What distinguishes guaranteed amounts from projected amounts in insurance documentation?

Guaranteed amounts and projected amounts serve different purposes in insurance documentation, particularly in the context of policy illustrations. Guaranteed amounts refer to the minimum values that an insurance company assures will be provided to the policyholder, regardless of future performance. This includes things like death benefits and cash values that are promised based on the terms of the policy.

On the other hand, projected amounts are estimates that reflect the potential future performance of the policy based on certain assumptions, such as interest rates or market conditions. These amounts can fluctuate and are not guaranteed.

The clarity in distinguishing between these two types of amounts is crucial for policyholders. It helps ensure that they understand what is guaranteed and what is subject to change based on the insurer's performance. Consequently, regulations often require that insurance illustrations clearly highlight this distinction so that consumers are not misled about their policies' value and future performance. This requirement fosters transparency and aids consumers in making informed decisions.