Life Insurance Underwriting Guide National Life Insurance Company Life Insurance Company of the Southwest 30 % Last Updated March 2012 62797 MK2312(0412) TC66287(0312)
Table of Contents Quick Tips for fficient Processing........................................................ 4 Paramedical Facilities/Laboratory Testing Services........................................... 5 Medical Testing..................................................................... 5 Life Underwriting Requirements Provider............................................................................. 7 Harbor and Foundation................................................................ 8 Horizon, Advantage 79, IncomeBuilder, FlexLife, and LSW LifeCycle........................... 9 LSW Term.......................................................................... 10 National Life Insurance Company Term and Permanent Products............................. 11 Rate Classes/Table Ratings.............................................................. 12 lite Preferred and Preferred Risk Guidelines............................................... 13 Table of Height and Weight............................................................. 14 Financial Underwriting Guidelines.........................................................15 Juvenile Applications....................................................................15 Business Insurance.................................................................... 16 Insurable Interest.......................................................................17 Section 79 Plans.......................................................................18 Tentative Quotes....................................................................... 21 Tentative Rating Request................................................................ 22 Trial Application....................................................................... 23 Informal Inquiry....................................................................... 24 Field Underwriting isability Income Rider................................................ 27 IR Ineligible Occupation Listing......................................................... 28 Foreign National Guidelines............................................................. 29 Medical Questionnaires - Help avoid APS!................................................. 32 iabetes Tentative Rating Charts......................................................... 58 APS Guidelines....................................................................... 60 Uninsurable Risks and xtremely Problematic Risks......................................... 61 Life Coverage/isability Income Rider Probable Action....................................... 62 After Issue Contract Changes............................................................ 63 Sample Application LSW.............................................................. 72 Sample Application NLIC.............................................................. 79 Sample Paramedical xam.............................................................. 90
Quick Tips for fficient Processing Submitting an Application Before submitting an application for processing, be sure to complete the application in its entirety with answers to all questions and details to all questions answered yes. Use black or blue ink only. o not use white-out or make changes after the client has signed the application form. Be sure to use the most current version of the application kit and include all required forms. This can include illustrations, sales certificates, strategy allocation forms, replacement forms, 1035 exchange forms, HIPAA, HIV consent form etc. If COM is elected, attach a voided check to the checklist. The Preferred method for submitting completed applications is: mail: NBApplicationImages@NationalLifeGroup.com or Fax: 802-229-4726 To send by US Mail: LSW/NLIC Attn: New Business M300 One National Life rive Montpelier, VT 05604 Originals: In most cases, there is no need to send originals to the Home Office. However, incoming 1035 transfer paperwork, lost policy forms, surrender forms, absolute assignment forms and policies from other companies must be sent via mail with an original signature. Transferring companies will require the original signatures and forms. Underwriting Requirements Once your application has been processed, you will be notified by email of any outstanding underwriting requirements. As the writing agent, you are responsible for ordering and following up on requirements. The Home Office will order medical records (APSs) unless otherwise noted (MSI is available for agency ordered APSs; see page six). Please note that requirements vary by product, issue age and the rate class, see product specific charts in this guide. The company may request additional requirements as deemed necessary. Common