Free NV Life & Health Exam Flashcards

Both build guaranteed cash value and endow at the policy's stated maturity age, but ordinary whole life spreads premiums across the insured's entire lifetime while limited-pay (20-pay, paid-up at 65, single premium) compresses the same funding into fewer, larger payments. That compression is why limited-pay contracts are the ones most likely to fail the federal 7-pay test and be reclassified as Modified Endowment Contracts.

Level term holds both face amount and premium fixed for the term. Decreasing term holds the premium level while the death benefit declines, which is why it is sold against a mortgage balance. Annually renewable term holds the face amount level while premium climbs each year with attained age. None of the three develops cash value.

Option A pays a level face amount, so as cash value accumulates the insurer's net amount at risk shrinks and the cost of insurance charge stays lower. Option B pays the face amount plus the accumulated cash value, so the net amount at risk stays level and the policy costs more to carry for the same face amount.

Variable products invest premium in separate-account subaccounts, so the policyowner rather than the insurer bears the investment risk and the contract is regulated as a security. The producer must hold a life insurance license with the variable line of authority AND a securities registration; a life license alone does not permit the sale.

During accumulation the owner funds the contract and earnings grow tax-deferred inside it. During annuitization the accumulated value is converted into a stream of income payments and the contract can no longer be funded. An immediate annuity skips accumulation and begins payout shortly after purchase; a deferred annuity accumulates first.

Joint life pays the death benefit when the first of two insureds dies, which fits income replacement and buy-sell funding. Survivorship life pays only after the last insured dies, so it costs less per dollar of coverage and is typically bought to fund estate settlement costs that come due at the second death.

Waiver of premium keeps a policy in force by waiving premium when the INSURED becomes totally disabled, normally after a waiting period. The payor benefit rider waives premium when the person PAYING the premium (usually a parent on a juvenile policy) dies or becomes disabled. The difference is whose disability triggers the waiver.

Cash surrender pays out the accumulated cash value and terminates coverage. Reduced paid-up buys a smaller permanent policy that is fully paid for life. Extended term buys the same face amount as term insurance for a limited period. Extended term is the automatic option in most contracts if the owner elects nothing.

Dividends are treated as a return of overpaid premium, so the dividend itself is not taxable income. The usual elections are cash, premium reduction, accumulate at interest (the interest IS taxable), paid-up additions, and one-year term. Paid-up additions add death benefit and cash value without new evidence of insurability.

A Nevada life policy must become incontestable after it has been in force during the insured's lifetime for not more than 2 years from issue, except for nonpayment of premium (NRS 688A.080). A suicide exclusion may reach no further than 2 years from the date of issue, after which suicide is a covered death (NRS 688A.260).

The policy must grant a grace period of 30 days, or at the insurer's option 1 month of not less than 30 days, during which the contract stays in full force (NRS 688A.060). The insurer may charge interest of no more than 6 percent per year on the late premium and may deduct any overdue premium from proceeds if a claim arises during grace.

A warranty is guaranteed to be literally true and any falsity can void the contract. A representation is a statement believed true to the best of the applicant's knowledge. Application answers are treated as representations, so only a MATERIAL misrepresentation, one that would have changed the underwriting decision, supports rescission.

A conditional receipt is given when the producer collects the initial premium with the application. Coverage begins on the later of the application date or the date of any required medical exam, but only if the applicant proves insurable as applied for. An applicant who fails underwriting was never covered at all, and the collected premium is returned.

Insurable interest between policyowner and insured is required only when the policy is taken out — property insurance demands it again at the moment of loss, but life insurance never re-tests it at claim time. Stranger-originated or investor-owned life insurance (STOLI/IOLI) uses outside money to manufacture a policy on a stranger, which lacks insurable interest and is prohibited.

Conditional: benefits are owed only if policy conditions are satisfied. Unilateral: the insurer alone is legally bound to perform; the insured may stop paying premiums without breaching anything. Adhesion: the insurer drafts it, so ambiguity is construed against the insurer. Aleatory: the dollars each side exchanges are unequal and depend on chance.

The business applies for, owns, pays for and is the beneficiary of a policy on the key employee's life, which is where its insurable interest comes from. Premiums are NOT deductible as a business expense, and the death proceeds are generally received income-tax-free to offset the loss of that employee.

A qualified plan satisfies IRS and ERISA rules, so employer contributions are deductible, growth is tax-deferred, and the whole distribution is taxable because it was funded with pre-tax dollars. A nonqualified plan is funded with after-tax dollars, may legally favor selected employees, and taxes only the earnings portion at distribution.

