SecurePlus Gold Disclosure/Application

Transcription

1 Flexible Premium Indexed Annuity SecurePlus Gold Disclosure/Application Thank You for choosing a SecurePlus Gold annuity from Life Insurance Company of the Southwest. You have chosen an annuity backed by a company with a long history of carefully protecting policy owner assets. This disclosure reviews important points to consider before you 1 buy a SecurePlus Gold annuity. Please read it carefully. SecurePlus Gold is a flexible premium indexed and declared interest deferred annuity. It is Policy Form Nos and 8891(0910), or a state variation thereof. SecurePlus Gold is a tax deferred 2 annuity, which means all amounts in the annuity accumulate with federal and state income tax deferred until withdrawn or received as income. Annuities owned by certain trusts or corporate entities may not enjoy the tax deferral feature. You can use the annuity to save for retirement and to receive retirement income for life. It is not meant to be used to meet short-term financial goals. Section I The Annuity Policy Annuities have guarantees 3 regarding premium paid, interest credited, death benefit and income amounts which distinguish them from other savings vehicles. SecurePlus Gold is an indexed annuity that may credit interest based on a formula that considers changes in the value of an external equity index but does not participate directly in any stock or equity investment. The amount of indexed interest depends on the performance of the S&P a widely used market-value weighted price index which reflects capital growth only and excludes dividends paid on its stocks. How will the value of my annuity grow? Your annuity s Accumulation Value will grow through the payment of additional premium, if you so choose, and by credited interest. You may pay multiple premiums into your annuity. However, premiums that are rollovers, exchanges or transfers may only be paid during the first five Policy Years 4. The Accumulation Value equals your premium paid (net of any applicable state taxes), plus credited interest, minus any applicable rider charges, minus any partial withdrawals taken (including any Withdrawal Charges assessed). How is interest calculated and credited? The Accumulation Value is composed of the Premium Account and three distinct types of Interest Accounts: Declared Interest S&P 500 Ending Index S&P 500 Average Index You may allocate your net premiums to any combination of the Interest Accounts. Allocations must be in whole percentages. On the day the premium is received, it is placed in the Premium Account. The Premium Account earns interest daily at an annual effective rate no less than 1%. On the 21 st of each month, the entire value of the Premium Account is transferred to new Interest Accounts. The date that an Interest Account is established, and the dates at 12-month intervals thereafter are called the Reset Dates for that Account. The period from the Reset Date when an Interest Account is established to the Reset Date in the next year, and each one-year period thereafter, is an Account Year for that Account. We maintain each Interest Account separately. Life Insurance Company of the Southwest Experience Life Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No Submit with Annuity Application. 1

2 The Declared Interest Accounts credit interest daily at an annual effective rate we set in advance for each Account Year. The rate guaranteed on the issue date and the minimum rate thereafter will be shown in your policy. Neither rate will be less than 1%. The Indexed Interest Accounts credit interest at the end of each Account Year, based in part on the annual change of the S&P 500 Index. The interest rate credited to an Indexed Interest Account is the Index Rate multiplied by the Annual Percentage Change (described below), the result being subject to a minimum called the Floor and a maximum called the Cap. The Floor is 0%. We set the Index Rate and Cap for each Indexed Interest Account in advance for each Account Year. The Index Rates and Caps guaranteed on the issue date and the minimum rates thereafter will be shown in your policy. The Index Rate will be no less than 10%, and the Cap will be no less than 1%. The Annual Percentage Change is determined by either the Ending Index or Average Index methods. Using the Ending Index method, the Annual Percentage Change is the change in the index value from the beginning of the Account Year to the index value at the end of the Account Year. Using the Average Index method, the Annual Percentage Change is the change in the index value from the beginning of the Account Year to the average of the daily index values for all open stock market days during the Account Year. The following table provides examples of how to determine the interest credited to an Indexed Interest Account in various hypothetical situations: Example Index Rate Hypothetical Annual Percentage Change Multiplied Result Cap Floor Indexed Interest Credited % 8.00% 8.00% 3.00% 0.00% 3.00% % 8.00% 2.40% No Cap 0.00% 2.40% % 8.00% 0.80% 1.00% 0.00% 0.80% % -8.00% -8.00% 3.00% 0.00% 0.00% % -8.00% -2.40% No Cap 0.00% 0.00% % -8.00% -0.80% 1.00% 0.00% 0.00% In the first example, the indexed interest is determined as follows: Step 1: Multiply the Index Rate (which had been declared at the beginning of the Account Year) by the Annual Percentage Change % x 8.00% = 8.00% Step 2: Compare this to the Cap of 3.00% (which also had been declared at the beginning of the Account Year) and a Floor of 0.00%. The Cap is smaller, since 8.00% is greater than the Cap of 3.00% Step 3: The interest rate credited is limited to the Cap of 3.00%. The interest rate credited is 3.00%. Examples 1-3 assume a positive Annual Percentage Change, while examples 4-6 assume a negative Annual Percentage Change. Examples 1 and 4 assume a hypothetical Index Rate and Cap for an account that uses the Ending Index method for determining the Annual Percentage Change. Examples 2 and 5 assume a hypothetical