Underwriting Requirements Oral Swab Kit (Agent Administered) Your Field Underwriting Guide can help you determine if an Oral Fluid Swab will be required for the underwriting process. If required, it must be completed at the time the application is taken; agent administered. Include a copy of the lab slip with the application. o not obtain this test if a paramedical exam and blood/urine are otherwise required. Follow the instructions on the kit and mail immediately to the address indicated. Additional kits can be ordered from Clinical Reference Lab, Customer Service at 800-882-1922 or via email at ilscskits@crlcorp.com Status Once submitted, application status and outstanding requirements are available to view via the website. Go to www.nationallifegroup.com to access this information 24 hours a day. Please refrain from calling the Home Office for status. The website also allows you to download current application kits, check state approvals, research new products and more. We re here to help! If you have questions, call the Sales Team at 800-906-3310, Option 2, Option 1. 4
Paramedical xamination (Agent Ordered) Full testing (paramedical exam, blood/urine, KG etc) may be needed depending on the product, issue age, rate class, face amount applied for and medical history (i.e. diabetes or obesity). Please review the Life Underwriting Requirements in this guide. If full testing is needed, one of the following companies must be utilized: APPS/American ParaProfessional Systems www.appsnational.com 516-822-6230 xam One www.examone.com 800-768-2061 Portamedic www.portamedic.com 908-766-5000 MSI/xamination Management Service www.exams4web.com 800-872-3674 The paramed company will contact the prospective client to set up an appointment. Reference LSW/ National Life when contacting the paramed company Laboratory Testing Services Clinical Reference Lab is the approved testing service for oral fluid/saliva, blood profiles and urinalyses. Use of our approved lab assures the timely transmission of test results. Blood Profiles/Urinalysis/Oral Fluid OF Agent administered oral fluid testing is available for certain rate classes and certain products. A full blood profile and urinalysis is always required for Preferred and lite Preferred consideration. A urinalysis is required whenever blood testing is needed. Please refer to the product-specific charts in this guide for additional information. HIV consent forms must be submitted in those states where required, for all proposed insureds that require laboratory testing. Completion of these forms is the agent s responsibility. Medical Testing by Other Companies We will consider a paramedical exam*, KG, treadmill and/or labs that have been completed within the last twelve months for another carrier if copies are made available to us. We reserve the right to request current testing. Medical Testing Please refer to the product specific charts for certain products, face amounts, ages and rate classes that may be considered without medical testing. The company reserves the right to require additional requirements as deemed necessary. Questionnaires Medical Questionnaires are available to help avoid the need for medical records and also assist in gathering detailed medical information from a client. Available on web site and in this guide. Form Catalog# Alcohol Use/UI 9270 47552 Arthritis 9275 47557 Avocation, Aviation & Foreign Travel 1480 51381 Back Pain 9277 47559 Blood Pressure/Hypertension 8625 50789 Business Insurance 20098 51945 Cardiac/Chest Pain 9274 47556 Criminal History 20087 51943 epression/anxiety/psych. 9437 48390 iabetes 9594 48824 rug Use 9269 47551 Financial 1392 40121 Foreign National 8327 50038 Gastro-Intestinal 9276 47558 Genitourinary 9267 47549 Military Personnel 20086 51942 Migraines 9271 47553 Mountain Climbing 20088 51944 Respiratory/Asthma/Sleep Apnea 9268 47550 Seizures 9272 47554 Stroke/TIA 8624 50788 Tumors 9279 47561 * The health questions on the application must be completed. 5
Quick Tips for fficient Processing (cont d) APS (Attending Physician Statement) The Home Office will order medical records unless otherwise noted. We offer the service of ordering medical records through our vendor MSI/xamination Management Service. Contact your New Business Case Manager if you wish to use this service. An APS (copy of the client s medical records) may be required by the underwriter in order to complete the underwriting process. Obtaining these records can take 2-6 weeks, depending on the physician. Its important to provide complete physician information on the application (full name, address, phone number) for the personal physician as well as all other physicians and specialists seen. The Underwriter will advise of options for requirements for certain impairments. If available, you will be notified via email from the Underwriter. Inspection Reports/Personal History