What is an In-Force Illustration?
An In-Force Illustration is a document provided by a life insurance company that projects how an existing policy is expected to perform over time. This illustration considers the current status of the policy, including factors such as cash value, premiums paid, death benefits, interest rates, and other charges. It provides policyholders with a snapshot of the potential future performance of their policy under current assumptions.
The primary purpose of an In-Force Illustration is to help policyholders assess whether their life insurance policy will continue to meet their financial goals. For example, if a policyholder is concerned that their policy may not have sufficient cash value to sustain premiums in later years, they can use an In-Force Illustration to understand potential outcomes and make informed adjustments.
This tool is especially useful for evaluating policies like Whole Life, Universal Life, or Indexed Universal Life insurance, where cash value accumulation and other flexible components play a crucial role. In-Force Illustrations are not guarantees but offer insight based on current assumptions and market conditions, highlighting how changes in factors like interest rates or fees could impact the policy’s future.