New Jersey Life Producer Law Practice Test

A policy illustration provided at the point of sale is designed to help a potential policyholder understand the key features and benefits of a life insurance product. While it generally includes essential information such as the first year premium amount, the guaranteed death benefit, and the annual dividends, it often does not include the 10th and 20th year cost surrender value.

The cost surrender value reflects the amount of money a policyholder would receive if they decide to cancel the policy at certain points in time, typically after several years of holding the policy. This information may not always be included in the initial illustration, as it is more pertinent to the long-term financial planning of the policyholder and could distract from the primary objectives of the illustration at the time of sale. Instead, illustrations tend to focus on immediate and guaranteed features of the policy, making it clear what the buyer can expect shortly after purchase and during the early years of coverage.