Interview (Ordered by Home Office) Please provide the proposed insured s phone numbers on every application regardless of the amount applied for and inform the applicant of the possibility of contact. Routine Inspection $5,000,001 and over: Inspection Required Foreign Nationals: Inspection Required Routine PHI (Phone Interview) Through $2,000,000: Underwriter iscretion $2,000,001 - $5,000,000 (all ages): Required PHI Ages 70 & over for $500,000 and over: Required PHI PHI may also be required for certain riders applied for Illustrations Contact the Sales esk for assistance with running illustrations at 800-906-3310, Option 2, Option 1. In states that have adopted the NAIC Illustration Regulation, a signed illustration or valid sales certification is required with submission of the application. If a state hasn t adopted the NAIC Model Regulation and the state s regulations do not require a signed illustration one does not need to be submitted. Agents are required to familiarize themselves with their state s regulations. LifeBuilder applications also require an illustration to be submitted with the application. Policy Issue and elivery Policies are sent directly to the agent for delivery to the policyowner unless otherwise directed. The policy should be delivered in person as soon as possible. A policy transmittal accompanies the policy which outlines all delivery requirements and receipts needed to complete the sale. A self-addressed envelope is also enclosed for your convenience in returning of these items or they may be faxed to the Home Office at 802-229-4726 or emailed to NBRequirementImages@NationalLifeGroup.com. Agent Commissions and Contracting LSW commissions are generated weekly and National Life commissions are generated twice a month. Please see the website www.nationallifegroup.com for a Life commission cutoff schedule. Motor Vehicle Report (Ordered by Home Office) Ages 14 30: All applications Ages 31 40: Requested for $250,000 and over Ages 41 69: Requested for $500,000 and over Ages 70+: Requested for $100,000 and over Please note that Pennsylvania and Louisiana require us to appoint you in their State prior to solicitation. Contact the Life Agent Services Support Center at 800-906-3310 (x6765) for commission, contracting, website or forms related questions. An MVR may also be requested at the underwriter s discretion, based on the application and history. 6
Life Underwriting Requirements Provider Underwriting Amount Issue Age 0-14 15-30 31-40 41-50 51-60 61-65 66-70 71-80 81+ Through $50,000 A A A A A A OF $50,001 - $100,000 A A A A A A $100,001 - $150,000 A A A A A A $150,001 - $200,000 A A A A A A $200,001 - $250,000 A A A A A A $250,001 - $300,000 A C $300,001 - $500,000 A $500,001 - $1,000,000 A $1,000,001 - $3,000,000 A $3,000,001 - $5,000,000 A F F F F F $5,000,001 - $10,000,000 A F F F F F F F F $10,000,001 and up A F F F F F F F F Category OF A C F Medical Requirements Application and Oral Fluid (for VSNT, SNT or Std Tobacco) Application (for VSNT, SNT or Std Tobacco) Application, Blood Profile and Urine Application, Paramedical, Blood Profile, Urine Application, Paramedical, Blood Profile, Urine and KG Application, M xam, Blood Profile, Urine and KG (Ages 51-69 need Stress Test in lieu of KG for $10,000,001+) Rate Classes Please note that preferred rates are not available at ages 0 to 65 for face amounts through $250,000. Available Ages/Face Amounts Verified Standard 3 Ages 0-85; All Face Amounts xpress Standard 4 Ages 0-85; All Face Amounts Standard Tobacco 5 Ages 15-85; All Face Amounts Preferred NT Ages 15-65; $250,001 and Over Ages 66-75; $25,000 and Over Preferred Tobacco Ages 15-65; $250,001 and Over Ages 66-75; $25,000 and Over 2 Issue age last birthday 3 Verified Standard NT used at ages 0-14 4 xpress standard class not available in PA/NJ 5 200% rating added to Standard NT rates for tobacco users up to age 19 (NA in PA) 7
Life Underwriting Requirements Harbor and Foundation Issue Age Underwriting Amount 0-14 Through $50,000 $50,001 - $100,000 $100,001 - $150,000 $150,001 - $200,000 $200,001 - $250,000 $250,001 - $300,000 $300,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 - $5,000,000 $5,000,001 - $10,000,000 $10,000,001 and up A A A A A A A A A A A A 15-30 OF OF OF OF C C F F C C C C 31-40 41-50 51-60 61-65 C OF C OF C OF F F OF C OF OF OF F F OF OF F F F OF OF Category OF Medical Requirements Application and Oral Fluid (for VSNT, SNT or Std Tobacco) A C F Application Application, Blood Profile and Urine Application, Paramedical, Blood Profile, Urine Application, Paramedical, Blood Profile, Urine and KG Application, M xam, Blood Profile, Urine and KG (Ages 51-69 need Stress Test in lieu of KG for $10,000,001+) F F F 66-70 F F F OF 71-80 81+ F F F F F F Rate Classes Harbor1 lite Preferred NT Preferred NT ages 20-75 Foundation2 ages 20-85 ages 15-85 3 ages 0-85 ages 0-85 xpress Standard NT4 ages 0-85 ages 0-85 Preferred Tobacco ages 20-85 ages 15-85 Standard Tobacco ages 20-85 ages 15-85 Verified Standard NT 5 1 Issue age nearest birthday 2 Issue age last birthday 3 Verified Standard NT used at ages 0-14 4 xpress standard class not available in PA/NJ 5 200% rating added to Standard NT rates for tobacco users up to age 19 (NA in PA) 8 8
