NAC: CHAPTER 688A - LIFE INSURANCE AND ANNUITY CONTRACTS

[Rev. 11/2/2026 3:24:22 PM]

CHAPTER 688A - LIFE INSURANCE AND ANNUITY CONTRACTS

[NAC-688A Revised Date: 10-26]

ANNUITY CONTRACTS AND DEPOSIT FUNDS

688A.110 Purpose and scope of provisions.

688A.115 Applicability of provisions.

688A.120 Contract summary: Provision to prospective purchasers.

688A.130 Contract summary: Preparation.

688A.135 Contract summary: Contents.

688A.140 Disclosure of agency and identity of insurance company.

688A.150 Use of certain professional designations; restriction on fees.

688A.160 Restrictions on presentations, literature and contract forms.

688A.170 Maintenance of records.

688A.180 Effect of failure to provide contract summary.

MINIMUM NONFORFEITURE AMOUNTS FOR DEFERRED ANNUITIES

688A.200 Rate of interest for determination.

688A.210 Actuarial certification for certain forms.

MULTIPLE POLICIES OF LIFE INSURANCE

688A.250 Written standards for processing claims; records substantiating compliance.

688A.260 Processing of claims: Search for and action on additional policies issued by insurer on life of decedent.

POLICIES OF SMALL FACE AMOUNT

688A.300 Requirements for disclosure.

STANDARDS OF VALUATION

Determination of Minimum Reserve Liabilities

688A.320 Definitions.

688A.325 “2001 CSO Mortality Table” defined.

688A.327 “2001 CSO Preferred Class Structure Mortality Table” defined.

688A.330 “CSO” defined.

688A.350 Adoption by reference of Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation.

688A.352 Restrictions on use of 2001 CSO Preferred Class Structure Mortality Table.

688A.353 Valuation standards: Policies issued on or after January 1, 2005, and before January 1, 2008; policies issued on or after January 1, 2008.

688A.355 Plans with separate rates for preferred and standard nonsmoker lives; certification by appointed actuary.

688A.357 Plans with separate rates for preferred and standard smoker lives; certification by appointed actuary.

688A.360 Notice to Commissioner.

688A.363 Communications and disclosures.

Preneed Insurance

688A.370 Definitions.

688A.373 “2001 CSO Mortality Table” defined.

688A.375 “CSO” defined.

688A.380 “Preneed insurance” defined.

688A.383 “Prepaid contract” defined.

688A.385 “Ultimate 1980 CSO Mortality Table” defined.

688A.387 Calculation of reserve liabilities and nonforfeiture values.

688A.390 Policies issued on or after January 1, 2009, but before January 1, 2012.

PURCHASE OR EXCHANGE OF ANNUITIES

688A.400 Definitions.

688A.410 “Buyer’s guide” defined.

688A.415 “Determinable elements” defined.

688A.420 “Generic name” defined.

688A.425 “Guaranteed elements” defined.

688A.435 “Nonguaranteed elements” defined.

688A.445 “Recommendation” defined.

688A.450 Applicability of provisions.

688A.470 Provision of buyer’s guide and disclosure statement to applicant for annuity.

688A.475 Provision of annual report to owner of annuity.

SUITABILITY OF CERTAIN ANNUITY TRANSACTIONS

688A.476 Definitions.

688A.477 “Cash compensation” defined.

688A.478 “Consumer profile information” defined.

688A.479 “Intermediary” defined.

688A.480 “Material conflict of interest” defined.

688A.481 “Non-cash compensation” defined.

688A.482 “Non-guaranteed elements” defined.

688A.483 “Producer” defined.

688A.484 “Recommendation” defined.

688A.485 “Replacement” defined.

688A.486 Applicability.

688A.487 Producer required to make recommendation in best interest of consumer.

688A.488 Producer required to exercise reasonable diligence, care and skill in making recommendation; effect, applicability and construction of requirement.

688A.489 Producer required to disclose certain information related to recommendation or sale of annuity.

688A.490 Producer required to identify and avoid or manage and disclose material conflicts of interest.

688A.491 Producer required to make records and obtain documentation related to certain recommendations and sales of annuities.

688A.492 Requirements related to recommendations and sales of annuities applicable to producer who exercised material control or influence in making recommendation and received direct compensation from recommendation or sale.

688A.493 Circumstances when producer does not have obligation to consumer.

688A.494 Standard for issuing recommended annuity; establishment and maintenance of supervision system.

688A.495 Producer or insurer prohibited from dissuading consumer from taking certain actions.

688A.496 Effect of recommendations and sales of annuities made in compliance with comparable standards.

688A.497 Producer required to have adequate knowledge of annuity product and complete certain training; requirements for training courses; verification of required training.

688A.498 Penalties for noncompliance with provisions governing recommendations and sales of annuities; authority of Commissioner to enforce, reduce or eliminate penalty.

688A.499 Maintenance of records by insurers, general agents, independent agencies and producers.

PROHIBITED ACTS AND PRACTICES

688A.500 Engaging in certain acts or practices regarding sales to active duty service members.

REVISER’S NOTE.

Pursuant to the provisions of NRS 0.024, the section added to chapter 688A of NAC by section 4 of LCB File No. R109-23 contained a definition that was deemed duplicative of that set forth in NRS 688A.020 and was not codified in NAC in accordance with ch. 56, Stats. 2009, which contains the following provision not included in NRS:

“Sec. 2. The Legislative Counsel shall, in preparing supplements to the Nevada Administrative Code, appropriately change, move or remove any words and terms in the Nevada Administrative Code in a manner that the Legislative Counsel determines necessary to ensure consistency with the provisions of section 1 of this act [NRS 0.024].”

ANNUITY CONTRACTS AND DEPOSIT FUNDS

NAC 688A.110 Purpose and scope of provisions. (NRS 679B.130)

1. NAC 688A.110 to 688A.180, inclusive, require insurers to deliver to prospects for annuity contracts, or for deposit funds accepted in conjunction with life insurance policies or annuity contracts, information which:

(a) Helps the prospect select an annuity, a deposit fund, or both, appropriate to the prospect’s needs;

(b) Improves the prospect’s understanding of the basic features of the plan under consideration; and

2. NAC 688A.110 to 688A.180, inclusive, do not prohibit the use of additional material which is not in violation of this regulation or of law.

[Comm’r of Insurance, LH-7 § 2, eff. 2-6-80]

NAC 688A.115 Applicability of provisions. (NRS 679B.130)

1. NAC 688A.110 to 688A.180, inclusive, apply to:

(a) Any solicitation, negotiation or procurement of:

(1) Annuity contracts; or

(2) Deposit funds accepted in conjunction with individual life insurance policies or with annuity contracts which are subject to NAC 688A.110 to 688A.180, inclusive, within this State;

(b) Any issuer of life insurance policies or annuity contracts, including fraternal benefit societies;

(c) Individual deferred annuities other than variable annuities, investment annuities and contracts registered with the Federal Securities and Exchange Commission; and

(d) Deposit fund arrangements under which amounts to accumulate at interest are paid in addition to life insurance premiums or annuity considerations under provisions of individual life insurance policies or annuity contracts.

2. NAC 688A.110 to 688A.180, inclusive, do not apply to:

(a) Group annuity contracts whose costs are borne in whole or in part by the annuitant’s employer or by an association of which the annuitant is a member. The cost of a contract must not be deemed to be borne by an annuitant’s employer to the extent the annuitant’s salary is reduced or the annuitant foregoes a salary increase;

(b) Immediate annuity contracts;

(c) Policies or contracts issued in connection with employee benefit plans as defined by Section 3 (3) of the Federal Employee Retirement Income Security Act of 1974, as amended;

(d) Individual retirement accounts and individual retirement annuities as described in Section 408 of the Federal Internal Revenue Code;

(e) A single advance payment of specific premiums equal to the discounted value of the premiums; or

(f) A policyholder’s deposit account established primarily to facilitate payment of regular premiums, and where the anticipated balance of the account does not exceed twice the sum of the premiums payable in 1 year on all policies for which premiums are being paid from the account.

3. NAC 688A.110 to 688A.180, inclusive, apply to all solicitations which commence on or after April 1, 1980.

[Comm’r of Insurance, LH-7 § 3, eff. 2-6-80]

NAC 688A.120 Contract summary: Provision to prospective purchasers. (NRS 679B.130)

1. The insurer shall provide to all prospective purchasers a contract summary before accepting the applicant’s initial consideration for the annuity contract or, in the case of a deposit fund, before accepting the applicant’s initial consideration for the associated life insurance policy or annuity contract, unless:

(a) The annuity contract or associated life insurance policy for which application is made provides for an unconditional refund period of at least 10 days; or

(b) Unless the contract summary contains an unconditional refund offer of at least 10 days, in which case the contract summary must be delivered with or before delivery of the annuity contract or associated life insurance policy.

