GUIDE TO GROWTH FOR AGENTS

Transcription

1 GUIDE TO GROWTH FOR AGENTS LIBERTY NATIONAL LIFE INSURANCE COMPANY Agent LNL0418 R-3623-B

2 Foreword At Liberty National, the Agent's income is earned from the sales of policies, the servicing of policies, and from bonuses. There is practically no limit to the amount of income an Agent can earn. Ours is a sales job. We are in the business of selling insurance. We also must service what we sell so that it will stay in force. The Agent's compensation is a reflection of his/her ability to develop new clients, sell additional business to existing clients as their needs dictate, and to keep the business sold and all business assigned in force. We believe that under this compensation system those who produce good business and look after their customers will be rewarded. The sale of a policy and the collection of the initial premium are not the whole story. It is just as important, or more so, that the insurance be continued in force and that the customers receive the service to which they are entitled. The Company maintains exclusive discretion to exercise the customary functions of management which include, but are not limited to, the discretion to discipline and dismiss employees; to determine the size and makeup of its work force; to establish, change or abolish policies, procedures, rules and regulations; and to assign duties to its employees in accordance with the needs and requirements of the Company. THE PROVISIONS OF THIS BOOKLET DO NOT CONSTITUTE A CONTRACT OF EMPLOYMENT AND ARE SUBJECT TO CHANGE OR MODIFICATION WITHOUT PRIOR NOTICE TO EMPLOYEES OR CONTRACTORS. ii

3 GUIDE TO GROWTH TABLE OF CONTENTS SUBJECT PAGE I. COMMISSION ACCOUNT A. Credits... 1 B. Charges... 2 C. Payments from the Commission Account... 3 D. Lump Sum Withdrawals... 3 E. Transfers of First Year Commissions... 3 F. Settlement of Commission Account... 3 II. FIRST YEAR AND RENEWAL COMMISSIONS... 4 III. REVIVAL COMMISSIONS... 5 IV. EXPENSE REIMBURSEMENT PROGRAM(BEAM)... 5 V. WEEKLY PRODUCTION BONUS A. Calculation of Bonus... 6 B. Payment of Bonus C. QOB Multiplier for Management Reassigned as Agents D. DCN Multiplier for Management Reassigned as Agents VI. VII. SPECIAL BENEFITS A. Vacation B. Holidays C. Torch Club D. Senior Liberty Underwriter E. Physical Examinations CONTRACT REQUIREMENTS A. QOB B. Production C. Net Issued Policies Eight Week Rule VIII. AMENDMENTS Appendix A. COMMISSION RATES FOR AGENTS iii

4 Explanation of Abbreviations and Terms ANN - Annual Mode AP - Annual Premium ART - Annual Renewable Term BB - Bank Budget Mode DCN - Declines, Cancellations, Not Takens FYA - First Year Agent LNL - Liberty National Life Insurance Company MDRT - Million Dollar Round Table MN - Monthly Notice Mode NAIFA - National Association of Insurance and Financial Advisors PD - Payroll Deduction Mode Q - Quarterly Mode QOB _ Quality Of Business RYA - Renewal Year Agent SA - Semi-annual Mode SLU - Senior Liberty Underwriter WD - Weekly Deduction Mode (LNL employees only) iv

5 I. COMMISSION ACCOUNT A. Credits A percentage of the first year commission will be credited and included as Direct Pay in the Agent s weekly earnings when an application is keyed into the Issue System in the Home Office. This amount is the submitted advance. No submitted advance will be paid if the Agent has a negative commission account or if the application is for personal business. The week of official issue, the full commission will be credited to the commission account and any submitted advance will be charged. The submitted advance percentages are: BB and Annual modes - 70% PD (Sec. 125 only) - 50% MN & Other PD - 0% Other modes - 30% Although there is no submitted advance on non-section 125 PD applications, 50% of the commission will be treated as Direct Pay when the first premium is paid and the Transaction Register indicates that the policy has been issued. There will also be Direct Pay on term conversions when the converted policy is issued and settled in the Transaction Register. The balance of the commission will be credited to the commission account. If the Agent writing a policy on an annual premium mode has more than one year of service, the Agent will receive the balance of the commission as Direct Pay when the policy is issued. With the exception of annual premium policies, the maximum amount of Direct Pay on any one application/policy will be $300. Agents may elect to have all their first year commission credited to their commission account (i.e., no Direct Pay.) If the commission account of an Agent who has been employed more than 13 weeks falls below $500, the amount of Direct Pay will be reduced by one half. Commissions on placed COD policies will be credited to the commission account one week after the Home Office receives the balance of the COD premium. If an Agent has a negative commission account, renewal commissions and bonuses will be credited to the commission account to the extent necessary to bring the commission account back to $0. The balance of renewal commissions and bonuses will then be paid in the normal manner. 1

