What Is an In‑Force Policy Illustration?
An in‑force policy illustration is a detailed document issued by a life insurance company that shows the current status of a permanent life insurance policy and projects its future performance. It includes the policy's cash value, death benefit, premium history, and projected growth under the policy's assumed rates.
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Key Elements of the Illustration
- Cash Value: The accumulated savings component that can be borrowed against or withdrawn.
- Death Benefit: The guaranteed payout to beneficiaries, which may increase if the policy has a built‑in rider.
- Premium History: A record of past payments and any unpaid amounts.
- Projected Growth: A table of future cash value and death benefit based on current assumptions.
How It Helps Policyholders
The illustration lets policyholders see how their premiums are allocated, how the policy's cash value will grow, and how changes—such as a higher premium or a policy conversion—will affect the benefits. It is also a required disclosure for policy changes.
When You Receive One
Insurance companies provide an illustration after a policy is issued, whenever a major change is requested, or annually for policy review. The document is updated to reflect any new assumptions, such as interest rate adjustments or fee changes.
Limitations and Assumptions
Illustrations use projected rates that may differ from actual future performance. They are not guarantees but estimates based on current assumptions. Policyholders should review the assumptions section for details on the interest rate, mortality, and expense assumptions used.