NV Life & Health common mistakes
NV Life & Health · Understand the traps and how to avoid them.
Selecting the NAIC as the body that enforces Nevada insurance law or disciplines a producer.
NAIC model laws and study materials mention the NAIC frequently, so it sounds like a regulator with enforcement power.
What to do instead
Map roles explicitly: the Nevada Division of Insurance and Insurance Commissioner license and enforce; the NAIC drafts model laws and collects data but does not enforce; the guaranty association handles claims against insolvent insurers.
Answering that insurable interest must continue until the insured dies for a life insurance policy.
Candidates import the property-insurance rule that insurable interest must exist at the time of loss.
What to do instead
State the rule cleanly: life insurance requires insurable interest at application or policy issue; property/casualty insurance requires it at time of loss. A life beneficiary need not have insurable interest at the insured's death.
Using the applicant's gross annual salary as the human life value in needs-analysis questions.
Gross salary is the most visible number, and the formula is memorized without netting taxes and personal expenses.
What to do instead
Human life value is the present value of future earnings available to dependents after taxes and self-maintenance. For 'amount of insurance needed,' subtract existing resources and use net income and expenses, not gross salary.
Treating 'renewable' term life insurance as a guarantee that the premium remains level.
'Renewable' sounds like the same contract continues on the same terms.
What to do instead
Renewable means the insured may continue term coverage to a stated age without new evidence of insurability, but premiums increase at renewal. Convertible means changing to permanent coverage without evidence. Level premium is a separate feature.
Choosing waiver of premium for any disability, including partial or short-term disability, without checking the waiting period.
The rider name implies all premiums stop whenever disability begins.
What to do instead
Waiver of premium generally requires total disability lasting a waiting period, then waives premiums while disability continues. Partial or short-term disability usually does not trigger it. Disability income riders pay income, not premiums.
Assuming annuity payments are tax-free because premiums were already paid, or taxing the entire payment from a nonqualified annuity.
The owner, annuitant, accumulation phase, and payout phase blur together.
What to do instead
For a nonqualified annuity, only the earnings portion is taxable during payout; use the exclusion ratio for annuitized payments. Qualified annuity payments are generally fully taxable. The owner controls the contract and is taxed on annuity income; the annuitant's life measures payments.
Selecting an HMO when the question describes no PCP referrals and broad out-of-network benefits, or selecting a PPO when referrals are required.
Plan names are memorized as labels rather than by access and cost-sharing rules.
What to do instead
Anchor the plans: HMO typically uses a PCP gatekeeper and referrals with an in-network focus; PPO normally has no referrals and higher out-of-network costs; indemnity reimburses usual, customary, and reasonable charges.
Applying an individual disability policy's 'own occupation' definition to group LTD for the entire benefit period.
The same phrase appears in both, but group LTD often changes the definition after an initial period.
What to do instead
Check the benefit duration: group LTD commonly pays own-occupation for an initial period, such as two years, then any-occupation. Individual policies may offer own-occupation longer. Group eligibility also uses group underwriting, not individual evidence of insurability.
Answering that a life insurance death benefit is always completely tax-free in every situation.
The general income-tax exclusion for death benefits is overgeneralized to estate tax and transfer-for-value situations.
What to do instead
The death benefit is generally income-tax-free to the beneficiary, but it can be included in the insured's estate if the insured held incidents of ownership. A transfer-for-value can make part of the benefit taxable. Personal life insurance premiums are generally not deductible.
Confusing coinsurance with a copayment and choosing a fixed dollar amount when the question says '20% after the deductible.'
Both are cost-sharing features and appear together in benefit summaries.
What to do instead
Copay is a fixed dollar amount; coinsurance is a percentage of the allowed charge after the deductible; the deductible is paid before cost-sharing. Read the unit in the question: dollar sign means copay, percent means coinsurance.