6 B. Charges 1. Declines, Cancellations, Not-Takens and Lapsed Policies There will be a commission charge back to the writing Agent on declines, cancellations, not-takens and policies lapsing in the first policy year. Lapse charges will be made the same week of lapse based on the following schedule. Months Premium Charge Months Premium Charge Paid Back % Paid Back % 0-2 months 100% 7 months 50% 3 months 90% 8 months 40% 4 months 80% 9 months 30% 5 months 70% 10 months 20% 6 months 60% 11 months 10% If there is a 100% charge back of commissions on a policy that generated Direct Pay, the amount of commissions previously paid as Direct Pay on that policy will be charged against the current week s Direct Pay. (Typically, these are declines, cancellations, nottakens and policies that have lapsed with less than 3 months premium paid. If there is not sufficient Direct Pay to cover the charge back for the week, the excess charge will be applied to the commission account. For record-keeping purposes, commission charge backs may be made against the year the commission was originally credited in the following instances: a. Not-taken policies b. Where it appears that the lapsed policy was issued only to improve the Agent's record. 2. Commission Disallowance A commission disallowance will occur if an individual or a family member has a policy issued within six months of a lapse or if a policy lapses within six months after another policy is issued. Renewals on the new policy will revert to the ultimate renewal rate for all years. 3. First Year Death Claims Generally no charge back is made of commissions for first year death claims on insureds that were insurable at the time of application. The Company reserves the right to charge back the full amount of the commission if the insured was not insurable at the time of application or where the maximum limits of the Company were exceeded. First year commissions will be charged back in full on modified benefit policy (ALX) death claims where death occurred in the first year due to natural causes. 2

7 C. Payments from the Commission Account A percentage of the balance in the Agent s commission account will be paid each week according to the following schedule: Commission Acct. Balance % paid less than $3,000 6 % $3,000 to 3,999 8 % $4,000 and over 10 % D. Lump Sum Withdrawals There will be no lump sum withdrawals from the commission account. E. Transfers of First Year Commissions First year commissions will not be transferred to an active Agent from a terminating Agent or an Agent being reassigned to Unit Manager. F. Settlement of Commission Account The Company may at any time offset against commission accrued, or to be accrued, all indebtedness owed by an Agent to the Company. If any such indebtedness shall remain unpaid, the Agent will remain indebted to the Company until it is paid and full and the Agent shall be responsible for reasonable attorney s fees and costs incurred by the Company to collect the indebtedness. Payment on indebtedness is due immediately. Agents who terminate with less than five years of continuous service from the date of last employment are not eligible to receive payments from their commission account unless termination is due to death or disability. Otherwise, terminated Agents may be eligible to receive payments from their commission account if the account remains positive after adjustment for amounts owed the Company. Payments from the commission account will cease upon termination, and the commission account will be analyzed at the end of 12 weeks. Any indebtedness, bonus overpayment and supplemental salaries paid will be charged to the commission account. Negative commission account balances will be charged against any bond account balance or renewals that may be payable at time of settlement. At the end of the 13th week after termination, the Company will furnish the former Agent a statement of the commission account showing all credits and charges made during the 12 weeks following termination. For Agents eligible to receive payments from their commission account, the commission account will be analyzed monthly beginning with the 13th week after termination. The Agent will receive a check each month if there is an excess of the then current commission account balance over all potential commission charge backs. No payments will be made from the commission account for Agents going on sick leave. After 52 weeks, if the Agent is approved for Social Security disability, a final settlement of the account will be made. The Company will pay 100% of any balance left in the commission account. Negative commission account balances will be charged against any bond account balance or renewals that may be payable at time of settlement. 3

