It is important to note that even if all states adopt the model regulation, there will still be wide variation in acceptable underlying assumptions. (Texas has already deviated significantly by adopting an incompatible regulation.) Illustrations will never be an accurate prediction of future results or policy performance. Actual future situations will be heavily influenced by the economy and by the investment performance of the specific insurance company�s actual portfolio.

Illustrations are useful for showing how a policy works and how sensitive a policy is to given changes in factors such as interest, mortality, or expenses. However, illustrations are of limited value for comparing different policies (whether from the same insurer or from different insurers).

The new regulation will no doubt eliminate some of the past abuses in illustrations where the assumptions were based on unfettered pie-in-the-sky optimism. The new restrictions do not constrain illustrations to such an extent that we can compare apples to apples. It is still important to study all the questions about the underlying assumptions. Those questions are set forth in the Life Insurance Illustration Questionnaire (IQ) developed by the American Society of CLU and ChFC. (See pages 271�274.)