What is a policy illustration?

A policy illustration is a visual representation of the benefits provided by an insurance policy, which helps policyholders understand how the contract will perform over time. It typically includes projected values such as cash value, death benefit, and premiums due at various points in time. This tool is essential for demonstrating the potential future performance of a policy and aids in making informed decisions regarding life insurance.

The emphasis on a visual format distinguishes policy illustrations from other documents that may summarize, compare, or report on insurance aspects. While summaries, claims reports, and comparisons can provide important information about a policy, none of these aspects convey the projected dynamics or benefits of a specific policy over its term as effectively as a policy illustration does. This makes the illustration a vital component in helping clients and agents visualize and comprehend the insurance they are considering more comprehensively.