This chapter, with the exception of NRS
688A.390 , applies only to contracts
of life insurance, endowment and annuities, other than reinsurance, group
life insurance and group annuities.
(Added to NRS by 1971, 1726)
For the purposes of this Code an
“annuity” is a contract under which obligations are assumed to make
periodic payments for a specific term or terms or where the making or
continuance of all or some such payments, or the amount of any such
payment, is dependent upon continuance of human life, except payments
made pursuant to optional modes of settlement under the authority of NRS
681A.040 (“life insurance” defined).
Such a contract which includes extra benefits of the kinds set forth in
NRS 681A.030 (“health insurance”
defined) and NRS 681A.040 (“life
insurance” defined) shall nevertheless be deemed to be an annuity if such
extra benefits constitute a subsidiary or incidental part of the entire
contract.
(Added to NRS by 1971, 1726)
For the
purposes of this Code, “industrial life insurance” is that form of life
insurance written under policies of a face amount of $2,500 or less
bearing the words “industrial policy” or “weekly premium policy” or words
of similar import imprinted on the face thereof as part of the
descriptive matter, and under which premiums are payable monthly or more
often.
(Added to NRS by 1971, 1727)
1. No policy of life insurance other than pure endowments, with or
without return of premiums or of premiums and interest, shall be
delivered or issued for delivery in this state unless it contains in
substance all of the applicable provisions required by NRS 688A.050
to 688A.160 , inclusive. This section does not apply to
annuity contracts or to any provision of a life insurance policy, or
contract supplemental thereto, relating to disability benefits or to
additional benefits in the event of death by accident or accidental means.
2. Any of such provisions or portions thereof not applicable to
single premium or nonparticipating or term policies or insurance granted
in exchange for lapsed or surrendered policies shall to that extent not
be incorporated therein.
(Added to NRS by 1971, 1727)
There shall be a provision
relating to the time and place of payment of premiums.
(Added to NRS by 1971, 1727)
There shall be a provision that a
grace period of 30 days or, at the option of the insurer, of 1 month of
not less than 30 days or of 4 weeks in the case of industrial life
insurance policies the premiums for which are payable more frequently
than monthly shall be allowed within which the payment of any premium
after the first may be made, during which period of grace the policy
shall continue in full force. The insurer may impose an interest charge
not in excess of 6 percent per annum for the number of days of grace
elapsing before the payment of the premium, and, whether or not such
interest charge is imposed, if a claim arises under the policy during
such period of grace the amount of any premium due or overdue, together
with interest and any deferred installment of the annual premium, may be
deducted from the policy proceeds. Grace shall date from the premium due
date specified in the policy.
(Added to NRS by 1971, 1727)
There shall be a provision that
except as otherwise expressly provided by law, the policy and the
application therefor, if a copy of such application is endorsed upon or
attached to the policy when issued, shall constitute the entire contract
between the parties, and that all statements contained in the application
shall, in the absence of fraud, be deemed representations and not
warranties.
(Added to NRS by 1971, 1727)
There shall be a provision that
the policy shall be incontestable after it has been in force during the
lifetime of the insured for a period of not more than 2 years after its
date of issue, except for nonpayment of premiums, and, at the insurer’s
option, provisions relating to benefits in the event of total and
permanent disability and provisions granting additional benefits
specifically against death by accident or accidental means.
(Added to NRS by 1971, 1728)
There shall be a provision that
if the age of the insured or of any other person whose age is considered
in determining the premium or benefit has been misstated, any amount
payable or benefit accruing under the policy shall be such as the premium
would have purchased at the correct age or ages.
(Added to NRS by 1971, 1728)
1. There shall be a provision in participating policies that,
beginning not later than the end of the third policy year, the insurer
shall annually ascertain and apportion the divisible surplus, if any,
that will accrue on the policy anniversary or other dividend date
specified in the policy, provided the policy is in force and all premiums
to that date are paid. Except as hereinafter provided, any dividend
becoming payable shall at the option of the party entitled to elect such
option be either:
(a) Payable in cash; or
(b) Applied to any one of such other dividend options as may be
provided by the policy. If any such other dividend options are provided,
the policy shall further state which option shall be automatically
effective if such party has not elected some other option. If the policy
specifies a period within which such other dividend option may be
elected, such period shall be not less than 30 days following the date on
which such dividend is due and payable. The annually apportioned dividend
shall be deemed to be payable in cash within the meaning of paragraph
(a), even though the policy provides that payment of such dividend is to
be deferred for a specified period, provided such period does not exceed
6 years from the date of apportionment and that interest will be added to
such dividend at a specified rate.
2. Renewable term policies of 10 years or less may provide that
the surplus accrued to such policies shall be determined and apportioned
each year after the second policy year, and accumulated during each
renewal period, and that at the end of the renewal period, on renewal of
the policy by the insured, the insurer shall apply the accumulated
surplus as an annuity for the next succeeding renewal term in the
reduction of premiums.
3. In participating industrial life insurance policies, in lieu of
the provision required in subsection 1, there shall be a provision that,
beginning not later than the end of the fifth policy year, the policy
shall participate annually in the divisible surplus, if any, in the
manner set forth in the policy.
4. This section does not apply to insurance issued under
nonforfeiture provisions of lapsed or surrendered policies.
(Added to NRS by 1971, 1728)
1. There shall be a provision that after 3 full years’ premiums
have been paid and after the policy has a cash surrender value and while
no premium is in default beyond the grace period for payment, the insurer
will advance, on proper assignment or pledge of the policy and on the
sole security thereof, at a fixed or variable rate of interest as may be
approved by the Commissioner, an amount equal to or, at the option of the
party entitled thereto, less than the loan value of the policy. The loan
value of the policy shall be at least equal to the cash surrender value
at the end of the then current policy year, and the insurer may deduct,
either from such loan value or from the proceeds of the loan, any
existing indebtedness not already deducted in determining such cash
surrender value, including any interest then accrued but not due, any
unpaid balance of the premium for the current policy year, and interest
on the loan to the end of the current policy year. The policy may also
provide that if interest on any indebtedness is not paid when due it
shall then be added to the existing indebtedness and shall bear interest
at the same rate, and that if and when the total indebtedness on the
policy, including interest due or accrued, equals or exceeds the amount
of the loan value thereof, then the policy shall terminate and become
void, but not until at least 30 days’ notice has been mailed by the
insurer to the last address of record with the insurer, of the insured or
other policy owner and of any assignee of record at the insurer’s home
office. The policy shall reserve to the insurer the right to defer the
granting of a loan, other than for the payment of any premium to the
insurer, for 6 months after application therefor. Such provision shall
also contain a table showing in figures the loan values each year during
the first 20 years of the policy, or during the term of the policy,
whichever is shorter. The policy, at the insurer’s option, may provide
for an automatic premium loan.
2. This section does not apply to term policies, or to term
insurance benefits provided by rider or supplemental policy provisions or
to industrial life insurance policies.
(Added to NRS by 1971, 1729; A 1971, 1950)
In case the policy provides
that the proceeds may be payable in installments which are determinable
at issue of the policy, there shall be a table showing the amounts of the
guaranteed installments.
(Added to NRS by 1971, 1729)
There must be a provision that unless:
1. The policy has been surrendered for its cash surrender value;
2. Its cash surrender value has been exhausted; or
3. The paid-up term insurance, if any, has expired,
Ê the policy will be reinstated at any time within 3 years after the date
of premium default upon written application therefor, the production of
evidence of insurability satisfactory to the insurer, the payment of all
premiums in arrears and any interest due thereon and the payment or
reinstatement of any other indebtedness to the insurer upon the policy
including any interest due thereon.
(Added to NRS by 1971, 1730; A 1985, 1049)
There shall be a provision that
when the benefits under the policy become payable by reason of the death
of the insured, settlement shall be made upon receipt of due proof of
death and, at the insurer’s option, surrender of the policy and proof of
the interest of the claimant or surrender of proof. If an insurer
specifies a particular period prior to the expiration of which settlement
shall be made, such period shall not exceed 2 months from the receipt of
such proofs.
(Added to NRS by 1971, 1730)
1. An industrial life insurance policy shall have the name of the
beneficiary designated thereon or in the application or other form if
attached to the policy, with a reservation of the right to designate or
change the beneficiary after the issuance of the policy, unless such
beneficiary is irrevocably designated.
2. The policy may also provide that:
(a) No designation or change of beneficiary shall be binding on the
insurer until endorsed on the policy by the insurer, and that the insurer
may refuse to endorse the name of any proposed beneficiary who does not
appear to the insurer to have an insurable interest in the life of the
insured.
