The Potential Problems With No-Lapse Premium Guarantees

    by Peter Katt

    Coming to a life insurance solicitation near you: “You should replace all of your permanent life insurance with a fully guaranteed policy.”

    Like Pac-Man, a new policy-type is trying to gobble up as much existing permanent insurance as possible. And why not, who wouldn’t want to buy (either as new or replacing existing policies) a permanent policy with excellent guaranteed premiums? So-called no-lapse-premium-guarantee (NLPG) policies have become a hot concept with many agents promising “rock-solid, unconditional guaranteed premiums.”

    No-lapse premium guarantees are impressing agents, insurance buyers and their advisors. And the financial media are cheering them on as 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.

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