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What's your reaction when you realize that the quoted price for an expensive service is for an amount that is clearly "too good to be true"? Equitable - the third largest carrier in the United States - came close to failure before negotiating its acquisition by French insurer AXA. Executive Life was highly rated within months of its collapse; Mutual Benefit was A+ (highest) rated by A.M. Best as late as 1989. By 1991, both had been declared insolvent and liquidated. Both Executive Life and Mutual Benefit were among the 20 largest insurance companies in America in the late 1980s. Even large home insurance companies can fail. No Lapse caters to the (understandable) fears of premium inadequacy at the customer level, but potentially jeopardizes the relationship of insured to insurer at the industry level.

There is a concern that No Lapse policies are underpriced in a competitive frenzy within the home insurance industry, which if sold in too great a concentration to other lines of business, at the extreme, could lead to carrier failure. This is also significant if yet another evolutionary design comes along suggesting an exchange out of the No Lapse policy: there will be little or no exchange value to facilitate the move to a new policy. If legislation or circumstances render the insurance no longer necessary, the policy will likely have no long-term equity value to recoup the policy owner's investment. Even an inflation rate of 3 percent will nearly double the cost of living in 20 years; this means today's death benefit will only do half the job 20 years from now. When considering No Lapse policies, especially in replacement, think about the following: The death benefit will not increase beyond the original amount, leaving no ability to offset the effects of inflation. This should not be viewed as a reason not to use such a policy, but rather it is the first in the list of cautions.