What are Nevada's life insurance replacement rules?

Nevada has specific replacement regulations when a new life insurance policy replaces an existing one. Replacement occurs when a new policy is purchased in connection with the lapse, surrender, or reduction of an existing policy. These rules protect consumers from unnecessary or unsuitable replacements.

When replacement is involved, Nevada requires the agent to provide you with a replacement notice explaining the transaction and provide the existing insurer with notice of the replacement. The existing carrier then has the opportunity to send you a conservation letter—informing you of what you'd be giving up and asking whether you want to reconsider.

You should carefully evaluate replacements by comparing: the new surrender charges period, cash value accumulation projections, death benefit amounts, premium amounts, and the financial strength ratings of both carriers. What the illustration shows is not always what actually happens—non-guaranteed elements can change.

Legitimate reasons to replace a policy include: moving to a carrier with better financial strength ratings, accessing better policy terms or riders not available in the original, responding to health improvement that qualifies for better rates, or consolidating policies. Illegitimate replacements that primarily generate new commissions without policyholder benefit are prohibited. Agents in our network adhere to Nevada replacement regulations and will fully disclose replacement implications.