The inforce illustration, an owner's yearly check

What an inforce illustration is, and what it is not

The NAIC model regulation defines an inforce illustration as one furnished any time after the policy has been in force for a year or more.² The model makes it follow the same format rules as a sales illustration, and any age shown in its table is the issue age plus the years in force.² Three documents get confused, and they answer different questions.

Built from the NAIC Life Insurance Illustrations Model Regulation and the NAIC consumer page on illustrations, opened November 10, 2026.

The annual statement carries a warning worth knowing. Under the model rule, a universal life report must say so if, at guaranteed interest, mortality and expense charges, the net cash surrender value will not keep the coverage in force to the end of the next reporting period without more premium.² If you have ever seen that notice, an inforce illustration is overdue.

When to order one

• Every year, near the policy anniversary. The model notice says you may request one annually without charge.
• After any loan or withdrawal. Nationwide's own loan request form tells owners they may ask it for an inforce illustration showing the impact of the loan.⁴ The same form warns that loans make it more likely the policy enters the grace period and lapses, and that loan proceeds may be taxable at death if the loan is not repaid.
• After a missed or smaller premium. Universal life lets you pay less, and the policy absorbs it quietly until it cannot.
• After a notice that a cap or charge changed. The model rule requires the annual report to flag an adverse change in non-guaranteed elements.² On an IUL, caps, spreads and participation rates can change for new segments within the contract's guaranteed minimums.
• Before replacing the policy or changing the coverage. The model notice says not to without requesting a current illustration first.

A financial planner writing in the Journal of Accountancy gave the same advice two decades ago, ask for "an inforce reprojection showing any changes in credits or charges the company has declared for the next policy year."³

The four runs to ask for

One run tells you little. Four runs, side by side, show how much room the policy has.

Our suggested request set. Ask for each run with your current loan, if any, carried at the policy's loan rate.

The Journal of Accountancy article put the second run plainly. "The guaranteed column in an insurance illustration assumes the worst case."³ It is not a forecast, but it is the only column the insurer is bound to.

How to request one

1. Find the policy number and the service contact. Both are on your annual statement.
2. Ask as the owner, in writing if you can. The model rule gives the right to the policy owner. If an agent or adviser will ask for you, ask the insurer what signed authorization it needs.
3. List the runs. Name the four above, the target age for run 4, and the rate you want for the lower-rate case.
4. Ask for the strategy rates in force. For an IUL, request the current cap or participation rate on each indexed strategy you hold, so you can compare them with today's new-policy rates on our cap rate tracker.
5. Note the date. If 30 days pass with nothing, follow up, and use your state insurance department if needed.

Insurers route requests differently. Nationwide's loan form points owners to its service line for an inforce illustration.⁴ Pacific Life's consumer FAQ tells owners to read the policyowner statement for the most accurate view of performance, and to ask their life insurance producer for an illustration when weighing a rider.⁵ If you no longer have an agent, the insurer's service team is the place to ask.

Reading the result

Go straight to the year the policy lapses in each run. Some ledgers print a lapse message, others show values falling to zero. Then check three things.

• The gap between runs 1 and 2. A wide gap means the policy leans on non-guaranteed credits.
• The illustrated rate. For policies sold on or after December 14, 2020, AG 49-A limits the rate an IUL illustration may assume. It also limits a loan to an illustrated spread of 50 basis points, so a 4.00% loan rate cannot be shown earning more than 4.50%.⁶
• Today against the sales illustration. Compare the account value this year with the value the original ledger showed for the same year. The difference is what the past actually did.

Illustrations are not guarantees, inforce ones included. Each run is one path, and real index years arrive in an order no ledger predicts. To test a bad order of years or a higher loan rate, put the figures into the loan and lapse stress test, or check a ledger line by line with the illustration reader.

What to do with what you find

If the runs look tight, the usual levers are to pay more, repay part of a loan, lower the face amount, switch an increasing death benefit to level, or move value between strategies. Each changes the coverage or the cost, so rerun the illustration on the option before acting. If you are weighing leaving the policy, see getting out of an IUL first, and never drop coverage before new coverage is approved. A policy that lapses with a loan can leave a tax bill, so ask a tax professional before letting that happen. An IUL is life insurance, not an investment, and the inforce illustration is how you check it is still doing that job.

Questions people ask