What is meant by "life insurance illustration"?

A life insurance illustration is a comprehensive document that provides an overview of a life insurance policy's features, benefits, costs, and projected growth of the cash value. It serves as a visual and explanatory tool that helps potential policyholders understand what to expect from the policy over time, including how premiums are allocated, how the policy will perform, and the financial benefits it may provide.

This illustration is particularly important as it helps consumers make informed decisions about choosing a policy that suits their needs. It is usually presented in a way that clearly outlines assumptions related to interest rates, mortality rates, and any other variables that could impact the policy's performance.

In contrast, the other options pertain to different components of life insurance. A summary of claims refers to the benefits paid out after a policyholder passes away, but does not address the proactive planning through an illustration. Outlining the underwriting process focuses on how insurance companies assess risk when issuing a policy, which is more about obtaining coverage rather than understanding it. Lastly, while a contract does detail the terms of life insurance coverage, it does not provide the illustrative projections and comparisons that help potential buyers navigate their options.