User:Tayxbeatz/sandbox

No Lapse Guarantees
A no-lapse guarantee is guarantees that a life insurance policy will remain in force for a certain number of years, such as 15 or 20 years, if at least the minimum premium is paid (most life insurance policies have a no-lapse guarantee). When it comes to no-lapse guarantees the minimum premium is specified in the policy and, depending on the insurer, may be less than or equal to the target premium. No-lapse guarantees are usually found in universal life insurance policies and guarantee that your premiums will not go up. Locking in to a life insurance policy containing a no-lapse guarantee at a young age is beneficial because the policy holder is healthier than in the following years.

No-lapse premium guarantees are impressing agents, insurance buyers and their advisors. This is due to them being ideal for consumers because of lost confidence in permanent insurance due to poorly performing universal life and vanishing-premium and variable-life promises that have not come true.

History
Long-term secondary guaranteed policies first appeared in the marketplace in the early to mid 2000s. But over the past few years, companies have incorporated more and more aggressive pricing to generate lower and lower premiums. Today, the low premiums required for these guarantees have made these policies the hottest commodities in the life insurance industry. Not only are they grabbing a large market share of new permanent insurance; they are replacing many existing policies whose current non-guaranteed projections simply cannot match the guaranteed death benefits of the lowest priced versions of this new product.

The appeal of these competitive guarantees is understandable. The burst of the 1990’s stock market bubble and a steady decline in interest rates have lowered investors’ near-term expectations and increased the allure of investment guarantees generally. For those who are considered preferred risks, these policies commonly guarantee internal rates of return on premiums paid of 7 percent or more at age 80, 6 percent at age 90 and 5 percent at age 100 – and all income tax-free because of the favorable tax treatment of policy death benefits.

Potential Problems

 * Consequence of Late Premium Payment
 * Insurer's possible financial inability to meet its guarantees
 * a clear conflict of interest between the policyholder and the insurer as the result of these first two risks
 * the inflexibility of the guaranteed policy due to little cash value and high surrender charges
 * the possible “opportunity cost” of higher returns from the bestperforming non-guaranteed traditional policies for insureds who live a long time

Real Guarantees
No-lapse Premium Guarantees have a much smaller margin for error than conventionally set guarantees. NLPG insurers could experience non-systemic solvency strains that only affect some insurers selling NLPGs. If NLPGs are generally underpriced, it could cause the pricing for that company's non-NLPG policies to be adversely affected. It is also possible that a company aggressively pricing and selling NLPGs could end up under-reserved and seized by regulators.

NLPGs use the universal life form of insurance. Essentially NLPGs promise that the specified death benefit will be paid if the policyholder pays the stipulated premium for a stated period of time. NLPGs have varying guaranteed periods, but the only relevant period for them is to age 100.

NLPG policies have very low to zero guaranteed cash values with higher illustrated current cash values. NLPG policy performance is subject to current-pricing that may be better. In theory, NLPGs promise to dramatically limit a policy's downside while giving policyholders access to a possible upside. In practice, however, the possibility of an upside is probably a mirage for aggressively priced NLPGs, making them static-priced policies in reality.