Index Rate and Cap for an account that uses the Average Index method for determining the Annual Percentage Change. Examples 3 and 6 assume the guaranteed minimum Index Rate and Cap for an Indexed Interest Account. Your agent can provide information about the current guaranteed interest rates, Index Rates, and Caps. Please note that such rates are subject to change without notice. How do I transfer amounts in my annuity among Interest Accounts? Transfers between and among Interest Accounts of different types may be made only on the Reset Date of the Interest Account(s) from which the transfer is to be made and only after receipt of your written request for the transfer 15 days prior to the Reset Date. Transfers from Interest Accounts are made on a LIFO basis (Last In, First Out). This means that the most recently established Interest Accounts are transferred first. The prospective rates applicable to the transferred amount will be the same rates as if its premium had been originally allocated to the new Interest Account(s). Section II Access to Value You may make a total or partial withdrawal, or you may request that your annuity be converted to periodic income. These benefits will be based on the Accumulation Value, Cash Value and/or Policy Value of your annuity. The Accumulation Value is previously described. The Cash Value of your annuity is equal to the larger of the Accumulation Value less applicable Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No Submit with Annuity Application. 2

3 Withdrawal Charges or the Policy Value. The Policy Value equals 87.5% of the premiums less withdrawals taken, accumulated daily at an annual effective interest rate shown in your policy. The rate will be no less than 1%. What happens if I take out some or all of the money from my annuity? Withdrawals in the first Policy Year are subject to a Withdrawal Charge. After the first Policy Year, you may withdraw in any one year, without incurring a Withdrawal Charge, up to 10% of the Accumulation Value. Withdrawal Charges are a percentage of the amount withdrawn in excess of this Free Withdrawal Amount. Withdrawal Charge percentages are shown in the table on page 5. Contractually, the minimum partial withdrawal you may request is $500, and your Accumulation Value must be no less than $2,500 after the withdrawal. How do I get income (payouts) from my annuity 5? If you convert your annuity to income prior to the end of the 5 th Policy Year, we will calculate the income using the Cash Value. If you do so after the 5 th Policy Year, any applicable Withdrawal Charges will be waived. Your annuity policy describes your options in detail (see Part 7: The Payment Options in your annuity policy). Your current choices are: Designated period of time: Guarantees income for a chosen period, from five to 25 years Life: Guarantees income for as long as you live Life income with a period certain: Guarantees income for as long as you live or for a chosen period, whichever is longer. If you die within the period certain, the income continues to your beneficiary for the remainder of the period certain. Periods certain are 10 years, 20 years and Installment Refund (income continues until the amount paid is at least the amount applied) Joint and survivor life: Guarantees income for as long as you or your joint annuitant live. What happens after I die? If you die before we start to pay you periodic income under the Payment Options of your annuity, your beneficiary can choose to receive the death benefit as one payment or as a series of payments over time (see Part 5: Payment of Benefits in your annuity policy). If you are the Annuitant, the death benefit is the greater of the Accumulation Value or the Policy Value. If you are the Owner but not the Annuitant, the death benefit is the Cash Value. If your death occurs after periodic income payments have begun, any payments which remain to be paid under your payment option selection will be paid to your beneficiary. Can I take a loan from my annuity 6? If you purchase SecurePlus Gold as a 403(b) and your employer s plan permits loans, you may request a loan while pledging your annuity as collateral. The loan interest rate charged is a variable loan interest rate based on Moody s Corporate Bond Yield Average. For more information, please see the loan rider in your policy. Section III Fees, Expenses & Other Charges Do I pay any fees or charges? SecurePlus Gold has no fees or expenses charged against your Accumulation Value. Some states charge a tax on annuities, in addition to any applicable state income tax. If we must pay this tax, we will deduct it from your premium, from your policy s values or from policy benefits as is appropriate. Charges may apply for some riders attached to the policy. The impact of any rider that constrains benefits or has a cost and that is not disclosed in this document will be disclosed separately. Section IV Taxes You should consult your own tax advisor for tax advice. How will payouts and withdrawals from my annuity be taxed? When you receive income or make a withdrawal, you pay ordinary income taxes on the taxable value. If you make a withdrawal before age 59 ½, you will be subject to a 10% federal income tax penalty unless you qualify under one of the exceptions provided by law. How are state premium taxes assessed? As of the date of publication of this document, state premium taxes will be administered as follows. States not identified do not currently assess state premium taxes on annuities; however, any applicable state income taxes would apply. Residents of Maine: The State of Maine imposes a state premium tax of 2% of all premiums paid to non-qualified annuities. We deduct 2% from your premium and pay this to the state. We apply the remaining 98% of the premium to the Accumulation Value of your policy. Since the Cash Value may depend on the Accumulation Value, the Cash Value may be reduced as a result of the state premium tax. Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No Submit with Annuity Application. 3

