Illustration versus delivered policy: checking they match

The policy arrives in an envelope, or as a PDF in an email, weeks after you signed the application. It looks like a legal document and runs thirty pages or more, so most people file it without reading beyond the first page. That is a mistake with a deadline attached. The free-look period, usually 10 to 30 days and longer in some states, is the time when you can return the policy for a refund of premium if it is not what you expected. After it ends, you can still ask for corrections, but you are asking and no longer holding an easy exit.

The most useful thing you can do in the first week is compare what you were shown with what you received. The illustration or quote you saw when you applied was a description of a plan. The delivered contract is the plan. This post is a checklist for putting the two side by side, with the reason for each item and the person to contact when something does not match.

Why the two documents can differ

Differences between an illustration and a delivered policy are common, and most have ordinary explanations. They are not necessarily errors or bad faith, but you should know about each one before the free-look period ends.

• Underwriting changed the rate class. The illustration was prepared before the insurer reviewed your health. If the underwriter placed you in a different rate class than the one illustrated, the premium or the values will differ.
• The product or rider options changed. A rider you asked about may have been declined, or limited, or added at a different cost.
• Assumptions moved. For permanent policies, the illustration used a dividend scale or crediting rate that was current on the date it was run. The scale may have changed by the time the policy was issued.
• The data was mistyped. Birth dates, names, addresses, the spelling of a beneficiary and the face amount are entered by people and systems. Mistakes happen.
• Something was said that is not in writing. A verbal promise from a salesperson is not part of the contract. In most policies the entire contract clause states that the contract consists of the policy, the application and any attached riders, and the illustration is usually not among them. What was written in the illustration may describe the plan, but the policy language governs.

Because of the last point, the delivered contract wins any conflict in practice. Your goal is to discover differences while they are cheap to fix.

Before you start

Gather four things: the signed illustration or the quote you relied on, the application copy, the policy and any riders or endorsement pages, and the delivery paperwork. If you do not have the signed illustration, ask the agent for it. For permanent products, the signed illustration is a record of what was shown, and many insurers require one to be signed and kept on file. Ask the agent for the exact version you saw, with the date it was generated.

Set aside an hour with a highlighter, and read at a table, not on a phone. Mark each line you check. If something is unclear, write down the question rather than guessing.

Group 1: Who and what is insured

These items are short and usually correct, and an error here is the most costly to leave.

• Insured's name, date of birth and sex. A wrong birth date changes premiums and may trigger an age adjustment at claim time. A misspelled name can slow a claim, since the insurer must match the death certificate.
• Address and contact details. The insurer uses this for premium notices and lapse warnings. A wrong address can mean a missed notice.
• Tobacco status. The class on the policy should match your history. If you were classified as a nonsmoker, you are also being held to the answer you gave on the application, so be sure it is accurate.
• Policy number and issue date. Write the number on a sheet your family can find. The issue date begins the contestability period, so it matters later.

Why it matters: a clean identity page avoids delays and disputes. Who to ask: the agent first, then the insurer's policy service department.

Group 2: The amounts

• Face amount. The death benefit on the first page should equal the amount on the illustration, for example $500,000. If the amount is different, ask whether underwriting reduced it or the application changed.
• Premium amount and schedule. Check the premium, how often it is billed (annual, semiannual, quarterly or monthly) and how long it is payable. Paying monthly usually costs more over a year than paying annually, since the insurer adds a charge for installments. paying life insurance monthly vs annually explains the difference.
• Premium guarantees. For term, confirm the premium is level for the stated period. For permanent policies, find whether the premium is fixed for life or flexible.
• Policy fee, if any. Some policies charge a flat annual fee that is part of the stated premium. It should be the same as on the quote.

Why it matters: the premium is the figure you will pay for years. A small difference that you do not catch now becomes a larger one over the term.

Say a hypothetical illustration showed a $500,000 20-year term policy at $48 a month for a preferred nonsmoker class, and the delivered policy says $61 a month at a standard class. The difference is $61 − $48 = $13 a month, or $156 a year. Over 20 years that is $156 × 20 = $3,120. Whether that is acceptable depends on you, but it should not come as a surprise, and it may have been disclosed in an offer letter you did not read. The point is to find it during the free-look period so that you can choose to keep the policy, appeal the class or return it.

Group 3: The rate class

If the amount differs, the class is the usual reason. Look for terms such as preferred plus, preferred, standard plus, standard, or a table rating like "Table B" in the specifications page. A table rating or a flat extra charge raises the cost for health or lifestyle reasons. life insurance rate classes: preferred plus to substandard explains the system.

• Confirm the class matches the illustration, or that you were informed in writing of the change.
• If it is lower than expected, ask what factors drove it and whether the company reconsiders after a period. Some policies allow a request for re-evaluation after a health improvement, and asking for a better rate class later describes how that works.

Who to ask: the agent, who can often see the underwriter's reasons, or the insurer's underwriting department directly.

Group 4: Riders and endorsements

Riders add benefits and cost money. Compare the list of riders in the illustration to the list in the policy.

