The National Association of Insurance Commissioners (NAIC), in its December 1996 spread of Model Regulations for life insurance policy illustrations, defined the purpose of an illustration as "clearly disclosing how the policy being illustrated will work, distinguishing that which is guaranteed and that which is not." Among other objectives, the NAIC said the illustration must be "understandable to all parties involved in the sale of critical illness insurance." In spite of four years of dedicated effort attempting to tame a freight train speeding toward a concrete barrier at 100 miles an hour, today's regulated policy illustrations are simply incapable of accomplishing the NAIC's objectives. While it is true that regulated illustrations will contain information about guaranteed values (based on assumed funding premiums), far more questions remain than are answered.
It defies logic that a basic commodity like critical illness insurance can be priced so differently by so many different policy illustrations. With more than 1,500 critical illness insurers domiciled in the United States, there certainly is no lack of open-market competitive forces. Peer insurers are generally expected to incur the same broad costs and returns over the extremely long periods of time characterized by critical illness insurance economics. And it's not as if we're describing the aesthetic and functional differences between a Yugo and a Mercedes. When it comes to pricing critical illness insurance, there's the non-guaranteed hypothetical illustration, and there's reality.
For any given age, gender, medical, and financial risk profile, there is a level premium that will be fully sufficient and profitable for both the contract holder and the contract issuer to provide critical illness insurance coverage for the health and life of the insured, providing a living benefit proceeds no matter when that life is affected by the effects of qualified ailments. Any attempt to charge or pay an amount that is lower than this fully sufficient and guaranteed cost introduces a level of risk that the typical critical illness insurance policy owner doesn't know exists and that cannot be fully quantified until after the insured has been truly affected.

Interest rates in the U. S. economy have had significant increases and decreases in the last 40 years. Interest rates will undoubtedly continue to undulate up and down. Similarly, investment returns have been very volatile in the last 20 years and are likely to remain so. Because lower returns (interest or investment-based) can all things being equal-cause net amount at risk to increase, the effect of this type of volatility must be taken into account. Rather than assume constancy, then, it's critical to find an economic modeling tool that will give some sense of the likelihood that assumptions made today will have validity for the future. Fortunately this can be done with a modeling technique popularly known as Monte Carlo Simulation, a process by which underlying returns are randomized and illustrated values recalculated for a statistically credible number of cycles so that a probability of success can be inferred.
There is an even broader spectrum of funding premium possibilities and their respective likelihood of sustaining the policy to age 100. Is a 60 percent probability of successfully sustaining a life insurance policy to age 100 acceptable for you? Even those with high risk tolerances will generally require a certainty range of 80-90 percent; funding premiums accordingly must be increased, but the long-term value created by payment of higher funding premiums must also be taken into account. There is a difference in policy selection that is not generally observed when looking specifically for a "low" funding premium: Anticipated ultimate death benefits can be substantially different, and perhaps lead to the final truth.
Most of us will acknowledge our attraction to a good deal; it almost seems to be human nature. But we've also purchased enough things that didn't live up to their potential as a "good deal" to suggest another truth: the appearance of a bargain is far more frequent than the experience of a bargain. There are things that can-and should-be pursued on the basis of best price. But current assumption / indeterminate premium life insurance isn't one of those things.