NAC686A.4955. Engaging in certain acts or practices relating to side funds, compliance with standard nonforfeiture law or exclusion of coverage.

An insurer or producer of insurance engages in an unfair or deceptive act or practice in violation of NRS 686A.020 if, in connection with the sale of a life insurance product to an active duty service member, the insurer or producer of insurance:

     1. Recommends to an active duty service member the purchase of, or offers to sell or sells to an active duty service member, a life insurance product, other than an individually issued annuity, which includes a side fund, unless the insurer or producer of insurance has reasonable grounds to believe that the life insurance death benefit, standing alone, is suitable. If an active duty service member is currently enrolled in Servicemembers’ Group Life Insurance, a life insurance death benefit is presumed unsuitable, unless, after the completion of a needs assessment, the insurer or producer of insurance demonstrates that the death benefit of the Servicemembers’ Group Life Insurance, together with any other military survivor benefits, savings and investments, survivor income and other life insurance, is insufficient to meet the insurable needs for life insurance of the active duty service member. As used in this subsection:

     (a) “Insurable needs” means the risk associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the estate, survivors and dependents of the service member.

     (b) “Other military survivor benefits” includes, without limitation, the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents’ Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness and Social Security Survivor Benefits.

     2. Offers for sale or sells a life insurance product, other than an individually issued annuity, that includes a side fund which, by default, diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due, unless:

     (a) Interest credited accrues from the date of deposit to the date of withdrawal and allows withdrawals without limit or penalty; and

     (b) At least once each policy year during the first 10 policy years and every fifth policy year thereafter, ending at the age of 100, policy maturity or final expiration, whichever is later, the policyholder will be provided with a schedule of effective rates of return which is based on cash flows of the combined product. The effective rate of return must consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage.

     3. Offers for sale or sells a life insurance product, other than an individually issued annuity, which does not comply with standard nonforfeiture law for life insurance after considering all policy benefits, including, without limitation, endowment, return of premium and persistency.

     4. Sells to a person known to be an active duty service member any life insurance product that excludes coverage if the death of the insured service member is related to a declared or undeclared war or any other act related to military service other than an accidental death.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007, eff. 9-1-2007)