(b) If the beneficiary designated in the policy does not make a
claim under the policy or does not surrender the policy with due proof of
death within the period stated in the policy, which shall not be less
than 30 days after the death of the insured, or if the beneficiary is the
estate of the insured, or is a minor, or dies before the insured, or is
not legally competent to give a valid release, then the insurer may make
any payment thereunder to the executor or administrator of the insured,
or to any relative of the insured by blood or legal adoption or
connection by marriage, or to any person appearing to the insurer to be
equitably entitled thereto by reason of having been named beneficiary, or
by reason of having incurred expense for the maintenance, medical
attention or burial of the insured.
3. The policy may also include a similar provision applicable to
any other payment due under the policy.
(Added to NRS by 1971, 1730)
There shall be a title on the policy, briefly
describing the same.
(Added to NRS by 1971, 1731)
No
policy of life insurance, other than an industrial life insurance policy,
may be delivered or issued for delivery in this state unless it contains
a provision, or a notice attached to the policy, which, in substance,
states that during a period of 10 days from the date the policy is
delivered to the policy owner, it may be surrendered to the insurer
together with a written request for cancellation of the policy and in
such event, the insurer will refund any premium paid therefor, including
any policy fees or other charges.
(Added to NRS by 1977, 455)
A clause in any
policy of life insurance providing that such policy shall be
incontestable after a specified period shall preclude only a contest of
the validity of the policy, and shall not preclude the assertion at any
time of defenses based upon provisions in the policy which exclude or
restrict coverage, whether or not such restrictions or exclusions are
excepted in such clause.
(Added to NRS by 1971, 1731)
1. No annuity or pure endowment contract, other than reversionary
annuities (also called survivorship annuities) or group annuities and
except as stated in this section, shall be delivered or issued for
delivery in this state unless it contains in substance each of the
provisions specified in NRS 688A.190
to 688A.240 , inclusive. Any of such
provisions not applicable to single-premium annuities or single-premium
pure endowment contracts shall not, to that extent, be incorporated
therein.
2. This section does not apply to contracts for deferred annuities
included in, or upon the lives of beneficiaries under, life insurance
policies.
(Added to NRS by 1971, 1731)
In an annuity or pure
endowment contract, other than a reversionary, survivorship or group
annuity, there shall be a provision that there shall be a period of grace
of 1 month, but not less than 30 days, within which any stipulated
payment to the insurer falling due after the first may be made, subject
at the option of the insurer to an interest charge thereon at a rate to
be specified in the contract but not exceeding 6 percent per annum for
the number of days of grace elapsing before such payment, during which
period of grace the contract shall continue in full force; but in case a
claim arises under the contract on account of death prior to expiration
of the period of grace before the overdue payment to the insurer or the
deferred payments of the current contract year, if any, are made, the
amount of such payments, with interest on any overdue payments, may be
deducted from any amount payable under the contract in settlement.
(Added to NRS by 1971, 1731)
If any statements,
other than those relating to age, sex and identity are required as a
condition to issuing an annuity or pure endowment contract, other than a
reversionary, survivorship or group annuity, and subject to NRS 688A.220
, there shall be a provision that the
contract shall be incontestable after it has been in force during the
lifetime of the person or of each of the persons as to whom such
statements are required, for a period of 2 years from its date of issue,
except for nonpayment of stipulated payments to the insurer; and at the
option of the insurer such contract may also except any provisions
relative to benefits in the event of disability and any provisions which
grant insurance specifically against death by accident or accidental
means.
(Added to NRS by 1971, 1731)
In an annuity or pure
endowment contract, other than a reversionary, survivorship or group
annuity, there shall be a provision that the contract shall constitute
the entire contract between the parties or, if a copy of the application
is endorsed upon or attached to the contract when issued, a provision
that the contract and the application therefor shall constitute the
entire contract between the parties.
(Added to NRS by 1971, 1732)
In an annuity
or pure endowment contract, other than a reversionary, survivorship or
group annuity, there shall be a provision that if the age or sex of the
person or persons upon whose life or lives the contract is made, or of
any of them, has been misstated, the amount payable or benefits accruing
under the contract shall be such as the stipulated payment or payments to
the insurer would have purchased according to the correct age or sex and
that if the insurer makes or has made any overpayment or overpayments on
account of any such misstatement, the amount thereof, with interest at
the rate to be specified in the contract but not exceeding 6 percent per
annum, may be charged against the current or next succeeding payment or
payments to be made by the insurer under the contract.
(Added to NRS by 1971, 1732)
If an annuity or pure
endowment contract, other than a reversionary, survivorship or group
annuity, is participating, there shall be a provision that the insurer
shall annually ascertain and apportion any divisible surplus accruing on
the contract.
(Added to NRS by 1971, 1732)
In an annuity or pure
endowment contract, other than a reversionary or group annuity, there
shall be a provision that the contract may be reinstated at any time
within 1 year from the default in making stipulated payments to the
insurer, unless the cash surrender value has been paid, but all overdue
stipulated payments and any indebtedness to the insurer on the contract
shall be paid or reinstated with interest thereon at a rate to be
specified in the contract but not exceeding 6 percent per annum payable
annually, and in cases where applicable the insurer may also include a
requirement of evidence of insurability satisfactory to the insurer.
(Added to NRS by 1971, 1732)
1. Except as stated in this section, no contract for a
reversionary annuity shall be delivered or issued for delivery in this
state unless it contains in substance each of the following provisions:
(a) Any such reversionary annuity contract shall contain the
provisions specified in NRS 688A.190
to 688A.230 , inclusive, except that
under NRS 688A.190 the insurer may at
its option provide for an equitable reduction of the amount of the
annuity payments in settlement of an overdue payment in lieu of providing
for deduction of such payments from an amount payable upon settlement
under the contract.
(b) In such reversionary annuity contracts there shall be a
provision that the contract may be reinstated at any time within 3 years
from the date of default in making stipulated payments to the insurer,
upon production of evidence of insurability satisfactory to the insurer,
and upon condition that all overdue payments and any indebtedness to the
insurer on account of the contract are paid, or, within the limits
permitted by the then cash values of the contract, reinstated, with
interest as to both payments and indebtedness at a rate to be specified
in the contract but not exceeding 6 percent per annum compounded annually.
2. This section does not apply to group annuities or to annuities
included in life insurance policies, and any of such provisions not
applicable to single premium annuities shall not to that extent be
incorporated therein.
(Added to NRS by 1971, 1733)
1. No policy of life insurance shall be delivered or issued for
delivery in this state if it contains any of the following provisions:
(a) A provision limiting the time within which an action at law or
in equity may be commenced on such a policy to less than 3 years after
the cause of action has accrued.
(b) A provision which excludes or restricts liability for death
caused in a certain specified manner or occurring while the insured has a
specified status, except that a policy may contain provisions excluding
or restricting coverage as specified therein in the event of death under
any one or more of the following circumstances:
(1) Death as a result, directly or indirectly, of war,
declared or undeclared, or of action by military forces, or of any act or
hazard of such war or action, or of service in the military, naval or air
forces or in civilian forces auxiliary thereto, or from any cause while a
member of such military, naval or air forces of any country at war,
declared or undeclared, or of any country engaged in such military action;
(2) Death as a result of aviation or any air travel or
flight;
(3) Death as a result of a specified hazardous occupation or
occupations or avocation;
(4) Death while the insured is a resident outside the
continental United States of America and Canada; or
(5) Death within 2 years from the date of issue of the
policy as a result of suicide, while sane or insane.
2. A policy which contains any exclusion or restriction pursuant
to paragraph (b) shall also provide that in the event of death under the
circumstances to which any such exclusion or restriction is applicable,
the insurer will pay an amount not less than a reserve determined
according to the Commissioners Reserve Valuation Method upon the basis of
the mortality table and interest rate specified in the policy for the
calculation of nonforfeiture benefits (or if the policy provides for no
such benefits, computed according to a mortality table and interest rate
determined by the insurer and specified in the policy) with adjustment
for indebtedness or dividend credit.
3. This section does not apply to group life insurance, health
insurance, reinsurance or annuities, or to any provision in a life
insurance policy or contract supplemental thereto relating to disability
benefits or to additional benefits in the event of death by accident or
accidental means.
4. Nothing contained in this section prohibits any provision which
in the opinion of the Commissioner is more favorable to the policyholder
than a provision permitted by this section.
(Added to NRS by 1971, 1733)
1. No life insurance policy, other than industrial life insurance,
shall be delivered or issued for delivery in this state, if it contains
any of the following provisions:
(a) A provision by which the policy purports to be issued or to
take effect more than 1 year before the original application for the
insurance was made.
(b) A provision for any mode of settlement at maturity of the
policy of less value than the amount insured under the policy, plus
dividend additions, if any, less any indebtedness to the insurer on or
secured by the policy and less any premium that may by the terms of the
policy be deducted.
(c) A provision to the effect that the agent soliciting the
insurance is the agent of the person insured under the policy, or making
the acts or representations of such agent binding upon the person so
insured under the policy.