An employee whose group life coverage ceases because employment or class eligibility terminates may obtain an individual policy without evidence of insurability, but must apply and pay the first premium within 31 days after termination (NRS 688B.120). The conversion policy may be any form the insurer customarily issues except term insurance.

Individual DI replaces part of the disabled insured's own earnings. Business overhead expense reimburses fixed business costs such as rent, utilities and staff pay, but never the owner's own salary. Disability buy-out funds the purchase of a disabled owner's interest and typically pays a lump sum after a long elimination period.

An HMO routes care through a gatekeeper primary care physician and pays in-network only, except emergencies. A PPO allows self-referral and still pays out-of-network at a reduced level. An EPO drops the gatekeeper but keeps the in-network-only limit. A POS is the hybrid: gatekeeper referrals like an HMO plus out-of-network benefits like a PPO.

The person must be covered by a qualifying High Deductible Health Plan, have no other disqualifying first-dollar coverage, not be enrolled in Medicare, and not be claimed as another taxpayer's dependent. Unlike a Flexible Spending Account, an HSA balance rolls over year to year and stays with the individual when jobs change.

A Medigap policy sits alongside Original Medicare and pays the deductibles, coinsurance and copayments Parts A and B leave behind; the enrollee keeps Original Medicare. A Medicare Advantage (Part C) plan replaces the delivery of Original Medicare through a private plan network. Selling a Medigap policy to someone enrolled in an Advantage plan is a prohibited duplicative sale unless that person is leaving the Advantage plan.

LTC policies cover skilled, intermediate and custodial care delivered in nursing facilities, at home, in adult day care and in assisted living. Benefits are normally triggered by inability to perform a stated number of activities of daily living (bathing, dressing, transferring, toileting, continence, eating) or by severe cognitive impairment.

Written notice of claim is due within 20 days of the loss or as soon as reasonably possible (NRS 689A.090), and written proof of loss within 90 days (NRS 689A.110). No suit may be brought until 60 days after proof of loss is furnished, and none may be brought more than 3 years after proof was due (NRS 689A.150).

The uniform grace period provision requires at least 7 days for weekly-premium policies, 10 days for monthly-premium policies, and 31 days for every other premium mode (NRS 689A.070). Coverage continues during grace, so a loss incurred in that window is payable subject to the unpaid premium.

After 3 years from the date of issue, non-fraudulent misstatements in the application cannot be used to void the policy or deny a claim for a loss commencing after that period (NRS 689A.060). Fraudulent misstatements are never protected, and note the contrast: a Nevada LIFE policy becomes incontestable after only 2 years.

Noncancelable means the insurer can neither cancel nor raise the premium through the stated age. Guaranteed renewable means the insurer must renew but may raise rates for an entire class, never for one insured alone. Conditionally renewable allows nonrenewal only for reasons written into the contract, such as ending employment.

A probationary period runs once, from the policy's effective date, and excludes sickness that begins during it. An elimination period is a deductible measured in time that restarts with each disability and must pass before benefits are payable. Lengthening the elimination period lowers premium because the insurer avoids short claims.

Part A is hospital insurance covering inpatient hospital, skilled nursing facility, hospice and some home health care, and is premium-free for people with enough work credits. Part B is medical insurance covering physician services, outpatient care and durable medical equipment, and requires a monthly premium. Part C is Medicare Advantage and Part D is outpatient prescription drug coverage.

Medicare is a federal entitlement earned by reaching age 65, or by disability or end-stage renal disease at any age; income is irrelevant. Medicaid is a joint federal-state program based on financial need, so income and assets decide eligibility. A person meeting both tests is dual-eligible and Medicare pays before Medicaid.

Coordination of benefits designates one plan primary and the other secondary so combined payment never exceeds 100 percent of the allowable expense. The primary plan pays as though no other coverage existed; the secondary plan then pays remaining eligible expenses up to its own limits. This nonduplication rule prevents profiting from a loss.

If the insured pays the premium with after-tax dollars, the benefits are received income-tax-free. If the employer pays the premium and deducts it as a business expense, the benefits paid to the employee are taxable income. The rule follows the money: untaxed premium in means taxed benefit out.

The producer is the insurer's first-line risk screener: asking every question, probing vague answers, and never 'cleaning up' an application. Recording an answer the producer knows is false is misrepresentation, and leaving a question blank on a submitted application signals the insurer accepted the risk without that fact.

The applicant must be told in advance that a consumer or investigative consumer report may be ordered and may request its nature and scope and the information collected. If coverage is declined, rated or reduced because of that report, the insurer must send an adverse action notice identifying the reporting agency.

When the initial premium was not collected with the application, the producer must collect it at delivery and obtain a signed statement of good health confirming the proposed insured's health has not changed since the application date. Without it the policy does not take effect, because the insurer underwrote a risk that may no longer exist.

