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Understanding Insurance Company Illustrations

A life insurance policy illustration is a text-and-graphics presentation of how a life insurance policy will perform at a selected interest rate, with an assumed number of predetermined premium payments and a "current" and "guaranteed" cost of insurance and expenses. A life insurance policy illustration is not a legal document--legal obligations are contained in the policy itself.

What does the illustration show?

A policy illustration shows items such as policy premiums, death benefits, cash values, and other information that can affect your cost of buying insurance. Some of the figures in the illustration are guaranteed, while others are projections and may depend on the future financial results of the insurance company. The illustration shows how your policy would perform in the future under a set of assumptions.

Guaranteed items

The policy illustration contains some figures that are guaranteed. The insurance company will honor these figures regardless of the policy's future financial experience. What is guaranteed will depend on the type of life insurance policy. A whole life insurance policy will guarantee the premium, cash value, and death benefit. A universal life insurance policy will guarantee a minimum interest credit on the cash value. A variable universal life insurance policy will guarantee the death benefit, provided a maximum premium is paid. In all cases, the company will guarantee a maximum that it will charge for expenses and mortality charges. (Keep in mind that guarantees are based on the claims-paying ability of the issuing insurance company.)

Nonguaranteed items

The policy's performance projections are based on the insurance company's assumptions about future performance many years into the future. Like any other assumption, actual results will be more or less favorable, and the longer the time period being projected, the greater the likelihood of variance from the predicted values. The policy pricing factors that contain elements of uncertainty again depend on the type of life insurance policy. They include future dividend rates on whole life policies that are determined by the performance results of the company's investment portfolio, the interest credited to a universal life policy cash value, and performance of the pool of subaccounts available to choose from in a variable life insurance policy. In all cases, the company's "current" future expenses and mortality costs will be subject to change.

Note:Variable life insurance policies are offered by prospectus, which you can obtain from your financial professional or the insurance company issuing the policy. The prospectus contains detailed information about investment objectives, risks, charges, and expenses. You should read the prospectus and consider this information carefully before purchasing a variable life insurance policy.

Please be advised that this material is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Data and information is general in nature and not meant as specific to any particular situation. As such, you should not act on this information and should seek advice based on your particular circumstances from a qualified advisor.

Information provided has been prepared from sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Wealth Dimensions Group, Ltd, your advisor, nor any of the data and content providers, such as Forefield, shall be liable for any errors or delays in the content, or for the actions taken in reliance therein.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012.