After selecting an insurance company, illustrations are shown for different policy types. Each illustration is based on inferences about the carrier’s projections for mortality rate, investment performance, and policy lapses.
For example, an illustration showing a policy’s performance based on a 6 percent earning rate will provide numbers that relate to premiums paid, and accumulation of cash value that are only accurate if the insurance company achieve a 6 percent earning rate for that period (i.e. if the insurance company meets the projections that assumed in the illustration). Therefore, the policy illustrations are used more as a sales tactic because performance is never guaranteed. This is something to keep in mind when reviewing different types of policies, and even different insurance companies.
Thus, it is important to ask insurance agents to show various illustrations based on different projections (especially as it pertains to guaranteed maximum premiums and guaranteed minimum earning projections).
NOTE: Hiring someone with experience in assessing different types of policies from different insurance carriers so that they can present them to you objectively is ideal (although not always practical).