• Each rider you wanted is present, with the right name, amount and duration. A waiver of premium rider, a child rider or a rider for accelerated benefits should appear on the policy specifications page.
• No rider you did not want has been added. Check the premium breakdown for items that were not on the quote.
• Rider limits are as described. Riders often have age limits, waiting periods and exclusions. Read the paragraph, not only the title.
• Endorsements and amendments. An endorsement changes the policy language. If the policy came with one you were not told about, read it and ask why.

Why it matters: the benefit you thought you were buying is only the benefit that is written down. See life insurance riders: which are worth paying for for the common types.

Group 5: Ownership and beneficiaries

This group is where a clerical error can undo your purpose for buying the policy.

• Owner. The policy owner controls the policy and may be different from the insured. If you intended a trust, a spouse or a business to own it, check that the named owner is correct. policy owner vs insured: why it matters explains why the distinction matters.
• Primary and contingent beneficiaries. The names, relationships and shares should match your intentions exactly. A designation of "my children" is different from a list of names, and percentages must add to 100.
• Special arrangements. A trust beneficiary, a minor's custodian or a charitable gift should be recorded as you described.

Who to ask: if there is an error, the correction usually requires a signed change form from the owner, not a conversation. Ask the agent for the form and keep a dated copy. The post your year-one policy review: what to confirm after you buy suggests returning to these items again after the first year.

Group 6: Guarantees and values (permanent policies)

For whole life, universal life and similar policies, the illustration contains projected values and the policy contains guaranteed ones.

• Guaranteed cash value table. The policy includes a table of guaranteed values by year. Compare it with the guaranteed column of the illustration. They should agree. If the illustration shows higher values, check that they were labeled non-guaranteed.
• Dividend or crediting assumptions. The policy does not usually promise dividends or non-guaranteed credits. The illustration shows the scale or rate assumed. Note it, and ask when the company last changed it. a whole life illustration walked through column by column walks through the columns.
• Surrender charges. Look for the schedule that reduces your payout if you surrender early.
• Minimum and maximum premiums or loan terms. For flexible products, read how the policy ends if premiums are insufficient. why universal life policies lapse, and how to prevent it describes that mechanism.

Why it matters: a difference between the guaranteed column in the illustration and the table in the contract is a sign that someone has mislabeled something.

Group 7: Dates, periods and the clauses that run on clocks

• Contestability period. Usually two years from the issue date. Note when it ends.
• Suicide exclusion. Commonly two years, one in some states.
• Grace period. Commonly 30 or 31 days after a missed premium.
• Free-look period. Find the number of days and the date it ends, counted from the day you received the policy. Put the date in your calendar.
• Reinstatement terms. The period during which a lapsed policy can be restored.

Why it matters: the clocks start from dates on the contract, which may not equal the date you applied. If the policy date was backdated or set later, it affects when the clocks end. backdating a life insurance policy to save age explains why a policy date is sometimes set earlier.

Group 8: What the delivery requires of you

Many policies are delivered with a delivery receipt and sometimes a statement that your health has not changed since you applied. Read it before you sign. If your health has changed, tell the agent first, since a signed statement that is not true can create trouble later. Pay the first premium if it is due, and keep the receipt. The post your policy arrives: what to check in the first 30 days covers these steps and the others you should take in the first month.

A one-page comparison sheet

Writing the answers in one place makes gaps visible and gives you something to send the agent. Copy this table onto paper and fill each row from the two documents.

Rows where the answer is "yes" can be set aside. For each row that is "no" or "not sure," the last column becomes your email. A message that says "page 3 of the illustration shows a 20-year level premium of $48 a month, and the policy specifications page shows $61; please explain the change in writing" is easy to answer and easy to forward to the insurer if it is not.

When something does not match

Use a simple order of response:

1. Write down the difference and the page of each document where you found it.
2. Ask the agent in an email, attaching the pages. A written question gets a written answer.
3. Ask the insurer's policy service department if the agent cannot explain it, or if the answer is unsatisfying.
4. Decide before the free-look period ends. If a material difference is unresolved, you can return the policy for a refund of premium and keep your options open. Check the exact procedure in the policy: most require written notice by a certain date.
5. Contact the state insurance department if you believe you were misled about the product. how to file a complaint against a life insurer describes the process.

Do not cancel any existing coverage until the new policy is in force and checked. Letting an old policy lapse before you have confirmed the new one is a common way people end up uninsured.

Key takeaways

• The delivered contract governs, not the illustration. Compare them during the free-look period, while returning the policy for a refund is still possible.
• Check eight groups: identity, amounts, rate class, riders, ownership and beneficiaries, guarantees, clocks and delivery requirements.
• Most differences have ordinary causes, such as a changed rate class or assumptions, but each deserves a written explanation.
• The guaranteed values in the contract matter more than the projected values in the illustration.
• Put the free-look end date in your calendar the day the policy arrives, and keep your old coverage until the new one is confirmed.