Why is a "policy illustration" significant in life insurance?

A policy illustration is significant in life insurance because it serves as a visual representation of the policy's benefits, costs, and values over time. This tool helps both the agent and the policyholder understand how the policy works, what the projected cash values might be, and how the death benefit will change over the life of the policy, depending on various factors such as premium payments and performance of the underlying investments. It enables prospective buyers to make informed decisions based on their individual needs and expectations, illustrating potential outcomes in a clear and comparative way.

This visual representation is particularly valuable during the decision-making process, empowering clients to assess whether the policy aligns with their financial goals and insurance needs. By comparing different policies and scenarios, clients can better understand the implications of their choices before committing to a life insurance contract.