2. No policy of industrial life insurance shall contain any of the
following provisions:
(a) A provision by which the insurer may deny liability under the
policy for the reason that the insured has previously obtained other
insurance from the same insurer.
(b) A provision giving the insurer the right to declare the policy
void because the insured has had any disease or ailment, whether
specified or not, or because the insured has received institutional,
hospital, medical or surgical treatment or attention, except a provision
which gives the insurer the right to declare the policy void if the
insured has, within 2 years prior to the issuance of the policy, received
institutional, hospital, medical or surgical treatment or attention and
if the insured or claimant under the policy fails to show that the
condition occasioning such treatment or attention was not of a serious
nature or was not material to the risk.
(c) A provision giving the insurer the right to declare the policy
void because the insured has been rejected for insurance, unless such
right is conditioned upon a showing by the insurer that knowledge of such
rejection would have led to a refusal by the insurer to make such
contract.
(Added to NRS by 1971, 1734)
The policies of a foreign life insurer when issued in this state may
contain any provision which the law of the state, territory, district or
country under which the insurer is organized prescribes shall be in such
policies, and the policies of a domestic life insurer may, when issued or
delivered in any other state, territory, district or country, contain any
provisions required by the law thereof, anything in this chapter to the
contrary notwithstanding.
(Added to NRS by 1971, 1735)
As
used in NRS 688A.281 to 688A.285
, inclusive, unless the context
otherwise requires:
1. “Charitable-gift annuity” means an annuity payable over one or
two lives issued by a charitable organization in return for a transfer of
money or property by the donor, if the actuarial value of the annuity is
less than the value of the money or property transferred and a deduction
as a charitable contribution is allowable for purposes of federal taxes.
2. “Charitable organization” means an artificial person described
as such in section 501(c)(3) of the Internal Revenue Code of 1986, 26
U.S.C. § 501(c)(3), or section 170(c) of the Internal Revenue Code of
1986, 26 U.S.C. § 170(c).
3. “Qualified charitable-gift annuity” means a charitable-gift
annuity described in section 501(m)(5) of the Internal Revenue Code of
1986, 26 U.S.C. § 501(m)(5), and section 514(c)(5) of the Internal
Revenue Code of 1986, 26 U.S.C. § 514(c)(5), which is issued by a
charitable organization that on the date of issuance:
(a) Owns at least $300,000 worth of money, cash equivalents or
publicly traded securities, exclusive of the amount transferred to it in
return for the annuity; and
(b) Has operated continuously for at least 3 years or is a
successor or affiliate of a charitable organization that has operated
continuously for at least 3 years.
Ê The term does not include an annuity for which any person is paid
compensation that is contingent upon the issuance of the annuity or based
upon the value of the annuity other than a payment for reinsurance to an
insurer licensed to issue insurance in this state.
(Added to NRS by 1999, 1950 )
The issuance of a qualified
charitable-gift annuity does not constitute transacting insurance in this
state. A charitable-gift annuity issued before October 1, 1999, is a
qualified charitable-gift annuity for the purposes of NRS 688A.281 to 688A.285 , inclusive.
(Added to NRS by 1999, 1951 )
In an agreement to issue a qualified
charitable-gift annuity, the charitable organization shall disclose in
writing to the donor that the annuity is not insurance under the laws of
this state, is not subject to regulation by the Commissioner and is not
protected by an insurance guaranty association. The disclosure must be
made in a separate paragraph and may not be in a size of type smaller
than used generally in the agreement.
(Added to NRS by 1999, 1951 )
1. A charitable organization that issues qualified charitable-gift
annuities shall notify the Commissioner in writing on or before December
30, 1999, or the expiration of 90 days after it first enters into an
agreement to issue a qualified charitable-gift annuity, whichever is
later. The notice must:
(a) Be signed by an officer or director of the organization;
(b) Identify the organization; and
(c) Certify that the organization is a charitable organization and
that the annuities are qualified charitable-gift annuities.
2. Unless the Commissioner demands information to determine the
amount of a penalty pursuant to NRS 688A.285 , the organization need submit no other
information.
(Added to NRS by 1999, 1951 )
1. Failure of a charitable organization to comply with the
requirements of NRS 688A.283 or
688A.284 for disclosure or notice, or
both, does not disqualify an annuity that otherwise constitutes a
qualified charitable-gift annuity.
2. The Commissioner may demand, by certified mail with return
receipt requested, that the organization comply with those requirements,
and may impose a fine of not more than $1,000 for each charitable-gift
annuity issued before compliance is complete.
(Added to NRS by 1999, 1951 )
STANDARD NONFORFEITURE LAW: LIFE INSURANCE
1. NRS 688A.290 to 688A.360
, inclusive, shall be known as the
Standard Nonforfeiture Law. Except as provided in NRS 688A.330 and 688A.340 , NRS 688A.290 to 688A.360 , inclusive, apply to policies of life
insurance issued on and after January 1, 1962, unless the Commissioner
deferred such application to a date not later than January 1, 1964, with
respect to an insurer for good cause shown.
2. In the case of policies issued on or after the date NRS
688A.290 to 688A.360 , inclusive, became applicable as defined in
subsection 1, no policy of life insurance, except as stated in NRS
688A.360 , may be issued for delivery
or delivered in this state unless it contains in substance the following
provisions, or corresponding provisions which in the opinion of the
Commissioner are at least as favorable to the defaulting or surrendering
policyholder as those required by this section and NRS 688A.305 :
(a) In the event of default in any premium payment, the insurer
will grant, upon proper request made not later than 60 days after the due
date of the premium in default, a paid-up nonforfeiture benefit on a plan
stipulated in the policy, effective as of such due date, of the amount
specified in NRS 688A.290 to 688A.360
, inclusive. In lieu of the stipulated
paid-up nonforfeiture benefit, the insurer may substitute, upon proper
request not later than 60 days after the due date of the premium in
default, an actuarially equivalent alternative paid-up nonforfeiture
benefit which provides a greater amount or longer period of death
benefits or, if applicable, a greater amount or earlier payment of
endowment benefits.
(b) Upon surrender of the policy within 60 days after the due date
of any premium payment in default after premiums have been paid for at
least 3 full years in the case of ordinary insurance or 5 full years in
the case of industrial insurance, the insurer will pay, in lieu of any
paid-up nonforfeiture benefit, a cash surrender value of the amount
specified in NRS 688A.290 to 688A.360
, inclusive.
(c) A specified paid-up nonforfeiture benefit must become effective
as specified in the policy unless the person entitled to make an election
elects another available option not later than 60 days after the due date
of the premium in default.
(d) If the policy has become paid up by completion of all premium
payments or if it is continued under any paid-up nonforfeiture benefit
which became effective on or after the third policy anniversary in the
case of ordinary insurance or the fifth policy anniversary in the case of
industrial insurance, the insurer will pay, upon surrender of the policy
within 30 days after any policy anniversary, a cash surrender value of
the amount specified in NRS 688A.290
to 688A.360 , inclusive.
(e) In the case of policies which cause, on a basis guaranteed in
the policy, unscheduled changes in benefits or premiums, or which provide
an option for changes in benefits or premiums other than a change to a
new policy, a statement of the mortality table, interest rate, and method
used in calculating cash surrender values and the paid-up nonforfeiture
benefits available under the policy. In the case of all other policies, a
statement of the mortality table and interest rate used in calculating
the cash surrender values and the paid-up nonforfeiture benefits
available under the policy, together with a table showing the cash
surrender value, if any, and paid-up nonforfeiture benefit, if any,
available under the policy on each policy anniversary either during the
first 20 policy years or during the term of the policy, whichever is
shorter. Such values and benefits must be calculated upon the assumption
that there are no dividends or paid-up additions credited to the policy
and that there is no indebtedness to the insurer on the policy.
(f) A statement that the cash surrender values and the paid-up
nonforfeiture benefits available under the policy are not less than the
minimum values and benefits required by or pursuant to the insurance law
of the state in which the policy is delivered, and an explanation of the
manner in which the cash surrender values and the paid-up nonforfeiture
benefits are altered by the existence of any paid-up additions credited
to the policy or any indebtedness to the insurer on the policy.
(g) If a detailed statement of the method of computation of the
values and benefits shown in the policy is not stated therein, a
statement that the method of computation has been filed with the
insurance supervisory officer of the state in which the policy is
delivered.
(h) A statement of the method to be used in calculating the cash
surrender value and paid-up nonforfeiture benefit available under the
policy on any policy anniversary beyond the last anniversary for which
such values and benefits are consecutively shown in the policy.
3. Any of the provisions required by subsection 2 which are not
applicable by reason of the plan of insurance may, to the extent
inapplicable, be omitted from the policy.
4. Each insurer shall reserve the right to defer the payment of
any cash surrender value for a period of 6 months after demand therefor
with surrender of the policy.
