Illustration Games: Unrealistic Mortality Rates

Published on 09/12/2014

Think that life insurance illustration you are looking at might be too good to be true? It just might! We have seen a number of illustrations lately that have little or no chance of coming to fruition.

One issue we see revolves around the level of mortality that is assumed for elderly insureds. In some cases, we see projected mortality rates that are as low as 1/10th of what we believe the actual mortality risk will be!

Why does this matter to you? Depending on the type of policy you have, those illustrated future mortality rates may be the primary reason why you think the product you chose is superior to other alternatives – and when they fail to come to fruition they may also be the primary reason why you are a disgruntled policyholder!

If you are buying a policy with non-guaranteed features, then always remember that the illustration is not the product! And if something looks too good to be true . . . then maybe it is!