What type of guarantee ensures that a policy will remain in force even if there are insufficient funds?

A no-lapse guarantee is a specific feature often found in universal life insurance policies. It ensures that the policy will stay active even if the cash value falls below what is typically required to cover the policy's costs, such as mortality charges and administrative fees. This guarantee is particularly valuable because it provides policyholders with peace of mind, knowing that their coverage will not accidentally lapse due to insufficient funds, as long as certain conditions are met.

In contrast, life income focuses on providing beneficiaries with a stream of income during their lifetimes rather than guaranteeing policy continuation. Graduated premium refers to a policy structure where premiums increase over time, which does not address the issue of maintaining insurance coverage when there are insufficient funds. Materiality generally relates to the importance of truthful disclosures in the underwriting process and does not pertain to the guarantee behind the policy's status, further differentiating it from the concept of a no-lapse guarantee.