Life Underwriting Requirements Horizon, Advantage 79, IncomeBuilder, LSW FlexLife, and LSW LifeCycle 6 Underwriting Amount Issue Age 0-14 15-30 31-40 41-50 51-60 61-65 66-70 71-80 81+ Through $50,000 A C C C $50,001 - $100,000 A C C $100,001 - $150,000 A C C $150,001 - $200,000 A C $200,001 - $250,000 A C $250,001 - $300,000 A C $300,001 - $500,000 A $500,001 - $1,000,000 A $1,000,001 - $3,000,000 A $3,000,001 - $5,000,000 A F F F F F $5,000,001 - $10,000,000 A F F F F F F F F $10,000,001 and up A F F F F F F F F Category Medical Requirements A Application C Application, Blood Profile and Urine Application, Paramedical, Blood Profile, Urine Application, Paramedical, Blood Profile, Urine and KG F Application, M xam, Blood Profile, Urine and KG (Ages 51-69 need stress test in lieu of KG for $10,000,001+) te: Oral Fluid testing is not available with the products listed on this page. Rate Classes Horizon 1 Advantage 79 1 IncomeBuilder 1 LSW FLexLife 1 LSW LifeCycle 1,6 lite Preferred NT ages 20-75 ages 20-75 ages 20-75 ages 20-75 ages 20-75 Preferred NT ages 20-85 ages 20-85 ages 20-85 ages 20-85 ages 20-85 Standard/Verified Standard NT 2 ages 0-85 ages 20-85 ages 0-85 ages 0-85 ages 0-90 Preferred Tobacco ages 20-85 ages 20-85 ages 20-85 ages 20-85 ages 20-85 Standard Tobacco 2 ages 20-85 ages 20-85 ages 20-85 ages 20-85 ages 20-90 1 Issue age nearest birthday 2 200% rating added to Standard NT rates for tobacco users up to age 19(NA in PA) 6 The underwriting amount for LifeCycle (2nd to die) will be equal to the Base Face Amount and APB Amount. If SPR is requested the Underwriting amount will be the greater of the Base and APB or Base and SPR lump sum equivalent amount. 9
Life Underwriting Requirements LSW Term Issue Age Underwriting Amount 0-14 15-30 31-40 41-50 51-60 61-65 66-70 71-75 Through $50,000 $50,001 - $100,000 $100,001 - $150,000 $150,001 - $200,000 $200,001 - $250,000 $250,001 - $300,000 $300,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 - $5,000,000 $5,000,001 - $10,000,000 $10,000,001 and up A A A A A A A A A A A A C OF C OF C OF C C C F F OF C OF C OF C OF F F OF C OF OF OF F F OF OF OF OF OF F F F F F F F F F F F F Category Medical Requirements OF Application and Oral Fluid (for VSNT, SNT or Std Tobacco) A C F Application Application, Blood Profile and Urine Application, Paramedical, Blood Profile, Urine Application, Paramedical, Blood Profile, Urine and KG Application, M xam, Blood Profile, Urine and KG (Ages 51-69 need stress test in lieu of KG for $10,000,001+) Issue Ages1 Rate Classes Available Level Term 10-G (ages 18-75) lite Preferred NT Level Term 15-G & 15-NG (ages 18-70) Preferred NT Level Term 20-G & 20-NG (ages 18-65) Verified Standard NT Level Term 30-G & 30-NG (ages 18-50) xpress Standard NT2 (for face amounts up to $249,999 only) Preferred Tobacco Standard Tobacco 1 Issue age last birthday 2 xpress Standard class not available in PA/NJ 10 10
Underwriting Requirements National Life Term and Permanent Products Underwriting Amount Issue Age 1 0-17 18-30 31-40 41-50 51-65 66-80 81+ Through $50,000 A C C C $50,001 - $150,000 A C C $150,001 - $300,000 A C $300,001 - $500,000 A $500,001 - $1,000,000 A $1,000,001 - $3,000,000 A $3,000,001 - $5,000,000 A F F F $5,000,001 - $10,000,000 A F F F F F F $10,000,001 and up F F F F F F F Category A C F Medical Requirements n-medical (Ages 15-17, urinalysis required) nmedical, Blood Profile, Urine Paramedical, Blood Profile, Urine Paramedical, Blood Profile, Urine, KG M xam, Blood Profile, Urine, KG ( Ages 0-14, M xam + KG only Ages 15-17, M xam, Urine, KG only Ages 51-69 Need Stress Test in lieu of KG for $10,000,001+) 1 Issue age nearest birthday. Proposed insureds with cardiovascular conditions should check with their physician before performing a Stress Test. 11
LSW Underwriting Classes 1 lite Preferred n-tobacco See guidelines on next page. Preferred n-tobacco See guidelines on next page. OF Verified Standard/Standard NT Offers competitive rates for applicants who are fully underwritten, who are standard risks and who do not use tobacco. OF xpress Standard 2 NT Available to applicants who do not use products containing tobacco or nicotine who qualify as standard under quick underwriting and to those with ratings of four tables or less who would otherwise be substandard. Preferred Tobacco Available to applicants who use products containing tobacco or nicotine who meet all preferred guidelines (see next page). A blood profile and urinalysis are required for all Preferred Tobacco applicants. OF Standard Tobacco Applicants who use tobacco and who do not otherwise meet the preferred guidelines will fall into this rate class. Table Ratings converted to Percent Ratings Table 2...Table B...150% Table 3...Table C...175% Table 4...Table...200% Table 5...Table...225% Table 6...Table F...250% Table 8...Table H...300% Table 10...Table J...350% Table 12...Table L...400% Table 16...Table P...500% Ratings are illustrated using Standard or Verified Standard class as the platform for n-smoker clients or using Standard Tobacco class as the platform for tobacco users. 12 1 See product-specific tables on pages 7-9 for rate classes available. 2 Please refer to the product-specific charts for class
