Should you Stop using Life Insurance Illustrations to Compare Policies?

When it comes to evaluating life insurance contracts for a potential purchase, a common tool used in analyzing policies is what the industry calls an “illustration.” The illustration is several pages of policy feature details and numerical details projecting policy values to the maturity date of the policy (generally the insured’s age 120 for policies issued since c. 2006).

But some have suggested that these so-called product illustrations should not be used to compare one policy against another and cite numerous sources who allegedly agree with their aversion to such a use for illustrations.

Should you be wary of a comparison that uses policy illustrations to make definitive or initial comparisons among possible products? And if these illustrations aren’t used to make comparisons, what does one use to discern the differences from one policy to another?

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