An Illustration Predicts The Future Profitability of Your Life Insurance Policy

An illustration gauges the potential future performance of a policy by using actual values and current assumptions (actual interest rate, current mortality and expense factors) to produce a current policy illustration. It allows you to compare past (actual) performance with anticipated (future) performance.

Life insurance agents use illustrations to help demonstrate how a policy may perform; but, keep in mind, that these projections may be different than what actually happens.

With an illustration, a policy owner can evaluate the performance of the policy to date and project how the policy may perform in the future. If you see a dramatic difference in the potential performance of your policy and the actual performance, there may be more than meets the eye.

Bottom line? What this means is that you may need to press your agent or someone at the company to resolve an issue like this. In other words, you’re using actual performance as a measure – rather than the original projections – in the sales illustration generated at the time of purchase.

An illustration like this can be requested from the life insurance company.  It can take anywhere from a couple days to a few weeks to receive one, and they should be reported annually – or at least every other year – to assure that your policy is meeting the initial objective goals.

The life insurance illustration is used to gauge the potential performance of a policy, and this type of illustration is available for all permanent (cash value) life insurance policies, at least where the policy and it values are not fully guaranteed.

Sample request forms for an in-force ledger illustration for a universal life policy can be found here, and depending on your situation, you can also ask for other in-force illustrations.

Here’s an example; if the policy was originally designed on a limited premium payment schedule, you can request the company to furnish an in-force illustration to determine how many more years the premium will actually need to be paid. Keep in mind that every life insurance company has their own way to formatting an in-force illustration.

Editors note:

Due to many abuses and the need to provide a greater degree of consumer protection, in-force illustrations became greater in length and now provide significantly more information than in years past. Keep in mind that, for the most part, every company’s illustration is different as are each of their products, and that’s by necessity.

Permanent cash value policies have non-guaranteed variables which may be subject to change over time, including interest rates, varying investment results and the cost of insurance charges. All of these variables will certainly have a dramatic impact on how effectively a policy will perform in the future, so pay attention.

Illustrations are also called an “in-force ledgers,” and they show an existing life insurance policy’s future premiums, cash values and death benefits. By law, policyholders usually have the right to request at least one in-force illustration – and without charge – every year. While the informational quality of these in-force illustrations can vary, some are exceptionally useful and feature hybrid designs.

If you run into problems getting your agent and/or insurance company to help with such requests, you can get assistance from a life insurance analyst or consultant, through your state’s Department of Insurance or you can email me at

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Tony Steuer is an author and advocate for financial preparedness. Tony Steuer, CLU, LA, CPFFE, helps people make sense of the financial world in a way that’s easy for them to understand. His books including, “GET READY!,” “Insurance Made Easy,” and “Questions and Answers on Life Insurance,” have won numerous awards. Tony is the founder of the GET READY! Initiative which includes the GET READY! financial organization system, the GET READY! Financial Preparedness Club, GET READY! Podcast, and the GET READY! Financial Principles, a best practices playbook for the financial services industry. Tony served as long-term member of the California Department of Insurance Curriculum Board. Tony is regularly featured in the media including the New York Times, the Washington Post, Fast Company, and other media. He has also appeared as a guest on television shows, such as ABC’s “Seven on Your Side.” Visit to join the GET READY! Financial Preparedness Club and access free resources.

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