An indexed universal life (IUL) illustration shows how a proposed life insurance policy could work under stated assumptions. To read it, start with the planned premiums and guaranteed values, then compare the nonguaranteed projections, cash surrender value and any loan assumptions. The most attractive column is a scenario, not a promise.
You don’t need to understand every actuarial calculation to ask useful questions. You do need to know what you’d pay, what you could access and what happens if results fall short.
1. Check whose policy you’re looking at
Before studying the numbers, check the insured person’s age, underwriting class, death benefit, policy form and illustration date. Confirm the riders and death benefit option, too. A quote prepared for a preferred nonsmoker can tell a very different story from the policy you’re actually offered.
Ask for the complete basic illustration, including its notes. A one-page income chart may leave out the information you need to judge it. The NAIC’s illustration model identifies these basic details and distinguishes guaranteed from nonguaranteed figures.
2. Follow the premium schedule all the way down
Find the annual payment and the years in which payments are assumed. Then ask: “Is this just my planned payment, or does paying it satisfy a contractual guarantee?”
If payments stop in year 10, that doesn’t necessarily mean the policy becomes paid up. The illustration may assume future credits will cover continuing charges. Ask what you’d need to pay if those credits are lower, and whether any no-lapse guarantee has separate timing and funding conditions.
“Flexible premium” gives you choices, but it doesn’t remove the cost of keeping coverage. Our IUL mechanics guide explains how payments, credits and deductions fit together.
3. Read the guaranteed columns before the projections
Look for the guaranteed values and how long the illustrated payments sustain coverage under those assumptions. Then move to the nonguaranteed columns. Those columns may use current charges and an assumed crediting rate that can change.
Here’s a made-up reading exercise. These figures are invented to explain the columns; they are not an insurer illustration, a quote or an estimate of typical results.
| Example: end of year 10 | Guaranteed column | Nonguaranteed column |
|---|---|---|
| Total premiums paid | $50,000 | $50,000 |
| Account value | $24,000 | $46,000 |
| Cash surrender value | $20,000 | $42,000 |
| Death benefit | $250,000 | $250,000 |
The projected $42,000 isn’t a guaranteed amount you can withdraw. The $20,000 belongs to the guaranteed scenario under the stated payment assumptions; it isn’t a separate savings account. And a death benefit shown in year 10 doesn’t prove coverage lasts for life. Keep reading the later years.
The NAIC’s consumer explanation describes the basic illustration’s guaranteed and nonguaranteed elements and the role of updated, in-force illustrations.
4. Separate account value, surrender value and death benefit
These numbers answer different questions:
- Account value: What value has accumulated inside the policy under that scenario?
- Cash surrender value: What would be available if you ended the policy, after applicable surrender charges and policy debt?
- Death benefit: What would the policy pay upon the insured person’s death under the terms shown?
Don’t assume beneficiaries receive the death benefit plus the account value. The death benefit option and contract control that calculation. Ask for the net benefit after any illustrated loans.
Also, an assumed crediting rate isn’t your personal return on premiums. Some premium dollars pay for coverage and other charges. If you want a return comparison, ask for an explanation based on the actual payment dates and cash surrender values.
5. Ask what happens in a less favorable scenario
Try these questions before deciding whether the funding plan feels comfortable:
- What happens with lower illustrated credits and the same payments?
- What happens if I pay less, pay late or stop earlier than planned?
- Which charges or crediting terms can change, and within what contractual limits?
- In each scenario, when does coverage end, and what extra funding would keep it going?
A lower-rate illustration is useful, but a steady annual rate still won’t show every possible sequence of credits. Ask how several low-credit years early on would affect the plan. The North Carolina insurance regulator urges universal life owners to monitor funding because charges continue and low returns can shorten coverage.
6. Give any loan-income column its own review
If an illustration shows future loans, find the loan amounts, interest charged, assumed credits on borrowed value and remaining death benefit. Ask for a comparison with lower credits and less favorable loan assumptions.
Don’t treat an illustrated stream of loans as guaranteed retirement income. Interest and policy costs continue, and an unsustainable loan plan can threaten coverage. Read our guide to IUL loans before relying on that column.
What does AG 49-A mean for an IUL illustration?
Actuarial Guideline 49-A provides guidance on illustrating index-based life insurance, including limits on illustrated crediting and loan leverage. The NAIC’s updated text includes additional historical-credit disclosures for policies sold on or after April 1, 2026. It also calls for an alternate-scale ledger alongside the illustrated scale. Source: NAIC AG 49-A.
These are illustration standards. They don’t guarantee the projected values or establish that a policy suits you. Ask the insurer which requirements apply to your policy and state, and have the agent explain the alternate scale. Historical or back-tested credits aren’t a forecast.
Frequently asked questions
Does signing an IUL illustration guarantee the results?
No. A signature doesn’t turn nonguaranteed projections into contractual guarantees. Read the policy’s guarantees and the illustration’s assumptions separately.
Can I request a new illustration for a policy I already own?
Yes. Ask the insurer for an in-force illustration using your current values, actual loans and intended future payments. An old sales illustration won’t reflect everything that has happened since purchase.
What’s the most useful question to ask before buying?
“What would I need to pay to keep the coverage I want if the projected credits don’t happen?” Ask for the answer in writing, with the relevant guaranteed and lower-credit scenarios.
Take the questions with you
Save the complete illustration and mark anything you can’t explain back in your own words. You can contact ShieldWise with a general coverage question. For a recommendation about a specific policy, speak with a properly licensed professional who can review the full contract and your circumstances.
This guide provides general education, not an individual insurance, investment, legal or tax recommendation. Products, underwriting, guarantees and availability depend on the insurer, contract and state. Guarantees depend on the insurer’s claims-paying ability.