Washington Life Producer Practice Exam 2025 – Complete Prep Guide

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What must be disclosed when a life insurance policy illustration shows future premiums being paid out of nonguaranteed values?

Annual premium increases may occur

Policy may lapse without additional premiums

Increased death benefits are guaranteed

She may need to resume premium payments, depending on actual results

When a life insurance policy illustration indicates that future premiums will be funded through nonguaranteed values, it is crucial to disclose that the policyholder may need to resume premium payments based on actual performance outcomes. This means that if the policy's actual results do not align with the projected values used in the illustration, the policyholder could find themselves required to make additional premium payments to keep the policy in force.

Nonguaranteed values can fluctuate, and if the performance of the underlying investments or the policy's costs change, the assumed values that allow for premium payments to be covered by these non-guarantees may not materialize. Therefore, it's important for policyholders to understand that their obligation to pay premiums may return if the reliance on those projections becomes unfeasible due to actual policy performance. This helps manage expectations and encourages prudent monitoring of the policy's status to avoid lapsing.

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