2.1 Nevada Life Insurance Policy Requirements

Nevada regulates life insurance contracts under Title 57 NRS, Chapter 688A (life insurance and annuity contract provisions). These mandatory provisions standardize policies and protect policyholders.

Regulatory Authority

The Nevada Division of Insurance (DOI), within the Department of Business and Industry and led by the appointed Commissioner, reviews and approves life policy forms, licenses producers, investigates complaints, and enforces the code.

Free Look Period

During the free look the owner may return the policy for a full refund of premium, no questions asked. The period runs from delivery, so accurate delivery documentation matters.

Exam Tip: Nevada's standard life/annuity free look is 10 days. Long-term care is the exception — it gets a longer 30-day free look (covered in Chapter 3).

Incontestability (NRS 688A.080)

A Nevada life policy becomes incontestable after 2 years from issue (during the insured's lifetime). After that window the insurer cannot void the policy for misstatements in the application.

• The clock runs from the date of issue.
• Exception: nonpayment of premium is always a valid defense.
• The clause bars only a contest of validity; it does not waive coverage exclusions (e.g., an aviation or war exclusion still applies).
• If a lapsed policy is reinstated, a new contestable period may begin as to statements in the reinstatement application.

Suicide Clause (NRS 688A.090)

Nevada caps the suicide exclusion at 2 years from issue. If the insured dies by suicide within that period, the insurer's liability is limited to a refund of premiums paid. After 2 years, suicide is covered like any other death.

Grace Period and Reinstatement

Reinstatement restarts the contestable and suicide periods only as to the reinstatement application; the original policy date otherwise governs.

Insurable Interest and Consent (NRS 687B.080)

Nevada requires insurable interest at the inception of the policy and the written consent of the person insured. The purpose is to bar wagering on human life.

STOLI prohibition

Nevada prohibits Stranger-Originated Life Insurance (STOLI) — arrangements to procure a policy for transfer to someone without insurable interest. STOLI policies may be voided and producers who participate face discipline.

Exam Tip: Insurable interest must exist at inception, not at claim, and the beneficiary does not need insurable interest — only the applicant/owner does.

Standard Policy Provisions (NRS 688A)

Nevada incorporates the standard provisions law. Memorize the headline numbers and their statute homes.

Misstatement of age or sex

If the insured's age (or sex, where used) was misstated, the death benefit is adjusted to the amount the premium paid would have purchased at the correct age — the contract is not voided. This is tested as a contrast with material misrepresentation, which can be contested only within the 2-year window.

Nonforfeiture Options

Cash-value life policies must offer nonforfeiture values when the owner stops paying:

Minimum values follow the Standard Nonforfeiture Law and the commissioners' standard mortality tables; surrender charges are limited and must be disclosed.

Beneficiary and Unclaimed-Benefit Protections

Nevada requires insurers to make reasonable efforts to locate beneficiaries, including cross-checking in-force policies against the Social Security Death Master File, and prohibits charging fees to find beneficiaries. If a beneficiary cannot be found, the death benefit is not forfeited — it is reported to the state as unclaimed property, where the rightful beneficiary may still claim it.

Exam Tip: Common-disaster and simultaneous-death rules determine order of death when an insured and primary beneficiary die together; absent proof, the insured is generally presumed to have survived, directing proceeds to the contingent beneficiary.

Settlement Options and Policy Loans

Nevada policies offer standard settlement options for paying death proceeds: lump sum, interest only, fixed period, fixed amount, and life income (with or without a period certain). A beneficiary may also be paid through a retained-asset account. The owner controls the options during the insured's lifetime; a beneficiary may select among available options if the owner did not specify one.

Policy loans are available against the cash value of permanent policies. Interest accrues, and any unpaid loan balance plus interest is deducted from the death benefit. Nevada requires that loan terms and the effect on the death benefit be disclosed, and that the policy not lapse for an unpaid loan until proper notice is given.