8 II. FIRST YEAR AND RENEWAL COMMISSIONS First year commissions will be based on the annual premium. Renewals will be based on the amount of premium remitted. Commission Rates are found in Appendix A. Commission Rules 1. To Whom Paid First year commissions are paid to the writing Agent if, at the time of payment, the Agent is licensed. Commissions may be split only on policies written on a paper A-250 application. Renewal commissions will be paid to the writing Agent as long as the business is in force and the Agent is employed as an Agent, Unit Manager or Branch Manager (although any servicing renewals may be subject to a reduction factor based on performance.) Agents on sick leave/worker's compensation (employees only) will be paid 2 nd and 3 rd year renewals upon return from sick leave/worker's compensation or upon settlement of the commission account. 2. Additional Commissions Paid a. Commissions on rated policies Full first year commissions will be paid on: - Flat extra premiums for over five years - Extra premiums for aviation coverage for over five years - All table ratings No commission will be paid on temporary flat extra premium for a period of five years or less. b. Commissions on riders added to existing policies Full first year commissions will be paid on riders and supplemental benefits added to a policy. c. Commissions on proceeds left with Company A commission of 1% will be paid to the servicing Agent on a life insurance death claim, endowment or cash surrender proceeds left with the Company under a settlement option. To qualify for the commission, a minimum of $25,000 must be left on deposit. The minimum amount can be established from multiple policies as long as they are on the same insured. There will be a full commission charge back if the money is withdrawn within six months from the date of deposit. 4

9 III. REVIVAL COMMISSIONS Agents will be paid the balance of first year commission on revivals where a policy has been lapsed and has remained out of benefit for three or more months. The reviving Agent, if other than the original writing Agent, must request the commission and receive approval by the Branch Manager at the time of revival. The Company reserves the right to deny the commissions on any particular policy. When revived, the policy will be assigned to the reviving Agent. IV. EXPENSE REIMBURSEMENT PROGRAM (BEAM) The Business Expense Advance Management program (BEAM) helps Agents by designating a portion of their weekly earnings as a reimbursement of some of the business expenses incurred on a regular basis. This results in tax savings for the Agent. Under the program, 60% of weekly earnings in excess of $100, up to a maximum of $90, will be considered a reimbursement of business expenses. Example: An Agent s weekly earnings are $850. The first $100 is excluded from BEAM, and 60% of the remaining $750 is greater than $90; so the Agent will have $90 in earnings that will be considered an expense reimbursement which is not subject to taxation. This program is operated under IRS regulations as an accountable plan, and the amount designated as an expense reimbursement is not included in taxable earnings on Form W-2. IRS regulations require that Agents provide substantiation to the Company that the expenses were actually incurred and that any amounts not substantiated on a timely basis must be returned. Agents must therefore file business expense reports (BEAM reports) each month to substantiate that they have incurred business expenses of at least the amount of reimbursement received. Failure to do so in a timely manner will trigger earnings charges to recover the unsubstantiated amounts. This program only applies to Agents who are employees of the Company and on whom payroll taxes are being withheld. 5

10 V. WEEKLY PRODUCTION BONUS To qualify for a weekly production bonus, an Agent must meet minimum requirements with respect to Quality of Business (QOB) or, for agents appointed 4/28/08 and after, Declines, Cancellations, & Not Takens (DCN), and the minimum amount of gross submitted premium. The Company reserves the right to modify or discontinue the bonus program at any time. A. Calculation of Bonus Bonus for Agents appointed prior to 4/28/08 The qualification for a bonus is based on the Agent s gross submitted premium. A first-year agent qualifies for a bonus when they submit $950 or more, gross annual premium in one week. Excluded from the calculation are annuities, group dental, group vision, discount cards, auto-issue accident policies and similar products on which a commission is not paid. The bonus percentages are dependent upon the number of consecutive weeks the Agent has qualified for a bonus. The bonus premium is calculated weekly, with declines, cancellations and not-takens counted against the gross submitted to get net submitted premium for the week. The production bonus percentages are calculated according to the following schedule: FIRST YEAR AGENT PRODUCTION BONUS SCHEDULE Consecutive Weeks Gross Submit Production Bonus % $950 Annual Premium 1 10% 2 20% 3 30% 4 40% 6

