A policy illustration is the packet that projects premiums, death benefit, and cash value year by year. It is required for permanent life insurance. It is not a statement of what you will have. The guaranteed column is the contract. The current or illustrated column assumes today’s charges and credits continue, and those can change.
If a plan only works in the illustrated column, it is not a plan you can count on.
Guaranteed column versus illustrated column
The guaranteed column uses the maximum charges and the minimum interest or credit the contract allows. Cash value grows more slowly there, and a flexible premium policy can lapse if you pay only what the illustrated column suggested and you miss the no-lapse guarantee premium.
The illustrated column uses the carrier’s current assumptions. It is useful for comparing how a company is crediting policies now. It is not the promise. Carriers also show a midpoint scale on many illustrations so you can see a result between the floor and the current assumption.
Term life does not illustrate cash value because there is none. The “illustration” for term is the premium schedule: level for the term, then the renewal cost if you keep it.
What changes after issue
Charges, index caps, and dividend scales move. A whole life dividend is not guaranteed. An indexed universal life cap is not guaranteed. When those drop, the non-guaranteed cash value falls behind the original packet. The guaranteed column does not get worse than what was printed, but a policy that was funded to the illustration can still lapse if you were never funding the guarantee.
Ask for an in-force illustration every few years on a permanent policy. It replaces the sales packet with the values you actually have, including loans.
How to read one before you buy
Check four lines before you look at the year-40 cash value.
- Premium required to keep the guarantee, if there is a no-lapse guarantee
- Premium the illustration assumes you will pay, which may be lower
- Death benefit on the guaranteed side at the ages you care about
- Any loan, withdrawal, or rider already built into the projection
If the guaranteed death benefit is zero in a year you still need coverage, you are looking at a policy that can run out unless crediting stays strong or you pay more later.
What else to verify before you apply is on the life insurance buyer's guide.
Compare illustrations, not one carrier’s packet
A single illustration only shows that company’s guarantees and current assumptions. The useful comparison is the same age, face amount, and premium run at more than one carrier.
Conclusion
We read the guaranteed column before we talk about the illustrated one. A permanent policy that stays in force only if caps and dividends never drop is not a plan. The independent work is running the same case at 30+ A-rated carriers and showing which guarantee you are actually buying.
Our agents will pull an in-force illustration on a policy you already own before you cut the premium, take a loan, or replace it.
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