Nev. Admin. Code § 690A.125

Current through November 8, 2024

Section 690A.125 - Credit accident and health insurance: Calculation and use of prima facie rates; outstanding balance rate; conversion to closed-end credit rate; use of different rates

1. Except as otherwise provided in NAC 690A.030 and 690A.165, a prima facie rate for credit accident and health 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 prima facie rate complies with the provisions of this section.

2. If the premium is charged on a single premium basis, the prima facie rate per $100 of initial insured debt for credit accident and health insurance must comply with the provisions of this subsection. Rates for monthly periods that are different from the rates set forth in this subsection must be extrapolated.

Term of Loan in Months	Prospective Benefits		Retroactive Benefits
	14-Day	30-Day	7-Day	14-Day	30-Day
1 to 12	0.96	0.55	2.06	1.51	1.17
13 to 24	1.51	1.10	2.75	2.06	1.72
25 to 36	2.06	1.65	3.44	2.61	2.27
37 to 48	2.40	1.99	4.12	2.95	2.61
49 to 60	2.68	2.27	4.81	3.23	2.89
61 to 72	2.95	2.54	5.50	3.50	3.16
73 to 84	3.23	2.82	6.18	3.78	3.44
85 to 96	3.50	3.09	6.87	4.05	3.71
97 to 108	3.78	3.37	7.56	4.33	3.98
109 to 120	4.05	3.64	8.24	4.60	4.26
121 to 132	4.33	3.92	8.93	4.88	4.53
133 to 144	4.60	4.19	9.62	5.15	4.81
145 to 156	4.88	4.47	10.31	5.43	5.08
157 to 168	5.15	4.74	10.99	5.70	5.43
169 to 180	5.43	4.88	11.66	6.05	5.70

3. For single credit accident and health insurance, if the premium is charged on the basis of a premium rate per month per $1,000 of outstanding insured debt, the prima facie rate per $1,000 must comply with the provisions of this subsection. Rates for monthly periods that are different from the rates set forth in this subsection must be extrapolated.

Term of Loan in Months	Prospective Benefits		Retroactive Benefits
	14-Day	30-Day	7-Day	14-Day	30-Day
1 to 12	1.48	0.85	3.17	2.32	1.80
13 to 24	1.21	0.88	2.20	1.65	1.37
25 to 36	1.11	0.89	1.85	1.41	1.22
37 to 48	0.98	0.81	1.68	1.21	1.06
49 to 60	0.88	0.74	1.58	1.06	0.95
61 to 72	0.81	0.69	1.50	0.96	0.87
73 to 84	0.76	0.66	1.46	0.89	0.81
85 to 96	0.72	0.64	1.42	0.84	0.76
97 to 108	0.69	0.62	1.39	0.80	0.73
109 to 120	0.67	0.60	1.36	0.76	0.70

4. If the coverage provided is a constant maximum indemnity for a specific period, the actuarial equivalent of subsections 2 and 3 must be used.

5. If the coverage provided is a combination of a constant maximum indemnity for a specific period after which the maximum indemnity begins to decrease in even amounts per month, an appropriate combination of the premium rate for a constant maximum indemnity for a specific period and the premium rate for a maximum indemnity which decreases in even amounts per month must be used.

6. The outstanding balance rate for credit accident and health insurance may be a term-specified rate or a rate paid on an outstanding balance basis for an average of the single rates if the Commissioner finds that the single rate is actuarially consistent with the rates set forth in subsection 3.

7. The prima facie rates and the formulas used to calculate the rates for credit accident and health insurance set forth in subsection 3 shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner if the insurance is issued for an open-end credit agreement. Any formula used to convert from an open-end credit rate to a closed-end credit rate may be used if approved by the Commissioner.

8. If the maximum benefit of the credit accident and health insurance equals the net debt on the date of disability, the term of the loan must be calculated according to the following formula:

n = 1/(minimum payment percent)

Where "n" = Term of the loan.

The prima facie rate must be determined by applying the calculated term to the rates set forth in subsections 2 and 3. A composite percentage may be used in place of the minimum payment percentage for a specific credit transaction.

9. If the maximum benefit of the credit accident and health insurance equals the outstanding balance of the loan on the date of disability plus any interest accruing on that amount during the period of disability, the term of the insurance is calculated by using the following formula:

n = ln{1-(1000i/x)}/ln(v)

Where:

"i" = Interest rate on the account or a composite interest rate used for the type of policy.

"n" = Term of the insurance.

"x" = Monthly payment per $1,000 of coverage that is established for a term of insurance calculated in this subsection.

"v" = 1/(1 + i).

The calculated value of the term of insurance must be used to determine an initial rate set forth in subsections 2 and 3. The final prima facie rate must be calculated by multiplying the initial rate by the adjustment by using the following formula:

n/a_n

Where:

"n" = Term of insurance calculated in this subsection.

"a_n" = (1 - vⁿ)/i.

10. If the credit accident and health insurance is sold on a joint basis, the rate for the coverage must be calculated by multiplying the applicable rate for single coverage by 1.85.

11. If the benefits provided under a policy of credit accident and health insurance are different from the benefits described in this section, the rates for those benefits must be actuarially consistent with the rates set forth in this section.

12. As used in this section:

(a) "Composite interest rate" means an average of all interest rates offered by a creditor of an insurer.

(b) "Composite percentage" means the average of all minimum payment percentages for a specific credit transaction.

Nev. Admin. Code § 690A.125

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