Nevada Administrative Code
Chapter 690A - Credit Insurance
Section 690A.105 - Credit life insurance: Calculation and use of prima facie rates; use of different rates

Universal Citation: NV Admin Code 690A.105

Current through September 16, 2024

1. Except as otherwise provided in subsection 5 of NAC 690A.165, the prima facie rate for credit life insurance shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner if the rate complies with the provisions of this section.

2. If the premium for credit life insurance is charged on a single premium basis and the premium is based on a premium rate per $100 per annum of actual or scheduled net debt, the premiums must be calculated according to the formula set forth in this subsection or according to a formula approved by the Commissioner that produces a rate that is actuarially consistent with the rates set forth in this section:

NSPn,t = (0.94 /13) X (t - an + an-t)/(i X an)

Where:

"NSPn,t" = Single premium net balance rate per $100 of initial insured indebtedness for "t" months.

"n" = Term of loan.

"t" = Term of insurance.

"i" = Monthly interest rate.

"an" = Present value of an annuity immediate of $1 for a period of "n" months at interest rate "i."

"an-t" = Present value of an annuity immediate of $1 for a period of "n-t" months at interest rate "i."

3. For single credit life insurance, if the premium is charged on a monthly outstanding balance basis, the rate must be 72 cents per month per $1,000 of outstanding insured indebtedness.

4. If credit life insurance is sold on a joint basis, the rate for the coverage must be calculated by multiplying the applicable rate for single coverage by 1.54.

5. For dismemberment insurance, if the premium is charged on:

(a) A single premium basis, the rate must be 5 cents per $100 of insurance per annum for single life insurance and 10 cents per $100 of insurance per annum for joint life insurance.

(b) A monthly outstanding balance basis, the rate must be 8 cents per month per $1,000 of outstanding insured indebtedness on single life insurance and 16 cents per month per $1,000 of outstanding insured indebtedness on joint life insurance.

6. If the benefits provided are different from the benefits described in this section, the premium rates for those benefits must be actuarially consistent with the rates set forth in subsections 2 to 5, inclusive, and must be approved by the Commissioner before those rates may be used.

7. The rates in this section may be used only if the coverage issued in conjunction with those rates does not include an exception for a preexisting condition. If the coverage includes an exception for a preexisting condition as specified in NAC 690A.115, an insurer may file for approval for lower rates in the manner prescribed in NAC 690A.165.

8. The rates set forth in this section apply to a policy of credit life insurance that is offered to a debtor if the policy includes:

(a) Coverage for death caused by any means, except that coverage may exclude death resulting from:
(1) War or any act of war; or

(2) Suicide within 2 years after the effective date of the coverage.

(b) For the exclusions set forth in paragraph (a), the effective date of coverage for each part of the insurance attributable to a different advance or a charge to the plan account that is the date on which the advance or charge occurs.

(c) A provision that prohibits coverage from becoming effective after the debtor attains:
(1) The age of 66 years and requires that all insurance for the debtor will terminate when the debtor attains the age of 70 years; or

(2) The age of 68 years and requires that all insurance for the debtor will terminate when the debtor attains the age of 72 years. If such a provision is included, prima facie rates for credit life insurance may be increased by 5.9 percent and shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner.

9. As used in this section:

(a) "Dismemberment insurance" means insurance which, at a minimum, provides benefits for the actual loss of use of a hand or foot or the irrecoverable loss of sight in an eye.

(b) "Joint life insurance" means credit life insurance issued to two debtors who are jointly and severally liable for the indebtedness.

(c) "Single life insurance" means credit life insurance issued to one debtor who is liable for the indebtedness.

Added to NAC by Comm'r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008

NRS 679B.130, 690A.093, 690A.277

Disclaimer: These regulations may not be the most recent version. Nevada may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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