Illustration (Policy Illustration)
Fundamental terms that define how a life insurance policy works.
What Is Illustration (Policy Illustration)?
A policy illustration is a document provided before or at policy purchase that projects how a life insurance policy will perform over time under specified assumptions. It shows current and guaranteed values including premiums, death benefit, cash value, and for participating or IUL policies, non-guaranteed projected values at various credited rates. Illustrations are required to show at least one scenario at a reduced or zero interest rate to demonstrate policy performance under adverse conditions. Illustrations are not contracts and do not guarantee future performance — they are projections based on current assumptions. The NAIC has adopted model illustration regulations to ensure consistency and prevent misleading presentations.
Nevada Context
Nevada requires life insurance illustrations to conform to state-adopted illustration regulations. Agents must deliver a signed illustration at or before policy delivery for permanent life policies sold in Nevada.
How It Affects You
Always review the guaranteed column of any illustration — not just the non-guaranteed projections. Ask your agent to show you how the policy performs if the credited rate drops to the guaranteed minimum.
Illustration (Policy Illustration) in Practice
A Nevada couple reviewing an IUL illustration sees non-guaranteed projected values at 6% and 7% crediting rates, plus guaranteed values at 0% — helping them understand the range of possible outcomes for their illustrative $1,000/month premium.
Dollar amounts shown are illustrative. Actual amounts vary by carrier, applicant age, health status, and individual underwriting.
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