11 The QOB component of the bonus is shown in the following table. A 4-month QOB rate will be calculated for each Agent each month, and that determines the Agent s QOB multiplier for the following month. For newly hired Agents who have less than eight (8) full months of service, a multiplier of 1.00 will be used. QOB MULTIPIER TABLE (For Agents Appointed on or before April 25, 2008) QOB Multiplier QOB Multiplier QOB Multiplier QOB Multiplier <59%.00 69%.92 79% % %.70 70%.94 80% % %.73 71%.96 81% % %.76 72%.98 82% % %.79 73% % % %.82 74% % % %.84 75% % %> %.86 76% % %.88 77% % %.90 78% % 1.24 The bonus calculation will be as follows: First, if the first year agent gross submits $950 or more annual premium, the agent qualifies for a bonus. If not, the agent does not qualify for a bonus. If an agent gross submits $950 or more, then we determine how many weeks in a row the agent has qualified for a bonus and apply the applicable percentage rate to the net submitted premium. Net submitted premium is calculated as follows: Net submitted premium = Gross submitted premium minus declines, cancellations & not-takens. The QOB multiplier is then applied. Net submitted premium x Bonus Percentage based on consecutive weeks gross submitting $950 x QOB Multiplier Weekly Production Bonus Payable to Agent Example 1: A FYA has qualified for a bonus for the previous 3 weeks. This week, the FYA gross submits $950. The agent has no declines, cancellations or not-takens this week. The Agent s 4-month QOB rate is 77%, so the QOB multiplier is Weekly Production Bonus = $950 x 40% x 1.04 = $

12 Example 2: A FYA has qualified for a bonus for the previous 3 weeks. This week, the FYA gross submits $950. The agent has $100 in declines, cancellations or not-takens this week. The Agent s 4-month QOB rate is 77%, so the QOB multiplier is Since the agent gross submitted $950 or more, the Agent is eligible for a bonus. The actual bonus paid is based upon the net submitted premium. Net submitted premium equals $850 ($950-$100). Weekly Production Bonus = $850 x 40% x 1.04 = $ Example 3: A FYA has qualified for a bonus for the previous 2 weeks. This week, the FYA gross submits $600. The agent has $100 in declines, cancellations or not-takens this week. The Agent s 4-month QOB rate is 77%, so the QOB multiplier is Since the agent did not gross submit $950 or more, the Agent is not eligible for a bonus. To be eligible for a bonus in the future, the Agent must submit $950 or more. Beginning the 10th month of service, the FYA production bonus qualifying amount will increase by $100 each month until the bonus qualifying amount reaches $1,450 gross submit, which is the RYA qualifying amount. An Agent s first month of service is the partial month of appointment plus the first full calendar month after their appointment date. For example, if the Agent s appointment date is April 14, their first month of service will be from April 14 through the entire month of May. If the Agent s appointment date is April 1, their first month of service is April. Production Bonus Gross Submit Requirement: Months of Service Gross Submit Requirement 1-9 $ , , , , ,450 The qualification for a bonus is based on the Agent s gross submitted premium. A renewal year agent qualifies for a bonus when the RYA submits $1450 or more, gross annual premium in one week. 8

13 The production bonus percentages are calculated according to the following schedule: RENEWAL YEAR AGENT PRODUCTION BONUS SCHEDULE Consecutive Weeks Gross Submit Production Bonus % $1450 Annual Premium 1 10% 2 20% 3 30% 4 40% The bonus calculation will be as follows: First, if the agent gross submits $1450 or more annual premium, the agent qualifies for a bonus. If not, the agent does not qualify for a bonus. If an agent gross submits $1450, then we determine how many weeks in a row the agent has qualified for a bonus and apply the applicable percentage rate to the net submitted premium. Net submitted premium is calculated as follows: Net submitted premium = Gross submitted premium minus declines, cancellations & not-takens. The QOB multiplier is then applied. Net submitted premium x Bonus Percentage based on consecutive weeks gross submitting $1450 x QOB Multiplier Weekly Production Bonus Payable to Agent Example 1: A RYA has qualified for a bonus for the previous 2 weeks. This week, the RYA gross submits $1600. The agent has no declines, cancellations or not-takens this week. The Agent s 4-month QOB rate is 77%, so the QOB multiplier is Weekly Production Bonus = $1,600 x 30% x 1.04 = $ Example 2: A RYA has qualified for a bonus for the previous 2 weeks. This week, the RYA gross submits $1600. The agent has $500 in declines, cancellations or not-takens this week. The Agent s 4-month QOB rate is 77%, so the QOB multiplier is Since the agent gross submitted $1450 or more, he is eligible for a bonus. The actual bonus paid is based upon the net submitted premium. Net submitted premium equals $1,100 ($1,600-$500). Weekly Production Bonus = $1,100 x 30% x 1.04 = $

