What am I being shown?
This stage covers the document itself. A proposal for a participating contract prints two sets of numbers, one of which the insurer owes and one of which it does not, and almost every misunderstanding in this field starts with reading the second set as though it were the first. The questions here are about which column is which, what the scale of participations is and is not, and what can honestly be compared between two companies.
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What is the difference between the guaranteed column and the illustrated column?
The guaranteed column is contractual and the illustrated column rests on an assumption about future participations. The gap between them at year twenty measures the assumption, not a benefit.
- Contract fact
- Contract dependent
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Which document wins if the illustration and the policy disagree?
The contract governs. An illustration is a document produced before issue, and anything in it that the contract does not repeat is not an obligation of the insurer.
- Contract fact
- Contract dependent
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Are life insurance illustrations forecasts?
No. The arithmetic freezes today's inputs and carries them forward without predicting anything. It demonstrates how a contract behaves under stated conditions rather than what those conditions will be.
- Contract fact
- Professional judgment
- Contract dependent
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What does a life insurance illustration leave out?
An illustration is a projection under stated assumptions, not a forecast and not the contract. It usually shows no cost breakdown, no premium tax line and no alternative scale, and the contract governs wherever the two differ.
- Contract fact
- Contract dependent
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How should I compare two illustrations from different insurers?
Line up guaranteed values and contract provisions. Projected columns are not comparable between companies because each rests on assumptions the insurer chose for itself.
- Contract fact
- Professional judgment
- Contract dependent
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What should I ask about an illustration before I sign?
Five questions asked before signature: a lower scale run, the guaranteed row, which payments are obligations, what a stopped deposit does, and what would end the contract early.
- Professional judgment
- Contract fact
- Contract dependent
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How is the dividend scale actually decided?
A board declares it annually on actuarial advice, driven by investment results, mortality experience and expenses in the participating account. It divides a completed year rather than promising a future one.
- Contract fact
- Canada wide
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Does a higher dividend scale mean a better contract?
No. The declared figure is not a yield and does not rank between companies, because each prices on its own assumptions. The guaranteed schedule and the provisions decide the outcome.
- Professional judgment
- Contract fact
- Canada wide
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What is the difference between a dividend scale and an interest rate?
A rate applies to a balance and can be calculated. A scale is a set of factors dividing a finished year of surplus, and what reaches one contract depends on its own design and history.
- Contract fact
- Canada wide
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Are the participations shown on an illustration guaranteed?
No. A policy dividend is declared annually at the discretion of the insurer's board. What is guaranteed is the guaranteed cash value and guaranteed death benefit in the policy schedule, which are obligations of the insurer and are not government backed.
- Contract fact
- Canada wide
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What happens to my illustration if the scale drops?
Guaranteed values are unaffected and everything above them moves. Fewer paid up additions are purchased, growth slows against the illustration, and a design that assumed the scale would carry the premium may need premiums to continue.
- Contract fact
- Contract dependent
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Why does the premium schedule show payments ending in a particular year?
Because the software was told to stop them there once accumulated value was projected to meet the cost. That year is a calculated outcome rather than a term of the contract, and it moves whenever the assumption behind it moves.
- Contract fact
- Contract dependent
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Should the same design be run a second time at a lower scale?
Yes, and asking for it costs nothing. One run at a reduced scale shows the same contract with a single input changed, which is the cheapest way to see how much of the document is obligation and how much is arithmetic.
- Professional judgment
- Contract dependent
What this stage decides
Nothing at this stage is a decision about whether to buy. It is a decision about what the document in front of you actually says, and that question comes first because everything argued afterwards is argued from these pages. A proposal for a participating contract is a table sixty rows long, and the rows carry at least two kinds of number: amounts the insurer is contractually bound to pay, and amounts it has calculated on the assumption that the current scale of participations is declared again every year until the table ends.
Those two kinds of number look identical. They sit in adjacent columns, in the same typeface, produced by the same software on the same afternoon. Only one of them is an obligation. A reader who leaves a meeting carrying the larger figure has not been misled by anything on the page, because the page said what it was, and has still walked out with the wrong number in their head.
Why these questions recur
They recur because the document is a disclosure instrument being used as a sales instrument, and it is honest at the first job and flattering at the second. The scale of participations is the part most often misread, because it is quoted as a percentage and a percentage reads as a rate. It is not a rate applied to your value; it is a set of factors used to divide a year that has already finished among contracts that differ from one another in design, in issue year and in size.
That single confusion produces most of the rest. It is why a figure from one company gets ranked against a figure from another, when each was set on its own pricing assumptions. It is why a proposal that later delivers less is described as having failed, when it did exactly what it said it might. And it is why the two cheapest habits in this whole section are asking for a second run at a lower scale and writing down the guaranteed row before leaving the room.
The complete treatment of the product and its account sits in the silo pages rather than here, and every answer at this stage links into them. The method behind each answer, including what the status labels mean, is set out on the IBC Answers hub.
Where this answer may not apply
- A universal life or non participating proposal is built differently and most of this stage does not describe it.
- An in force document produced on a contract already issued starts from today's values and answers a review question rather than a buying one.
- Nothing at this stage is a suitability finding, which is made on your own figures by a licensed representative.
- Where a corporation would own the contract, the document is read a second time with an accountant for the tax and accounting treatment.
What to verify in your own contract
- The guaranteed cash value and guaranteed coverage at years one, five, ten and twenty, beside cumulative payments made by each of those years.
- The assumptions page, including the scale in force and the date the document was produced.
- A second version of the same design run at a reduced scale, kept with the first.
- Which line of the payment schedule is the contractual premium and which line is an optional deposit.
- The year the schedule shows payments ending, and what the document assumes is true for that to happen.
- The representative and the firm in the provincial register, with the licence class and any conditions attached.
Continue to the full explanation
Continue to the next question in this stage.
Sources
- Canadian Life and Health Insurance Association, illustration guidelines, verified 2026-08-30
- Office of the Superintendent of Financial Institutions, list of federally regulated insurers, verified 2026-08-30
Accountability and disclosure
- Written by
- José Salloum
- Professional capacity
- Financial security advisor, Canadian Wealth Creation Centre Inc., operating as IBC Financial
- Reviewed by
- Insurance and contract education tier, reviewed under a licensed insurance professional's own authority
- Jurisdiction
- Contract dependent
- Last reviewed
- 2026-08-30
- Version
- 1.0
- Compensation disclosure
- Canadian Wealth Creation Centre Inc., operating as IBC Financial, may receive insurer paid compensation if a policy is purchased. It takes the form of first year compensation followed by renewal compensation, and the amount varies by insurer, product, age, premium, contract design, riders and the arrangement with the managing general agency. No single figure would describe every contract honestly, and none is published here.
- Report a correction
- Info@ibcfinancial.com. Write without a policy number, medical information or account details.
Last reviewed 2026-08-30. By Jose Salloum, Financial Security Advisor.