A life insurance illustration is a document prepared by the insurance company that outlines how a policy works. It gives the policyholder insight into elements such as premium structure, living benefits, and projected values over time.

These reports break down what's guaranteed and what’s not. Keep in mind that an illustration is a planning tool—not a future performance promise. The non-guaranteed section may be based on dividends, index performance, or market-related assumptions depending on the product type.

What Typically Shows Up in an Illustration

• Policy structure – the type of insurance (term, whole life, UL), age at issue, and underwriting class.
• Premiums – how much, how often, and over what duration premiums are paid.
• Death benefit – the amount of protection and how it adjusts over time.
• Cash value – if applicable, how it’s projected to grow year-by-year.
• Guarantees vs. assumptions – a side-by-side comparison of fixed vs. performance-based values.
• Policy access – how loans or withdrawals may affect long–term values.
• Riders – optional benefits like long-term care or a waiver of premium.
• Policy limits – exclusions, limitations, and contestability periods are typically outlined.

Building the Illustration

A licensed insurance professional begins by gathering key client information—such as age, health status, and funding goals.

From there, the carrier’s software generates the illustration using internal assumptions. These may include, but are not limited to:

• Interest rates
• Dividend scales
• Mortality costs
• Expense charges
• Administrative fees

The final output includes a detailed ledger showing projected policy values over time, as well as a summary page that highlights guaranteed and non-guaranteed elements.

Common Sections and What They Show

Allocation Summary

For indexed or variable ULs, this section outlines how premiums are allocated across available indices or funds. It also includes caps, participation rates, and any investment-related fees.

Ledger

The core of the illustration. It breaks down each year’s premium payments, policy charges, interest credits, loan activity, and the projected values (cash, death benefit, and surrender value).

Rider Overview

Explains added benefits like long-term care or premium waivers, including when they activate, how much they cost, and what they provide.

Oversight That Shapes These Reports

AG 49-B

Is a regulatory guideline issued by the National Association of Insurance Commissioners (NAIC) to regulate the illustrations of indexed universal life insurance (IUL) policies. It aims to address concerns about potentially misleading IUL policy illustrations by establishing uniform standards, ensuring greater consistency, and preventing insurers from projecting unrealistically high policy performance through specific bonuses or multipliers.

State Insurance Departments

Individual state insurance departments can regulate insurance practices within their respective states. They often adopt NAIC models with some modifications and enforce compliance with these regulations.

Regulation Best Interest (Reg BI)

The U.S. Securities and Exchange Commission (SEC) implemented Reg BI to require that certain recommendations made by a broker dealers or associated person to be in the client's best interest at the time of recommendation, this can include certain types of life insurance products. However, this is SEC rule and does not apply to unregistered insurance agents.

Why a Brokerage General Agency and Milo Can Make All the Difference

• Access to many carriers – Compare top-tier options quickly without spending your prime working hours getting buried in illustrations or navigating carrier portals.
• Illustration support – Quick, strategic designs tailored to your client’s objectives, saving you time and removing guesswork.
• Product knowledge – Milo can identify solutions that match your client’s goals and risk tolerance, helping you uncover what matters most to them.
• Underwriting support – Skip the back-and-forth with multiple carriers. Milo helps coordinate medical and financial underwriting to secure the most appropriate offer.
• Post-sale guidance – Ongoing help with servicing, policy reviews, and strategic updates.

Tracking Number 8106973.1  

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