When life-insurance agents call, one of their main selling tools is the illustration, that daunting set of numbers that estimates how much the cash value of a policy will increase each year. The trouble is, the estimates are usually based on current returns. So if interest rates fall, you can owe more money just when you think your policy is paid in full.

A handful of insurers, including Phoenix Home Life, New England Mutual, Connecticut Mutual, and Manufacturers Life, are trying to correct the problem with more realistic disclosure materials. The new illustrations show what a policy would be worth if rates, which determine how quickly cash builds, remain the same, rise, or drop.

Other changes include highlighting a policy's guaranteed minimum value, clearly stating that the projections aren't guaranteed and asking consumers to sign a statement saying they understand what they're buying. Phoenix simplified illustration language, substituting "payment" for "premium" and providing definitions for terms such as "cash value" and "dividends."

The revisions come in the wake of recent problems at Metropolitan Life and Prudential involving the sale of life insurance and other investment products. "The concern surrounding Met and Pru has persuaded insurers that more disclosure is in their best interest," says Phoenix CEO Robert Fiondella.

ON GUARD. Still, insurers could go further by, say, disclosing commissions paid to agents and other charges that factor into a policy's cost, says Keith Maurer, president of Fee for Service, a Tampa insurance brokerage. He says many of the new illustrations are still too confusing.

Various industry groups are also promoting change. The National Association of Insurance Commissioners is proposing laws to require insurers to show projections of cash accumulation based on past performance. But that could backfire if past high interest rates boost projected cash values too much.

The National Association of Life Underwriters (NALU), an agents' trade group, is recommending that companies base expected cash appreciation on rates 1% lower than current ones at the time the policy is written. It also wants companies to warn consumers when an insurer's investment portfolio is earning less than the illustrated rate. Manufacturers Life has implemented some NALU proposals.

Buyers of whole or universal life insurance, meantime, need to fix a sharp eye on illustrations. Ask the agent what assumptions were made to come up with cash-growth estimates. And ask how well the insurer has met its projections. The more information you have, the smarter your purchase decision will be.

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