14 Example 3: A RYA has qualified for a bonus for the previous 2 weeks. This week, the FYA gross submits $1300. The agent has $100 in declines, cancellations or not-takens this week. The Agent s 4-month QOB rate is 77%, so the QOB multiplier is Since the agent did not gross submitted $1450 or more, the Agent is not eligible for a bonus. To be eligible for a bonus in the future, the Agent must submit $1450 or more. Bonus for Agents appointed 4/28/08 and after The agent s Production Bonus Multiplier (PBM) will be based on Declines, Cancellations, and Not Takens (DCN) with a multiplier of 1.00 for the first two full months of service. After the initial two month period, if the agent s production in the DCN calculation period is less than $1,000, the maximum DCN multiplier he/she can qualify for will be To qualify for a DCN multiplier of greater than 1.00, the net DCN submitted premium during the calculation period must be $1,000 or more, as shown on the DCN Summary Report. DCN % DCN MULTIPLIER TABLE (For Agents appointed April 28, 2008 and after) MULTIPLIER DCN MULTIPLIER DCN MULTIPLIER % % 29> The bonus calculation will be as follows: First, if the first year agent gross submits $950 or more annual premium, the agent qualifies for a bonus. If not, the agent does not qualify for a bonus. If an agent gross submits $950 or more, then we determine how many weeks in a row the agent has qualified for a bonus and apply the applicable percentage rate to the net submitted premium. Net submitted premium is calculated as follows: Net submitted premium = Gross submitted premium minus declines, cancellations & not-takens. The DCN multiplier is then applied. 10

15 Net submitted premium x Bonus Percentage based on consecutive weeks gross submitting $950 x DCN Multiplier Weekly Production Bonus payable to the agent Example 1: A FYA has qualified for a bonus for the previous 3 weeks. This week, the FYA gross submits $950. The agent has no declines, cancellations or not-takens this week. The Agent s 3-month DCN rate is 12%, so the DCN multiplier is Weekly Production Bonus = $950 x 40% x 1.05 = $ Example 2: A FYA has qualified for a bonus for the previous 3 weeks. This week, the FYA gross submits $950. The agent has $100 in declines, cancellations or not-takens this week. The Agent s 3-month DCN rate is 12%, so the DCN multiplier is Since the agent gross submitted $950 or more, the Agent is eligible for a bonus. The actual bonus paid is based upon the net submitted premium. Net submitted premium equals $850 ($950-$100). Weekly Production Bonus = $850 x 40% x 1.05 = $ Example 3: A FYA has qualified for a bonus for the previous 2 weeks. This week, the FYA gross submits $600. The agent has $100 in declines, cancellations or not-takens this week. The Agent s 3-month DCN rate is 12%, so the DCN multiplier is Since the agent did not gross submit $950 or more, the Agent is not eligible for a bonus. To be eligible for a bonus in the future, the Agent must submit $950 or more. Production Bonus During Vacation Scheduled vacations (full week only) will not be used in determining the agent s string of consecutive weeks in qualifying for the Production Bonus. Term Conversions The annual premium on the increase in premium will be credited to the Gross Submit the same week it is submitted. C.O.D. S The amount submitted will be credited to the Gross Submit the same week the app is submitted. The difference between the submitted premium & the issued premium will be adjusted in the Net Submit when issued. Additional Coverage or Rider added to an existing policy The additional premium will be added to the Gross Submit. B. Payment of Bonus Subject to the following exceptions, 100% of the production bonus will be paid direct by including it in the Agent s weekly pay statement. 11

