Nevada Revised Statutes
Chapter 681B - Assets and Liabilities
NRS 681B.125 - Interest rates for minimum standard; applicability.

1. This section sets forth the interest rates used in determining the minimum standard for valuation of:
(a) All life insurance policies issued in a particular calendar year on or after the operative date of NRS 688A.325;
(b) All individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1984;
(c) All annuities and pure endowments purchased in a particular calendar year on or after January 1, 1984, under group annuity and pure endowment contracts; and
(d) The net increase, if any, in a particular calendar year after January 1, 1984, in amounts held under contract which have guaranteed interest.
2. The interest rates for valuation must be determined as follows, and the results rounded to the nearer one-quarter of 1 percent:
(a) For life insurance:
I = .03 + W (R1 - .03) + W/2 (R2 - .09)
(b) For single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with options for cash settlement and from contracts which have guaranteed interest with options for cash settlement:
I = .03 + W (R - .03)
where
R1 is the lesser of R and .09,
R2 is the greater of R and .09,
R is the reference interest rate defined in this
section, and
W is the weighting factor defined in this section.
(c) For other annuities with options for cash settlement and contracts which have guaranteed interest with options for cash settlement, valued on the basis of the year issued, except as stated in paragraph (b), the formula for life insurance set forth in paragraph (a) applies to annuities and contracts which have guaranteed interest with a guaranteed duration in excess of 10 years, and the formula for single-premium immediate annuities stated in paragraph (b) applies to annuities and contracts which have guaranteed interest with guaranteed durations of 10 years or less.
(d) For other annuities with no options for cash settlement and for contracts which have guaranteed interest with no options for cash settlement, the formula for single-premium immediate annuities set forth in paragraph (b) applies.
(e) For other annuities with options for cash settlement and contracts which have guaranteed interest with no options for cash settlement which are valued on the basis of a change in its fund the formula for single-premium immediate annuities stated in paragraph (b) applies.
(f) If the interest rate for valuation for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of 1 percent, the interest rate for the valuation of such life insurance policies is equal to the corresponding actual rate for the immediately preceding calendar year. The interest rate for the valuation of life insurance policies issued in a calendar year must be determined for 1980 using the reference interest rate defined for 1979 and must be determined for each subsequent calendar year regardless of when NRS 688A.325 becomes operative with respect to the insurer.
3. The weighting factors referred to in the formulas set forth in subsection 2 are given in the following tables:
(a) Weighting Factors for Life Insurance:
Guarantee
Duration Weighting
(Years) Factors
10 or less........................................................................................................... .50
More than 10 but not more than 20.............................................................. .45
More than 20.................................................................................................... .35
For life insurance, the duration of the guarantee is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values, or both, which are guaranteed in the original policy;
(b) The weighting factor for single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with options for cash settlement and contracts which have guaranteed interest with options for cash settlement is .80; and
(c) Weighting factors for other annuities and for contracts which have guaranteed interest except as stated in paragraph (b), are specified in the tables in subparagraphs (1), (2) and (3), according to the rules and definitions in subparagraphs (4), (5) and (6) as follows:
(1) For annuities and contracts which have guaranteed interest valued on the basis of the year issued:
Guarantee
Duration Weighting Factor
(Years) for Plan Type
A B C
5 or less.................................................................... .80 .60 .50
More than 5, but not more than 10...................... .75 .60 .50
More than 10, but not more than 20................... .65 .50 .45
More than 2............................................................. .45 .35 .35
(2) For annuities and contracts which have guaranteed interest valued on a change in fund basis, the factors shown in subparagraph (1):
Weighting Factor
for Plan Type
A B C
Increased by............................................................ .15 .25 .05
(3) For annuities and contracts which have guaranteed interest valued on the basis of the year issued, (other than those with no options for cash settlement) which do not guarantee interest on considerations received more than 1 year after issue or purchase and for annuities and contracts which have guaranteed interest valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors shown in subparagraph (1) or derived in subparagraph (2) increased by .05.
(4) For other annuities with options for cash settlement and contracts which have guaranteed interest with options for cash settlement, the guaranteed duration is the number of years for which the contract guarantees interest rates in excess of the interest rate for the valuation of life insurance policies with a guaranteed duration in excess of 20 years. For other annuities with no options for cash settlement and for contracts which have guaranteed interest with no options for cash settlement, the guaranteed duration is the number of years from the date of issue or date of purchase to the date on which the annuity benefits are scheduled to commence.