lite Preferred n-tobacco and Preferred Criteria 1 lite Preferred n-tobacco Preferred Citizenship U.S. Resident. U.S. Resident. Tobacco or Nicotine Products 2,3 use of tobacco or nicotine - containing products of any kind within the last 24 months. Current lab testing negative for nicotine. use of tobacco or nicotine - containing products 4 of any kind within the past 12 months. Current lab testing negative for nicotine. Health Alcohol/rugs Aviation/Avocation Family History Standard risks with no current borderline medical problems. medical history which would have been ratable in the past. drug or alcohol abuse or treatment within the last 10 years. aviation, hazardous avocation or occupation. This does not include major commercial airline pilots or holiday scuba diving. parental family history of death from cardiovascular disease or cancer prior to age 60. Standard risk with no current borderline medical problems. medical history which would have been ratable in the past. drug or alcohol abuse or treatment within the last 10 years. aviation, hazardous avocation or occupation. This does not include major commercial airline pilots or holiday scuba diving. parental family history of death from cardiovascular disease or cancer prior to age 60. Build Blood Pressure Cholesterol riving History See Height and Weight Chart on next page. Current untreated blood pressure with a 12-month average reading of 135/85 or better. Current untreated cholesterol of 200mg/dl or less and a Chol/HL ratio of 4.0 or less. alcohol related moving violations within five years and no more than two moving violations within the last two years. See Height and Weight Chart on next page. Current blood pressure with a 12-month average reading of 140/90 or better. Cholesterol of 240mg with ratio of 8.0 or less; or total cholesterol of 240 280 with a ratio of 6.0 or less. alcohol related moving violations within five years. ratable driving record. 1 Please refer to the National Life and LSW product-specific charts for classes available. 2 t applicable for Preferred Tobacco class. 3 Products such as cigarettes, cigars, chewing tobacco, pipe, nicotine gum products, nicotine patch, etc. 4 Individual consideration will be given for infrequent cigar use. 13
Table of Height and Weight (LSW Products) This chart is used as a guideline to identify the weights that are usually acceptable for standard premium rates within the rate classes shown, and to show the acceptable weight to qualify for the disability income rider. Other factors, including age or disproportion in body measurements (girth of chest and abdomen), may impact the final decision. Feet Inches xpress Standard NT Verified Standard NT & Standard Tobacco Preferred NT & Preferred Tobacco lite Preferred NT 4 8 175 144 129 114 163 4 9 180 149 133 119 169 4 10 185 153 137 124 174 4 11 190 157 141 128 178 5 0 195 162 145 133 183 5 1 199 166 149 138 188 5 2 204 170 153 143 193 5 3 211 175 157 147 198 5 4 217 180 162 152 204 5 5 223 186 167 163 209 5 6 230 191 172 166 216 5 7 236 196 176 171 221 5 8 243 202 181 176 228 5 9 249 207 186 181 235 5 10 257 214 192 185 241 5 11 263 218 196 190 248 6 0 271 225 202 195 255 6 1 278 231 207 200 263 6 2 286 237 213 204 270 6 3 294 244 219 209 278 6 4 303 252 226 214 285 6 5 311 258 232 219 292 6 6 321 266 239 223 300 6 7 331 274 246 228 309 6 8 344 283 253 233 315 IR 14
Financial Underwriting Guidelines Cover Letter The writing producer is an important source of information. Through a cover letter, he/she can provide an explanation of the purpose, need, and method used to establish the requested face amount and total line of coverage as well as any unusual aspects of the case, and competitive situations. Copies of the needs analysis and financial statement should accompany applications with large face amounts. Personal Insurance While each application is underwritten based on its own merits, the following are general guidelines for personal insurance to cover income replacement and survivorship. Coverage for non-working spouses would be considered for reasonable amounts based on the working spouse s income as well as net worth and purpose of the coverage. We welcome discussions on individual