What Is In-Force Illustration on Life Insurance Policy?

An in-force illustration is a personalized report from a life insurance company. It projects the future performance of an existing life insurance policy, helping policyholders understand its current status and long-term outlook. This document provides a snapshot based on current conditions and projections. It differs from the initial illustration received at purchase, as it incorporates actual performance since the policy’s inception.

Key Components of an In-Force Illustration

An in-force illustration contains specific details about an existing life insurance policy. It begins with fundamental policy details, such as the policy number, original issue date, policy type (e.g., whole life, universal life), and the face amount or death benefit.

The illustration outlines premium information, including scheduled premiums, amounts paid, and future premium requirements. It includes cash value projections, showing both guaranteed and non-guaranteed accumulation over many years. It also provides death benefit projections, detailing guaranteed and non-guaranteed amounts for beneficiaries.

Information regarding any existing policy loans or withdrawals is included, illustrating their impact on future cash values and death benefits. Details on attached riders, which are additional benefits or features, are also presented with their associated costs or benefits. The illustration itemizes fees and charges, such as policy fees, administrative charges, and the cost of insurance, which directly affect performance. Finally, it specifies the underlying assumptions used for its projections, including interest rates, mortality rates, and expense charges, which are fundamental to calculating future values.

Why Request an In-Force Illustration

Policyholders request an in-force illustration to understand policy performance and make informed decisions. A common reason is for a policy review, to assess if the policy is meeting original expectations or if its performance has deviated due to changing economic conditions. This review helps policyholders confirm if their policy remains financially healthy or if adjustments are needed.

An in-force illustration is also a valuable tool for financial planning, allowing policyholders to integrate projected values into their broader financial goals. For instance, it can help determine if the policy’s cash value growth aligns with long-term savings objectives or if the death benefit still meets family protection needs. Before making changes to a policy, such as reducing the death benefit, altering premium payments, or considering a loan or withdrawal, an illustration provides a clear picture of how these actions would affect the policy’s future performance.

The illustration helps policyholders understand the impact of external factors, like fluctuations in interest rates or market performance, especially for policies with variable components. This insight is particularly relevant for universal life policies, where interest rates can significantly influence cash value growth. For estate planning purposes, an in-force illustration ensures the policy’s design and projected death benefit align with current estate objectives. Regularly obtaining an illustration can help prevent unexpected policy performance issues.

Understanding the Projections

Interpreting the projections within an in-force illustration requires understanding the distinction between guaranteed and non-guaranteed values. Guaranteed values represent the minimum contractual performance the insurer is obligated to provide, offering a level of certainty. Non-guaranteed values are projections based on the insurer’s current assumptions, such as prevailing interest rates, dividend scales, and expense charges. These values are illustrative and can change over time, influenced by the actual experience of the insurance company and broader market conditions.

The illustration’s projections are impacted by the assumptions used, including interest rates, mortality rates, and expense charges. For participating policies, such as whole life, dividend scales also play a substantial role in non-guaranteed projections. Changes in these underlying assumptions can lead to variations in projected cash value accumulation and death benefit over the policy’s lifetime. For example, a lower declared interest rate or higher expense charges can reduce non-guaranteed cash value growth.

The illustration presents policy values in tables and graphs, showing cash value and death benefit year by year. These visual aids help policyholders track the projected performance over time. Understanding the current performance of the policy, such as credited interest rates for universal life or declared dividends for whole life, directly influences the non-guaranteed projections.

How to Obtain an In-Force Illustration

Obtaining an in-force illustration is a straightforward process, typically initiated by the policyholder. The most common method is to contact the life insurance company directly, either by calling customer service or through online policyholder portals.

Alternatively, policyholders can reach out to their insurance agent or broker, who can facilitate the request. When making the request, policyholders will need to provide basic information to identify their policy, such as their full name, date of birth, and the policy number. This ensures the correct policy is identified and the illustration is generated accurately.

Policyholders can request different scenarios for their illustration, such as projections based on current premium payments, or an illustration that solves for the minimum premium needed to maintain the policy to a certain age. Once requested, the illustration is typically delivered via mail or email, or made available through the online portal. The time frame to receive an illustration can vary, but it is generally provided within a few business days to a few weeks, with some online portals offering immediate access.