No-lapse Guarantee

Definition - What does No-lapse Guarantee mean?

A no-lapse guarantee is an agreement as part of a life insurance policy in which the death benefit for the insured is assured. Insurance policies that boast this feature have lower premiums than other life insurance products because it has little or no cash value. The guarantee is only effective if premiums are paid regularly and on time.

It is also known as guaranteed universal life insurance.

Insuranceopedia explains No-lapse Guarantee

If the premiums for the policy are paid on time, the death benefit is assured. If not, the company might strip the insurance policy of its guarantee.

Policyholders who wish to increase cash value through an insurance product should purchase another type of life insurance. This is because the payments made to a no-lapse life insurance policy are not invested in order to make gains for the insured, as is the case with many other life insurance policies.

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