situations. Issue Ages Will Consider Up To: 0-17 See juvenile insurance guidelines 18-30 40x annual earned income 31-40 35x annual earned income 41-50 25x annual earned income 51-60 15x annual earned income 61-65 10x annual earned income 66+ 5x annual earned income Bankruptcy We will not offer coverage to an individual with a history of Chapter 7 bankruptcy until the bankruptcy proceedings have been discharged, the client is currently working full-time, and demonstrates a financial need for a reasonable amount of coverage. We will consider coverage for applicants currently in Chapter 11 or 13 once the applicant is making regular debt payments and they are not subject to any court imposed restrictions. All applicants will be underwritten on their own merit, taking into consideration stable employment, annual income, net worth, purpose and need for coverage, as well as any emotional, anxiety and other medical concerns. Juvenile Applications Face Amount up to $1,000,000 Generally, we will consider insurance on juveniles up to the face amount on the lesser insured parent (or legal guardian); unless state insurance law dictates otherwise. All children should be similarly insured and the purpose of the coverage clearly defined. In order to sustain long term premium payments, households with modest annual income should not exceed 10% of income for life insurance premiums. If multiple applications are submitted for the same family, a cover letter (include a copy with each application) or note on the Agent s Report with details on the sale will help to provide more efficient processing. Please include the amount of coverage in force and applied for on the parents and any siblings on the application. Face Amounts over $1,000,000 Larger face amounts applied for on children are considered on an individual basis. It is the agent s responsibility to provide supporting financial details and the background of the sale to justify the coverage applied for. Ownership Acceptable ownership and premium payers for minors include parents/legal guardians or grandparents only. 15
Juvenile Applications (cont d) Forms/Signatures A HIPAA form is needed for each child. The child s signature is required at age 15 and over. A HIV consent form is also required whenever laboratory testing is needed. A parent s signature is required on the application if the grandparents are applying for the coverage. Medical Testing Please refer to the product-specific requirements for medical testing needed. Please contact your Underwriting Team with special situations prior to completing an application. Business Insurance Insurance is frequently used to protect against financial loss in a business relationship. The most common are Key Person, Buy/Sell, and eferred Compensation. The amount of death benefit must be suitable for the given business financial situation. ach business sale should include a detailed cover letter and Business Insurance Questionnaire, Form 20098. The letter should clearly explain the purpose, how the amount was arrived at, and how others in the business are equitably treated. Reference to and/or copies of tax returns [both personal and business] along with business income statements and balance sheets will often be requested to support the amount applied for. 16
Insurable Interest Owner/Beneficiary Insurance law and public policy in the various states require that we establish that an insurable interest between the Proposed Insured and the Owner/ Beneficiary exists at the time we issue a life insurance policy. The strictest definition of insurable interest suggests that the Owner/Beneficiary must suffer a quantifiable financial loss at the Insured s death. In other words, the Owner/Beneficiary must be better off if the Insured lives rather than dies. xcept when spouses insure each other or when parents insure minor children; it is the Agent s responsibility to carefully describe the insurable interest supporting any application where the Owner is someone other than the Proposed Insured and if the relationship of the Owner to the Beneficiary is questionable. It s important that the explanation include the financial loss incurred at the Proposed Insured s death. Because the Owner controls several aspects of the policy such as the right to change the beneficiary, change the face amount or riders or cancel the policy; the insurance company is charged with assuring there is insurable interest of the owner for any policy issued. Generally accepted Ownership Arrangements include Insured, Spouse, Parent of Minor Child, Grandparent, Business Partner, Business/Corporation Owned by the Insured, and Trusts. The simplest, most common relationship we insure is that between spouses. Survivor income, debt repayment, tuition costs and final expenses are all quantifiable needs that become readily apparent at death in this situation and are perfectly appropriate purposes for life insurance. Loan repayment in debtor relationships, key-person and buy-sell agreements in business relationships and estate protection are other fairly quantifiable needs that can be supported by life insurance. The law also makes allowance for the bonds of love and affection which exist between spouses (or significant others ), when parents insure minor children and grandparents insuring grandchildren (with parent s approval). The relationships between cousins, nieces/nephews and aunts/uncles are more difficult to insure because the financial and emotional ties are hard to identify and quantify; therefore not generally accepted and the insurance company may ask for additional clarification or justification. 17
