Policy illustration update is a refreshed projection of an existing life insurance policy's future performance, generated using current values, current non-guaranteed assumptions, and updated premium or loan patterns. Over time, interest rates, dividends, index credits, policy charges, or client behavior can diverge from original assumptions. An updated illustration recalculates future death benefits, cash values, and lapse projections based on today's reality. It is especially important for flexible-premium policies such as universal life and indexed universal life, where inadequate funding or lower-than-expected crediting rates can cause policies to underperform and risk lapse. Regular policy illustration updates help identify emerging issues early and provide a factual basis for corrective actions, such as increasing premiums, reducing face amount, or adjusting loan strategies.

In practical servicing, advisors request policy illustration updates as part of periodic policy reviews-often every one to three years, or sooner if there are significant market or life changes. They compare updated projections with the original illustration to see whether the policy is tracking as expected, improving, or falling behind. When underperformance appears, advisors use the update to illustrate alternative strategies, such as new premium schedules or partial face reductions, and then help clients choose an approach that fits their current cash flow and goals. For policies being considered for replacement, updated inforce illustrations are often required to support suitability and best interest analysis. Understanding policy illustration updates allows advisors to treat life insurance as a managed, long-term asset rather than a static purchase, helping clients avoid surprise lapses and keep coverage aligned with evolving financial plans.