4 Residents of South Dakota and Wyoming: The State of South Dakota imposes a state premium tax of 1.25% and the State of Wyoming imposes a state premium tax of 1% of all premiums paid to non-qualified annuities. We deduct this amount from your premium and pay this to the state. We apply the remaining amount of the premium to the Accumulation Value of your policy. Since the Cash Value may depend on the Accumulation Value, the Cash Value may be reduced as a result of the state premium tax. Residents of California: The State of California imposes a 0.50% state premium tax in the case of qualified annuities and a 2.35% state premium tax in the case of nonqualified annuities. This tax is assessed on Withdrawal Charges in the case of a Total or Partial Withdrawal. It is assessed on amounts withdrawn to provide a periodic income. We deduct the amount of the tax from the amount withdrawn and pay this to the state. We then provide or apply the remaining amount as is appropriate at that time. Residents of Nevada and West Virginia: The State of Nevada imposes a state premium tax of 3.5% in the case of non-qualified annuities while the State of West Virginia imposes a state premium tax of 1% in the case of both qualified and non-qualified annuities. This tax is assessed on amounts withdrawn to provide a periodic income. We deduct the amount of the tax from the amount withdrawn and pay this to the state. We then apply the remaining amount as is appropriate at that time. Section V Other Information Issue age limits for this annuity are owner/annuitant age Minimum Premium: Qualified $100 per month salary reduction/deduction; Non-Qualified and IRA $100 per month, automatic bank draft. Cumulative Maximum premium for Qualified Annuities: Issue ages 0-75 $500,000; $250,000; $125,000. Annual premium limit for Non-Qualified Annuities: $25,000; Cumulative Maximum premium for Non-Qualified annuities: Issue ages 0-75 $250,000; $150,000; $100,000. Qualified and Non-Qualified premium limits are subject to change. Refer to policy/endorsement for actual limits. Determination of Qualified and Non-Qualified status is made by Company. Transfer, rollover and exchange Premiums may only be paid during the first 5 Policy Years into policies actively receiving flex premium. This annuity is designed for people who are willing to let their savings build for at least ten years. We may change your annuity policy from time to time only to follow federal or state laws and regulations. If we do, we will tell you about the changes in writing. Right to Examine: You have the right to a complete refund of your premium paid at any time within 30 days of receiving your annuity policy. To exercise this right, you must return your Policy with a written request for a refund. What should I know about Life Insurance Company of the Southwest? Life Insurance Company of the Southwest is a life insurance company that specializes in annuity and life insurance products. Our goal is to provide products that benefit policyholders regardless of market conditions. We were incorporated in 1955 under the laws of Texas as a legal reserve insurance company and are licensed in 49 states and the District of Columbia. We are a member of National Life Group 7. National Life Group is a diversified family of financial services companies that has successfully forged a strong identity as a product innovator offering personalized service. Companies in the group offer a comprehensive portfolio of life insurance, annuity and investment products to help individuals, families and businesses pursue their financial goals. Acknowledgement/Understanding Please do not rely on any statements about SecurePlus Gold that are not consistent with what is described in this Disclosure, in the annuity Policy form or in other material published by us. In case of any ambiguity, conflict or question regarding interpretation of this Disclosure or any other published material or statements, the provisions of the Policy form prevail. Please consult your annuity Policy form for further details. Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No Submit with Annuity Application. 4

5 Table 1 Withdrawal Charges Policy Yr W/D Charge % Notice of Policies Do you the applicant have any other life insurance or annuity contract/policy with Life Insurance Company of the Southwest, National Life Insurance Company or any other insurance company? Yes No If yes, Form No or state variation, entitled Important Notice Regarding Replacement of Life Insurance or Annuities, must be completed. Statement of Agent I hereby state that I have left with the applicant all sales materials used in my presentation and that such sales materials are only those issued by or approved by Life Insurance Company of the Southwest or National Life Insurance Company. Following are the form numbers of sales materials left with the applicant: Form No(s): Does the agent have reason to believe that the applicant has any other life insurance or annuity contract/policy with Life Insurance Company of the Southwest, National Life Insurance Company or any other insurance company? Yes No My signature as Applicant acknowledges that I have read and the agent has explained the contents of this Disclosure. I understand that I am applying for an indexed annuity that provides benefits linked to an external equity index but does not participate directly in the equity market. I understand this original Disclosure will be enclosed with my application and a copy of it will be sent with my Policy. Print Applicant Name Applicant Signature Print Agent Name Agent Signature Date Agent No. 1. When we use the words, you and your in this Disclosure, we mean the applicant of a SecurePlus Gold. We, us and our mean Life Insurance Company of the Southwest. 2. Buying an annuity within an IRA, 401(k) or other tax deferred retirement plan does not provide tax benefits beyond what are provided by these qualified arrangements. If considering an annuity within a retirement plan, base your decision on the annuity s other features and benefits as well as its risks and costs, not on its tax benefits. 