The Commissioner of Insurance heads the Nevada Division of Insurance, an agency within the Department of Business and Industry. NRS chapter 679B gives the Commissioner authority to examine insurers and producers, hold hearings, issue orders and impose penalties, and to adopt implementing regulations that appear in the NAC.

An applicant must attain a score of 70 or more on the licensing examination, and that examination must be successfully completed within the 1 year immediately preceding the date of application (NAC 683A.270). The 70 is a scaled score reported on a 0-100 scale, not the percentage of questions answered correctly.

To renew, a licensee must certify completing 30 hours of approved continuing education within the 3-year period before the renewal date, and 3 of those 30 hours must be in ethics (NAC 683A.330). Under NAC 683A.355 hours earned beyond the requirement may not be carried forward into the next renewal period.

Twisting is issuing a statement that misrepresents, or makes a misleading comparison of, the terms, conditions, benefits or advantages of policies in order to induce a policyholder to lapse, forfeit, surrender or convert existing insurance (NRS 686A.050). The violation is the misleading comparison itself, not the act of replacing coverage.

A producer may not offer any rebate of premium, or any special favor, advantage or valuable consideration not specified in the policy, as an inducement to buy (NRS 686A.110). NRS 686A.120 expressly permits bonuses paid from insurer surplus, group readjustments of premium, and reduced rates tied to policy size or salary-savings plans.

All money of others received under an insurance policy is held in a fiduciary capacity, and diverting or appropriating it is embezzlement (NRS 683A.400). A producer who does not remit immediately must either remit received premiums, less commissions, within 15 days of receipt or deposit them in a fiduciary account kept separate from the producer's own general personal, firm or corporate accounts. The statute allows the producer to add only limited amounts of the producer's own money to that account, such as to advance premiums or hold reserves for return commissions.

For any one insured life the Association covers up to $300,000 in life death benefits, of which no more than $100,000 may be net cash surrender or withdrawal value, plus $250,000 in the present value of annuity benefits (NRS 686C.210). Health limits are $100,000 for coverage other than disability income, $300,000 for disability income or long-term care, and $500,000 for a health benefit plan.

Credit life insurance is insurance on the life of a debtor written in connection with a specific loan or credit transaction to satisfy that debt, in whole or in part, if the insured debtor dies (NRS 690A.016). The amount of credit life insurance must not exceed the greater of the actual net debt or the scheduled net debt (NRS 690A.045).

A life policy, annuity or pure endowment contract must allow the owner to surrender it with a written cancellation request within 10 days after delivery and receive a refund of premium and any fees. If the contract is a REPLACEMENT contract, the window is 30 days instead (NRS 688A.165), giving the buyer time to compare old and new coverage.

On every life application the producer must indicate whether an existing policy will be replaced. When replacement is involved the producer must present the required notice to the applicant, sign it, obtain the applicant's signature on a copy, furnish a copy to the applicant, and retain a copy of the notice and any sales proposals for at least 3 years (NAC 686A.550).

An individual family health policy written on an expense-incurred basis must cover a newly born child from the moment of birth, an adopted child from the effective date of adoption, and a child placed for adoption from the moment of placement (NRS 689A.043). To continue coverage past 31 days, notification and any required premium must reach the insurer within 31 days of that date.

A Nevada policy that covers mastectomy must also cover reconstruction of the treated breast, surgery and reconstruction of the other breast to restore symmetry, prostheses, and treatment of physical complications including lymphedema at all stages of the surgery (NRS 689A.041). Reconstructive surgery is defined as the procedure that re-establishes symmetry between the two breasts.

NRS 687B.404 requires an insurer or organization providing health coverage in Nevada to adhere to the federal laws on parity in coverage for mental health and substance use disorder treatment. In practice that means financial requirements and treatment limitations on behavioral health cannot be more restrictive than those applied to comparable medical and surgical benefits.

An insurer must give each current Medicare supplement policyholder an annual open enrollment period that begins on the first day of the person's birthday month and stays open at least 60 days (NRS 687B.352). During it the person may buy any Medigap policy the insurer sells in Nevada with the same or lesser benefits, and the insurer may not deny, condition or price the policy on health status, claims experience or medical condition.

Senate Bill 292 (2025) requires an insurer offering Medicare supplement coverage in Nevada to let a person under 65 who is enrolled in Medicare due to disability or end-stage renal disease buy ANY Medigap policy the insurer offers to new insureds aged 65 or older. Premiums for Standardized Benefit Plan A, B or D may not exceed the rate charged a person exactly 65, and other plans may not exceed 200 percent of that rate.