(Added to NRS by 1971, 1735; A 1983, 950)
1. Any cash surrender value available under the policy in the
event of default in a premium payment due on any policy anniversary,
whether or not required by NRS 688A.290 , must be an amount not less than the excess,
if any, of the present value, on that anniversary, of the future
guaranteed benefits which would have been provided for by the policy,
including any existing paid-up additions, if there had been no default,
over the sum of:
(a) The then present value of the adjusted premiums, as defined in
NRS 688A.320 to 688A.340 , inclusive, corresponding to premiums which
would have fallen due on and after such anniversary; and
(b) The amount of any indebtedness to the insurer on the policy.
2. For any policy issued on or after the operative date of NRS
688A.325 which provides supplemental
life insurance or annuity benefits at the option of the insured and for
an identifiable additional premium by rider or supplemental policy
provision, the cash surrender value referred to in subsection 1 of this
section must be an amount not less than the sum of the cash surrender
value for an otherwise similar policy issued at the same age without a
rider or supplemental policy provision and the cash surrender value for a
policy which provides only the benefits otherwise provided by a rider or
supplemental policy provision.
3. For any family policy issued on or after the operative date of
NRS 688A.325 which defines a primary
insured and provides term insurance on the life of the spouse of the
primary insured expiring before the spouse reaches age 71, the cash
surrender value referred to in subsection 1 must be an amount not less
than the sum of the cash surrender value for an otherwise similar policy
issued at the same age without term insurance on the life of the spouse
and the cash surrender value for a policy which provides only the
benefits otherwise provided by term insurance on the life of the spouse.
4. Any cash surrender value available within 30 days after any
policy anniversary under any policy paid up by completion of all premium
payments or any policy continued under any paid-up nonforfeiture benefit,
whether or not required by NRS 688A.290 , must be an amount not less than the present
value, on that anniversary, of the future guaranteed benefits provided
for by the policy, including any existing paid-up additions, decreased by
any indebtedness to the insurer on the policy.
(Added to NRS by 1971, 1736; A 1983, 952)
1. This section applies to all policies issued on or after January
1, 1987. Any cash surrender value available under the policy in the event
of default in a premium payment due on any policy anniversary must be in
an amount which does not differ by more than two-tenths of 1 percent of
the amount of insurance, if the insurance is uniform in amount, or the
average amount of insurance at the beginning of each of the first 10
policy years, from the sum of:
(a) The greater of zero and the basic cash value specified in this
section; and
(b) The present value of any existing paid-up additions less the
amount of any indebtedness to the insurer under the policy.
2. The basic cash value must be equal to the present value, on the
anniversary, of the future guaranteed benefits which would have been
provided by the policy, excluding any existing paid-up additions and
before deduction of any indebtedness to the insurer, if there had been no
default, less the present value of the nonforfeiture factors,
corresponding to premiums which would have fallen due on and after the
anniversary. The effects on the basic cash value of supplemental life
insurance or annuity benefits or of family coverage, as described in NRS
688A.300 or 688A.320 , whichever is applicable, must be the same
as the effects specified in NRS 688A.300 or 688A.320 , on the cash surrender values defined in
that section.
3. The nonforfeiture factor for each policy year must be an amount
equal to a percentage of the adjusted premium for the policy year, as
defined in NRS 688A.320 or 688A.325
, whichever is applicable. Except as
is required in this subsection, the percentage must be:
(a) The same for each policy year between the second policy
anniversary and the later of:
(1) The fifth policy anniversary; and
(2) The first policy anniversary at which there is available
under the policy a cash surrender value in an amount, before including
any paid-up additions and before deducting any indebtedness, of at least
two-tenths of 1 percent of the amount of insurance, if the insurance is
uniform in amount, or the average amount of insurance at the beginning of
each of the first 10 policy years; and
(b) Such that no percentage after the later of the two policy
anniversaries specified in paragraph (a) may apply to fewer than 5
consecutive policy years.
Ê No basic cash value may be less than the value which would be obtained
if the adjusted premiums for the policy, as defined in NRS 688A.320
or 688A.325 , whichever is applicable, were substituted
for the nonforfeiture factors in the calculation of the basic cash value.
4. All adjusted premiums and present values referred to in this
section for a particular policy must be calculated on the same mortality
and interest bases as are used in demonstrating the policy’s compliance
with NRS 688A.290 to 688A.360 , inclusive. The cash surrender values
referred to in this section must include any endowment benefits provided
for by the policy.
5. Any cash surrender value available other than in the event of
default in a premium payment due on a policy anniversary, and the amount
of any paid-up nonforfeiture benefit available under the policy in the
event of default in a premium payment must be determined by methods
consistent with those specified for determining the analogous minimum
amounts in NRS 688A.290 , 688A.300
, 688A.325 and 688A.350 . The amounts of any cash surrender values
and of any paid-up nonforfeiture benefits granted in connection with
additional benefits such as those listed in paragraphs (a) to (f),
inclusive, of subsection 4 of NRS 688A.350 , must conform with the principles of this
section.
(Added to NRS by 1983, 949)
Any paid-up
nonforfeiture benefit available under the policy in the event of default
in a premium payment due on any policy anniversary must be such that its
present value as of the anniversary is at least equal to the cash
surrender value then provided for by the policy or, if none is provided
for, that cash surrender value which would have been required by NRS
688A.290 to 688A.360 , inclusive, in the absence of the condition
that premiums must have been paid for at least a specified period.
(Added to NRS by 1971, 1737; A 1983, 953)
In the case of any plan of life
insurance which provides for future premium determination, the amounts of
which are to be determined by the insurer based on estimates of future
experience, or in the case of any plan of life insurance which is of such
a nature that minimum values cannot be determined by the methods
described in NRS 688A.290 to 688A.340
, inclusive:
1. The Commissioner must be satisfied that the benefits provided
under the plan are substantially as favorable to policyholders and
insureds as the minimum benefits otherwise required by NRS 688A.290
to 688A.340 , inclusive;
2. The Commissioner must be satisfied that the benefits and the
pattern of premiums of that plan are not such as to mislead prospective
policyholders or insureds; and
3. The cash surrender values and paid-up nonforfeiture benefits
provided by the plan must not be less than the minimum values and
benefits required for the plan computed by a method consistent with the
principles of the Standard Nonforfeiture Law for Life Insurance, as
determined by regulations adopted by the Commissioner.
(Added to NRS by 1983, 948)
325 .
1. Except as provided in subsections 4 and 6, the adjusted
premiums for any policy must be calculated on an annual basis and be such
a uniform percentage of the respective premiums specified in the policy
for each policy year, excluding any extra premiums charged because of
impairments or special hazards, that the present value, at the date of
issue of the policy, of all such adjusted premiums is equal to the sum of:
(a) The then present value of the future guaranteed benefits
provided for by the policy;
(b) Two percent of the amount of insurance, if the insurance is
uniform in amount, or of the equivalent uniform amount, as defined in
this section, if the amount of insurance varies with duration of the
policy;
(c) Forty percent of the adjusted premium for the first policy
year; and
(d) Twenty-five percent of either the adjusted premium for the
first policy year or the adjusted premium for a whole life policy of the
same uniform or equivalent uniform amount with uniform premiums for the
whole of life issued at the same age for the same amount of insurance,
whichever is less.
2. In applying the percentages specified in paragraphs (c) and (d)
of subsection 1, no adjusted premium shall be deemed to exceed 4 percent
of the amount of insurance or uniform amount equivalent thereto. The date
of issue of a policy for the purpose of this section must be the date as
of which the rated age of the insured is determined.
3. In the case of a policy providing an amount of insurance
varying with duration of the policy, the equivalent uniform amount
thereof for the purpose of this section shall be deemed to be the uniform
amount of insurance provided by an otherwise similar policy, containing
the same endowment benefit or benefits, if any, issued at the same age
and for the same term, the amount of which does not vary with duration
and the benefits under which have the same present value at the date of
issue as the benefits under the policy, except that, in the case of a
policy providing a varying amount of insurance issued on the life of a
child under 10 years of age, the equivalent uniform amount may be
computed as though the amount of insurance provided by the policy before
the attainment of age 10 were the amount provided by the policy at age 10.
4. The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision must be equal to (A)
the adjusted premiums for an otherwise similar policy issued at the same
age without term insurance benefits, increased, during the period for
which premiums for term insurance benefits are payable, by (B) the
adjusted premiums for such term insurance, the foregoing items (A) and
(B) being calculated separately and as specified in subsections 1 and 2,
except that, for the purposes of paragraphs (b), (c) and (d) of
subsection 1, the amount of insurance or equivalent uniform amount of
insurance used in the calculation of the adjusted premiums referred to in
(B) must be equal to the excess of the corresponding amount determined
for the entire policy over the amount used in the calculation of the
adjusted premiums in (A).
