NAC687B.119. Required reserves for policy, rider or endorsement.

     1. When benefits for long-term care are provided through the acceleration of benefits under a group or an individual policy of life insurance or a rider or endorsement to that policy, the reserves for the benefits must be determined in accordance with the provisions of paragraph (g) of subsection 2 of NRS 681B.120. Reserves for a claim must also be established when a policy, rider or endorsement is in claim status.

     2. Reserves for policies, riders and endorsements subject to the provisions of subsection 1 must be based on a multiple decrement model using all relevant decrements except those for rates for voluntary termination. An approximation based upon a single decrement model may be used if the calculation produces similar reserves as the multiple decrement model, the reserves are more conservative than the multiple decrement model or the reserves are immaterial. The calculation may take into account the reduction in benefits for life insurance as the result of payment of benefits for long-term care. However, the reserves for the benefit for long-term care and the benefit for life insurance must not be less than the reserves for the benefit for life insurance assuming no benefit for long-term care.

     3. In the development and calculation of reserves for policies, riders and endorsements subject to the provisions of subsection 1, consideration must be given to the applicable provisions of the policy, marketing methods, administrative procedures and all other factors which have an impact on projected costs of claims, including, but not limited to, the following:

     (a) Definition of insured events;

     (b) Covered facilities for long-term care;

     (c) Existence of coverage for convalescent care at home;

     (d) Definition of facilities;

     (e) Existence or absence of barriers to eligibility;

     (f) Provisions regarding waiver of premiums;

     (g) Renewability;

     (h) Ability to raise premiums;

     (i) Methods of marketing;

     (j) Procedures regarding underwriting;

     (k) Procedures regarding adjustment of claims;

     (l) Waiting periods;

     (m) Maximum benefits;

     (n) Availability of eligible facilities;

     (o) Margins in costs of a claim;

     (p) Optional nature of benefits;

     (q) Delay in eligibility for benefits;

     (r) Provisions regarding protection against inflation; and

     (s) Option of guaranteed insurability.

Ê Any valuation table for morbidity consulted in the development and calculation of reserves must be certified as appropriate as a statutory valuation table by a qualified actuary.

     4. When benefits for long-term care are provided other than by the method described in subsection 1, reserves must be determined using a table that is:

     (a) Established by a qualified actuary for the purpose of setting reserves; and

     (b) Acceptable to the Commissioner.

     5. As used in this section, “multiple decrement model” means a model in which people in a defined status at any age are subject to more than one contingency at the next age.

     6. As used in this section, “single decrement model” means a model in which people in a defined status at any age are subject to only one contingency during the next age.

     (Added to NAC by Comm’r of Insurance, eff. 12-15-94; A by R028-10, 12-16-2010, eff. 10-1-2011)