3. Guarantees are dependent on the claims paying ability of the issuing company. 4. Policy Years are yearly periods which start on the issue date and on the same month and day each year thereafter. 5. Benefits at annuitization could be reduced if a misstatement of age or gender has occurred. 6. Loans are added by rider, Form Number 7914, which is not available in all states. All 403(b) annuities must be associated with an employer plan. Hardship withdrawals and loans are also subject to any restrictions listed in your employer s plan documents. Loans are not available on Roth 403(b). 7. National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest (LSW), Addison, TX and their affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. LSW is not an authorized insurer in New York and does not conduct insurance business in New York. Standard & Poor s, S&P, S&P 500, Standard & Poor s 500, and 500 are trademarks of The McGraw- Hill Companies, Inc. and have been licensed for use by Life Insurance Company of the Southwest. The product is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s makes no representation regarding the advisability of purchasing the product. Home Office: Dallas Pkwy., Ste. 800, Addison, TX / Telephone: / Centralized Mailing Address: One National Life Drive / Montpelier, VT Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No Submit with Annuity Application. 5

6 Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No Submit with Annuity Application. 6

7 application for annuity Section I Owner/Joint Owner/Annuitant Life Insurance Company of the Southwest (LSW) Centralized Mailing Address: One National Life Drive, Montpelier, VT Customer Relations Owner s Name SS No or Taxpayer ID DOB (m/d/yy) Age Sex S0105 Home Address City County State Zip Code Home Phone Number Home Fax Number Home Address Annuitant s Name (if different from Owner) SS No or Taxpayer ID DOB (m/d/yy) Age Sex Home Address City County State Zip Code Home Phone Number Home Fax Number Home Address Joint Owner s Name (if applicable, non-qualified only) SS No or Taxpayer ID DOB (m/d/yy) Age Sex Home Address City County State Zip Code Home Phone Number Home Fax Number Home Address Employer Work Address Work Address City County State Zip Code Work Phone Number Work Fax Number Occupation or Job Title Hire Date (m/d/yy) Annual Salary Section II Beneficiary S0202 Primary Beneficiary Relationship Social Security Number DOB (m/d/yy) Share 1) % 2) % Contingent Beneficiary Relationship Social Security Number DOB (m/d/yy) Share 1) % 2) % Section III Premium Amount Paid with Application Rollover/Transfer/1035 (Approximate) Planned Premium Per Pay S0306 If Salary Reduction, first on (m/d/yy) Payable How? Salary Reduction/Deduction Pre-Authorized Check Plan Direct (Check) Transfer/1035 Payable How Often? Monthly (12 payments) Semi-Monthly (24 payments) Bi-Weekly (26 payments) Single Other Check Months to Skip Payments: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Special Instructions for Future Billing Changes Premium Allocation Must be whole numbers and sum to 100%. Selection required. Standard Allocation: Ending Index Account % + Average Index Account % + Declared Interest Account % =100% (003) (005) (007) Initial Single Sum Transfer (If Different): Ending Index Account %+Average Index Account %+Declared Interest Account %=100% (003) (005) (007) Form No. 7913(0810) SecurePlus Gold

8 Section IV Plan Selected SecurePlus Gold S0403 Section V Plan Qualification S (b) TSA ERISA 403(b) ROTH 403(b) IRA ROTH IRA SIMPLE IRA Pension/Profit Sharing IRA Rollover Non-Qualified 401(k) Other (specify) Section VI Existing Insurance S0602 Do you, the applicant, know that replacement of existing life insurance or an existing annuity is or may be involved in the purchase of this annuity? Yes No Applicant s Initials Do you, the agent, know that replacement of existing life insurance or an existing annuity is or may be involved in the purchase of this annuity? Yes No Agent s Initials If the answer to either or both questions is yes, you must complete the appropriate replacement and exchange forms. However, if your state has adopted the NAIC Model Regulations for replacements, you must complete the appropriate forms regardless of your answers to the above questions. Please refer to LSW s 2630-Required States Forms to determine the form(s) needed. Section VII Remarks S0701 Section VIII For Home Office Endorsement Only S0801 (Not applicable in Pennsylvania or West Virginia) Section IX Fraud Warnings and Notices S0901 DC/LA/MD/RI Any person who knowingly and willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly and willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. FL Notice: Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony in the third degree. KY/ME/OH Any person who knowingly and with intent to injure, defraud, or deceive any insurer files an application for insurance containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime. NJ Notice: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. AR/NM/PA Warning: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. VA Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may have violated state law. WA It is a crime to knowingly provide false incomplete or misleading information to an insurance company for the purposes of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. Section X Acknowledgments S1003 The Annuitant and the Owner, if other than the Annuitant; (1) represents, to the best of their knowledge and belief, that all statements and answers contained herein are full, complete and true as written and are correctly recorded; and, (2) expressly agrees as follows: 1. This application and the answers and agreements contained herein shall be the basis of, a part of the consideration for and a part of the annuity hereby applied for. 2. The payment of premium constitutes consideration to the Company for the granting of an annuity and upon payment becomes the absolute property of the Company. 