5. Except as provided in NRS 688A.330 and 688A.340 , all adjusted premiums and present values
referred to in NRS 688A.290 to
688A.360 , inclusive, must for all
policies of ordinary insurance be calculated on the basis of the
Commissioners 1941 Standard Ordinary Mortality Table, but for any
category of ordinary insurance on female risks, adjusted premiums and
present values may be calculated according to an age not more than 3
years younger than the actual age of the insured, and such calculations
for all policies of industrial insurance must be made on the basis of the
1941 Standard Industrial Mortality Table. All calculations must be made
on the basis of the rate of interest, not exceeding 3.5 percent per
annum, specified in the policy for calculating cash surrender values and
paid-up nonforfeiture benefits, but in calculating the present value of
any paid-up term insurance with accompanying pure endowment, if any,
offered as a nonforfeiture benefit, the rates of mortality assumed may be
not more than 130 percent of the rates of mortality according to the
applicable table. The calculation of any adjusted premiums and present
values for insurance issued on a substandard basis may be based on such
other table of mortality as may be specified by the insurer and approved
by the Commissioner.
6. This section does not apply to policies issued on or after the
operative date of NRS 688A.325 .
(Added to NRS by 1971, 1737; A 1983, 953)
1. This section applies to all policies issued by an insurer on or
after the operative date of this section as it relates to that insurer.
Except as otherwise provided in subsection 7, the adjusted premiums for
any policy must be calculated on an annual basis and be the uniform
percentage of the respective premium specified in the policy for each
policy year, excluding amounts payable as extra premiums to cover
impairments or special hazards and any uniform annual contract charge or
policy fee specified in the policy in a statement of the method to be
used in calculating the cash surrender values and paid-up nonforfeiture
benefits. The present value, at the date of issue of the policy, of all
adjusted premiums must be equal to the sum of:
(a) The value of the future guaranteed benefits provided for by the
policy;
(b) One percent of the amount of insurance, if the insurance is
uniform in amount, or the average amount of insurance at the beginning of
each of the first 10 policy years; and
(c) One hundred twenty-five percent of the nonforfeiture net level
premium. In applying the percentage specified in paragraph (c), no
nonforfeiture net level premium may be deemed to exceed 4 percent of the
amount of insurance, if the insurance is uniform in amount, or the
average amount of insurance at the beginning of each of the first 10
policy years. The date of issue of a policy for the purpose of this
section must be the date as of which the rated age of the insured is
determined.
2. The nonforfeiture net level premium must be equal to the
present value, at the date of issue of the policy, of the guaranteed
benefits provided for by the policy divided by the present value, at the
date of issue of the policy, of an annuity of one per annum payable on
the date of issue of the policy and on each anniversary of the policy on
which a premium falls due.
3. In the case of policies which cause unscheduled changes in
benefits or premiums on a basis guaranteed in the policy, or which
provide an option for changes in benefits or premiums other than a change
to a new policy, the adjusted premiums and present values must initially
be calculated on the assumption that future benefits and premiums do not
change from those stipulated at the date of issue of the policy. At the
time of any change in the benefits or premiums, the future adjusted
premiums, nonforfeiture net level premiums and present values must be
recalculated on the assumption that future benefits and premiums do not
change from those stipulated by the policy immediately after the change.
4. Except as otherwise provided in subsection 7, the recalculated
future adjusted premiums for any such policy must be a uniform percentage
of the respective future premiums specified in the policy for each policy
year, excluding amounts payable as extra premiums to cover impairments
and special hazards and any uniform annual contract charge or policy fee
specified in the policy in a statement of the method to be used in
calculating the cash surrender values and paid-up nonforfeiture benefits,
which results in the present value, at the time of change to the newly
defined benefits or premiums, of all future adjusted premiums being equal
to the excess of the sum of the present value of the future guaranteed
benefits provided for by the policy and the additional expense allowance,
if any, over the cash surrender value, if any, or present value of any
paid-up nonforfeiture benefit under the policy.
5. The additional expense allowance, at the time of the change to
the newly defined benefits or premiums, must be the sum of:
(a) One percent of the excess, if positive, of the average amount
of insurance at the beginning of each of the first 10 policy years after
the change, over the average amount of insurance before the change at the
beginning of each of the first 10 policy years after the most recent
previous change, or, if there has been no previous change, the date of
issue of the policy; and
(b) One hundred twenty-five percent of the increase, if positive,
in the nonforfeiture net level premium.
6. The recalculated nonforfeiture net level premium must be equal
to the result obtained by dividing amount “A” by amount “B” where:
(a) “A” equals the sum of:
(1) The nonforfeiture net level premium applicable before
the change, multiplied by the present value of an annuity of one per
annum payable on each anniversary of the policy on or after the date of
the change on which a premium would have fallen due if the change had not
occurred; and
(2) The present value of the increase in future guaranteed
benefits provided for by the policy.
(b) “B” equals the present value of an annuity of one per annum
payable on each anniversary of the policy on or after the date of change
on which a premium falls due.
7. In the case of a policy issued on a substandard basis which
provides reduced graded amounts of insurance so that, in each policy
year, the policy has the same tabular mortality cost as an otherwise
similar policy issued on the standard basis which provides higher uniform
amounts of insurance, adjusted premiums and present values for the
substandard policy may be calculated as if it were issued to provide the
higher uniform amounts of insurance on the standard basis.
8. All adjusted premiums and present values referred to in NRS
688A.290 to 688A.360 , inclusive, must be calculated for all
policies of ordinary insurance on the basis of the Commissioners 1980
Standard Ordinary Mortality Table or, at the election of the insurer for
any one or more specified plans of life insurance, the Commissioners 1980
Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors;
all policies of industrial insurance must be calculated on the basis of
the Commissioners 1961 Standard Industrial Mortality Table; and all
policies issued in a particular calendar year must be calculated on the
basis of a rate of interest not exceeding the nonforfeiture interest rate
established in this section for policies issued in that calendar year,
except as follows:
(a) At the option of the insurer, calculations for all policies
issued in a particular calendar year may be made on the basis of a rate
of interest not exceeding the nonforfeiture interest rate, established in
this section, for policies issued in the immediately preceding calendar
year.
(b) Under any paid-up nonforfeiture benefit, including any paid-up
dividend additions, any cash surrender value available, whether or not
required by NRS 688A.290 , must be
calculated on the basis of the mortality table and rate of interest used
in determining the amount of the paid-up nonforfeiture benefit and
paid-up dividend additions, if any.
(c) An insurer may calculate the amount of any guaranteed paid-up
nonforfeiture benefit including any paid-up additions under the policy on
the basis of an interest rate which is not lower than that specified in
the policy for calculating cash surrender values.
(d) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1980 Extended Term Insurance Table for policies of
ordinary insurance and not more than the Commissioners 1961 Industrial
Extended Term Insurance Table for policies of industrial insurance.
(e) For insurance issued on a substandard basis or a special
underwriting basis, the calculation of any adjusted premiums and present
values may be based on appropriate modifications of the tables specified
in this subsection.
(f) Any ordinary mortality tables which are adopted after 1980 by
the National Association of Insurance Commissioners and are approved by a
regulation adopted by the Commissioner for use in determining the minimum
nonforfeiture standard may be substituted for the Commissioners 1980
Standard Ordinary Mortality Table with or without Ten-Year Select
Mortality Factors or for the Commissioners 1980 Extended Term Insurance
Table.
(g) Any industrial mortality tables which are adopted after 1980 by
the National Association of Insurance Commissioners and are approved by a
regulation adopted by the Commissioner for use in determining the minimum
nonforfeiture standard may be substituted for the Commissioners 1961
Standard Industrial Mortality Table or the Commissioners 1961 Industrial
Extended Term Insurance Table.
9. The nonforfeiture interest rate for any policy issued in a
particular calendar year must be equal to 125 percent of the calendar
year statutory valuation interest rate for the policy as defined in the
Standard Valuation Law, rounded to the nearer one-fourth of 1 percent.
10. Any refiling of nonforfeiture values or their methods of
computation for any previously approved policy form which involves only a
change in the interest rate or mortality table used to compute
nonforfeiture values does not require refiling of any other provisions of
that policy form.
11. After July 1, 1983, any insurer may file with the Commissioner
a written notice of its election to comply with the provision of this
section after a specified date before January 1, 1989. A date so
specified is the operative date of this section for that insurer. If an
insurer makes no election, the operative date of this section for that
insurer is January 1, 1989.
(Added to NRS by 1983, 945; A 1995, 1625)
1. In the case of industrial policies issued on or after the
operative date of this section, as provided in subsection 2, all adjusted
premiums and present values referred to in NRS 688A.290 to 688A.360 , inclusive, must be calculated on the basis
of the Commissioners 1961 Standard Industrial Mortality Table and the
rate of interest specified in the policy for calculating cash surrender
values and paid-up nonforfeiture benefits, but that rate of interest must
not exceed 3.5 percent per annum, or 4 percent per annum for policies
issued on or after July 1, 1973, and before July 1, 1977, and a rate of
interest not exceeding 5.5 percent per annum may be used for policies
issued on or after July 1, 1977, other than single premium whole life or
endowment insurance policies, and for the latter policies a rate of
interest not exceeding 6.5 percent per annum may be used, except that:
(a) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1961 Industrial Extended Term Insurance Table.