2. The insurer shall provide a contract summary to any prospective purchaser upon request.

[Comm’r of Insurance, LH-7 § 4, eff. 2-6-80]

NAC 688A.130 Contract summary: Preparation. (NRS 679B.130)

1. The contract summary must be a separate document.

2. All information required to be disclosed must be set out in a manner which will not minimize or render any portion of the summary obscure.

3. Any amounts which remain level for 2 or more contract years may be represented by a single number if it is clearly indicated what amounts are applicable for each contract year.

4. Amounts in subsections 4, 6, 7 and 9 of NAC 688A.135 must, in the case of flexible premium annuity contracts, be determined either according to an anticipated pattern of consideration payments or on the assumption that annual considerations payable will be $1,000.

5. If not specified in the contract, annuity payments must be assumed to commence at age 65 or 10 years from issue, whichever is later.

6. Zero amounts must be displayed as zero and not as blank spaces.

[Comm’r of Insurance, LH-7 § 6, eff. 2-6-80]

NAC 688A.135 Contract summary: Contents. (NRS 679B.130) A contract summary must be a written statement describing the elements of the annuity contract and deposit fund and including as a minimum:

1. A prominently placed title, to be followed by an identification of the annuity contract, deposit fund, or both, to which the statement applies.

2. The name and address of the insurance agent or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the contract summary.

3. The full name and home office or administrative office address of the insurer which will issue the annuity contract or administer the deposit fund.

4. The death benefits for the deposit fund and for the annuity contract during the deferred period, and the form of payment of the annuity. Where a choice of form of payment of the annuity is provided, this item must show the options guaranteed and the form of payment of the annuity selected for subsections 6, 7 and 9.

5. If the contract does not provide cash surrender values, a prominent statement to that effect.

6. The amount of the guaranteed annuity payments at the scheduled commencement of the annuity, based on the assumption that all scheduled considerations are paid and no prior withdrawals from or partial surrenders of the contract are made and no indebtedness to the insurer on the contract is incurred.

7. An amount of annuity payments as in subsection 6 other than guaranteed payments, in amounts not greater than those based on:

(a) The current dividend scale and the interest rate currently used to accumulate dividends under such contracts, or the current excess interest rate credited by the insurer; and

(b) Current annuity purchase rates.

8. For annuity contracts or deposit funds for which guaranteed cash surrender values at any duration are less than the total considerations paid, a prominent statement that the contract or fund may result in a loss if kept for only a few years, together with a reference to the schedule of guaranteed cash surrender values required by paragraph (c) of subsection 9.

9. The following amounts, where applicable, for the first 5 contract years and representative contract years thereafter sufficient to clearly illustrate the patterns of considerations and benefits, including, but not limited to, the 10th and 20th contract years and at least one age between 60 and 65, inclusive, or the scheduled commencement of annuity payments, if any, whichever is earlier:

(a) The gross annual or single consideration for the annuity contract;

(b) Scheduled annual or single deposit for the deposit fund, if any;

(c) The total guaranteed cash surrender value at the end of the year or, if no guaranteed cash surrender values are provided, the total guaranteed paid-up annuity at the end of the year. Values for a deposit fund must be shown separately from those for a basic contract; and

(d) The total illustrative cash value or paid-up annuity at the end of the year, not greater in amount than that based on:

(1) The current dividend scale and the interest rate currently used to accumulate dividends under such contracts or the current excess interest rate credited by the insurer; and

(2) Current annuity purchase rates.

10. For a contract summary which includes values based on the current dividend scale or the current dividend accumulation or excess interest rate, a statement that the values are illustrative and are not guaranteed.

11. The date on which the contract summary is prepared. A dividend scale or excess interest rate which has been publicly declared by the insurer with an effective date not more than 2 months after the date of the declaration must be considered a current dividend scale or current excess interest rate.

[Comm’r of Insurance, LH-7 § 5, eff. 2-6-80]

NAC 688A.140 Disclosure of agency and identity of insurance company. (NRS 679B.130)

1. Before beginning a sales presentation, the agent shall inform the prospective purchaser:

(a) That the agent is acting as a life insurance agent; and

(b) Of the full name of the insurance company which the agent is representing.

2. In sales situations in which an agent is not involved, the insurer shall identify its full name.

[Comm’r of Insurance, LH-7 § 7 subsec. B, eff. 2-6-80]

NAC 688A.150 Use of certain professional designations; restriction on fees. (NRS 679B.130) Terms such as “financial planner,” “investment adviser,” “financial consultant” or “financial counselor” must not be used in such a way as to imply that the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales, unless that is actually the case. This section is not intended to preclude a person who is a financial planner, an investment adviser, a financial consultant, a financial counselor or a member of a recognized trade or professional organization from using such a designation when selling an annuity, but a person who is a financial planner, an investment adviser, a financial consultant, a financial counselor or a member of a recognized trade or professional organization may not charge any fees for his or her services that are in addition to those fees customarily associated with the solicitation, negotiation or servicing of annuities.

[Comm’r of Insurance, LH-7 § 7 subsec. C, eff. 2-6-80]—(NAC A by R076-05, 2-23-2006)

NAC 688A.160 Restrictions on presentations, literature and contract forms. (NRS 679B.130)

1. A presentation of benefits must not display guaranteed and nonguaranteed benefits as a single sum unless guaranteed benefits are shown separately in close proximity thereto and with equal prominence.

2. Sales promotion literature and contract forms must not state or imply that annuity contracts or deposit funds are the same as savings accounts or deposits in banking or savings institutions. The use of passbooks which resemble savings bank passbooks is prohibited.

3. Any reference to dividends or to excess interest credits must include a statement that the dividends or credits are not guaranteed.

[Comm’r of Insurance, LH-7 § 7 subsecs. D, E & F, eff. 2-6-80]

NAC 688A.170 Maintenance of records. (NRS 679B.130) Each insurer shall maintain, at its home office or principal office, a complete file containing one copy of each document authorized by the insurer for use pursuant to NAC 688A.110 to 688A.180, inclusive. The file must contain one copy of each authorized form for at least 3 years after its last authorized use.

[Comm’r of Insurance, LH-7 § 7 subsec. A, eff. 2-6-80]

NAC 688A.180 Effect of failure to provide contract summary. (NRS 679B.130) Failure of an insurer to provide or deliver a contract summary as provided in NAC 688A.120 is an omission which misrepresents the benefits, advantages, conditions or terms of an annuity contract or of an insurance policy.

[Comm’r of Insurance, LH-7 § 8, eff. 2-6-80]

MINIMUM NONFORFEITURE AMOUNTS FOR DEFERRED ANNUITIES

NAC 688A.200 Rate of interest for determination. (NRS 679B.130, 688A.363)

1. Except as otherwise provided in subsection 2, for the purposes of NRS 688A.363, the rate of interest used to determine the minimum nonforfeiture amount must be an annual rate of interest determined as the lesser of:

(a) The statutorily provided rate of 3 percent per annum; or

(b) A rate equal to 125 basis points less than the 5-Year Treasury Constant Maturity Rate as reported by the Federal Reserve rounded to the nearest 0.05 of a percent:

(1) If a date is specified in a contract for the determination of the interest rate, on the date specified in the contract; or

(2) If a period is specified in a contract for the determination of the interest rate, the average rate for the period specified in the contract.

2. A deferred annuity contract that provides for the substantive participation in an equity indexed benefit may provide that the rate calculated pursuant to paragraph (b) of subsection 1 may be reduced by up to an additional 100 basis points. The amount of an additional reduction to the interest rate must not exceed the value of the equity indexed benefit. The Commissioner may require an insurer to substantiate that the additional reduction to the interest rate does not exceed the value of the equity indexed benefit. If the Commissioner finds that the additional reduction to the interest rate exceeds the value of the equity indexed benefit, the Commissioner may disallow or limit the amount of the additional reduction.

3. If the rate calculated pursuant to paragraph (b) of subsection 1 or subsection 2 is less than 1 percent per annum, the interest rate used to determine the minimum nonforfeiture amount must be 1 percent per annum.

4. For the purposes of subparagraphs (1) and (2) of paragraph (b) of subsection 1, the date or period specified in a contract for the determination of the 5-Year Treasury Constant Maturity Rate shall be a date or period between the effective date of the interest rate and 15 months prior to the effective date of the interest rate.

5. Except as otherwise provided in subsection 4, the interest rate calculated pursuant to NRS 688A.363 and this section must apply for the term of the deferred annuity contract.

