A life insurance illustration shows how a policy could operate under stated assumptions. Read the guaranteed and nonguaranteed columns separately, identify the premium schedule, and distinguish account value, surrender value, and death benefit. A favorable projection is not a promise. For an existing policy, request an in-force illustration using current information rather than relying only on the document supplied when it was purchased.
In this guide
Which document are you reading?
A basic illustration presents important policy information and modeled values. A supplemental illustration may highlight a particular scenario but should not be read without the underlying basic illustration. An in-force illustration updates projections for a policy already in existence. A sales summary or social-media chart may omit information that the full document contains.
The NAIC overview of life insurance illustrations describes these distinctions and the separation of guaranteed and nonguaranteed elements. Illustration rules and product details vary. The document explains assumptions; the contract establishes policy obligations and guarantees.
Before reading the values, check the insured person's age, underwriting class, policy type, face amount, state, riders, and date prepared. An illustration using the wrong age or an underwriting class that has not been approved is not a final statement of your offered coverage.
Where are the payment assumptions?
Find the premium amount, frequency, and years paid. A scenario with ten years of planned payments differs from one funded every year. Also identify whether future withdrawals or loans are assumed. Two illustrations can look similar on the last page while assuming very different cash contributions along the way.
For universal life, a planned premium is not necessarily a contractual promise that the policy will stay in force for life at that payment. Ask what funding is required under the guaranteed assumptions and what any no-lapse provision requires. Missed, delayed, or altered payments can matter.
For whole life, identify the required premium separately from any scenario using future dividends to pay it. Dividends on participating policies are not guaranteed. If the illustration suggests out-of-pocket payments stop, ask exactly which assumptions make that possible and what happens if they do not occur.
What do the main value columns mean?
On smaller screens, scroll the table to compare every column.
| Column | Plain-language meaning | Question to ask |
|---|---|---|
| Premium or outlay | Money paid under the illustrated schedule | Are all years and any extra payments included? |
| Account or accumulated value | Value before some contract adjustments | Is this different from money available on surrender? |
| Cash surrender value | Amount after applicable surrender adjustments | Is it net of loans and other amounts owed? |
| Death benefit | Amount modeled for a covered death | Does this include or exclude outstanding indebtedness? |
| Loan balance | Borrowing and possibly accrued interest | How does it affect value and coverage later? |
Use the labels and footnotes in the actual document. Carriers can present figures differently, and an unlabeled “cash value” figure may not tell you what you could receive today. Ask the representative to point to the same year in every column so that comparisons use consistent dates.
Why are guaranteed and nonguaranteed results different?
Guaranteed values reflect the contractual assumptions shown in that column. Nonguaranteed results can depend on current charges, credited interest, dividends, or other assumptions that may change. The most favorable figure in one column cannot be combined with a guarantee from another to create a result the insurer never promised.
For IUL, an illustrated crediting rate is not a prediction of a constant annual return. Actual index credits can vary by period, and charges continue to affect values. A floor on index crediting does not guarantee that the account value cannot fall. See the IUL crediting explanation for the difference.
The Texas insurance consumer guide cautions that illustrated growth is a projection. Ask what happens under lower crediting assumptions, delayed payments, or different loan use. The purpose is to understand sensitivity, not to choose whichever illustration has the highest distant number.
How should you compare two proposals?
Keep the insured person, benefit objective, funding period, payment timing, and loan assumptions as consistent as possible. Then compare differences in guarantees, charges, surrender schedules, riders, and death-benefit options. If those inputs differ, write the difference next to the result instead of treating the comparison as equivalent.
For a hypothetical comparison, one proposal may show more cash in year twenty because it assumes five additional years of premiums. Another may use a smaller death benefit. Neither result proves that its product performs better. First determine which design addresses the actual insurance need.
Ask to see a complete illustration rather than only the page with a highlighted retirement year. Later pages can reveal a shrinking benefit, a growing loan balance, or a projected lapse after distributions. Those outcomes matter even if an earlier value looks attractive.
What should an existing owner request?
Request a current statement, loan balance, surrender value, and an in-force illustration with the insurer's actual records. Ask for scenarios that reflect your intended payments and any contemplated loans or withdrawals. If the policy is at risk, ask about deadlines and available corrective actions promptly rather than waiting for the next annual review.
Keep a short review note stating the assumptions used, questions answered, and next review date. A change in health, family needs, or retirement plans may justify another discussion even when the contract itself is unchanged.
JFZ can help you organize the questions for a policy review. The issuing insurer provides authoritative values and contract interpretations; a qualified tax professional evaluates tax consequences. Understanding an illustration is a reason to make an informed decision, not an automatic reason to replace coverage.
HOW JFZ CAN HELP
Request an existing coverage review
Every family’s situation is a little different, and that is where we come in. Bring the questions from this guide to a JFZ agent and we will walk through your life insurance coverage options options together, in plain language and at your pace.
Request an existing coverage review An inquiry starts a discussion. It is not an instant quote, application, approval, or authorization to change existing coverage.General education only. Insurance availability, benefits, rates, and eligibility vary by state, carrier, product, age, and underwriting. Contract terms control. Consult qualified advisers about personal tax or legal questions.
Sources & further reading (2)
Prepared September 24, 2026. Carrier examples do not establish product availability through JFZ; contract and state requirements vary. Tax discussion is general education.
