(Taken from moneysense.gov.sg)
Moneysense has a excellent explanation of the benefit illustration but I thought it would be good to explain on how are the numbers are derived.
This benefit illustration is an example of a 15 years regular premium participating endowment policy. As you may know, the premiums after accounting for the expenses will go into a participating fund or in short, a par fund in which the insurer will manage this fund to in order to grow it. This participating fund is also used for payouts to those who make claims on their policies.
For this benefit illustration, the investment return is assumed to be at 5.25%. The surrender value is the amount which you will get back if you terminate the policy. And this surrender value is made up of 2 components, the guaranteed and the non-guaranteed portion. Once again, the non-guaranteed portion is subjected to the investment performance of...