Guides
How to request and read an in-force illustration
An in-force illustration projects your existing policy forward from today's values. How to ask for one, what to check, and the warning signs.
An in-force illustration is a projection of a policy you already own. It starts from today's actual cash value and charges, and then shows how the policy is expected to behave under stated assumptions. You request it from your insurer or agent, and it answers the question an annual statement cannot: will this policy last, given what I am paying now?
What it is, and how it differs from the sales illustration
The policy illustration you saw when you bought the policy was a projection made at issue, starting at year one. An in-force illustration is a new projection made partway through the life of the policy. It uses the real account value, the current premium, the loan balance if any, and the insurer's current rates. Statements tell you what happened; an in-force illustration shows where you are headed.
It is most valuable for flexible policies: universal life insurance, indexed and variable universal life, and for whole life with policy dividend options or loans. A level term policy has little to project.
When to request one
- Every year or two for any flexible permanent policy, as part of an how to review your life insurance policy every year.
- After a notice of a change in crediting rate, cost of insurance, or an index cap or participation rate.
- Before changing the premium, skipping a payment, taking a loan or withdrawal, or changing the death benefit option.
- Before surrendering, replacing or selling the policy, so you know what you would give up. See replacing a life insurance policy: when it makes sense.
- When your statement shows the cash value falling, or when the insurer has sent a lapse warning.
- When you approach a milestone such as retirement, when you planned to stop paying or start taking income.
How to request one
- Gather the policy number and who owns the policy. Only the owner (or an authorized person) can ask.
- Contact the insurer. Customer service, the online account, or your agent can usually order it. Ask for "an in-force illustration" or "in-force ledger" specifically, not just a statement.
- Say what scenarios you want. At minimum ask for: (a) your current premium continuing, (b) the premium needed to keep the policy in force to a specific age (such as 100 or 121), and (c) the guaranteed scenario using the contractual minimums. If you plan a loan or income, ask for that too.
- Ask about cost. Rules under the NAIC's Life Insurance Illustrations Model Regulation, which many states have adopted in some form, require insurers to provide an in-force illustration on request. Some insurers provide one free once a year and may charge a reasonable fee beyond that. Check your state's rule and your insurer's policy; see state insurance departments: what they do for you if you get stuck.
- Get it in writing, with the date and the assumptions printed on the pages. Keep it with the policy; see where to keep your policy and who to tell about it.
How to read it
Most pages show the same columns, one row per policy year or age.
| Column | What to look at |
|---|---|
| Age / year | Where today's date falls |
| Premium outlay | Whether it matches what you pay; a gap means the projection assumes a different payment |
| Loans and withdrawals | Whether the loan balance is growing with interest |
| Accumulation or account value | The cash growing, flat, or shrinking |
| cash surrender value | Account value less surrender charges |
| death benefit | Whether it stays level or erodes |
| Guaranteed vs current columns | The widest gap is your exposure to non-guaranteed elements |
Then look at the assumptions page. It states the credited interest rate (or index assumption), current cost of insurance scale, and the date through which values are projected. Note the age at which the policy lapses under each scenario. That is the single most important number. If the current-assumption column shows the policy lapsing at 85 or 90, you will need to add premium, reduce the death benefit, or accept the outcome.
A hypothetical example
Say a 62-year-old owns a universal life policy with a $500,000 death benefit and pays $450 a month. The in-force illustration shows: under current assumptions, values last to age 94; under guaranteed assumptions, the policy lapses at 78. Reading this, the owner learns that the policy works only if the insurer keeps the rates it uses today. The owner then asks for a second run at $600 a month to see the ages at which it holds under each scenario. (Invented numbers for explanation only.)
Warning signs
- A lapse age earlier than your life expectancy under the current column.
- A cash value that drops each year even though you are paying the planned premium. Charges are rising faster than credits; see universal life cost-of-insurance increases and what to do.
- Illustrated rates much higher than your recent statements actually credited.
- A growing loan balance, which can trigger lapse and a tax bill; see life insurance policy loans: how they work and what they risk.
- Missing guaranteed columns. Insist on them.
- A reduction in the death benefit that you did not request.
- A rate in the "illustrated" scenario above what the company currently credits. Regulatory limits on illustrated rates for indexed policies exist for a reason; see IUL illustrations and Actuarial Guideline 49.
What to do with the result
If the policy lasts comfortably under the guaranteed column, you can relax and re-check in a few years. If it lasts only under the current column, consider paying more, shifting to a lower death benefit, or asking whether a conversion or rider offers a guarantee. If it fails even under current assumptions, act now: a small premium increase this year is cheaper than a large one later, and options shrink as health and age change. Compare the cost of keeping versus ending with the keep, surrender or sell your policy?, and see why universal life policies lapse, and how to prevent it. The annual life insurance policy review checklist covers what else to check.
Do not rely on the agent who sold the policy to be the only voice; if the result looks wrong, ask a fee-only advisor or your state insurance department to review it.
Key takeaways
- An in-force illustration projects your existing policy from its current values, not from the day it was issued.
- Request one every year or two, and before changing premiums, taking loans or surrendering.
- Ask for the current, guaranteed and "what premium keeps it in force" scenarios, and find the age at which the policy would lapse.
- Large gaps between guaranteed and current columns, or credited rates below those shown, are the main warning signs.
- Fixing a shortfall early is cheaper than fixing it late.