6. A deferred annuity contract may provide for a redetermination of the interest rate used to determine the minimum nonforfeiture amount. Any redetermination of the interest rate must be made pursuant to subsections 1 and 2. If the deferred annuity contract provides that the interest rate used to determine the minimum nonforfeiture amount will be redetermined, the contract shall set forth:

(a) The dates upon which a redetermination will be made;

(b) The periods for which a redetermined rate will apply; and

7. As used in this section, “basis point” means one-hundredth of 1 percent of yield.

(Added to NAC by Comm’r of Insurance by R130-03, eff. 11-24-2003)

NAC 688A.210 Actuarial certification for certain forms. (NRS 679B.130, 688A.363) In addition to any other requirement for the approval of a form pursuant to NRS 679B.120, an insurer filing forms for approval that incorporate the provisions of NRS 688A.363 must file an actuarial certification that the form complies with the provisions of NAC 688A.200.

(Added to NAC by Comm’r of Insurance by R130-03, eff. 11-24-2003)

MULTIPLE POLICIES OF LIFE INSURANCE

NAC 688A.250 Written standards for processing claims; records substantiating compliance. (NRS 679B.130, 679B.137)

1. Each insurer issuing a policy of life insurance shall adopt a written standard for processing a claim for a benefit under a policy of life insurance that provides for the search of all policies issued by the insurer for other policies covering the life of the same person.

2. The written standard must provide that the insurer shall:

(a) Ask the person submitting a claim for a benefit under a policy of life insurance for any other names by which the person covered under the policy was known; and

(b) Search all policies issued by the insurer to determine whether the insured was covered under a policy issued by the insurer under another name.

3. The insurer shall maintain records substantiating compliance with the standard for processing a claim for a benefit under a policy of life insurance adopted pursuant to subsection 1.

(Added to NAC by Comm’r of Insurance by R177-03, eff. 12-16-2003)

NAC 688A.260 Processing of claims: Search for and action on additional policies issued by insurer on life of decedent. (NRS 679B.130)

1. Upon the submission of a claim for a benefit under a policy of life insurance, the insurer issuing the policy shall conduct a search pursuant to the standard adopted pursuant to NAC 688A.250 of all the policies issued by the insurer to determine if any other policy issued by the insurer provides coverage on the life of the decedent.

2. If the person filing a claim provides information identifying other names by which the insured may have been known, the insurer shall search all the policies issued by the insurer to determine if the insured was covered by another policy under a different name.

3. If the insurer determines that it has issued another policy on the life of the insured, the insurer shall:

(a) Notify the policy owner and beneficiaries of the discovery of the policy; and

(b) Within 6 months after discovering the policy, determine whether the insurer has liability to pay a claim on the policy.

(Added to NAC by Comm’r of Insurance by R177-03, eff. 12-16-2003)

POLICIES OF SMALL FACE AMOUNT

NAC 688A.300 Requirements for disclosure. (NRS 679B.130)

1. Except as otherwise provided in subsection 7, if at any time during the term of a policy of small face amount the total premiums paid for the policy may exceed the face amount of the policy, the insurer that delivers or issues for delivery the policy of small face amount shall provide the disclosure set forth in subsection 6.

2. The insurer shall provide the disclosure required pursuant to subsection 1 to the owner of the policy of small face amount or the holder of a certificate on the policy of small face amount before or at the time the policy or certificate is delivered.

3. The disclosure required pursuant to subsection 1 must not be attached to the policy of small face amount, but may be delivered with the policy.

4. If the total premiums paid for a policy of small face amount may exceed the face amount of the policy for only certain demographics or certain benefit combinations, the insurer shall provide the disclosure required pursuant to subsection 1:

(a) In any circumstance in which the total premiums paid for the policy may exceed the face amount of the policy; or

(b) In all circumstances.

5. An insurer and any agent of the insurer providing the disclosure required pursuant to subsection 1 shall promptly provide assistance to an insured who has questions relating to the disclosure.

6. The disclosure required pursuant to subsection 1 must be in substantially the following form:

IMPORTANT INFORMATION ABOUT YOUR POLICY

The premiums that you will pay for your policy may exceed the amount of your coverage (the face amount). You can find both the face amount and the annual premium for your policy. Look for the page labeled [Use the label the insurer uses on the page containing that information, for example, “Statement of Policy Cost and Benefit Information.”].

Usually, you can calculate how many years it will take before the premiums paid will be greater than the face amount. For an estimate, divide the face amount by the annual premium. Several factors may affect how many years this might take for your policy. These factors include not paying premiums when due, taking out a loan on the policy, surrendering your policy for cash, riders on your policy, changes in the face amount and the payment of dividends, if applicable.

Many factors will affect how much your life insurance costs. Some are your age and health, the face amount of the policy and the cost of a policy rider. You may be able to pay less for your life insurance if you answer health questions. You may also pay less if you pay your premium less often.

Ask your insurance agent or your insurance company if you have any questions about your premium, your coverage or anything else about your policy.

If You Change Your Mind . . .

You can get a full refund of premiums you have paid if you return your policy and cancel your coverage. You must do this within the number of days stated on the front page of your policy. To return your policy for a full refund, send it back to the agent or the company.

If you stop paying premiums or cancel your policy after the time that a full refund is available, you have specific rights. Ask your insurance agent or your insurance company about your rights.

Contact Information

If you have questions about your insurance policy, ask your agent or your insurance company. If your agent is not available, contact your insurance company at [provide telephone number (including toll-free number, if available), address and website (if available)].

7. The provisions of this section do not apply to:

(a) A policy of variable life insurance.

(b) An annuity contract.

(c) A policy of life insurance in which an illustration was provided that meets the requirements of NAC 686A.460 to 686A.479, inclusive.

(d) An individual policy of life insurance issued to the members of a group of employees or another authorized group of persons if:

(1) Every plan of coverage was selected by the employer or group representative;

(2) A portion of the premium is paid by the group or through payroll deduction; and

(3) Group underwriting or simplified underwriting is used.

8. As used in this section, “policy of small face amount” means a policy of life insurance with an initial face amount of $15,000 or less.

(Added to NAC by Comm’r of Insurance by R178-03, 5-21-2004, eff. 7-1-2004)

REVISER’S NOTE.

The regulation of the Commissioner of Insurance filed with the Secretary of State on May 21, 2004, and effective on July 1, 2004 (LCB File No. R178-03), the source of this section (section 1 of the regulation), contains the following provisions not included in NAC:

“The amendatory provisions of section 1 of this regulation [NAC 688A.300] apply to a policy of small face amount delivered or issued for delivery on or after July 1, 2004. As used in this subsection, “policy of small face amount” has the meaning ascribed to it in section 1 of this regulation [NAC 688A.300].”

STANDARDS OF VALUATION

Determination of Minimum Reserve Liabilities

NAC 688A.320 Definitions. (NRS 679B.130, 681B.120, 688A.325) As used in NAC 688A.320 to 688A.363, inclusive, unless the context otherwise requires, the words and terms defined in NAC 688A.325, 688A.327 and 688A.330 have the meanings ascribed to them in those sections.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008; A by R093-14, 6-28-2016)

NAC 688A.325 “2001 CSO Mortality Table” defined. (NRS 679B.130, 681B.120, 688A.325)

1. “2001 CSO Mortality Table” means the mortality table, consisting of separate rates of mortality for male and female lives, developed by the CSO Task Force of the American Academy of Actuaries from the 2001 Valuation Basic Mortality Table developed by the Individual Life Insurance Valuation Mortality Task Force of the Society of Actuaries and adopted by the National Association of Insurance Commissioners in December 2002. The 2001 CSO Mortality Table is set forth in the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO Preferred Class Structure Mortality Table.

2. Unless the context otherwise requires, the 2001 CSO Mortality Table includes both the ultimate form of that table and the select and ultimate form of that table, both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. The mortality tables in the 2001 CSO Mortality Table include:

(a) A table which consists of the rates of mortality for female lives from the 2001 CSO Mortality Table;

(b) A table which consists of the rates of mortality for male lives from the 2001 CSO Mortality Table;

(c) Composite mortality tables, which consist of rates of mortality that do not distinguish between smokers and nonsmokers; and

(d) Smoker and nonsmoker mortality tables, which consist of separate rates of mortality for smokers and nonsmokers.

3. A copy of the Proceedings of the NAIC (2nd Quarter 2002), which includes a copy of the 2001 CSO Mortality Table, may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Suite 1500, Kansas City, Missouri 64106-2197, by telephone at (816) 783-8300 or on the Internet at http://www.naic.org, for the price of $180.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008; A by R093-14, 6-28-2016)

NAC 688A.327 “2001 CSO Preferred Class Structure Mortality Table” defined. (NRS 679B.130, 681B.120, 688A.325)

1. “2001 CSO Preferred Class Structure Mortality Table” means the mortality table with separate rates of mortality for super preferred nonsmokers, preferred nonsmokers, residual standard nonsmokers, preferred smokers and residual standard smokers which are splits of the 2001 CSO nonsmoker and smoker mortality tables as adopted by the National Association of Insurance Commissioners at the September 2006 national meeting and published in the Proceedings of the NAIC (3rd Quarter 2006).

