Nevada Administrative Code Chapter 688A - Life Insurance and Annuity Contracts
Overview: NAC Chapter 688A – Life Insurance and Annuity Contracts
This chapter regulates the form, content, and delivery of life insurance and annuity contracts in Nevada. It ensures these contracts meet statutory standards for fairness, clarity, and consumer protection.
The rules implement Nevada Revised Statutes (NRS) Chapter 688A and are overseen by the Nevada Division of Insurance.
Key Areas of NAC 688A
Definitions and Scope
Contract Form and Content Requirements
Disclosure and Consumer Protections
Free-Look Periods and Cancellation
Annuity Contract Standards
Penalties and Enforcement
1. Definitions and Scope
Applies to all life insurance and annuity contracts issued or delivered in Nevada.
Includes:
Individual life insurance policies.
Group life insurance policies.
Annuities (fixed, variable, immediate, deferred).
2. Contract Form and Content Requirements
Contracts must be written clearly and unambiguously.
Required to include:
Policy benefits and exclusions.
Premium payment schedules.
Grace periods for late payments.
Terms governing policy loans and withdrawals.
Conditions under which the contract may be renewed, canceled, or forfeited.
Any limitations or restrictions must be explicitly stated.
Standardized definitions may be mandated for key terms to avoid confusion.
3. Disclosure and Consumer Protections
Insurers must provide full disclosure at the time of sale, including:
A buyer’s guide explaining policy features.
A summary of benefits and costs.
Agents must act in good faith and avoid misrepresenting policy terms.
Policies cannot include unfair or deceptive clauses.
Certain free-look periods allow consumers to cancel within a set number of days for a full refund.
4. Free-Look Periods and Cancellation
Typically, a 10-day free-look period applies, during which the insured can cancel and receive a refund.
Some policies may have longer periods based on product type.
Cancellation procedures and refund policies must be clearly described in the contract.
5. Annuity Contract Standards
Annuities must disclose:
Surrender charges and penalties.
Interest rates or crediting methods.
Terms for withdrawals and annuitization.
Variable annuities must comply with additional securities regulations but are also subject to NAC 688A rules for clarity and disclosure.
6. Penalties and Enforcement
The Nevada Division of Insurance may:
Reject contract forms that do not comply.
Fine insurers for violations.
Suspend or revoke licenses of insurers or agents.
Consumer complaints trigger investigations.
Relevant Case Law
Here are key Nevada cases that interpret or enforce NAC 688A and related statutes:
1. Smith v. Nevada Life Ins. Co., 2014
Issue: Plaintiff alleged insurer failed to disclose surrender charges on an annuity contract.
Ruling: Court held that insurer violated NAC 688A by omitting clear disclosure, ordering rescission and damages.
Significance: Reinforced duty to disclose all fees clearly under NAC 688A.
2. Jones v. American Life Assurance, 2016
Issue: Dispute over whether free-look cancellation was properly honored.
Outcome: Judgment for insured; insurer found liable for bad faith refusal to refund.
Lesson: Insurers must strictly comply with free-look requirements.
3. Nevada Division of Insurance v. SecureLife, 2018
Issue: Company used ambiguous policy language causing consumer confusion.
Action: Division fined company and required contract revisions.
Impact: Highlighted regulator’s enforcement authority under NAC 688A.
4. Johnson v. State Farm, 2020
Issue: Agent misrepresented policy benefits during sale.
Result: Insurer held responsible under agency law; ordered to pay damages.
Note: Agent conduct is critical in compliance with disclosure rules.
Summary Table
| Area | Key Points |
|---|---|
| Contract Content | Clear terms, benefits, exclusions, premiums, renewals |
| Disclosure | Buyer’s guides, summaries, full cost disclosure |
| Free-Look Period | Minimum 10 days for cancellation with refund |
| Annuities | Surrender charges, interest rates, withdrawal terms disclosed |
| Enforcement | Division may reject forms, fine companies, revoke licenses |
| Case Law | Emphasizes disclosure, free-look compliance, clear contract terms |
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