Key Requirements for Life Insurance Illustrations (Excluding Non‑Essential Elements)

Regulatory Foundations

Life insurance illustrations must meet strict standards set by state insurance departments and the NAIC. The core mandate is that every illustration accurately projects premiums, cash values, and death benefits based on the assumptions disclosed in the document.

Actuarial Assumptions

Illustrations rely on actuarial assumptions that must be clearly stated. Required assumptions include:

• Interest rate or investment return used for cash‑value growth
• Mortality table and any applied mortality charges
• Policy fees, expense loads, and surrender charges
• Policyholder behavior assumptions such as premium payment frequency and lapse rates

These figures cannot be omitted; they form the basis for every projected cash‑value or benefit figure.

Disclosure Elements

Beyond the numbers, the illustration must disclose:

• All costs that affect the policy, including administrative, underwriting, and rider fees
• The time horizon of the projection (typically 10, 20, and 30 years)
• Any non‑guaranteed elements and the conditions under which they may change
• A clear disclaimer that projections are not guarantees and that actual results may differ

These disclosures ensure consumers understand the limits of the illustration.

Formatting and Presentation Rules

The NAIC's Model Regulation requires a standardized format:

• Tabular presentation of projected values at each policy year
• Separate columns for guaranteed and non‑guaranteed amounts
• Use of consistent units (e.g., dollars, percentages) throughout

While the layout can vary slightly, the essential data columns must be present; any decorative graphics or marketing language that does not convey quantitative data are optional and can be excluded.

What Can Be Omitted

Items that are not required and may be left out of a compliant illustration include:

• Historical performance charts of the insurer's investment portfolio
• Comparative illustrations for competing products
• Detailed biographies of agents or company executives
• Marketing slogans, brand imagery, or testimonials

Excluding these elements keeps the illustration focused on the statutory requirements and avoids potential confusion.

Sample Comparison Table