2. Unless the context otherwise requires, the 2001 CSO Preferred Class Structure Mortality Table includes both the ultimate form of that table and the select and ultimate form of that table, both the smoker and nonsmoker mortality tables, both the male and female mortality tables and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table.

3. A copy of the Proceedings of the NAIC (3rd Quarter 2006), which includes the 2001 CSO Preferred Class Structure Mortality Table, may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Suite 1500, Kansas City, Missouri 64106-2197, by telephone at (816) 783-8300 or on the Internet at http://www.naic.org, for the price of $90.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008; A by R093-14, 6-28-2016)

NAC 688A.330 “CSO” defined. (NRS 679B.130, 681B.120, 688A.325) “CSO” means Commissioners Standard Ordinary.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008)

NAC 688A.350 Adoption by reference of Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation. (NRS 679B.130, 681B.120, 688A.325)

1. For the purposes of NRS 681B.120 and 688A.325 and NAC 681B.161 and 688A.320 to 688A.363, inclusive, and except as otherwise provided in this section, the Commissioner hereby adopts by reference the Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation as adopted by the National Association of Insurance Commissioners on December 8, 2002. The Commissioner will periodically review the publication adopted by reference in this subsection and any changes thereto and determine within 30 days after the review whether a change made to the publication is appropriate for application in this State. If the Commissioner does not disapprove a change to the publication within 30 days after the review, the change is deemed to be approved by the Commissioner.

2. Any reference in the Model Regulation to:

(a) “Section 4A(c) of the Standard Valuation Law” shall be deemed a reference to “subparagraph (3) of paragraph (a) of subsection 2 of NRS 681B.120.”

(b) “Section 5cH(6) of the Standard Nonforfeiture Law for Life Insurance” shall be deemed a reference to “paragraph (f) of subsection 8 of NRS 688A.325.”

(c) The “Valuation of Life Insurance Policies Model Regulation” or “Valuation of Life Insurance Model Regulation” shall be deemed a reference to “NAC 681B.161.”

(d) “Section 8 of the NAIC Model Standard Valuation Law” shall be deemed a reference to “NRS 681B.150.”

(e) “Section 5A of the Actuarial Opinion and Memorandum Regulation” shall be deemed a reference to “NAC 681B.175.”

(f) An “unfair trade practices statute” shall be deemed a reference to “NRS 686A.100.”

3. A copy of the Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Suite 1500, Kansas City, Missouri 64106-2197, by telephone at (816) 783-8300 or on the Internet at www.naic.org, at no charge.

(Added to NAC by Comm’r of Insurance by R113-04, 11-24-2004, eff. 1-1-2005; A by R031-08, 8-26-2008; R093-14, 6-28-2016)

NAC 688A.352 Restrictions on use of 2001 CSO Preferred Class Structure Mortality Table.

1. An insurer shall not use the 2001 CSO Preferred Class Structure Mortality Table for the valuation of policies issued before January 1, 2008, in any financial statement required by statute in which the insurer reports, with respect to any policy or portion of a policy coinsured:

(a) In cases where the mode of payment of the reinsurance premium is less frequent than the mode of payment of the policy premium, a reserve credit that exceeds, by more than Y, the gross reserve calculated before reinsurance. As used in this paragraph, Y is the amount of the gross reinsurance premium that:

(1) Provides coverage for the period from the next policy premium due date to the earlier of the end of the policy year and the next reinsurance premium due date; and

(2) Would be refunded to the ceding entity upon the termination of the policy.

(b) In cases where the mode of payment of the reinsurance premium is more frequent than the mode of payment of the policy premium, a reserve credit that is less than the gross reserve, calculated before reinsurance, by an amount that is less than Z. As used in this paragraph, Z is the amount of the gross reinsurance premium that the ceding entity would need to pay the assuming company to provide reinsurance coverage from the period of the next reinsurance premium due date to the next policy premium due date minus any liability established for the proportionate amount not remitted to the insurer.

2. An insurer may estimate and adjust its accounting on an aggregate basis to meet the conditions to use the 2001 CSO Preferred Class Structure Mortality Table set forth in this section and NAC 688A.355 and 688A.357.

3. For the purposes of subsection 1, the reserve:

(a) For the mean reserve method is defined as the mean reserve minus the deferred premium asset; and

(b) For the mid-terminal reserve method includes the unearned premium reserve.

(Added to NAC by Comm’r of Insurance by R093-14, eff. 6-28-2016)

NAC 688A.353 Valuation standards: Policies issued on or after January 1, 2005, and before January 1, 2008; policies issued on or after January 1, 2008. (NRS 679B.130, 681B.120, 688A.325)

1. Except as otherwise provided in subsection 3 and NAC 688A.352, at the election of the insurer, for each calendar year of issue and for any one or more specified plans of insurance, an insurer who satisfies the requirements of NAC 688A.355 to 688A.363, inclusive, may use the 2001 CSO Preferred Class Structure Mortality Table in lieu of the smoker and nonsmoker mortality tables in the 2001 CSO Mortality Table as the minimum valuation standard for policies of life insurance issued on or after January 1, 2008.

2. For policies of life insurance issued on or after January 1, 2005, and before January 1, 2008, with the consent of the Commissioner and subject to the conditions of NAC 688A.352, 688A.355 and 688A.357, an insurer may use the 2001 CSO Preferred Class Structure Mortality Table in lieu of the smoker and nonsmoker mortality tables in the 2001 CSO Mortality Table as the minimum valuation standard for the policies. In determining such consent, the Commissioner may rely on the consent of the insurance commissioner of the insurer’s state of domicile.

3. An insurer may make the election described in subsection 1 only if the insurer provides proof satisfactory to the Commissioner that 20 percent or more of the business to be valued pursuant to the 2001 CSO Preferred Class Structure Mortality Table is in one or more of the preferred classes.

4. A mortality table used pursuant to this section shall be deemed to be part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation adopted by reference pursuant to NAC 688A.350.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008; A by R093-14, 6-28-2016)

NAC 688A.355 Plans with separate rates for preferred and standard nonsmoker lives; certification by appointed actuary. (NRS 679B.130, 681B.120, 688A.325) For each plan of insurance with separate rates for preferred and standard nonsmoker lives, an insurer may use the super preferred nonsmoker, preferred nonsmoker and residual standard nonsmoker tables in the 2001 CSO Preferred Class Structure Mortality Table in lieu of the nonsmoker mortality table in the 2001 CSO Mortality Table to determine minimum reserves. On the valuation date on which the insurer first uses the tables in the 2001 CSO Preferred Class Structure Mortality Table to determine minimum reserves, and annually thereafter, except for business valued under the residual standard nonsmoker table, the appointed actuary must certify that:

1. The present value of death benefits over the 10-year period immediately following the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class; and

2. The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008)

NAC 688A.357 Plans with separate rates for preferred and standard smoker lives; certification by appointed actuary. (NRS 679B.130, 681B.120, 688A.325) Except as otherwise provided in NAC 688A.352, for each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the preferred smoker and residual standard smoker tables in the 2001 CSO Preferred Class Structure Mortality Table in lieu of the smoker mortality table in the 2001 CSO Mortality Table to determine minimum reserves. On the valuation date on which the insurer first uses the tables in the 2001 CSO Preferred Class Structure Mortality Table to determine minimum reserves, and annually thereafter, for business valued under the preferred smoker table, the appointed actuary must certify that:

1. The present value of death benefits over the 10-year period immediately following the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class; and

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008; A by R093-14, 6-28-2016)

NAC 688A.360 Notice to Commissioner. (NRS 679B.130, 681B.120, 688A.325)

1. An insurer shall provide written notice to the Commissioner and the Life and Health Section of the Division of the intent of the insurer to use the 2001 CSO Preferred Class Structure Mortality Table to determine minimum reserves not later than 90 days before the first use by the insurer of the 2001 CSO Preferred Class Structure Mortality Table.

2. The notice required by subsection 1 must include, without limitation, the date of valuation from which the insurer will use the 2001 CSO Preferred Class Structure Mortality Table and any additional information that the Commissioner determines is necessary.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008)

NAC 688A.363 Communications and disclosures. (NRS 679B.130, 681B.120, 688A.325) An insurer who uses the 2001 CSO Preferred Class Structure Table to determine minimum reserves shall make the communications and disclosures required pursuant to Actuarial Guideline XLII which is set forth in the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners and effective on January 1, 2001, and as amended by the National Association of Insurance Commissioners after that date. The communications and disclosures are required commencing on the first valuation date that the 2001 CSO Preferred Class Structure Table is used for any plan of insurance of the insurer, and annually thereafter.

