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(The purchase of a Variable UL or WL pol icy also requires delivery of a prospectus.) on-Variable Health insurance policies have two basic documents that are delivered to the new policy owner: the policy and a policy illustration. Most insurance company actuaries will privately acknowledge that in spite of dramatic differences in illustrated cost or benefits, actual long-term policy performance of similar policy types among peer carriers will be much more similar than those illustrations otherwise suggest. " As for long-term investment performance, peer companies (who, among other things, enjoy very similar financial ratings) are in virtual lockstep with respect to investment quality and therefore investment performance. Furthermore, as far as mortality expense is concerned, it isn't credible that peer companies would have dramatically different experiences over long periods of time while insuring tens of millions of people. But when considering the projection of current assumptions about costs and portfolio earnings far into the future and the insurance company's ability defines who's better and who's worse? An important issue implied by the overuse of policy illustrations is the belief that one insurance company must be better than another if its illustrated premiums are lower or its illustrated benefits are higher. Because attempts at reading financial crystal balls often lead to bankruptcy, life insurers will opt for the conservative approach to pricing, the result of which has been the Whole Life policy - and more recently the No Lapse/Secondary Guarantee Universal Life policy. If you want a price guarantee, the insurance company is going to have to be either extremely prescient or extremely conservative in its calculation of these underlying pricing elements. With respect to each of these pricing elements, insurers must make assumptions based on forecasts that span 40, 50, 60, or more years.

Of course this is a form of tontine, and it was generally forbidden by policy illustration regulations adopted by most states in the late 1990s. To the extent that an insurance company prices its policies for early profit and policyholders quit their policies in the early years, it is possible to assume those gains into later-year illustrated policy benefits.