A. In the 1990's, the insurance policy illustrations have been misused a lot which led to model legislation that requires insurers to identify policies that are to be marketed with an illustration and what the illustration should include.
Specifically, a life insurance policy's illustration should meet the following standards:
- Illustrations must clearly be labeled "life insurance illustration" and contain basic information such as the name of the insurer, name and address of the producer, identification of the proposed insured, and so forth.
- Producers may not represent the policy as anything other than life insurance, use an incomplete or noncompliant illustration, or mislead the prospect about the contents of the illustration.
- The illustration must conform to a certain basic format that accentuates clear, accurate labeling of information, especially nonguaranteed elements.
- The illustration must include both a narrative summary, explaining how the policy works, and a numeric summary, which details the death benefits, death values, and premium amounts.
- The illustration must be signed and dated by the applicant or policyowner, certifying that the agent has not guaranteed the nonguaranteed elements of the policy.
- Policy illustrations include a table that indicates the scheduled premium, corresponding guaranteed death benefit, and corresponding guaranteed surrender value for each of the first 10 years and for at least every fifth year up to age 100.