
- Premium
- The amount you pay an insurance company for your policy.
