Updated: Oct 15, 2020
Life insurance illustrations are meant to be a "disclosure document" of sorts, but that doesn't mean that "what you see is what will be".
There are a few things that can and will change.
1) Dividend scale on Whole Life &/or Index Cap rates on Indexed Universal Life
Life insurance illustrations use today's assumptions and carry those assumptions forward into the future in the illustration. The current dividend or assumed annual indexed interest return is projected forward - and not projected any higher than what is currently allowed by law. This means that dividends and indexed cap rates can and will change - either higher or lower, depending on the interest rate environment and other underlying factors to the insurance company.
2) Loan rates may fluctuate over time
Particularly for variable interest loan rates, they will change according to the interest rate environment, just as whole life dividend rates and indexed interest cap rates will change.
3) Any other changes as illustrated in the policy will NOT happen automatically.
The illustration is simply a calculation of how the policy will function if these illustrated events happen with the current assumptions, as above. Example 1: If your illustration shows that, after a funding period of 10 years, that the illustration shows a material change of changing from Death Benefit Option B (increasing death benefit) to Death Benefit Option A (level death benefit)... that will not happen automatically. This is only an illustration of how the policy will respond if and when you did that per current assumptions. To do this would require that the client contact the insurance company and request this modification. It would typically require a form to be completed and sent in. And yes, your agent can help you to do that.
Example 2: If your illustration shows that you took out a short term loan and repaid it back in 5 years... it won't happen automatically unless you actually make those payments back to the policy's loan.
Example 3: If you chose to fund your policy LESS than it was illustrated, the policy will not only perform poorly, but it will increase the possibility of lapsing the contract and losing everything you had put into it.
The CEO Emeritus of LifeHappens.org, Marvin Feldman, CLU, ChFC, RFC is known to say this:
"Every life insurance illustration is subject to the rule of 1-to-100: In one year, 100% of your illustrations will be wrong. So it is more important to understand WHY they bought what they bought, not just WHAT they bought."