Fifth Commitment - Illustration Performance
Since life insurance is intangible, illustrations bring a policy to life with your design goals in mind. An illustration is a way to visualize how your insurance policy may perform based on the previous four commitments.
Insurance companies use long term non-guaranteed assumptions on the illustration reflecting both current investment conditions and life expectancies.
Comparing Illustrations
When comparing illustrations, keep the following in mind:
- Products from the same universe illustrate similarly.
- There are vast differences in performance results from either two different products or two different illustrated designs.
- Illustrations are projections and are not reality.
- Putting all major companies on equal footing (actual vs. illustrated), there would be a modest difference, at best, between policies. Mortality and experience are relatively the same. Investment performance is relatively the same.
Next Step: Financial strength of the insurer is a critical factor during the insurance purchase process.