How annuities work (accumulation and payout, fixed, indexed and variable products, payout options and taxation) is covered in the national Annuities guide. This guide covers Nevada's annuity rules: the suitability rule (NAC 688A.455 to .470), annuity replacement, the free look and guaranty limits. Nevada's rule is a suitability standard. Nevada hasn't adopted the newer NAIC "best interest" version.

Suitability (NAC 688A.455)

• Before recommending an annuity, the producer or insurer makes reasonable efforts to learn the consumer's financial status, tax status, investment objectives and other useful information.
• The producer isn't responsible if the consumer refused to give the information, gave incomplete or inaccurate information, or bought the annuity without relying on the recommendation.
• If a consumer is financially harmed because the required information wasn't obtained, the Commissioner may require corrective action.
• Records of the information used must be kept for at least 7 years after the purchase (NAC 688A.465).

Disclosure (NAC 688A.470)

• The buyer's guide and disclosure statement are delivered at application when the application is taken in person. Otherwise they go out no later than 5 business days after the application is received.
• For an SEC-registered (variable) annuity, a prospectus can take the place of these documents.

Free look

An annuity may be returned within 10 days for a refund of all premiums, including fees and charges. A replacement annuity gets 30 days after delivery (NRS 688A.165).

Replacement

When an annuity replaces another, the producer gives a written, signed and dated statement comparing the existing and new contracts, including surrender penalties, premium tax and when any bonus vests, along with the replacement notice (NAC 686A.573).

Other rules

• A group annuity may not be delivered to a group formed mainly to buy group annuities (NRS 688A.430).
• Variable annuities need the variable line of authority (NRS 683A.261(1)(e)).

Guaranty limits

The Nevada Life and Health Insurance Guaranty Association covers annuities up to $250,000 in present value, including cash surrender and withdrawal values (NRS 686C.210). Separate-account values where the owner bears the risk aren't covered.

Common exam traps

• Nevada uses suitability, not the NAIC best interest model.
• Records: 7 years after the purchase.
• Disclosure at application in person, or within 5 business days otherwise.
• Free look: 10 days, 30 for replacements, with fees and charges refunded.
• Guaranty limit: $250,000 for annuities.