(5) The types of plans listed in this subsection have the following characteristics:
Plan Type A
Under this plan the policyholder:
(I) May withdraw money only with an adjustment to reflect changes in interest rates or the value of assets since the insurer’s receipt of the money, or without such an adjustment but in installments payable over 5 years or more;
(II) May withdraw money as an immediate life annuity; or
(III) Is not permitted to withdraw money.
Plan Type B
Under this plan, before expiration of the guaranteed interest rate, the policyholder:
(I) May withdraw money only with an adjustment to reflect changes in interest rates or the value of assets since the insurer’s receipt of the money, or without such an adjustment but in installments payable over 5 years or more; or
(II) Is not permitted to withdraw money.
At the end of the guaranteed interest rate, the policyholder may withdraw money without such an adjustment in a single sum or in installments over a period of less than 5 years.
Plan Type C
Under this plan the policyholder may withdraw money before expiration of the guaranteed interest rate in a single sum or in installments over a period of less than 5 years:
(I) Without any adjustment to reflect changes in interest rates or the value of assets since the insurer’s receipt of the money; or
(II) Subject only to a fixed charge for surrender which is stipulated in the contract as a percentage of the fund.
(6) An insurer may elect to value contracts which have guaranteed interest with options for cash settlement and annuities with options for cash settlement on the basis of the year issued or a change in fund basis. Contracts which have guaranteed interest but no options for cash settlement and annuities with no options for cash settlement must be valued on the basis of the year issued. As used in this section, "valuation on the basis of the year issued" means a basis of valuation under which the interest rate used to determine the minimum standard of valuation for the entire duration of an annuity or contract with guaranteed interest is the interest rate of valuation for the year of issue or the year of purchase of the annuity or contract, and "change in fund basis of valuation" means a basis of valuation under which the interest rate used to determine the minimum standard of valuation applicable to each change in the fund held under the annuity or contract is the interest rate for valuation for the year of the change in the fund.
4. For purposes of subsection 2, "reference interest rate" means:
(a) For all life insurance, the lesser of the average over 36 months and the average over 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody’s Corporate Bond Yield Average—Monthly Average Corporates, as published by Moody’s Investors Service, Inc.
(b) For single-premium immediate annuities, annuity benefits involving life contingencies arising from other annuities with options for cash settlement and contracts which have guaranteed interest with options for cash settlement, the average over 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody’s Corporate Bond Yield Average—Monthly Average Corporates, as published by Moody’s Investors Service, Inc.
(c) For other annuities with options for cash settlement and contracts which have guaranteed interest with options for cash settlement, valued on the basis of the year issued, except as stated in paragraph (b), with a guaranteed duration of more than 10 years, the lesser of the average over 36 months and the average over 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s Corporate Bond Yield Average—Monthly Average Corporates, as published by Moody’s Investors Service, Inc.
(d) For other annuities with options for cash settlement and guaranteed interest with options for cash settlement, valued on the basis of the year issued, except as stated in paragraph (b), with a guaranteed duration of 10 years or less, the average over 12 months, ending on June 30 of the calendar year issued or purchased, of Moody’s Corporate Bond Yield Average—Monthly Average Corporates, as published by Moody’s Investors Service, Inc.
(e) For other annuities with no options for cash settlement and for contracts which have guaranteed interest with no option for cash settlement, the average over 12 months, ending on June 30 of the calendar year issued or purchased, of Moody’s Corporate Bond Yield Average—Monthly Average Corporates, as published by Moody’s Investors Service, Inc.
(f) For other annuities with options for cash settlement and contracts which have guaranteed interest with options for cash settlement valued on a change in fund basis, except as stated in paragraph (b), the average over 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody’s Corporate Bond Yield Average—Monthly Average Corporates, as published by Moody’s Investors Service, Inc.
5. If the publication of Moody’s Corporate Bond Yield Average—Monthly Average Corporates by Moody’s Investors Service, Inc., ends or the National Association of Insurance Commissioners determines that Moody’s Corporate Bond Yield Average—Monthly Average Corporates is no longer appropriate for determination of the reference interest rate, an alternative method for determination of the reference interest rate which is adopted by the NAIC and approved by regulation of the Commissioner may be substituted.
6. The minimum standard for the valuation of policies and contracts issued before January 1, 1972, must be that provided by the laws in effect immediately preceding that date.
7. Except as otherwise provided in NRS 681B.310, the provisions of this section apply only to, or in connection with, policies and contracts issued on or after January 1, 1972, and before the operative date of the Valuation Manual.
(Added to NRS by 1983, 934; A 2015, 3404)

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