(b) For insurance issued on a substandard basis or a special
underwriting basis, the calculations of any such adjusted premiums and
present values may be based on such other table of mortality as may be
specified by the insurer and approved by the Commissioner.
2. After July 1, 1963, any insurer may file with the Commissioner
a written notice of its election to comply with the provisions of this
section after a specified date before January 1, 1968. After the filing
of a notice, upon the specified date, this section is operative with
respect to the industrial policies thereafter issued by the insurer. If
an insurer makes no such election, the operative date of this section for
the insurer is January 1, 1968.
3. This section does not apply to policies issued on or after the
operative date of NRS 688A.325 .
(Added to NRS by 1971, 1738; A 1973, 723; 1977, 691; 1983, 954;
1995, 1627)
1. In the case of ordinary policies issued on or after the
operative date of this section, all adjusted premiums and present values
referred to in NRS 688A.290 to
688A.360 , inclusive, must be
calculated on the basis of the Commissioners 1958 Standard Ordinary
Mortality Table and the rate of interest specified in the policy for
calculating cash surrender values and paid-up nonforfeiture benefits, but
the rate of interest must not exceed 3.5 percent per annum, or 4 percent
per annum for policies issued on or after July 1, 1973, and before July
1, 1977, and a rate of interest not exceeding 5.5 percent per annum may
be used for policies issued on or after July 1, 1977, other than single
premium whole life or endowment insurance policies, and for the latter
policies a rate of interest not exceeding 6.5 percent per annum may be
used, except that:
(a) For any category of ordinary insurance issued on female risks,
adjusted premiums and present values may be calculated according to an
age not more than 6 years younger than the actual age of the insured.
(b) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1958 Extended Term Insurance Table.
(c) The calculation of adjusted premiums and present values for
insurance issued on a substandard basis may be based on such other table
of mortality as may be specified by the insurer and approved by the
Commissioner.
2. Any insurer may file with the Commissioner a written notice of
its election to comply with the provisions of this section after a
specified date before January 1, 1966. After the filing of the notice,
this section becomes operative upon the specified date with respect to
the ordinary policies thereafter issued by the insurer.
3. If an insurer makes no such election, the operative date of
this section for the insurer is January 1, 1966.
4. This section does not apply to ordinary policies issued on or
after the operative date of NRS 688A.325 .
(Added to NRS by 1971, 1739; A 1973, 723; 1977, 692; 1983, 955)
1. Any cash surrender value and any paid-up nonforfeiture benefit,
available under the policy in the event of default in a premium payment
due at any time other than on the policy anniversary, must be calculated
with allowance for the lapse of time and the payment of fractional
premiums beyond the last preceding policy anniversary.
2. All values referred to in NRS 688A.300 to 688A.340 , inclusive, may be calculated upon the
assumption that any death benefit is payable at the end of the policy
year of death.
3. The net value of any paid-up additions, other than paid-up term
additions, must not be less than the amounts used to provide the
additions.
4. Notwithstanding the provisions of NRS 688A.300 , additional benefits payable:
(a) In the event of death or dismemberment by accident or
accidental means;
(b) In the event of total and permanent disability;
(c) As reversionary annuity or deferred reversionary annuity
benefits;
(d) As term insurance benefits provided by a rider or supplemental
policy provision to which, if issued as a separate policy, NRS 688A.290
to 688A.360 , inclusive, would not apply;
(e) As term insurance on the life of a child or on the lives of
children provided in a policy on the life of a parent of the child, if
the term insurance expires before the child’s age is 26, is uniform in
amount after the child’s age is 1, and has not become paid up by reason
of the death of a parent of the child;
(f) As other policy benefits additional to life insurance and
endowment benefits; and
(g) Premiums for all such additional benefits,
Ê must be disregarded in ascertaining cash surrender values and
nonforfeiture benefits required by NRS 688A.290 to 688A.360 , inclusive, and no such additional benefits
may be required to be included in any paid-up nonforfeiture benefits.
(Added to NRS by 1971, 1740; A 1983, 956)
290 to 688A.360 , inclusive, not applicable. NRS 688A.290
to 688A.360 , inclusive, do not apply to any:
1. Reinsurance, group insurance, pure endowment, annuity or
reversionary annuity contract.
2. Term policy of uniform amount which provides no guaranteed
nonforfeiture or endowment benefits, or the renewal thereof, of 20 years
or less expiring before age 71, for which uniform premiums are payable
during the entire term of the policy.
3. Term policy of decreasing amount which provides no guaranteed
nonforfeiture or endowment benefits on which each adjusted premium,
calculated as specified in NRS 688A.320 to 688A.340 , inclusive, is less than the adjusted
premium, calculated in the same manner, on a term policy of uniform
amount, or a renewal thereof, which provides no guaranteed nonforfeiture
or endowment benefits, issued at the same age and for the same initial
amount of insurance and for a term of 20 years or less, expiring before
age 71, for which uniform premiums are payable during the entire term of
the policy.
4. Policy which provides no guaranteed nonforfeiture or endowment
benefits, for which no cash surrender value, if any, or present value of
any paid-up nonforfeiture benefit, at the beginning of any policy year,
calculated as specified in NRS 688A.300 to 688A.340 , inclusive, exceeds 2.5 percent of the
amount of insurance at the beginning of the same policy year.
5. Policy which is delivered outside this state by an agent or
other representative of the company issuing the policy.
Ê For purposes of determining whether NRS 688A.290 to 688A.360 , inclusive, apply, the age at expiration for
a joint term policy of life insurance is the age of the oldest person at
the time of expiration.
(Added to NRS by 1971, 1740; A 1983, 957)
NONFORFEITURE LAW: DEFERRED ANNUITIES
No contract of annuity may be delivered or issued for
delivery in this state unless it contains in substance the following
provisions, or corresponding provisions which in the opinion of the
Commissioner are at least as favorable to the contract holder:
1. A statement that upon cessation of payment of considerations
under a contract, or upon receipt of a written request submitted by an
owner of a contract, the company will grant a paid-up annuity benefit on
a plan stipulated in the contract of such value as is specified in NRS
688A.3631 to 688A.3637 , inclusive, and 688A.366 ;
2. If a contract provides for a lump-sum settlement at maturity or
any other time, a statement that upon surrender of the contract at or
before the commencement of any annuity payments, the company will pay in
lieu of any paid-up annuity benefit a cash surrender benefit of an amount
specified in NRS 688A.3631 ,
688A.3633 , 688A.3637 and 688A.366 , and that the company may reserve the right
to defer the payment of such cash surrender benefit for a period of not
more than 6 months after demand therefor with surrender of the contract
if the company submits a written request to and receives written approval
for the deferral from the Commissioner. The request must address the
necessity and equitability to all policyholders of the deferral;
3. A statement of the mortality table, if any, and interest rates
used in calculating any minimum paid-up annuity, cash surrender or death
benefits which are guaranteed under the contract, together with
sufficient information to determine the amounts of those benefits; and
4. A statement that any paid-up annuity, cash surrender or death
benefits which may be available under the contract are not less than the
minimum benefits required by any statute of the state in which the
contract is delivered and an explanation of the manner in which such
benefits are altered by the existence of any additional amounts credited
by the company to the contract, any indebtedness to the company on the
contract or any prior withdrawals from or partial surrenders of the
contract,
Ê except that any deferred annuity contract may provide that if no
considerations have been received under a contract for a period of 2 full
years, and the portion of the paid-up annuity benefit at maturity on the
plan stipulated in the contract arising from considerations paid before
that period would be less than $20 monthly, the company may terminate the
contract by payment in cash of the then present value of such portion of
the paid-up annuity benefit, calculated on the basis of the mortality
table, if any, and interest rate specified in the contract for
determining the paid-up annuity benefit, and by such payment shall be
relieved of any further obligation under the contract.
(Added to NRS by 1977, 688; A 1979, 86; 2003, 3315 )
1. The minimum values, specified in NRS 688A.3631 to 688A.3637 , inclusive, and 688A.366 , of any paid-up annuity, cash surrender or
death benefits available under an annuity contract must be based upon
minimum nonforfeiture amounts as defined in this section.
2. With respect to contracts providing for flexible
considerations, the minimum nonforfeiture amount for any time at or
before the commencement of any annuity payments is equal to an
accumulation up to such time at a rate of interest calculated pursuant to
subsection 3, which must be decreased by the sum of:
(a) Any prior withdrawals from or partial surrenders of the
contract, accumulated at a rate of interest calculated pursuant to
subsection 3;
(b) An annual charge in the amount of $50, accumulated at rates of
interest calculated pursuant to subsection 3;
(c) Any premium tax paid by the company for the contract,
accumulated at rates of interest calculated pursuant to subsection 3; and
(d) The amount of any indebtedness to the company on the contract,
including interest due and accrued.