3. If proof of age is not given with this application, the Annuitant(s) will furnish the Company with such proof before annuity payments begin. 4. The annuity applied for shall take effect on the date the premium is received by the Company in its Home Office. The SecurePlus single premium deferred annuities shall take effect on the 7th, 14th, 21st or 28th of the month following or coincident with the date the premium is received by the Company in its Home Office. 5. The Company is authorized to amend this application by an appropriate notation in the space designated For Home Office Endorsement Only in order to correct apparent errors or omissions. The acceptance of any annuity issued on this application shall constitute acceptance and ratification of the beneficiary designation, if any, in such annuity and of any amendments contemplated above except that no change shall be made in the plan of annuity or benefits without the written acceptance of the Annuitant(s) or of the Owner if other than the Annuitant(s). W9: Under the penalties of perjury, I certify that: (1) the number shown on this application is my correct taxpayer identification number; (2) the IRS has never notified me that I am subject to backup withholding, or has notified me that I am no longer subject to such withholding or I am exempt from such withholding; and (3) I am a U.S. person (including a U.S. resident alien). You must cross out item 2 if you have been notified by the IRS that you are currently subject to backup withholding because of under reporting interest or dividends on your tax return. Section XI Signature and Agent Information S1102 Dated at (city/state) on (month/day/year) Signature of Owner Signature of Annuitant (if different from Owner) Signature of Joint Owner (if applicable) To the best of my knowledge, a replacement is is not involved in this transaction. (Agent to check box.) Florida License ID No. Signature of Agent Soliciting Agent (print) Agent No. Percent Agent Phone Number Other Agent (print) Agent No. Percent Trail Commission Option for SecurePlus Gold Section XII Disclosure Information S1202 I have received a copy of the disclosure material and understand that the results shown, other than the guaranteed minimum values, are not guarantees, promises or warranties. Applicant Signature Date I certify that the disclosure material has been presented to the applicant and a copy was provided to the applicant. I have not made statements that differ from this material nor have I made any promises about the expected future equity values of this contract. Agent Signature Date

9 Flexible Premium Indexed Annuity SecurePlus Gold Disclosure/Application Thank You for choosing a SecurePlus Gold annuity from Life Insurance Company of the Southwest. You have chosen an annuity backed by a company with a long history of carefully protecting policy owner assets. This disclosure reviews important points to consider before you 1 buy a SecurePlus Gold annuity. Please read it carefully. SecurePlus Gold is a flexible premium indexed and declared interest deferred annuity. It is Policy Form Nos and 8891(0910), or a state variation thereof. SecurePlus Gold is a tax deferred 2 annuity, which means all amounts in the annuity accumulate with federal and state income tax deferred until withdrawn or received as income. Annuities owned by certain trusts or corporate entities may not enjoy the tax deferral feature. You can use the annuity to save for retirement and to receive retirement income for life. It is not meant to be used to meet short-term financial goals. Section I The Annuity Policy Annuities have guarantees 3 regarding premium paid, interest credited, death benefit and income amounts which distinguish them from other savings vehicles. SecurePlus Gold is an indexed annuity that may credit interest based on a formula that considers changes in the value of an external equity index but does not participate directly in any stock or equity investment. The amount of indexed interest depends on the performance of the S&P a widely used market-value weighted price index which reflects capital growth only and excludes dividends paid on its stocks. How will the value of my annuity grow? Your annuity s Accumulation Value will grow through the payment of additional premium, if you so choose, and by credited interest. You may pay multiple premiums into your annuity. However, premiums that are rollovers, exchanges or transfers may only be paid during the first five Policy Years 4. The Accumulation Value equals your premium paid (net of any applicable state taxes), plus credited interest, minus any applicable rider charges, minus any partial withdrawals taken (including any Withdrawal Charges assessed). How is interest calculated and credited? The Accumulation Value is composed of the Premium Account and three distinct types of Interest Accounts: Declared Interest S&P 500 Ending Index S&P 500 Average Index You may allocate your net premiums to any combination of the Interest Accounts. Allocations must be in whole percentages. On the day the premium is received, it is placed in the Premium Account. The Premium Account earns interest daily at an annual effective rate no less than 1%. On the 21 st of each month, the entire value of the Premium Account is transferred to new Interest Accounts. The date that an Interest Account is established, and the dates at 12-month intervals thereafter are called the Reset Dates for that Account. The period from the Reset Date when an Interest Account is established to the Reset Date in the next year, and each one-year period thereafter, is an Account Year for that Account. We maintain each Interest Account separately. Life Insurance Company of the Southwest Experience Life Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No This copy to be left with applicant.

