Nevada Life & Health Insurance Guaranty Association

Covered Contracts

§686C.030.4. This chapter provides coverage to the persons described in subsections 1 and 2 for policies or contracts of direct, nongroup life insurance, health insurance and annuities, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case issued by member insurers, except as limited by this chapter.

Non-Covered Contracts

§686C.035. 1. This chapter does not provide coverage for: (a) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the owner of the policy or contract. (b) A policy or contract of reinsurance unless assumption certificates have been issued pursuant to that policy or contract. (c) A portion of a policy or contract, other than a portion of a policy or contract of health insurance or that provides benefits for long-term care, including, without limitation, a rider that provides such benefits, to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by the use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (1) Averaged over the period of 4 years before the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for the same period, or for the period between the date of issuance of the policy or contract and the date the association became obligated, whichever period is less; and (2) On or after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available. (d) A portion of a policy or contract issued to a plan or program of an employer, association or other person to provide life, health or annuity benefits to its employees, members or other persons to the extent that the plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association or other person under: (1) A multiple employer welfare arrangement described in 29 U.S.C. § 1002(40); (2) A minimum-premium group insurance plan; (3) A stop-loss group insurance plan; or (4) A contract for administrative services only. (e) A portion of a policy or contract to the extent that it provides for dividends, credits for experience, voting rights or the payment of any fee or allowance to any person, including the owner of a policy or contract, for services or administration connected with the policy or contract. (f) A policy or contract issued in this state by a member insurer at a time when the member insurer was not authorized to issue the policy or contract in this state. (g) A portion of a policy or contract to the extent that the assessments required by NRS 686C.230 with respect to the policy or contract are preempted by federal law. (h) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer, including: (1) Claims based on marketing materials; (2) Claims based on side letters or other documents that were issued by the member insurer without satisfying applicable requirements for filing or approval of policy or contract forms; (3) Misrepresentations of or regarding policy or contract benefits; (4) Extra-contractual claims; or (5) A claim for penalties or consequential or incidental damages. (i) A contractual agreement that establishes the member insurer’s obligation to provide a guarantee based on accounting at book value for participants in a defined-contribution benefit plan by reference to a portfolio of assets owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer. (j) A portion of a policy or contract to the extent that it provides for interest or other changes in value which are determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the rights of the owner of the policy or contract are subject to forfeiture, determined on the date the member insurer becomes an impaired or insolvent insurer, whichever occurs first. If the interest or changes in value of a policy or contract are credited less frequently than annually, for the purpose of determining the values that have been credited and are not subject to forfeiture, the interest or change in value determined by using procedures stated in the policy or contract must be credited as if the contractual date for crediting interest or changing values was the date of the impairment or insolvency of the insured member, whichever occurs first and is not subject to forfeiture. (k) An unallocated annuity contract other than an annuity owned by a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or the trustees of such a plan. (l) A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to 42 U.S.C. §§ 1395w-21 et seq. and 1395w-101 et seq. or 42 U.S.C. §§ 1396 et seq., and any regulations adopted pursuant thereto.

Non-Resident Coverage

§686C.030.1(a)(2). Yes. Covers nonresidents but only if: (I) The member insurer that issued the policies or contracts is domiciled in this state; (II) The states in which the persons reside have associations similar to the Association created by this chapter; and (III) The persons are not eligible for coverage by an association in another state because the member insurer was not authorized in the other state at the time specified in that state’s law governing guaranty associations;

§686C.210(1) 1. The benefits that the Association may become obligated to cover may not exceed the lesser of: (a) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; (b) With respect to one life, regardless of the number of policies or contracts: (1) Three hundred thousand dollars in death benefits from life insurance, but not more than $100,000 in net cash for surrender and withdrawal for life insurance; or (2) Two hundred fifty thousand dollars in the present value of benefits from annuities, including net cash for surrender and withdrawal; (c) With respect to health insurance for any one life: (1) One hundred thousand dollars for coverages other than disability income insurance, health benefit plans or long-term care insurance, including any net cash for surrender or withdrawal; (2) Three hundred thousand dollars for disability income insurance or long-term care insurance; or (3) Five hundred thousand dollars for health benefit plans; (d) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value of benefits from the annuity in the aggregate, including any net cash for surrender or withdrawal; or (e) With respect to each participant in a governmental retirement plan covered by an unallocated annuity contract which is owned by a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or the trustees of such a plan, and which is approved by the Commissioner, an aggregate of $250,000 in present-value annuity benefits, including the value of net cash for surrender and net cash for withdrawal, regardless of the number of contracts. 2. In no event is the Association obligated to cover more than: (a) With respect to any one life or person under paragraphs (b) to (e), inclusive, of subsection 1: (1) An aggregate of $300,000 in benefits, excluding benefits for health benefit plans; or (2) An aggregate of $500,000 in benefits, including benefits for health benefit plans. (b) With respect to one owner of several nongroup policies of life insurance, whether the owner is a natural person or an organization and whether the persons insured are officers, managers, employees or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.