Ê The net considerations for a given contract year used to define the
minimum nonforfeiture amount must be an amount that is equal to 87.5
percent of the gross considerations credited to the contract during that
contract year.
3. For the purpose of this section, the rate of interest used to
determine the minimum nonforfeiture amounts must be an annual rate of
interest determined as the lesser of 3 percent per annum or a rate
specified in the contract if the rate is calculated in accordance with
regulations adopted by the Commissioner, except that at no time may the
resulting rate be less than 1 percent per annum.
(Added to NRS by 1977, 688; A 2003, 3316 )
Any paid-up annuity benefit available under a
contract shall be such that its present value on the date when the
annuity payments are to commence is at least equal to the minimum
nonforfeiture amount on that date. Such present value shall be computed
by using the mortality table, if any, and the interest rate specified in
the contract for determining the minimum paid-up annuity benefits
guaranteed in the contract.
(Added to NRS by 1977, 689)
For contracts which provide cash surrender benefits, such
benefits available before maturity shall not be less than the present
value as of the date of surrender of that portion of the maturity value
of the paid-up annuity benefit which would be provided under the contract
at maturity arising from considerations paid before the time of cash
surrender, reduced by the amount appropriate to reflect any prior
withdrawals from or partial surrenders of the contract, such present
value being calculated on the basis of an interest rate of not more than
1 percent higher than the interest rate specified in the contract for
accumulating the net considerations to determine such maturity value,
decreased by the amount of any indebtedness to the company on the
contract, including interest due and accrued, and increased by any
existing additional amounts credited by the company to the contract. Any
cash surrender benefit shall not be less than the minimum nonforfeiture
amount at that time. The death benefit under such contracts shall be at
least equal to the cash surrender benefit.
(Added to NRS by 1977, 689)
For
contracts which do not provide cash surrender benefits, the present value
of any paid-up annuity benefit available as a nonforfeiture option at any
time before maturity shall not be less than the present value of that
portion of the maturity value of the paid-up annuity benefit provided
under the contract arising from considerations paid before the time when
the contract is surrendered in exchange for or changed to a deferred
paid-up annuity, such present value being calculated for the period
before the maturity date on the basis of the interest rate specified in
the contract for accumulating the net considerations to determine such
maturity value, and increased by any existing additional amounts credited
by the company to the contract. For contracts which do not provide any
death benefits before the commencement of any annuity payments, the
present values shall be calculated on the basis of such interest rate and
the mortality table specified in the contract for determining the
maturity value of the paid-up annuity benefit. The present value of a
paid-up annuity benefit shall not be less than the minimum nonforfeiture
amount at that time.
(Added to NRS by 1977, 690)
For the purpose of determining the
benefits calculated under NRS 688A.3633 and 688A.3635 , in the case of annuity contracts under
which an election may be made to have annuity payments commence at
optional maturity dates, the maturity date shall be deemed to be the
latest date for which election is permitted by the contract, but shall
not be deemed to be later than the anniversary of the contract next
following the annuitant’s 70th birthday or the 10th anniversary of the
contract, whichever is later.
(Added to NRS by 1977, 690)
Any contract
which does not provide cash surrender benefits or does not provide death
benefits at least equal to the minimum nonforfeiture amount before the
commencement of any annuity payments shall include a statement in a
prominent place in the contract that such benefits are not provided.
(Added to NRS by 1977, 690)
Any paid-up annuity, cash surrender or death
benefits available at any time, other than on the contract anniversary
under any contract with fixed scheduled considerations, shall be
calculated with allowance for the lapse of time and the payment of any
scheduled considerations beyond the beginning of the contract year in
which cessation of payment of considerations under the contract occurs.
(Added to NRS by 1977, 690)
For any contract
which provides, within the same contract by rider or supplemental
contract provision, both annuity benefits and life insurance benefits
which are in excess of the greater of cash surrender benefits or a return
of the gross considerations with interest, the minimum nonforfeiture
benefits shall be equal to the sum of the minimum nonforfeiture benefits
for the annuity portion and the minimum nonforfeiture benefits, if any,
for the life insurance portion computed as if each portion were a
separate contract. Any additional benefits payable:
1. In the event of total and permanent disability;
2. As reversionary annuity or deferred reversionary annuity
benefits; or
3. As other policy benefits additional to life insurance,
endowment and annuity benefits,
Ê and considerations for all such additional benefits shall be
disregarded in ascertaining the minimum nonforfeiture amounts, paid-up
annuity, cash surrender and death benefits which may be required by NRS
688A.361 to 688A.369 , inclusive. The inclusion of such additional
benefits shall not be required in any paid-up benefits, unless the
additional benefits separately would require minimum nonforfeiture
amounts, paid-up annuity, cash surrender and death benefits.
(Added to NRS by 1977, 690)
361 to 688A.369 , inclusive, not applicable. NRS 688A.361
to 688A.369 , inclusive, do not apply to any reinsurance,
group annuity purchased under a retirement plan or plan of deferred
compensation established or maintained by an employer (including a
partnership or sole proprietorship), by an employee organization, or by
both, other than a plan providing individual retirement accounts or
individual retirement annuities under section 408 of the Internal Revenue
Code, as amended, premium deposit fund, variable annuity, investment
annuity, immediate annuity, deferred annuity contract after annuity
payments have commenced, reversionary annuity or to any contract which
will be delivered outside this state through an agent or other
representative of the company issuing the contract.
(Added to NRS by 1977, 687)
MISCELLANEOUS PROVISIONS
1. A reinstated policy of life insurance or an annuity contract
may be contested on account of fraud or misrepresentation of facts
material to the reinstatement only for the same period following
reinstatement and with the same conditions and exceptions as the policy
provides with respect to contestability after original issuance.
2. When any life insurance policy or annuity contract is
reinstated such reinstated policy or contract may exclude or restrict
liability to the same extent that such liability could have been or was
excluded or restricted when the policy or contract was originally issued,
and such exclusion or restriction shall be effective from the date of
reinstatement.
3. After 3 years from the date of issue of a life insurance policy
or of a supplemental contract thereto providing total and permanent
disability benefits or additional benefits in the event of death by
accident or accidental means, no misstatements, except fraudulent
misstatements, made by the applicant in the application for the policy
shall be used to deny a claim for such total and permanent disability
commencing, or for such additional benefits in the event of death by
accident or accidental means occurring, after the expiration of such
3-year period. This subsection shall not be so construed as to preclude
the assertion at any time of defenses based upon provisions with respect
to such benefits which exclude or restrict coverage.
(Added to NRS by 1971, 1741)
1. A life insurer issuing both participating and nonparticipating
policies shall maintain such accounting records as are necessary for it
to determine dividends to participating policyholders on an equitable
basis.
2. For the purposes of such accounting records the insurer shall
make a reasonable allocation between participating and nonparticipating
policies of the expenses of such general operations or functions as are
jointly shared. Any allocation of expense between the respective
categories shall be made upon a reasonable basis, to the end that each
category shall bear a just portion of joint expense involved in the
administration of the business of such category.
3. No policy after January 1, 1972, shall provide for, and no life
insurer or representative shall, after January 1, 1972, knowingly offer
or promise payment, credit or distribution of participating “dividends,”
“earnings,” “profits” or “savings,” by whatever name called, to
participating policies out of such profits, earnings or savings on
nonparticipating policies. This subsection does not restrict the
generality of NRS 686A.110 (rebates).
(Added to NRS by 1971, 1741)
1. A domestic life insurer may establish one or more separate
accounts, and may allocate thereto amounts (including without limitation
proceeds applied under optional modes of settlement or under dividend
options) to provide for life insurance or annuities (and benefits
incidental thereto), payable in fixed or variable amounts or both,
subject to the following:
(a) The income, gains and losses, realized or unrealized, from
assets allocated to a separate account shall be credited to or charged
against the account, without regard to other income, gains or losses of
the company.
(b) Except as may be provided with respect to reserves for
guaranteed benefits and funds referred to in paragraph (c):
(1) Amounts allocated to any separate account and
accumulations thereon may be invested and reinvested without regard to
any requirements or limitations prescribed by the laws of this state
governing the investments of life insurance companies; and
(2) The investments in such separate account or accounts
shall not be taken into account in applying the investment limitations
otherwise applicable to the investments of the company.
(c) Except with the approval of the Commissioner and under such
conditions as to investments and other matters as he may prescribe, which
shall recognize the guaranteed nature of the benefits provided, reserves
for:
(1) Benefits guaranteed as to dollar amount and duration; and
(2) Funds guaranteed as to principal amount or stated rate
of interest,
Ê shall not be maintained in a separate account.