10 The Declared Interest Accounts credit interest daily at an annual effective rate we set in advance for each Account Year. The rate guaranteed on the issue date and the minimum rate thereafter will be shown in your policy. Neither rate will be less than 1%. The Indexed Interest Accounts credit interest at the end of each Account Year, based in part on the annual change of the S&P 500 Index. The interest rate credited to an Indexed Interest Account is the Index Rate multiplied by the Annual Percentage Change (described below), the result being subject to a minimum called the Floor and a maximum called the Cap. The Floor is 0%. We set the Index Rate and Cap for each Indexed Interest Account in advance for each Account Year. The Index Rates and Caps guaranteed on the issue date and the minimum rates thereafter will be shown in your policy. The Index Rate will be no less than 10%, and the Cap will be no less than 1%. The Annual Percentage Change is determined by either the Ending Index or Average Index methods. Using the Ending Index method, the Annual Percentage Change is the change in the index value from the beginning of the Account Year to the index value at the end of the Account Year. Using the Average Index method, the Annual Percentage Change is the change in the index value from the beginning of the Account Year to the average of the daily index values for all open stock market days during the Account Year. The following table provides examples of how to determine the interest credited to an Indexed Interest Account in various hypothetical situations: Example Index Rate Hypothetical Annual Percentage Change Multiplied Result Cap Floor Indexed Interest Credited % 8.00% 8.00% 3.00% 0.00% 3.00% % 8.00% 2.40% No Cap 0.00% 2.40% % 8.00% 0.80% 1.00% 0.00% 0.80% % -8.00% -8.00% 3.00% 0.00% 0.00% % -8.00% -2.40% No Cap 0.00% 0.00% % -8.00% -0.80% 1.00% 0.00% 0.00% In the first example, the indexed interest is determined as follows: Step 1: Multiply the Index Rate (which had been declared at the beginning of the Account Year) by the Annual Percentage Change % x 8.00% = 8.00% Step 2: Compare this to the Cap of 3.00% (which also had been declared at the beginning of the Account Year) and a Floor of 0.00%. The Cap is smaller, since 8.00% is greater than the Cap of 3.00% Step 3: The interest rate credited is limited to the Cap of 3.00%. The interest rate credited is 3.00%. Examples 1-3 assume a positive Annual Percentage Change, while examples 4-6 assume a negative Annual Percentage Change. Examples 1 and 4 assume a hypothetical Index Rate and Cap for an account that uses the Ending Index method for determining the Annual Percentage Change. Examples 2 and 5 assume a hypothetical Index Rate and Cap for an account that uses the Average Index method for determining the Annual Percentage Change. Examples 3 and 6 assume the guaranteed minimum Index Rate and Cap for an Indexed Interest Account. Your agent can provide information about the current guaranteed interest rates, Index Rates, and Caps. Please note that such rates are subject to change without notice. How do I transfer amounts in my annuity among Interest Accounts? Transfers between and among Interest Accounts of different types may be made only on the Reset Date of the Interest Account(s) from which the transfer is to be made and only after receipt of your written request for the transfer 15 days prior to the Reset Date. Transfers from Interest Accounts are made on a LIFO basis (Last In, First Out). This means that the most recently established Interest Accounts are transferred first. The prospective rates applicable to the transferred amount will be the same rates as if its premium had been originally allocated to the new Interest Account(s). Section II Access to Value You may make a total or partial withdrawal, or you may request that your annuity be converted to periodic income. These benefits will be based on the Accumulation Value, Cash Value and/or Policy Value of your annuity. The Accumulation Value is previously described. The Cash Value of your annuity is equal to the larger of the Accumulation Value less applicable Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No This copy to be left with applicant.