(Added to NAC by Comm’r of Insurance by R031-08, eff. 8-26-2008)

Preneed Insurance

NAC 688A.370 Definitions. (NRS 679B.130, 689.148) As used in NAC 688A.370 to 688A.390, inclusive, unless the context otherwise requires, the words and terms defined in NAC 688A.373 to 688A.385, inclusive, have the meanings ascribed to them in those sections.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009)

NAC 688A.373 “2001 CSO Mortality Table” defined. (NRS 679B.130, 689.148)

(a) A table which consists of the rates of mortality for female lives from the 2001 CSO Mortality Table;

(b) A table which consists of the rates of mortality for male lives from the 2001 CSO Mortality Table;

(c) Composite mortality tables, which consist of rates of mortality that do not distinguish between smokers and nonsmokers; and

(d) Smoker and nonsmoker mortality tables, which consist of separate rates of mortality for smokers and nonsmokers.

3. A copy of the Proceedings of the NAIC (2nd Quarter 2002), which includes a copy of the 2001 CSO Mortality Table may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Suite 1500, Kansas City, Missouri 64106-2197, by telephone at (816) 783-8300 or on the Internet at www.naic.org/account_manager.htm, for the price of $180.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009; A by R089-17, 5-16-2018)

NAC 688A.375 “CSO” defined. (NRS 679B.130, 689.148) “CSO” means Commissioners Standard Ordinary.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009)

NAC 688A.380 “Preneed insurance” defined. (NRS 679B.130, 689.148) “Preneed insurance” means a policy or contract of life insurance which is approved by the Commissioner as preneed insurance and used solely to fund a prepaid contract.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009)

NAC 688A.383 “Prepaid contract” defined. (NRS 679B.130, 689.148) “Prepaid contract” has the meaning ascribed to it in NRS 689.475.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009)

NAC 688A.385 “Ultimate 1980 CSO Mortality Table” defined. (NRS 679B.130, 689.148) “Ultimate 1980 CSO Mortality Table” means the 1980 CSO Mortality Table, without the Ten-Year Select Mortality Factors, incorporated into the 1980 amendments to the Standard Valuation Law approved by the National Association of Insurance Commissioners in December 1983. A copy of the Ultimate 1980 CSO Mortality Table may be obtained from the Research Library of the National Association of Insurance Commissioners, 1100 Walnut Street, Suite 1500, Kansas City, Missouri 64106-2197 or by telephone at (816) 783-8250, for the price of $10, plus $1 per page.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009; A by R089-17, 5-16-2018)

NAC 688A.387 Calculation of reserve liabilities and nonforfeiture values. (NRS 679B.130, 689.148) Except as otherwise provided in NAC 688A.390, for preneed insurance:

1. The minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds must be determined based on the Ultimate 1980 CSO Mortality Table;

2. The standard for the minimum valuation of reserves must be calculated pursuant to the provisions of NRS 681B.110 to 681B.150, inclusive; and

3. The standard for the minimum nonforfeiture values must be calculated pursuant to the provisions of NRS 688A.290 to 688A.360, inclusive.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009)

NAC 688A.390 Policies issued on or after January 1, 2009, but before January 1, 2012. (NRS 679B.130, 689.148)

1. For preneed insurance issued on or after January 1, 2009, but before January 1, 2012, an insurer may elect to use the 2001 CSO Mortality Table to determine the minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds.

2. If an insurer elects to use the 2001 CSO Mortality Table to determine the minimum standards for reserve liabilities and nonforfeiture values, the insurer shall provide to the Commissioner, as part of the actuarial opinion memorandum submitted annually in support of the insurer’s asset adequacy testing, a written notification which must include, without limitation:

(a) A complete list of all preneed insurance policy forms for which the insurer uses the 2001 CSO Mortality Table to determine the minimum standards for reserve liabilities and nonforfeiture values;

(b) A certification signed by the appointed actuary which states that the reserve methodology used by the insurer to determine reserves for preneed insurance for which the insurer uses the 2001 CSO Mortality Table to determine the minimum standards for reserve liabilities develops adequate reserves; and

3. For the purposes of the certification required by paragraph (b) of subsection 2, policies of preneed insurance for which the insurer elects to use the 2001 CSO Mortality Table to determine the minimum standards for reserve liabilities and nonforfeiture values may not be aggregated with any other policies of insurance.

(Added to NAC by Comm’r of Insurance by R166-08, 9-18-2008, eff. 1-1-2009)

PURCHASE OR EXCHANGE OF ANNUITIES

REVISER’S NOTE.

Pursuant to the provisions of NRS 0.024, former NAC 688A.405, 688A.430 and 688A.440 contained definitions that were deemed duplicative of those set forth in NRS 688A.020, 679A.100 and 679A.117, respectively, and were removed from chapter 688A of NAC in accordance with ch. 56, Stats. 2009, which contains the following provision not included in NRS:

NAC 688A.400 Definitions. (NRS 679B.130) As used in NAC 688A.400 to 688A.475, inclusive, unless the context otherwise requires, the words and terms defined in NAC 688A.410 to 688A.445, inclusive, have the meanings ascribed to them in those sections.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.410 “Buyer’s guide” defined. (NRS 679B.130) “Buyer’s guide” means a current guide relating to annuities that is published by the National Association of Insurance Commissioners for use by consumers.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.415 “Determinable elements” defined. (NRS 679B.130) “Determinable elements” means the elements under an annuity that are guaranteed at the time the annuity is issued, but the values of which cannot be determined until after the annuity is issued. A determinable element is calculated using other determinable elements or a combination of determinable elements and guaranteed elements. The term includes, without limitation, premiums, benefits, values, noninterest-based credits, credited interest rates, bonuses and charges.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.420 “Generic name” defined. (NRS 679B.130) “Generic name” means a term that is descriptive of an annuity, including, without limitation, the term “single premium deferred annuity.”

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.425 “Guaranteed elements” defined. (NRS 679B.130) “Guaranteed elements” means the premiums, benefits, values, credits or charges under an annuity that are guaranteed and determined at the time the annuity is issued.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.435 “Nonguaranteed elements” defined. (NRS 679B.130) “Nonguaranteed elements” means the elements under an annuity the values of which are not guaranteed at the time that the annuity is issued. The term includes, without limitation, premiums, benefits, values, noninterest-based credits, credited interested rates, bonuses and charges.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006; A by R115-06, 9-18-2006)

NAC 688A.445 “Recommendation” defined. (NRS 679B.130) “Recommendation” means advice provided by an insurer or a producer of insurance to a prospective purchaser of an annuity concerning the purchase or exchange of one or more annuities that results in the purchase or exchange of an annuity in accordance with the advice provided by the insurer or producer of insurance.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006; A by R115-06, 9-18-2006)

NAC 688A.450 Applicability of provisions. (NRS 679B.130)

1. Except as otherwise provided in subsections 2 and 3, NAC 688A.400 to 688A.475, inclusive, apply to:

(a) Any solicitation, negotiation or procurement of annuities occurring within this State;

(b) Any issuer of annuities, including, without limitation, fraternal benefit societies; and

2. NAC 688A.400 to 688A.475, inclusive, do not apply to:

(a) Annuities used to pay for:

(1) An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.

(2) A plan established or maintained by an employer and authorized by 26 U.S.C. § 401(a), 401(k), 403(b), 408(k) or 408(p).

(3) A governmental plan, as defined in 26 U.S.C. § 414(d).

(4) A church plan, as defined in 26 U.S.C. § 414(e).

(5) A government or church welfare benefit plan.

(6) A deferred compensation plan of a state or local government or a tax exempt organization authorized by 26 U.S.C. § 457.

(7) A nonqualified deferred compensation arrangement.

(8) A settlement or an assumption of liabilities associated with litigation or any other process for dispute resolution related to a claim for compensation for personal injury.

(9) A prepaid funeral contract.

(10) A structured settlement annuity.

(11) A funding agreement.

(b) Immediate annuity contracts that do not contain any nonguaranteed elements.

(c) Annuities purchased from an insurer in response to a direct-response solicitation and where the purchase was not based on a recommendation from the insurer.

3. Notwithstanding the provisions of subsection 2, NAC 688A.400 to 688A.475, inclusive, apply to any annuity that is used to pay for a plan or arrangement which is paid for solely by contributions made by an employee on a pretax or after-tax basis and where participants are able to choose from among two or more fixed annuity providers.

4. As used in this section:

(a) “Funding agreement” means an agreement under which an insurer accepts and accumulates money for the purpose of making one or more future payments to a person that are not based on mortality or morbidity contingencies.

(b) “Structured settlement annuity” means:

(1) A qualified funding asset that meets the requirements of section 130(d) of the Internal Revenue Code, 26 U.S.C. § 130(d); or

(2) An annuity that meets the requirements to be a qualified funding asset pursuant to section 130(d) of the Internal Revenue Code, 26 U.S.C. § 130(d), except that the annuity is not owned by an assignee under qualified assignment.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.470 Provision of buyer’s guide and disclosure statement to applicant for annuity. (NRS 679B.130)

1. Except as otherwise provided in subsection 3, an insurer or a producer of insurance shall provide a buyer’s guide and a disclosure statement to each applicant for an annuity:

(a) If the application for an annuity is submitted in person to the insurer or producer of insurance, at the time that the application is submitted.

