What is a Life Insurance Policy Illustration?
A life insurance policy illustration is a detailed document provided by the insurer to outline the projections of a life insurance policy. It serves as a visual representation of how the policy is expected to perform over time, including key components such as premiums, cash value accumulation, death benefits, and potential dividends.
Life insurance illustrations are particularly important for policyholders considering cash value products, like whole life or universal life insurance. The illustration typically includes various scenarios based on different assumptions about investment performance, mortality rates, and policy fees. This allows potential policyholders to understand not only the benefits but also the risks associated with their chosen policy.
In essence, a life insurance policy illustration is a crucial tool for informed decision-making. It helps consumers compare different products, assess financial commitments, and understand the long-term implications of their life insurance choices. It is important to note that these illustrations are not guarantees but rather projections based on current assumptions.
Before purchasing a life insurance policy, it's advisable to review the illustration carefully, ideally with a financial advisor, to ensure that it aligns with your long-term financial goals and needs.