Introduction
An inforce illustration is an important tool for reviewing permanent life insurance policies. It provides a detailed projection of how the policy is expected to perform over time.
For Canadians with permanent life insurance, like whole life or universal life, requesting regular inforce illustrations can help ensure your policy stays healthy and aligned with your coverage goals. This guide will explain everything you need to know.
What is an Inforce Illustration?
An inforce illustration is an updated projection of a permanent life insurance policy’s performance over time. It shows the policy’s projected:
- Cash value accumulation
- Death benefit amount
- Premium payments
- Lapse dates
- Loans or withdrawals
These projections are based on the policy’s current values and the insurance company’s current assumed interest rates, mortality charges, and expense loads.
Inforce illustrations are only available for permanent life policies like whole life insurance , universal life, indexed universal life, or variable life insurance.
Term life insurance does not require inforce illustrations since term policies have guaranteed level premiums for the length of the term.
Why Get an Inforce Illustration?
Here are some key reasons to request an inforce illustration on a permanent policy:
- Compare to original illustration – See how projections have changed over time based on interest rates, costs, and policy changes.
- Identify issues – Discover if premiums or death benefits are at risk due to declining cash values.
- Make decisions – Determine if changes are needed to keep the policy active and aligned with goals.
- Regular check-ups – Review policy health every 2-3 years.
How to Request an Inforce Life Insurance Illustration
Requesting an inforce illustration is easy. As the policy owner, you can ask for one at any time by:
- Contacting your insurance agent – Your agent can request the illustration and help explain it.
- Calling the insurance company – Customer service can provide instructions for requesting an illustration.
- Writing the insurance company – Send a written request with your policy number.
- Using the insurer’s online portal – Some companies provide online access for policy owners.
You’ll typically need to provide your full name, policy number, and other verification details.
The insurance company must provide the inforce illustration within 30 days of request. Most provide it faster, within 1-2 weeks.
What to Include in the Request
When requesting your inforce illustration, be sure to ask for the following:
- Current assumptions and guaranteed assumptions
- Scenarios showing premium changes, loans, etc.
This will provide the full scope of possibilities to determine if changes may be needed down the road.
Reviewing and Understanding Inforce Life Insurance Illustrations
The inforce illustration will project future cash values, death benefits, and premiums in columns by year. Here are tips for reviewing:
- Read the descriptions – Note which columns represent guaranteed, current, and projected values.
- Check page numbers – Ensure you have the full illustration.
- Focus on cash value – This is the key indicator of policy health.
- Compare scenarios – Contrast guaranteed and current interest rate assumptions.
- Review footnotes – Explanations of assumptions are included.
- Discuss with an advisor – Ask for help interpreting your policy’s projection.
What To Do Based on Your Inforce Illustration Results
The inforce illustration alerts you to any issues and helps guide the next steps:
Premium Changes
- Increase premiums if needed to keep the policy active.
Coverage Changes
- Adjust death benefit up or down based on needs.
- Add a new policy for more coverage.
Replace Policy
- Exchange policy using a 1035 tax-free transfer.
Surrender Policy
- Consider surrendering if no longer needed.
- Review surrender charges – may be high if the policy is young.
Maintaining Your Life Insurance Policy
Requesting an inforce illustration every 2-3 years is wise financial practice for permanent policy owners. Doing so provides peace of mind that your life insurance will perform as expected.
If the projections reveal trouble ahead, you can take action right away to get your policy back on track. Your insurance agent or an independent life insurance advisor can provide guidance to keep your policy in force.
The Bottom Line
An inforce life insurance illustration provides an invaluable look at your policy’s projected future performance. Reviewing it regularly allows you to make changes if needed to keep your coverage aligned with your financial goals.
At IDC Insurance Direct Canada, our licensed advisors provide customized insurance solutions, including:
- Term life insurance for family protection
- Whole and universal life insurance for lifetime coverage
- Critical illness insurance for health crisis coverage
- Disability insurance to replace lost income
We find the right solutions at competitive rates to help you financially protect yourself and your loved ones. To learn more and get a personalized quote, call 1-888-767-6576 or request a callback. Let’s discuss how the right insurance can provide peace of mind.
Frequently Asked Questions about Inforce Illustrations
When do I need an inforce illustration?
Get an updated inforce illustration every 2-3 years to monitor permanent policy performance.
Does term life insurance need inforce illustrations?
No, term policies have guaranteed level premiums, so illustrations are not needed.
How do I read an inforce illustration?
Review cash values, death benefits, and premiums projected yearly at current and guaranteed rates.
What if my cash value is declining?
Work with your agent to increase premiums to keep it from falling to zero and lapsing.
Will an inforce illustration cost me money?
Most insurers provide free annual inforce illustrations. Additional ones may incur a small fee.
