In Nevada, which life insurance policy is subject to a 30-day right to surrender for...

A replacement life insurance policy delivered in Nevada must provide a 30-day period during which the policyowner may surrender the policy to the insurer with a written request for cancellation and receive a refund of premiums paid, including policy fees or other charges. This longer review period recognizes the special risks associated with replacement transactions. Replacing existing coverage can cause the consumer to lose favorable values, restart contestability or suicide periods, incur surrender charges, or exchange a policy that better serves the client’s long-term needs.

For a nonreplacement life policy, annuity contract, or pure endowment contract, Nevada generally requires a 10-day right of surrender after delivery. The applicable statute excludes industrial life insurance from this requirement. The producer must therefore identify whether a proposed transaction is a replacement and follow the related disclosure and recordkeeping requirements. The free-look period is a consumer-protection right; it does not excuse a producer from determining suitability or accurately comparing existing and proposed coverage before the sale.

On an examination question, the key distinction is not whether the policy is whole life, term life, or universal life. The key is whether it is a replacement contract or policy.

References/topics from the Study Guide: Replacement; Free-Look Provision; Nevada Consumer Protections; NRS 688A.165.

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