11 Withdrawal Charges or the Policy Value. The Policy Value equals 87.5% of the premiums less withdrawals taken, accumulated daily at an annual effective interest rate shown in your policy. The rate will be no less than 1%. What happens if I take out some or all of the money from my annuity? Withdrawals in the first Policy Year are subject to a Withdrawal Charge. After the first Policy Year, you may withdraw in any one year, without incurring a Withdrawal Charge, up to 10% of the Accumulation Value. Withdrawal Charges are a percentage of the amount withdrawn in excess of this Free Withdrawal Amount. Withdrawal Charge percentages are shown in the table on page 5. Contractually, the minimum partial withdrawal you may request is $500, and your Accumulation Value must be no less than $2,500 after the withdrawal. How do I get income (payouts) from my annuity 5? If you convert your annuity to income prior to the end of the 5 th Policy Year, we will calculate the income using the Cash Value. If you do so after the 5 th Policy Year, any applicable Withdrawal Charges will be waived. Your annuity policy describes your options in detail (see Part 7: The Payment Options in your annuity policy). Your current choices are: Designated period of time: Guarantees income for a chosen period, from five to 25 years Life: Guarantees income for as long as you live Life income with a period certain: Guarantees income for as long as you live or for a chosen period, whichever is longer. If you die within the period certain, the income continues to your beneficiary for the remainder of the period certain. Periods certain are 10 years, 20 years and Installment Refund (income continues until the amount paid is at least the amount applied) Joint and survivor life: Guarantees income for as long as you or your joint annuitant live. What happens after I die? If you die before we start to pay you periodic income under the Payment Options of your annuity, your beneficiary can choose to receive the death benefit as one payment or as a series of payments over time (see Part 5: Payment of Benefits in your annuity policy). If you are the Annuitant, the death benefit is the greater of the Accumulation Value or the Policy Value. If you are the Owner but not the Annuitant, the death benefit is the Cash Value. If your death occurs after periodic income payments have begun, any payments which remain to be paid under your payment option selection will be paid to your beneficiary. Can I take a loan from my annuity 6? If you purchase SecurePlus Gold as a 403(b) and your employer s plan permits loans, you may request a loan while pledging your annuity as collateral. The loan interest rate charged is a variable loan interest rate based on Moody s Corporate Bond Yield Average. For more information, please see the loan rider in your policy. Section III Fees, Expenses & Other Charges Do I pay any fees or charges? SecurePlus Gold has no fees or expenses charged against your Accumulation Value. Some states charge a tax on annuities, in addition to any applicable state income tax. If we must pay this tax, we will deduct it from your premium, from your policy s values or from policy benefits as is appropriate. Charges may apply for some riders attached to the policy. The impact of any rider that constrains benefits or has a cost and that is not disclosed in this document will be disclosed separately. Section IV Taxes You should consult your own tax advisor for tax advice. How will payouts and withdrawals from my annuity be taxed? When you receive income or make a withdrawal, you pay ordinary income taxes on the taxable value. If you make a withdrawal before age 59 ½, you will be subject to a 10% federal income tax penalty unless you qualify under one of the exceptions provided by law. How are state premium taxes assessed? As of the date of publication of this document, state premium taxes will be administered as follows. States not identified do not currently assess state premium taxes on annuities; however, any applicable state income taxes would apply. Residents of Maine: The State of Maine imposes a state premium tax of 2% of all premiums paid to non-qualified annuities. We deduct 2% from your premium and pay this to the state. We apply the remaining 98% of the premium to the Accumulation Value of your policy. Since the Cash Value may depend on the Accumulation Value, the Cash Value may be reduced as a result of the state premium tax. Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No This copy to be left with applicant.