16 If an Agent has an outstanding bonus overpayment or a debit balance due to management guarantees, the weekly production bonus will be used to reduce those amounts. If an Agent has a negative commission account, the bonus will be credited to the commission account to the extent necessary to bring the commission account back to $0. The balance of the bonus will then be paid in the normal manner. Except in cases of retirement, death or disability, to receive a bonus the Agent must be continuously employed by the Company from the time the bonus is accrued until it is paid. C. QOB Multiplier for Management Reassigned as Agents When an Agent is assigned to management, the most recently calculated 4-month QOB rate for the Agent is saved. In the event the individual returns to Agent status, for the first eight months if there is less than $4,000 AP submitted from which a 4-month QOB rate can be calculated, the saved QOB rate will be used to determine the Agent s QOB multiplier. If no QOB rate was ever calculated for the Agent, a QOB multiplier of 1.00 will be used. At the time of the next monthly QOB rate recalculation, if there is at least $4,000 AP submitted available, a new QOB multiplier will be determined. If during the eight months following reassignment the AP issue available then falls below $4,000, a multiplier of 1.00 is used. Eight months after reassignment, a new QOB rate will be calculated each month regardless of the amount of AP issue available. D. DCN Multiplier for Management Reassigned as Agents When a Branch Manager or Unit Manager is reassigned as an Agent, the agent will be assigned a DCN multiplier of 1.00 for the remainder of that month and the next two full months. At that time, a new DCN will be calculated monthly. VI. SPECIAL BENEFITS A. Vacation (Employees Only) 1. Length of Vacation a. Re-employed Agents will have their years of service calculated from the date of re-employment. b. Agents employed prior to the first Monday in February are entitled to one week of summer vacation after June 1. c. Agents with one but less than 10 years of service by June 1 are entitled to two weeks of vacation after June 1. d. Agents with 10 but less than 20 years of service by June 1 are entitled to three weeks of vacation after June 1. 12

17 e. Agents with 20 years of service by June 1 are entitled to four weeks of vacation after June 1. f. Agents must be on the active payroll at least one week during the calendar year in order to be entitled to any vacation. The Branch Manager may give Agents employed on or after the first Monday in February a long weekend (starting Wednesday noon) vacation after they have completed three months of service. In addition to regular vacation, Agents who attend Torch Club will be given the necessary days off to attend the convention and for a reasonable amount of travel time to and from the convention site. When the Company offers air transportation to Torch Club, but an Agent elects to drive, any additional travel time must be counted as vacation. Agents may not sell unused vacation. 2. Vacation Dates Taking vacation in consecutive weeks is not recommended. In addition, vacations should be scheduled for full weeks, not partial weeks (e.g., not 1 or 2 days at a time). 3. Customer Service During Vacation During the Agent's absence any necessary service work will be handled by the Unit Manager. The Agent must give the Unit Manager a list of calls to be made showing dates, names, addresses and type of service needed. 4. Payroll Checks While on Vacation Payroll checks will be sent to the branch with the regular payroll for the weeks involved and held in the branch office until the Agent's return. 5. Vacation Pay to Terminated Agents Terminated Agents will receive 6% of their commission account balance for each unused week of vacation that was shown on the list of scheduled vacations sent to Field Compensation, and it will be included as a credit in the settlement of the Agent s Account. There will be no vacation pay for unused vacation not shown on that listing. 6. Production Bonus During Vacation Scheduled vacations (full week only) will not be used in determining the agent s string of consecutive weeks in qualifying for the Production Bonus. No Production Bonus will be paid during the vacation week, but the lack of submit during the vacation week will not cause a break in an agent s consecutive weeks of production. 13