Discretionary Triggers

§686C.150. When a member insurer is impaired. Amended effective 1/1/02.

Mandatory Triggers

§686C.152. When a member insurer is insolvent.

Foreign Triggers

No separate provision.

"Impaired Insurer"

§686C.090. “Impaired insurer” means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 7/1/15).

"Insolvent Insurer"

§686C.095. “Insolvent insurer” means a member insurer which is ordered to liquidate by a court of competent jurisdiction after a finding of insolvency. (Amended effective 7/1/15)

"Member Insurer"

§686C.100. “Member insurer” means an insurer which is licensed or holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided in this chapter or a health maintenance organization which holds a certificate of authority to operate in this State. The term includes an insurer or health maintenance organization whose license or certificate of authority in this state has been suspended, revoked, not renewed or voluntarily withdrawn. The term does not include: 1. A fraternal benefit society; 2. A mandatory state pooling plan; 3. A mutual assessment company or other person that operates on the basis of assessments; 4. An insurance exchange; 5. An organization that is authorized only to issue charitable gift annuities under NRS 688A.281 to 688A.285, inclusive; 6. A reinsurance program operated by the State Government; or 7. An organization similar to any of those listed in subsections 1 to 6, inclusive.

§686C.130.2. For purposes of administration and assessment, the Association shall maintain two accounts: (a) The Health Account; and (b) The Life and Annuity Account, which consists of: (1) The Subaccount for Life Insurance; and (2) The Subaccount for Annuities, including annuities owned by a governmental retirement plan, or its trustees, established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457.

Assessment Limits

§686C.250.2. Except as otherwise provided in subsection 3, the total of all assessments authorized by the Association with respect to a member insurer for: (a) The Life and Annuity Account and each of its subaccounts; and (b) The Health Account, respectively must not in any 1 calendar year exceed 2 percent of the member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became impaired or insolvent.

Assessment Classes

§686C.230. 2. There are two classes of assessments, as follows: (a) Assessments in Class A must be authorized and called for the purpose of meeting administrative and legal costs and other expenses. An assessment in Class A need not be related to a particular impaired or insolvent insurer. (b) Assessments in Class B must be authorized and called to the extent necessary to carry out the powers and duties of the Association under NRS 686C.150 to 686C.220, inclusive, with regard to an impaired or insolvent insurer.

§686C.035.1(c) A portion of a policy or contract, other than a portion of a policy or contract of health insurance or that provides benefits for long-term care, including, without limitation, a rider that provides such benefits, to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by the use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (1) Averaged over the period of 4 years before the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for the same period, or for the period between the date of issuance of the policy or contract and the date the association became obligated, whichever period is less; and (2) On or after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available.

§686C.280.2. Yes. Up to 20% of assessment amount may be offset for next 5 years, beginning with calendar year after the year the certificate of contribution is issued.

§686C.110 “Premiums” means amounts received in any calendar year on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and credits for experience thereon. The term does not include: 1. Any amounts received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under NRS 686C.030 except that the assessable premium is not reduced on account of paragraph (c) of subsection 1 of NRS 686C.035 relating to limitations on interest and subsection 2 or paragraph (b) of subsection 1 of NRS 686C.210 relating to limitations with respect to any one life. 2. Premiums for an unallocated annuity contract, except those issued in accordance with the provisions of a governmental retirement plan, established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or the trustees of such a plan. 3. Premiums that exceed $5,000,000 for several nongroup policies of life insurance owned by one owner, regardless of: (a) Whether the owner is a natural person, firm, corporation or other person; (b) Whether any person insured under the policies is an officer, manager, employee or other person; or (c) The number of policies or contracts held by the owner.

§686C.390 Unlawful advertisement using existence of Association for sale, solicitation or inducement to purchase; exception. It is unlawful for a member insurer, agent or affiliate of a member insurer, or other person to make, publish, circulate or place before the public, or cause any other person to do so, in any publication, notice, circular, letter or poster, or over any radio or television station, any advertisement or statement, written or oral, which uses the existence of the Association for the sale, solicitation or inducement to purchase any form of insurance or coverage offered by a health maintenance organization that is covered by the Association. This section does not apply to the association or any other person that does not sell or solicit insurance or coverage offered by a health maintenance organization.