12 Residents of South Dakota and Wyoming: The State of South Dakota imposes a state premium tax of 1.25% and the State of Wyoming imposes a state premium tax of 1% of all premiums paid to non-qualified annuities. We deduct this amount from your premium and pay this to the state. We apply the remaining amount of the premium to the Accumulation Value of your policy. Since the Cash Value may depend on the Accumulation Value, the Cash Value may be reduced as a result of the state premium tax. Residents of California: The State of California imposes a 0.50% state premium tax in the case of qualified annuities and a 2.35% state premium tax in the case of nonqualified annuities. This tax is assessed on Withdrawal Charges in the case of a Total or Partial Withdrawal. It is assessed on amounts withdrawn to provide a periodic income. We deduct the amount of the tax from the amount withdrawn and pay this to the state. We then provide or apply the remaining amount as is appropriate at that time. Residents of Nevada and West Virginia: The State of Nevada imposes a state premium tax of 3.5% in the case of non-qualified annuities while the State of West Virginia imposes a state premium tax of 1% in the case of both qualified and non-qualified annuities. This tax is assessed on amounts withdrawn to provide a periodic income. We deduct the amount of the tax from the amount withdrawn and pay this to the state. We then apply the remaining amount as is appropriate at that time. Section V Other Information Issue age limits for this annuity are owner/annuitant age Minimum Premium: Qualified $100 per month salary reduction/deduction; Non-Qualified and IRA $100 per month, automatic bank draft. Cumulative Maximum premium for Qualified Annuities: Issue ages 0-75 $500,000; $250,000; $125,000. Annual premium limit for Non-Qualified Annuities: $25,000; Cumulative Maximum premium for Non-Qualified annuities: Issue ages 0-75 $250,000; $150,000; $100,000. Qualified and Non-Qualified premium limits are subject to change. Refer to policy/endorsement for actual limits. Determination of Qualified and Non-Qualified status is made by Company. Transfer, rollover and exchange Premiums may only be paid during the first 5 Policy Years into policies actively receiving flex premium. This annuity is designed for people who are willing to let their savings build for at least ten years. We may change your annuity policy from time to time only to follow federal or state laws and regulations. If we do, we will tell you about the changes in writing. Right to Examine: You have the right to a complete refund of your premium paid at any time within 30 days of receiving your annuity policy. To exercise this right, you must return your Policy with a written request for a refund. What should I know about Life Insurance Company of the Southwest? Life Insurance Company of the Southwest is a life insurance company that specializes in annuity and life insurance products. Our goal is to provide products that benefit policyholders regardless of market conditions. We were incorporated in 1955 under the laws of Texas as a legal reserve insurance company and are licensed in 49 states and the District of Columbia. We are a member of National Life Group 7. National Life Group is a diversified family of financial services companies that has successfully forged a strong identity as a product innovator offering personalized service. Companies in the group offer a comprehensive portfolio of life insurance, annuity and investment products to help individuals, families and businesses pursue their financial goals. Acknowledgement/Understanding Please do not rely on any statements about SecurePlus Gold that are not consistent with what is described in this Disclosure, in the annuity Policy form or in other material published by us. In case of any ambiguity, conflict or question regarding interpretation of this Disclosure or any other published material or statements, the provisions of the Policy form prevail. Please consult your annuity Policy form for further details. Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No This copy to be left with applicant.

13 Table 1 Withdrawal Charges Policy Yr W/D Charge % Notice of Policies Do you the applicant have any other life insurance or annuity contract/policy with Life Insurance Company of the Southwest, National Life Insurance Company or any other insurance company? Yes No If yes, Form No or state variation, entitled Important Notice Regarding Replacement of Life Insurance or Annuities, must be completed. Statement of Agent I hereby state that I have left with the applicant all sales materials used in my presentation and that such sales materials are only those issued by or approved by Life Insurance Company of the Southwest or National Life Insurance Company. Following are the form numbers of sales materials left with the applicant: Form No(s): Does the agent have reason to believe that the applicant has any other life insurance or annuity contract/policy with Life Insurance Company of the Southwest, National Life Insurance Company or any other insurance company? Yes No My signature as Applicant acknowledges that I have read and the agent has explained the contents of this Disclosure. I understand that I am applying for an indexed annuity that provides benefits linked to an external equity index but does not participate directly in the equity market. I understand this original Disclosure will be enclosed with my application and a copy of it will be sent with my Policy. 1. When we use the words, you and your in this Disclosure, we mean the applicant of a SecurePlus Gold. We, us and our mean Life Insurance Company of the Southwest. 2. Buying an annuity within an IRA, 401(k) or other tax deferred retirement plan does not provide tax benefits beyond what are provided by these qualified arrangements. If considering an annuity within a retirement plan, base your decision on the annuity s other features and benefits as well as its risks and costs, not on its tax benefits. 3. Guarantees are dependent on the claims paying ability of the issuing company. 4. Policy Years are yearly periods which start on the issue date and on the same month and day each year thereafter. 5. Benefits at annuitization could be reduced if a misstatement of age or gender has occurred. 6. Loans are added by rider, Form Number 7914, which is not available in all states. All 403(b) annuities must be associated with an employer plan. Hardship withdrawals and loans are also subject to any restrictions listed in your employer s plan documents. Loans are not available on Roth 403(b). 7. National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest (LSW), Addison, TX and their affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. LSW is not an authorized insurer in New York and does not conduct insurance business in New York. Standard & Poor s, S&P, S&P 500, Standard & Poor s 500, and 500 are trademarks of The McGraw- Hill Companies, Inc. and have been licensed for use by Life Insurance Company of the Southwest. The product is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s makes no representation regarding the advisability of purchasing the product. Home Office: Dallas Pkwy., Ste. 800, Addison, TX / Telephone: / Centralized Mailing Address: One National Life Drive / Montpelier, VT Form No (0313)7913 SecurePlus Gold LR 11720(0112); Cat. No This copy to be left with applicant.