18 B. Holidays 1. Regular Holidays The Company will observe the holidays shown below. When these holidays occur on a Sunday, they will be observed on Monday. Otherwise, all holidays will be observed on the days they occur. Branch offices will be closed, and Agents will not be asked to work on the following days: New Year's Day Independence Day Thanksgiving Day Labor Day Memorial Day If the Home Office is closed due to any holidays other than the above, the branch office will also be closed. However, the Agent will be notified by management regarding the branch work schedule. 2. Christmas Holidays Dates of holidays will be determined each year by the Home Office, and the branches will be notified. C. Torch Club 1. Torch Club Qualification To qualify for Torch Club, Agents must have $72,800 ($1,400 per week) net AP issue and have premium growth during the qualification period. Agents employed in 2009 can qualify for Torch Club by averaging $1,400 per week net AP issue and have premium growth during the remainder of the year, subject to a minimum total issue of $18,200. In addition, the Agent must meet all current minimum standards. For Liberty National business, the first week s issue and growth included will be those in the Transaction/Production Register dated 01/02/09, and the last week s issue and growth will be those in the register dated 12/25/09. For United American business, the convention qualification will be from 12/25/08 thru 12/24/09. UA production counts at 1/4 th AP credit on CS1,GSP3, GSP2, GSP1, HSXC, MMXC, SHXC and Medicare Supplements. Liberty National production counts at full AP credit. The books will remain open for an additional two months to take not taken policies or any other adjustments into account before determining the final list of qualifiers. Policies issued on an agent, unit manger or branch manager or a member of the agent, unit manager or branch manager s immediate family will not count for Torch Club. 2. Dates and Location of Torch Club Torch Club will be held at the Fontainebleau Hilton Resort in Miami. The dates are July 8 11,

19 3. Torch Club Expense IRS regulations require that the Company report the approximate cost of sending the qualifier and the qualifier s spouse/guest to Torch Club as taxable wages on the W-2 or 1099 form. 4. Torch Club Attendance To be entitled to attend Torch Club, an Agent must be currently appointed by Liberty National or United American and above all current minimum standards at the time of the meeting. No expense allowance or other remuneration will be paid to any Agent or person eligible to attend who does not attend for any reason. The qualifier s spouse, or any person who does not work in a branch office and who is age 21 or over, may accompany the qualifier to the convention. Torch Club qualifiers who do not attend the convention must requalify for any future conventions. 5. Torch Club Honors To be eligible for one of the following honors, an Agent must qualify to attend Torch Club and must be appointed by the Company at the end of the qualifying period. The Company reserves the right to disqualify any Agent. a. Company Chairman & Top 10 Club The top 10 qualifiers in Torch Club production credits will be members of the Chairman s Club, and the leading Agent will be named Company Torch Club Chairman. Management personnel reassigned as Agents May 1 or after are not eligible. b. Honor Club The top 11 through 20 qualifiers in Torch Club production credits will be named members of the Honor Club. Management personnel reassigned as Agents May 1 or after are not eligible. c. Special Honors Leaders' Club - 150% of TC requirement President's Club - 200% of TC requirement President's Council - 300% of TC requirement Special badges will be given to qualifiers for the Leaders' Club, President's Club and President's Council. In addition, extra Torch Club credit is posted to the qualifier's record. Leaders' Club Torches President's Club Torches President's Council Torches 15

20 c. Rookie of the Year Agents contracted April 2008 through March 2009 will be eligible for the Rookie of the Year award. Re-contracted Agents are not eligible. The Agent cannot have been licensed with any company prior to Liberty National or United American. The leading eligible Agent in 2009 Torch Club credits will be named Rookie of the Year. d. Senior Liberty Underwriter Agents and Unit Managers who qualify for Torch Club ten or more times (Liberty or UA qualifications) are named Senior Liberty Underwriters. Senior Liberty Underwriter is the highest honor the Company confers on Unit Managers and Agents. Branch Managers who have been reassigned as a Unit Manager or Agent cannot qualify for the SLU designation until the completion of twelve months' service from the date of reassignment and until they qualify after reassignment for one additional Torch Club as an Agent or Unit Manager. The following items are furnished to the new SLU: 1. SLU ring 2. Business cards as required Re-appointed Agents who have previously earned the SLU designation will have their designation restored at the completion of their first anniversary of date of last employment. 6. Physical Examinations The Company will reimburse active SLUs between the ages of 40 and 65 up to $200 of out-of-pocket expense for a physical exam every other year. The Company will notify the SLU qualifier when an exam may be scheduled. The SLU qualifier will determine what tests, lab work and procedures will be included in the exam. The qualifier will pay the doctor for the full cost of the exam, then request reimbursement from the Company. Any costs above $200 will be the qualifier's responsibility. The qualifier will discuss the results of the exam with the doctor. The results will not be sent to the Home Office. 16