(b) If the application for an annuity is not submitted in person to the insurer or producer of insurance, not later than 5 business days after the application is received by the insurer or producer of insurance.

2. The disclosure statement required by subsection 1 must be written in plain language and include, without limitation:

(a) A brief description of the annuity, including, without limitation, a statement that the contract is an annuity, an explanation of the long-term nature of an annuity, the generic name of the annuity and the product name for the annuity that is used by the insurer or producer of insurance;

(b) The name, address and telephone number, including a toll-free number, if available, of the insurer or producer of insurance;

(c) A brief description of any determinable elements, the guaranteed elements and the nonguaranteed elements, an explanation of the method by which the determinable elements, guaranteed elements and nonguaranteed elements will be calculated and an explanation of the impact that the nonguaranteed elements may have on the benefits and values of the annuity;

(d) The crediting rate, any bonus or introductory portion of the crediting rate, the duration of the crediting rate and a disclosure that the crediting rate may change in value during the life of the annuity;

(e) Periodic income options, regardless of whether the options are guaranteed or nonguaranteed;

(f) An explanation of any reduction in the value of the annuity that would be caused by a withdrawal of money from the annuity or the surrender of the annuity by the owner of the annuity;

(g) An explanation of any method by which the values of the annuity can be accessed by the owner of the annuity;

(h) The value of any death benefit paid by the annuity and an explanation of the method by which the death benefit is calculated;

(i) An explanation of any effect that the annuity will have upon the tax status of the owner of the annuity and any tax penalties that may result upon any withdrawal of money from the annuity;

(j) An explanation of any rider to the annuity, including, without limitation, a rider that contains long-term care benefits;

(k) The amount of and an explanation of any charges and fees associated with the annuity, including, without limitation, a premium tax;

(l) The amount of the current guaranteed interest rates of the annuity and an explanation that the interest rates are not guaranteed for any other annuities that may be purchased in the future by the owner of the annuity;

(m) An explanation of the method by which the owner of the annuity may terminate the annuity and any penalties that may occur as a result of the termination;

(n) The date on which the owner of the annuity will begin to receive benefits from the annuity and the date on which the payment of those benefits will cease; and

(o) An explanation of the method by which the owner of the annuity may withdraw money from the annuity and any penalties associated with a withdrawal.

3. An insurer or a producer of insurance is not required to provide to an applicant the buyer’s guide and disclosure statement that is required by subsection 1 if:

(a) The annuity that the applicant is applying for is a variable annuity, investment annuity or any other type of annuity that is subject to the registration requirements of the Securities Act of 1933, 15 U.S.C. §§ 77a et seq.; and

(b) The insurer or producer of insurance provides a prospectus to the applicant that satisfies the requirements of section 10 of the Securities Act of 1933, 15 U.S.C. §§ 77b(a)(10).

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

NAC 688A.475 Provision of annual report to owner of annuity. (NRS 679B.130)

1. An insurer shall provide an annual report to each owner of an annuity that was purchased from the insurer.

2. The annual report required pursuant to subsection 1 must include, without limitation:

(a) The beginning and ending dates of the reporting period;

(b) A comparison of the cash surrender and accumulated values of the annuity between the end of the prior reporting period and the end of the current reporting period;

(d) Any amount that was credited or charged to the value of the annuity during the reporting period; and

(e) The amount of any loans taken out by the owner of the annuity on the annuity that remain outstanding at the end of the reporting period.

(Added to NAC by Comm’r of Insurance by R076-05, eff. 2-23-2006)

SUITABILITY OF CERTAIN ANNUITY TRANSACTIONS

NAC 688A.476 Definitions. (NRS 679B.130) As used in NAC 688A.476 to 688A.499, inclusive, unless the context otherwise requires, the words and terms defined in NAC 688A.477 to 688A.485, inclusive, have the meanings ascribed to them in those sections.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.477 “Cash compensation” defined. (NRS 679B.130) “Cash compensation” means any discount, concession, fee, service fee, commission, sales charge, loan, override or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, from an intermediary or directly from the consumer.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.478 “Consumer profile information” defined. (NRS 679B.130) “Consumer profile information” means information that is reasonably appropriate to determine whether a recommendation addresses the financial situation, insurance needs and financial objectives of a consumer, including, at a minimum, the following:

1. The age of the consumer;

2. The annual income of the consumer;

3. The financial situation and needs of the consumer, including debts and other obligations;

4. The financial experience of the consumer;

5. The insurance needs of the consumer;

6. The financial objectives of the consumer;

7. The intended use of the annuity;

8. The financial time horizon of the consumer;

9. The existing assets and financial products of the consumer, including, without limitation, holdings of investments and insurance;

10. The liquidity needs of the consumer;

11. The liquid net worth of the consumer;

12. The risk tolerance of the consumer, including, without limitation, the willingness of the consumer to accept changes in non-guaranteed elements;

13. Financial resources used to fund an annuity, including, without limitation, potential surrender charges, tax implications and penalties that could be incurred by the use of those resources; and

14. The tax status of the consumer.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.479 “Intermediary” defined. (NRS 679B.130) “Intermediary” means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer’s annuities by producers.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.480 “Material conflict of interest” defined. (NRS 679B.130) “Material conflict of interest” means a financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. The term does not include cash compensation or non-cash compensation.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.481 “Non-cash compensation” defined. (NRS 679B.130) “Non-cash compensation” means any form of compensation that is not cash compensation, including, without limitation, health insurance, office rent, office support and retirement benefits.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.482 “Non-guaranteed elements” defined. (NRS 679B.130) “Non-guaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, dividends, non-interest based credits, charges or elements of formulas used to determine any of these that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.483 “Producer” defined. (NRS 679B.130) “Producer” means a producer of insurance, as defined in NRS 679A.117. For the purposes of NAC 688A.476 to 688A.499, inclusive, the term includes an insurer where no producer is involved.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.484 “Recommendation” defined. (NRS 679B.130) “Recommendation” means advice provided by a producer to an individual consumer that was intended to result or does result in a purchase, an exchange or a replacement of an annuity in accordance with that advice. The term does not include general communication to the public, generalized customer services assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.485 “Replacement” defined. (NRS 679B.188) “Replacement” has the meaning ascribed to it in NAC 686A.526.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.486 Applicability. (NRS 679B.130) Unless otherwise specifically included, NAC 688A.476 to 688A.499, inclusive, shall not apply to transactions involving:

1. Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to NAC 688A.476 to 688A.499, inclusive;

2. Contracts used to fund:

(a) An employee pension or welfare benefit plan that is covered by the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.;

(b) A plan described by 26 U.S.C. § 401(a), 401(k), 403(b), 408(k) or 408(p), if established or maintained by an employer;

(c) A government or church plan defined in 26 U.S.C. § 414, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax-exempt organization under 26 U.S.C. § 457; or

(d) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

3. Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

4. Formal prepaid funeral contracts.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.487 Producer required to make recommendation in best interest of consumer. (NRS 679B.130) A producer, when making a recommendation of an annuity, shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the financial interest of the producer or insurer ahead of the interest of the consumer. A producer has acted in the best interest of the consumer if they have satisfied the obligations regarding care set forth in NAC 688A.488, the obligations regarding disclosure set forth in NAC 688A.489, the obligations regarding conflicts of interest set forth in NAC 688A.490 and the obligations regarding documentation set forth in NAC 688A.491.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.488 Producer required to exercise reasonable diligence, care and skill in making recommendation; effect, applicability and construction of requirement. (NRS 679B.130)

1. The producer, in making a recommendation, shall exercise reasonable diligence, care and skill to:

(a) Know the financial situation, insurance needs and financial objectives of the consumer;

(b) Understand the available recommendation options after making a reasonable inquiry into options available to the producer;

(c) Have a reasonable basis to believe the recommended option effectively addresses the financial situation, insurance needs and financial objectives of the consumer over the life of the product, as evaluated in light of the consumer profile information; and

(d) Communicate the basis or bases of the recommendation.

2. The requirements under subsection 1 include making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation of an annuity.

3. The requirements under subsection 1 require a producer to consider the types of products the producer is authorized and licensed to recommend or sell that address the financial situation, insurance needs and financial objectives of the consumer. This does not require analysis or consideration of any products outside the authority and license of the producer or other possible alternative products or strategies available in the market at the time of the recommendation. Producers shall be held to standards applicable to producers with similar authority and licensure.

4. The requirements under NAC 688A.488 to 688A.491, inclusive, do not create a fiduciary obligation or relationship and only create a regulatory obligation as established by NAC 688A.476 to 688A.499, inclusive.

