Policy illustration compliance refers to the set of regulatory and company rules that govern how life insurance illustrations are created, presented, and used in sales and service. In the United States, the NAIC Life Insurance Illustrations Model Regulation and related state regulations require that illustrations clearly separate guaranteed from non-guaranteed elements, disclose key assumptions, and avoid misleading presentations. Carriers must follow standardized formats, include specific notices, and ensure that illustrated interest, dividend, or crediting rates are reasonable based on current experience. Advisors are required to use only approved illustration software, refrain from altering documents, and provide clients with signed copies when an illustration is used in the sale. Policy illustration compliance protects consumers by making complex projections more transparent and by preventing illustrations from being used as unrealistic promises about future performance.

In everyday field practice, policy illustration compliance shapes how advisors run, explain, and store illustrations. They must select only approved products, funding patterns, riders, and assumptions within the carrier's system, and avoid "what if" manipulations that fall outside allowed parameters. During client meetings, advisors explain limitations of projections, review mandatory disclosure pages, and obtain signatures acknowledging receipt and understanding. Compliance departments may audit illustration use, checking for discrepancies between submitted applications and associated illustrations, or for patterns of overly aggressive assumptions. When regulators update illustration rules-for example, for indexed universal life-carriers adjust software and training, and advisors must adapt their practices. Understanding policy illustration compliance helps advisors protect their licenses, maintain good standing with carriers, and ensure that clients receive honest, well-documented information about the policies they are considering or already own.