21 VII. CONTRACT REQUIREMENTS The following contract requirements have been established by the Company and may be changed from time to time, as the Company deems appropriate. A. QOB Agents must maintain an acceptable QOB rate on business written. The current minimum standard is a 4-month QOB rate of 50%. Agents whose QOB rate is below the minimum standard may be terminated. The Agent s current QOB rate is available online through Agent Services. B. Production Agents must have a minimum average AP issued of $320 per week on a 13- week rolling basis. Agents falling below this minimum standard are on probation and subject to termination. The Agent s current 13-week average production is available online through Agent Services. C. Net Issued Policies Eight Week Rule The Company expects regular, daily activity from every Agent. The result should be a steady flow of issued policies. Any active Agent who does not have one net policy issued for eight (8) consecutive calendar weeks will be automatically terminated at the end of the eighth week. The following policies do not count: annuities, group dental, group vision, discount cards, the auto-issue accident policies, or similar products. R-868s count if a new policy is being issued (e.g., a term conversion.) VIII. AMENDMENTS The Company reserves the right to amend this manual at any time. 17

22 APPENDIX --- COMMISSION RATES FOR AGENTS Product Mode 1 st Yr 2+ Yrs. Whole Life $50,000 or less BB Unique Life Protector MN Year Renewable Term Other $50,001-$99,999 BB MN Other $100,000-$249,999 BB MN Other $250,00 or more BB MN Other Ages * BB (under $20,000) MN Other * - These commission rates are used for all term conversions to WL at ages 76 & up, regardless of the amount converted. Modified Benefit Life Ages 0-34 BB MN Other Ages BB MN Other Pay Life BB MN Other CareerLife Plus All

23 APPENDIX --- COMMISSION RATES FOR AGENTS Product Mode 1 st Yr 2+ Yrs. Annual Renewable Term Under $100,000 BB Level Premium MN Decreasing Term Other Mortgage Decreasing Term 10 & 20-Year R&C Term $100,000 & Up BB MN Other Term Riders - Commission rates for term riders are the same as those for term policies. Term Conversions First year commissions are paid on the increase in premium. Full renewals are paid. No commission will be paid on conversions of term policies or riders that are on premium waiver and that remain on premium waiver after conversion. Group Term Life PD VitaLife Select Less than $500,000 BB & 20 MN Other $500,000-$999,999 BB MN Other Accident Protector Plus Ages 3-55 All Ages All Hospital Intensive Care Ages 0 50 BB MN Other Ages BB MN Other

24 APPENDIX --- COMMISSION RATES FOR AGENTS Product Mode 1 st Yr 2+ Yrs. Hospital Accident Ages 3 55 BB Accident (ACA, ACB) MN Other Ages BB (Ages for ACB) MN Other Hospital Income Ages 0 55 BB MN Other Ages BB MN Other Cancer Expense Ages 0 50 BB MN Other Ages BB MN Other Critical Illness Ages BB & PD Ages BB & PD Auto Club Membership BB MN Other Flexible Premium Annuities If annuity premiums (on any one annuitant, regardless of the number of policies) exceed $2,000 in the first policy year, the first year commission will be 10% on $2,000 and 3% on the excess. A 1% commission will be paid on renewal premiums received after the first year. If annuity premiums are increased in the first year or in subsequent years, there will be a 10% commission on increases up to a total policy year premium of $2,000. A 3% commission will be paid on tax-qualified rollovers from an IRA with another company or bank into an IRA with LNL. This commission should be requested at the time of the rollover contribution if the request does not accompany the application. There will be no commission paid for a rollover of funds from LNL policies or annuities. APPENDIX --- COMMISSION RATES FOR AGENTS 3

25 Product Mode 1 st Yr 2+ Yrs. Dental Florida PD Other States PD Vision PD UnumProvident STD PD $3,000 Accidental Death Florida ANN 100% 0% Policy (Plan ADP) Other States ANN 0% 0% ****100% of the 1 st Year Commissions associated with Plan ADP shall be rebated to the insured(s), and the 1 st year s premium will be charged against the writing Agent s account, in accordance with the Florida Rebate Schedule filed by the writing Agent with Company. No net commissions will be paid to the writing Agent. 4