A No-Lapse Guarantee (NLG) feature in a Variable Universal Life (VUL) insurance policy is designed to ensure that the policy remains in force and does not lapse, regardless of fluctuations in the cash value or investment performance of the policy.
Variable Universal Life insurance is a type of permanent life insurance that combines a death benefit with an investment component. Policyholders have the flexibility to allocate their premiums among different investment options within the policy, such as mutual funds. The cash value of the policy is subject to market fluctuations based on the performance of these investments.
The No-Lapse Guarantee feature provides a safety net by guaranteeing that the policy will remain in force as long as certain conditions are met. These conditions typically include:
- Premium Payments: The policyholder must pay the required premiums on time and in the specified amounts to keep the NLG feature active.
- Death Benefit: The NLG feature often guarantees a minimum death benefit as long as the premium payments are maintained. This can provide peace of mind to policyholders by ensuring a certain level of protection for their beneficiaries.
- Cash Value Accumulation: The NLG feature may also have conditions related to the cash value accumulation. For example, there might be a required minimum cash value to keep the NLG in force.
It’s important to note that the No-Lapse Guarantee feature may come with additional costs, and the guaranteed period (the duration during which the policy will not lapse) can vary depending on the insurance company and the specific policy terms. Policyholders should carefully review the policy documents and understand the terms and conditions of the No-Lapse Guarantee before purchasing a Variable Universal Life insurance policy.
As with any financial product, it’s advisable to consult with a qualified financial advisor or insurance professional to determine if a No-Lapse Guarantee Variable Universal Life insurance policy aligns with your financial goals and risk tolerance.