What is the purpose of "policy illustrations"?

The purpose of policy illustrations is to provide potential policyholders with a visual representation of the policy benefits, costs, and cash values over time. These illustrations are crucial tools in the insurance industry, as they help both agents and clients understand how a life insurance policy works, including how premiums are structured and how the policy may perform throughout its duration.

In a policy illustration, various scenarios can be presented, demonstrating how the cash value may grow, how death benefits are affected, and how different factors can influence the outcomes. This helps clients to visualize the long-term implications of their insurance decisions and understand the financial commitments involved.

The other choices focus on aspects that are not the primary function of policy illustrations. For example, showing potential returns from investing in the stock market doesn't pertain to life insurance policies specifically. Outlining the steps for filing a claim and explaining the terms and conditions of the insurance contract are also essential functions of insurance but do not relate to the illustrative purpose of conveying financial and benefit projections over time.