5. The consumer profile information, characteristics of the insurer, and product costs, rates, benefits and features are those factors generally relevant in making a determination whether an annuity effectively addresses the financial situation, insurance needs and financial objectives of the consumer, but the level of importance of each factor under this section may vary depending on the facts and circumstances of a particular case. However, each factor may not be considered in isolation.

6. The requirements under subsection 1 include having a reasonable basis to believe the consumer would benefit from certain features of the annuity, such as annuitization, death or living benefit or other insurance-related features.

7. The requirements under subsection 1 apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of purchase or exchange of an annuity, and riders and similar product enhancements, if any.

8. The requirements under subsection 1 do not mean the annuity with the lowest one-time or multiple occurrence compensation structure shall necessarily be recommended.

9. The requirements under subsection 1 do not mean the producer has ongoing monitoring obligations under the care obligation set forth in this section, although such an obligation may be separately owed under the terms of a fiduciary, consulting, investment advising or financial planning agreement between the consumer and the producer.

10. In the case of an exchange or replacement of an annuity, the producer shall consider the whole transaction, which includes taking into consideration whether:

(a) The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, such as death, living or other contractual benefits, or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements;

(b) The replacing product would substantially benefit the consumer in comparison to the replaced product over the life of the product; and

(c) The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 60 months.

11. Nothing in NAC 688A.476 to 688A.499, inclusive, should be construed to require a producer to obtain any license other than a producer license with the appropriate line of authority to sell, solicit or negotiate insurance in this State, including, without limitation, any securities license, in order to fulfill the duties and obligations contained in NAC 688A.476 to 688A.499, inclusive, provided the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.489 Producer required to disclose certain information related to recommendation or sale of annuity. (NRS 679B.130)

1. Prior to the recommendation or sale of an annuity, the producer shall prominently disclose the following information to the consumer on a form approved by the Commissioner:

(a) A description of the scope and terms of the relationship with the consumer and the role of the producer in the transaction;

(b) An affirmative statement on whether the producer is licensed and authorized to sell the following products:

(1) Fixed annuities;

(2) Fixed indexed annuities;

(3) Variable annuities;

(4) Life insurance;

(5) Mutual funds;

(6) Stocks and bonds; and

(7) Certificates of deposit;

(c) An affirmative statement describing the insurers the producer is authorized, contracted or appointed, or otherwise able, to sell insurance products for, using the following descriptions:

(1) From one insurer;

(2) From two or more insurers; or

(3) From two or more insurers although primarily contracted with one insurer;

(d) A description of the sources and types of cash compensation and non-cash compensation to be received by the producer, including whether the producer is to be compensated for the sale of a recommended annuity by commission as part of premium or other remuneration received from the insurer, intermediary or other producer or by fee as a result of a contract for advice or consulting services; and

(e) A notice of the right of the consumer to request additional information regarding cash compensation described in subsection 2.

2. Upon request of the consumer or the designated representative of the consumer, the producer shall disclose:

(a) A reasonable estimate of the amount of cash compensation to be received by the producer, which may be stated as a range of amounts or percentages; and

(b) Whether the cash compensation is a one-time or multiple occurrence amount and, if the cash compensation is a multiple occurrence amount, the frequency and amount of the occurrence, which may be stated as a range of amounts or percentages.

3. Prior to or at the time of the recommendation or sale of an annuity, the producer shall have a reasonable basis to believe the consumer has been informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders or annuitizes the annuity, mortality and expense fees, investment advisory fees, any annual fees, potential charges for and features of riders or other options of the annuity, limitations on interest returns, potential changes in non-guaranteed elements of the annuity, insurance and investment components and market risk.

4. The requirements of this section are intended to supplement and not replace any other requirement of the laws of this State to provide information or disclosures to a consumer purchasing an annuity, including, without limitation, the requirements set forth in NAC 686A.573, 686A.577, 688A.470 and 688A.475.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.490 Producer required to identify and avoid or manage and disclose material conflicts of interest. (NRS 679B.130) A producer shall identify and avoid or reasonably manage and disclose material conflicts of interest, including material conflicts of interest related to an ownership interest.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.491 Producer required to make records and obtain documentation related to certain recommendations and sales of annuities. (NRS 679B.130) At the time of the recommendation or sale of an annuity, the producer shall:

1. Make a written record of any recommendation and the basis for the recommendation subject to NAC 688A.476 to 688A.499, inclusive;

2. If the consumer refuses to provide or provides insufficient consumer profile information, obtain a statement, on a form prescribed by the Commissioner, signed by the consumer, which documents that refusal or insufficiency and states that the consumer understands the ramifications of not providing or providing insufficient consumer profile information; and

3. If the consumer decides to enter into an annuity transaction that is not recommended by the producer, obtain a statement, on a form prescribed by the Commissioner, signed by the consumer, in which the consumer acknowledges that the annuity transaction is not recommended.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.492 Requirements related to recommendations and sales of annuities applicable to producer who exercised material control or influence in making recommendation and received direct compensation from recommendation or sale. (NRS 679B.130) Any requirement applicable to a producer under NAC 688A.487 to 688A.492, inclusive, shall apply to every producer who has exercised material control or influence in the making of a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the producer has had any direct contact with the consumer. Activities such as providing or delivering marketing or educational materials, product wholesaling or other back office product support, and general supervision of a producer, do not, in and of themselves, constitute material control or influence.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.493 Circumstances when producer does not have obligation to consumer. (NRS 679B.130)

1. Except as otherwise provided in subsection 2, a producer shall have no obligation to a consumer under NAC 688A.487 to 688A.492, inclusive, related to an annuity transaction if:

(a) No recommendation is made;

(b) A recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer;

(c) A consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended; or

(d) A consumer decides to enter into an annuity transaction that is not based on a recommendation of the producer.

2. An insurer’s issuance of an annuity subject to subsection 1 shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.494 Standard for issuing recommended annuity; establishment and maintenance of supervision system. (NRS 679A.130)

1. Except as otherwise provided in NAC 688A.493, an insurer may not issue an annuity which is recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer’s financial situation, insurance needs and financial objectives based on the consumer profile information of the consumer.

2. An insurer shall establish and maintain a supervision system that is reasonably designed to achieve the compliance of the insurer and its producers with NAC 688A.476 to 688A.499, inclusive. As part of the supervision system, the insurer shall, without limitation:

(a) Establish and maintain reasonable procedures to inform its producers of the requirements of NAC 688A.476 to 688A.499, inclusive, and shall incorporate the requirements of NAC 688A.476 to 688A.499, inclusive, into relevant producer training manuals.

(b) Establish and maintain standards for producer product training and shall establish and maintain reasonable procedures to require its producers to comply with the requirements of NAC 688A.497.

(c) Provide product-specific training and training materials which explain all material features of its annuity products to its producers.

(d) Establish and maintain procedures for the review of each recommendation prior to the issuance of an annuity that are designed to ensure there is a reasonable basis to determine that the recommended annuity would effectively address the particular financial situation, insurance needs and financial objectives of the consumer. Such review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means, including, without limitation, physical review. Such an electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criterion.

(e) Establish and maintain reasonable procedures to detect recommendations that are not in compliance with NAC 688A.487 to 688A.496, inclusive. This may include, without limitation, confirmation of the consumer profile information of the consumer, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations and programs of internal monitoring. Nothing in this paragraph prevents an insurer from complying with this paragraph by applying sampling procedures, or by confirming consumer profile information or other required information under NAC 688A.487 to 688A.496, inclusive, after issuance or delivery of the annuity.

(f) Establish and maintain reasonable procedures to assess, prior to or upon issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under NAC 688A.487 to 688A.496, inclusive.

(g) Establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information.

(h) Establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses and non-cash compensation that are based on the sales of specific annuities within a limited period of time. The requirements of this paragraph are not intended to prohibit the receipt of health insurance, office rent, office support, retirement benefits or other employee benefits by employees as long as those benefits are not based upon the volume of sales of a specific annuity within a limited period of time.

(i) Annually provide a written report to senior management, including, without limitation, to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.

3. Nothing in this section restricts an insurer from contracting for performance of a function, including, without limitation, maintenance of procedures, required under this section. An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to NAC 688A.498 regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with subsection 4.

4. An insurer’s supervision system under this section shall include supervision of contractual performance under this section. This includes, without limitation, the following:

(a) Monitoring and, as appropriate, conducting audits to ensure that the contracted function is properly performed; and

(b) Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.

