Free Life Policy Provisions Options and Riders Study Guide
Nevada Life, Accident & Health exam — Life Policy Provisions Options and Riders.
The standard life policy provisions, nonforfeiture and settlement options, dividend options and riders are explained in the national Life Policy Provisions, Options and Riders guide. This guide covers the provisions Nevada requires in individual life policies (NRS 688A), Nevada's free look, the buyer's guide and replacement rules, and the guaranty limits.
Required provisions
| Provision | Nevada rule |
|---|---|
| Free look | A non-replacement life policy, annuity or pure endowment may be returned within 10 days for a refund of all premiums, including fees and charges. A replacement policy gets 30 days after delivery (NRS 688A.165). Industrial life policies are excluded. |
| Grace period | 30 days, or at the insurer's option one month of at least 30 days. The policy stays in force, and the insurer may charge interest of up to 6% a year for the days used. An unpaid premium can be deducted from the proceeds (NRS 688A.060). |
| Entire contract | The policy and attached application are the entire contract. Statements are representations, not warranties, absent fraud (NRS 688A.070). |
| Incontestability | Incontestable after no more than two years from issue, except for nonpayment and, at the insurer's option, disability and accidental death provisions (NRS 688A.080). |
| Misstatement of age | Benefits are what the premium would have bought at the correct age (NRS 688A.090). |
| Policy loans | Required after three full years of premiums once there's a cash value. The insurer may defer a loan (other than one to pay premiums) for six months. If the loan reaches the loan value, the policy can end only after 30 days' notice to the owner and any assignee (NRS 688A.110). |
| Reinstatement | Within three years after default, with a written application, evidence of insurability and payment of back premiums and loans with interest (NRS 688A.130). |
| Settlement | Paid on receipt of due proof of death. Any settlement period in the policy can't exceed two months (NRS 688A.140). |
Incontestability and exclusions. The clause bars only a contest of the policy's validity. It doesn't stop the insurer from relying on an exclusion or restriction of coverage (NRS 688A.170).
Buyer's guide and policy summary (NAC 686A.415 to .455)
- The buyer's guide and policy summary must be delivered before the initial premium is accepted. If the policy has an unconditional refund period of at least 12 days, they can be delivered with the policy instead (NAC 686A.430).
- The policy summary is titled "Statement of Policy Cost and Benefit Information" (NAC 686A.435).
- The agent must say they are acting as a life insurance agent and name the company, and any mention of dividends must say they aren't guaranteed (NAC 686A.425).
- Failing to deliver these documents is treated as a misrepresentation of the policy (NAC 686A.455).
- The rule doesn't cover annuities, credit life, group life or separate-account variable life.
Replacement (NAC 686A.520 to .573)
- Replacement includes lapsing, surrendering or converting a policy to reduced values, and pledging or borrowing against it for more than 25% of its loan value (NAC 686A.526).
- The agent marks on each application whether replacement is involved. If it is, the agent presents and signs the replacement notice, gets the applicant's signature, leaves a copy, and keeps the notice and sales proposals for three years (NAC 686A.550).
- The replacing insurer sends a copy of the notice to the existing insurer within 3 working days and can't issue the policy until a signed notice is attached to the application (NAC 686A.555).
- The notice tells the applicant they have 30 days to decide (NAC 686A.563), matching the 30-day replacement free look.
- An agent who replaces a policy more than once, or shows a pattern of ignoring existing coverage, is treated as knowing about the existing policy (NAC 686A.570).
- Group life, credit life, variable life and conversions are exempt (NAC 686A.540).
Guaranty limits
The Nevada Life and Health Insurance Guaranty Association covers up to $300,000 in life death benefits, with no more than $100,000 in cash surrender and withdrawal values (NRS 686C.210).
Common exam traps
- Free look: 10 days, or 30 days for replacements. The refund includes fees and charges.
- Buyer's guide before the first premium, unless there's a 12-day free look.
- Incontestable after 2 years with nonpayment as the main exception; exclusions can still be applied after that.
- Policy loans: after 3 years, with a possible 6-month deferral, and 30 days' notice before a policy terminates for excess loans.
- Replacement includes borrowing more than 25% of the loan value.
Practice Life Policy Provisions Options and Riders questions All Life, Accident & Health topics
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
