When Is a Premium Not a Premium?

Life insurance policies can be straightforward (10-year term) or more complicated (indexed universal life with a proprietary index and a 50-page illustration), and there are many policy styles in between. When considering what type of product is suitable and in the client's best interest, one of the most difficult aspects of the buying process is appreciating that the illustration is not the policy. Policy illustrations are a presentation of nonguaranteed premiums, policy credits, policy debits, and death benefits reflecting a single scenario in which crediting rates don't vary, policy expenses don't deviate from the original nonguaranteed schedule, and customers always pay the planned premium into the policy (and may or may not borrow)--as the illustration assumes. This is not how life insurance works in the real world. [ABSTRACT FROM AUTHOR]