(d) Unless otherwise approved by the Commissioner, assets allocated
to a separate account shall be valued at their market value on the date
of valuation, or if there is no readily available market, then as
provided under the terms of the contract or the rules or other written
agreement applicable to such separate account; but unless otherwise
approved by the Commissioner, the portion if any of the assets of such
separate account equal to the company’s reserve liability with regard to
the guaranteed benefits and funds referred to in paragraph (c) shall be
valued in accordance with the rules otherwise applicable to the company’s
assets.
(e) Amounts allocated to a separate account in the exercise of the
power granted by this section shall be owned by the company, and the
company shall not be, nor hold itself out to be, a trustee with respect
to such amounts. If and to the extent so provided under the applicable
contracts, that portion of the assets of any such separate account equal
to the reserves and other contract liabilities with respect to such
account shall not be chargeable with liabilities arising out of any other
business the company may conduct.
(f) No sale, exchange or other transfer of assets may be made by a
company between any of its separate accounts or between any other
investment account and one or more of its separate accounts unless, in
case of a transfer into a separate account, such transfer is made solely
to establish the account pursuant to subsection 6 or to support the
operation of the contracts with respect to the separate account to which
the transfer is made, and unless such transfer, whether into or from a
separate account, is made:
(1) By a transfer of cash; or
(2) By a transfer of securities having a readily
determinable market value, provided that such transfer of securities is
approved by the Commissioner.
Ê The Commissioner may approve other transfers among such accounts if, in
his opinion, such transfers would not be inequitable.
(g) To the extent such company deems it necessary to comply with
any applicable federal or state laws, such company, with respect to any
separate account, including without limitation any separate account which
is a management investment company or a unit investment trust, may
provide for persons having an interest therein appropriate voting and
other rights and special procedures for the conduct of the business of
such account, including without limitation special rights and procedures
relating to investment policy, investment advisory services, selection of
independent public accountants and the selection of a committee, the
members of which need not be otherwise affiliated with such company, to
manage the business of such account.
2. Any contract providing benefits payable in variable amounts
delivered or issued for delivery in this state, including a group
contract and any certificate issued thereunder, shall contain a statement
of the essential features of the procedures to be followed by the
insurance company in determining the dollar amount of such variable
benefits. Any such contract under which the benefits vary to reflect
investment experience, including a group contract and any certificate in
evidence of variable benefits issued thereunder, shall state that such
dollar amount will so vary and shall contain on its first page a
statement to the effect that the benefits thereunder are on a variable
basis.
3. No company shall deliver or issue for delivery within this
state variable contracts unless it is licensed or organized to do a life
insurance or annuity business in this state, and the Commissioner is
satisfied that its condition or method of operation in connection with
the issuance of such contracts will not render its operation hazardous to
the public or its policyholders in this state. In this connection, the
Commissioner shall consider among other things:
(a) The history and financial condition of the company;
(b) The character, responsibility and fitness of the officers and
directors of the company; and
(c) The law and regulations under which the company is authorized
in the state of domicile to issue variable contracts.
Ê If the company is a subsidiary of an admitted life insurance company,
or affiliated with such company through common management or ownership,
it may be deemed by the Commissioner to have met the provisions of this
subsection if either it or the parent or the affiliated company meets the
requirements hereof.
4. Notwithstanding any other provision of law, the Commissioner
has sole authority to regulate the issuance and sale of variable
contracts, and to issue such reasonable rules and regulations as may be
appropriate to carry out the purposes and provisions of this section.
5. Except for NRS 688A.190 ,
688A.240 and 688A.250 in the case of a variable annuity contract
and NRS 688A.060 , 688A.110 , 688A.120 , 688A.130 , 688A.290 to 688A.360 , inclusive, and 688B.050 in the case of a variable life insurance
policy and except as otherwise provided in this Code, all pertinent
provisions of this Code shall apply to separate accounts and contracts
relating thereto. Any individual variable life insurance contract,
delivered or issued for delivery in this state, shall contain grace,
reinstatement and nonforfeiture provisions appropriate to such a
contract. Any individual variable annuity contract, delivered or issued
for delivery in this state, shall contain grace and reinstatement
provisions appropriate to such a contract. The reserve liability for
variable contracts shall be established in accordance with actuarial
procedures that recognize the variable nature of the benefits provided
and any mortality guarantees.
6. A domestic life insurer which establishes one or more separate
accounts pursuant to this section may participate therein by allocating
and contributing to such separate account funds which otherwise might be
invested pursuant to subsection 1 of NRS 682A.050 and NRS 682A.110 . The insurer shall have a proportionate
interest in any such account, along with all other participating contract
holders, to the extent of its participation therein, and with respect
thereto shall also be subject to all the provisions of NRS 682A.210
applicable to separate account
contract holders generally. The aggregate amount so allocated or
contributed by such an insurer to one or more separate accounts shall
not, without the consent of the Commissioner, exceed the greater of:
(a) One hundred thousand dollars;
(b) One percent of its admitted assets as of December 31 next
preceding; or
(c) Five percent of its surplus as to policyholders as of December
31 next preceding.
Ê All funds allocated or contributed by the insurer to a separate account
for the purpose of participation therein shall be included in applying
the limitations upon investments otherwise specified in this Code. The
insurer shall be entitled to withdraw at any time in whole or in part its
participation in any separate account to which funds have been allocated
or contributed and to receive upon withdrawal its proportional share of
the value of the assets of the separate account at the time of withdrawal.
(Added to NRS by 1971, 1742; A 1971, 1951)
1. No life insurer shall, after January 1, 1972, deliver or issue
for delivery in this state:
(a) As part of or in combination with any life insurance, endowment
or annuity contract, any agreement or plan, additional to the rights,
dividends and benefits arising out of any such contract, which provides
for the accumulation of profits over a period of years and for payment of
all or any part of such accumulated profits only to members or
policyholders of a designated group or class who continue as members or
policyholders until the end of a specified or ascertainable period of
years.
(b) Any “registered” policy; that is, any policy (other than one
“registered” as a security under applicable state or federal law)
purporting to be “registered” or otherwise specially recorded, with any
agency of the State of Nevada, or of any other state, or with any bank,
trust company, escrow company or other institution other than the
insurer, or purporting that any reserves, assets or deposits are held, or
will be so held, for the special benefit or protection of the holder of
such policy, by or through any such agency or institution.
(c) Any policy or contract under which any part of the premium or
of funds or values arising from the policy or contract or from investment
of reserves, or from mortality savings, lapses or surrenders, in excess
of the normal reserves or amounts required to pay death, endowment and
nonforfeiture benefits in respective amounts as specified in or pursuant
to the policy or contract, are on a basis not involving insurance or life
contingency features:
(1) To be placed in special funds or segregated accounts or
specially designated places; or
(2) To be invested in specially designated investments or
types thereof,
Ê and the funds or earnings thereon to be divided among the holders of
such policies or contracts, or their beneficiaries or assignees. This
paragraph does not apply to any contract authorized under NRS 688A.390
.
(d) Any policy providing for the segregation of policyholders into
mathematical groups and providing benefits for a surviving policyholder
arising out of the death of another policyholder of such group, or under
any other similar plan.
(e) Any policy providing benefits or values for surviving or
continuing policyholders contingent upon the lapse or termination of the
policies of other policyholders, whether by death or otherwise.
(f) Any policy providing that on the death of anyone not
specifically named therein, the owner or beneficiary of the policy shall
receive the payment or granting of anything of value. This provision
shall not be deemed to prohibit family policies insuring unspecified
members of a family, nor be deemed to prohibit payment to unspecified
beneficiaries of a class which has been expressly designated as such by
the insured or policy owner.
(g) Any policy containing or referring to one or more of the
following provisions or statements:
(1) Investment returns or profit sharing, other than as a
participation in the divisible surplus of the insurer under a regular
participation provision as provided for in NRS 688A.100 .
(2) Special treatment in the determination of any dividend
that may be paid as to such policy.
(3) Reference to premiums as “deposits.”
(4) Relating policyholder interest or returns to those of
stockholders.
(5) That the policyholder as a member of a select group will
be entitled to extra benefits or extra dividends not available to
policyholders generally.
2. This section does not prohibit the provision, payment,
allowance or apportionment of regular dividends or “savings” under
regular participating forms of policies or contracts.
(Added to NRS by 1971, 1744)
An
insurer shall pay the proceeds of any benefits under a policy of life
insurance not more than 30 days after the death of the insured. If the
proceeds are not paid within this period, the insurer shall pay interest
on the proceeds, at a rate which is not less than the current rate of
interest on death proceeds on deposit with the insurer, from the date of
death of the insured to the date when the proceeds are paid.
(Added to NRS by 1977, 626)
No group annuity may be delivered or issued for
delivery in this state to a group which was principally formed for the
purpose of purchasing one or more group annuities.
(Added to NRS by 1985, 1059)
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