The Non-Lapse Guarantee Rider: Ensuring Universal Life Coverage Security

Given the lapse risk inherent in flexible Universal Life (UL) and Indexed Universal Life (IUL) policies, many insurers offer a **Non-Lapse Guarantee Rider (NLG)**. This rider contractually locks in the coverage, provided the policyholder adheres to a specific payment schedule.

How the Non-Lapse Guarantee Works

The NLG rider requires the policyholder to pay a specified **minimum premium** on time every year (or month). If this minimum premium is paid, the insurer guarantees that the policy will not lapse, regardless of:

• **Cash Value Level:** Even if the cash value drops to zero or below.
• **Internal Cost Increases:** The increasing Cost of Insurance (COI) will not cause a lapse.
• **Low Index Performance:** Zero returns from the market index will not cause a lapse (in IUL).

The Trade-Off

The NLG provides the security of Whole Life’s guarantees within the structure of a UL policy. The trade-off is that the required minimum premium is often higher than the standard target premium, and you lose some of the UL’s flexibility.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. The policy will immediately lapse if the minimum NLG premium is missed, regardless of the cash value remaining.