What Is a Life Insurance Illustration?
Plain-English definition: A depiction of policy performance under stated guaranteed and non-guaranteed assumptions. It is not a forecast or the policy contract.
Reading two columns with very different outcomes
Guaranteed values beside current assumptions
A permanent-policy illustration can show one guaranteed column and another using current credited rates or dividends. The gap between them is decision-relevant uncertainty.
A disclosure built from stated assumptions
An illustration shows how policy values could develop under guaranteed and non-guaranteed assumptions. It is a disclosure and comparison tool, not a promise that current assumptions will continue.
Hold premiums, benefits and years constant
- Locate guaranteed values
- Identify every non-guaranteed assumption
- Compare equal premiums, benefits and years
The illustration is not the insurance contract
The illustration depicts values; the issued policy is the legal contract. When they conflict, the policy controls.
Continue through projections and policy values
Use how to read a life insurance illustration to see how this definition affects a real policy decision.
Terms to read alongside illustration
Sources for understanding illustration
This page explains general insurance usage. State law, the issued contract and the insurer's current records control a specific policy. Use the sources below to verify general terminology, then check the exact policy language.