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Where there is the most flash, there is often the least substance, warns the Guardian Life Insurance Co. of America. Life insurance buyers should be wary of attractive policy projections that promise higher returns, it says.

Insurers and their agents regularly prepare charts for prospective buyers that show the cash values predicted to be accumulated by a policy from year to year. Some insurers artificially inflate their projections in order to sell policies, it says. "Weaker insurance companies will often use more optimistic assumptions to boost their illustrations," it says. Some companies use assumptions that say their mortality experience will improve by 10 percent or that their expenses will be reduced. Such assumptions make projections look good, but may make it hard for the company to deliver on its promises.

Another ploy some companies use in 20-year projections is to include a bonus paid to policyholders who keep their policies for 20 years. "The problem is that the bonus is based on assumptions about the number of policy holders who will drop their policies in the interim," the Guardian says. "If these assumptions aren't realized, the company won't be able to pay the illustrated bonus."

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