5. An insurer is not required to include in its system of supervision:

(a) The recommendations of a producer to consumers of products other than the annuities offered by the insurer; or

(b) Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.495 Producer or insurer prohibited from dissuading consumer from taking certain actions. (NRS 679B.130) Neither a producer nor an insurer shall dissuade, or attempt to dissuade, a consumer from:

1. Truthfully responding to an insurer’s request for confirmation of the consumer profile information;

2. Filing a complaint; or

3. Cooperating with the investigation of a complaint.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.496 Effect of recommendations and sales of annuities made in compliance with comparable standards. (NRS 679B.130)

1. Recommendations and sales of annuities made in compliance with comparable standards shall satisfy the requirements of NAC 688A.476 to 688A.499, inclusive. This section applies to all recommendations and sales of annuities made by financial professionals in compliance with business rules, controls and procedures that satisfy a comparable standard even if such standard would not otherwise apply to the product or recommendation at issue. However, nothing in this section shall limit the ability of the Commissioner to investigate and enforce the provisions of NAC 688A.476 to 688A.499, inclusive.

2. Nothing in subsection 1 shall limit the obligations of an insurer to comply with subsection 1 of NAC 688A.494, although the insurer may base its analysis on information received from either the financial professional or the entity supervising the financial professional.

3. For subsection 1 to apply, an insurer shall:

(a) Monitor the relevant conduct of the financial professional seeking to rely on subsection 1 or the entity responsible for supervising the financial professional, such as the financial professional’s broker-dealer or an investment advisor registered under federal or state securities laws, using information collected in the normal course of the business of the insurer; and

(b) Provide to the entity responsible for supervising the financial professional seeking to rely on subsection 1, such as the financial professional’s broker-dealer or investment advisor registered under federal or state securities laws, information and reports that are reasonably appropriate to assist such entity to maintain its supervision system.

4. As used in this section:

(a) “Comparable standards” means:

(1) With respect to broker-dealers and registered representatives of broker-dealers, applicable rules of the Securities and Exchange Commission, or its successor, or the Financial Industry Regulatory Authority, or its successor, pertaining to best interest obligations and supervision of annuity recommendations and sales, including, without limitation, Rules 2111 and 3110 of the Financial Industry Regulatory Authority, and any amendments or successors to such Rules, and Regulation Best Interest of the Securities and Exchange Commission, and any amendments or successor regulations thereto;

(2) With respect to investment advisers registered under federal or state securities laws or investment adviser representatives, the fiduciary duties and all other requirements imposed on such investment advisers or investment adviser representatives by contract or under the federal Investment Advisors Act of 1940 or NRS 90.575 or any other applicable laws or regulations of this State relating to securities, including, without limitation, Form ADV of the Securities and Exchange Commission and interpretations; and

(3) With respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions and all other requirements attendant to such status under the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq., or the Internal Revenue Code and any amendments or successor statutes thereto.

(b) “Financial professional” means a producer that is regulated and acting as:

(1) A broker-dealer registered under federal or state securities laws or a registered representative of a broker-dealer;

(2) An investment adviser registered under federal or state securities laws or an investment adviser representative associated with the federal or state registered investment adviser; or

(3) A plan fiduciary under section 3(21) of the federal Employee Retirement Income Security Act of 1974 or fiduciary under section 4975(e)(3) of the Internal Revenue Code or any amendments or successor statutes thereto.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.497 Producer required to have adequate knowledge of annuity product and complete certain training; requirements for training courses; verification of required training. (NRS 679B.130)

1. A producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training. A producer may rely on product-specific training standards and materials provided by the insurer to comply with this subsection.

2. Before engaging in the solicitation or sale of an annuity, a producer must complete a one-time four credit training course approved pursuant to NAC 683A.335 by the Commissioner or a designated representative. A producer who holds a life insurance line of authority on November 15, 2024, and who desires to sell annuities shall complete the requirements of this subsection not later than 6 months after November 15, 2024. An individual who obtains a life insurance line of authority on or after November 15, 2024, may not engage in the sale of annuities until the annuity training course required under this subsection has been completed. A producer who has completed an annuity training course approved by the Commissioner or a designated representative prior to November 15, 2024, shall, within 6 months after November 15, 2024, complete either:

(a) A new four credit training course approved by the Commissioner or a designated representative pursuant to NAC 683A.335 after November 15, 2024; or

(b) An additional one-time one credit training course approved by the Commissioner or a designated representative pursuant to NAC 683A.335 on appropriate sales practices, replacement and disclosure requirements under NAC 688A.476 to 688A.499, inclusive.

3. The minimum length of the training required under subsection 2 shall be sufficient to qualify for at least 4 hours of continuing education credits but may be longer.

4. The training required under subsection 2 shall include information on the following topics:

(a) The types of annuities and various classifications of annuities;

(b) Identification of the parties to an annuity;

(d) The application of income taxation on qualified and non-qualified annuities; and

(e) Appropriate standards of conduct, sales practices, replacement and disclosure requirements.

5. A provider of a course intended to comply with the training requirements under subsection 2 shall cover all topics listed in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about the products of a particular insurer. Additional topics may be offered in conjunction with and in addition to the required outline.

6. A provider of an annuity training course intended to comply with the training requirements under subsection 2 shall comply with the rules and guidelines applicable to continuing education courses as set forth in NAC 683A.335, 683A.337 and 683A.340.

7. An annuity training course required by subsection 2 may be conducted and completed by classroom or self-study methods.

8. A provider of an annuity training course required by subsection 2 shall comply with the reporting requirements and shall issue certificates of completion in accordance with subsection 1 of NAC 683A.340.

9. The satisfaction of the training requirements of another state that are substantially similar to the provisions of this section shall be deemed to satisfy the training requirements of this section in this State.

10. The satisfaction of the components of the training requirements of any course or courses with components substantially similar to the provisions of this section, including, without limitation, a course which satisfies the requirements for contents of continuing education established by Rule 1240 of the Financial Industry Regulatory Authority, or any amendment or successor to such Rule, shall be deemed to satisfy the training requirements of this section in this State.

11. An insurer shall verify that a producer has completed the annuity training course required under this section before allowing the producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this subsection by obtaining certificates of completion of the training course or obtaining reports provided by Commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.498 Penalties for noncompliance with provisions governing recommendations and sales of annuities; authority of Commissioner to enforce, reduce or eliminate penalty. (NRS 679B.130)

1. An insurer is responsible for compliance with NAC 688A.476 to 688A.499, inclusive. If a violation of NAC 688A.476 to 688A.499, inclusive, occurs, either because of the action or inaction of the insurer or its producer, the Commissioner may order any or all of the following:

(a) An insurer to take reasonably appropriate corrective action approved in advance by the Commissioner for any consumer harmed by a failure to comply with NAC 688A.476 to 688A.499, inclusive, by the insurer, by an entity contracted to perform the insurer’s supervisory duties or by the producer.

(b) A general agency, independent agency or the producer to take reasonably appropriate corrective action approved by the Commissioner for any consumer harmed by the producer’s violation of NAC 688A.476 to 688A.499, inclusive.

(c) Any person to cease and desist from any activity in violation of NAC 688A.476 to 688A.499, inclusive, following notice and a hearing on the violation.

(d) Any person who violates a provision of NAC 688A.476 to 688A.499, inclusive, to pay a monetary penalty of not more than $2,000 for each violation.

(e) Suspend or revoke the license of an insurer or producer.

2. Any applicable penalty for a violation of NAC 688A.476 to 688A.499, inclusive, may be reduced or eliminated if corrective action for the consumer was taken promptly after a violation was discovered or the violation was not part of a pattern or practice.

3. The authority to enforce compliance with NAC 688A.476 to 688A.499, inclusive, is vested exclusively with the Commissioner.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

NAC 688A.499 Maintenance of records by insurers, general agents, independent agencies and producers. (NRS 679B.130)

1. Insurers, general agents, independent agencies and producers shall maintain or be able to make available to the Commissioner records of the information collected from the consumer, disclosures made to the consumer, including summaries of oral disclosures, and other information used in making the recommendations that were the basis for insurance transactions for 5 years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of a producer.

2. Records required to be maintained by NAC 688A.476 to 688A.499, inclusive, may be maintained in paper, photographic, micro-process, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

(Added to NAC by Comm’r of Insurance by R109-23, eff. 11-15-2024)

PROHIBITED ACTS AND PRACTICES

NAC 688A.500 Engaging in certain acts or practices regarding sales to active duty service members. (NRS 679B.130, 686A.015)

1. An insurer or producer of insurance engages in an unfair or deceptive act or practice in violation of NRS 686A.020 if the insurer or producer of insurance sells to a person who the insurer knows, or, with the exercise of ordinary care, would know, is an active duty service member any annuity or life insurance product, other than accidental death coverage, that excludes coverage if the death of the insured active duty service member is related to a declared or undeclared war or any other act related to military service.

2. As used in this section:

(a) “Active duty service member” has the meaning ascribed to it in NAC 686A.486.

(b) “Life insurance product” has the meaning ascribed to it in NAC 686A.4885.

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