Section 79 Plans The National Life Group supports its distribution partners with permanent life insurance products designed to provide a competitive edge in the Section 79 arena. The following guidelines and procedures are designed for efficient processing in New Business and Underwriting. Visit our Company website (www.nationallifegroup. com) for detailed product, sales and marketing materials available. Section 79 sales require the services of a National Life approved Third Party Administrator. General Guidelines Product Availability: Refer to website for current information. Although employee participants may elect the minimum $50,000 term coverage defined in the IRS Code Section 79, National Life Group will consider only applicants electing permanent insurance coverage. Groups of Nine and Less Participants Historic Treasury Regulations dictate limits on evidence of insurability for groups of nine or less participants. The determination of potential standard classification is based on limited evidence. medical testing should be completed. 1. Fully completed application 2. MIB (Medical Information Bureau) inquiry. 3. PHI (Personal History Interview). Maximum Age: 65 Maximum Face Amount: $2,000,000 or our available retention, if less, due to NL/LSW coverage already in-force. Rate Class: Standard Underwriting Classification Only The proposed insured must qualify for Table B or better, in which case we will offer standard. Those failing to qualify as such will be declined. Insureds who are issued standard under this process will not be permitted to apply for enhanced underwriting classification for the policy in the future. Flat xtra Rating A flat extra cost of insurance (COI) per $1,000 of face amount will be imposed for the first five policy years. An illustration is required for each application showing the appropriate plan, face amount and flat extra temporary rating. Insured s Age at Issue Male n- Tobacco Male Tobacco Female n- Tobacco Female Tobacco ages 20-40.24.84.12.60 ages 41-45.36 2.04.24 1.32 ages 46-50.96 4.20.72 2.52 ages 51-55 1.92 7.08 1.32 4.32 ages 56-60 3.96 12.24 2.04 6.24 ages 61-65 6.48 18.72 2.64 8.40 18
Section 79 Plans (cont d) Agent Responsibility 1. Fully completed application and related forms; with details to all answers. 2. The Agent s Report must note the commission percentage for the TPA. 3. Completed Hold Harmless Forms (LSW Form 8638 & Form 8639 or NL Form 8770 & Form 8771). 4. Provide census completed by employer at the point of sale. An mployer Certification Form will be required by Home Office if the completed census is not provided with the application (Form 20085 see sample form on the following pages; available on company website). Groups of Ten or More Participants Refer to the General Guidelines noted above. Groups of ten or more participants follow normal underwriting review with regard to evidence of insurability including medical testing based on face amount and age, prescription drug review, MVR, physician reports, etc. The proposed insured may be considered for any rate class available as the product allows. See Agent and TPA Responsibilities. 5. Submit requirements above to a company-approved TPA for review and approval. 6. A copy of the application papers should be submitted through usual channels. TPA Responsibility 1. Review application papers for suitability. 2. Review Census/mployer Certification. 3. Verify commission percentage on Agent s Report; approval stamp. 4. Complete Third Party Administrator Cover Letter Form 8642, approval stamp. 5. Run illustration with appropriate flat extra premium; approval stamp. 6. Forward all items above to NLG New Business, Montpelier, VT. 19
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Tentative Quotes Introduction Requirements Submission to Home Office Certain medical or non-medical impairments may require pre-qualifying a proposed client for insurance coverage. The Tentative Quote process is designed to provide detailed information to the underwriter to determine possible insurability before an application is taken. The listing of Uninsurable and Problematic Risks provided in this guide should be reviewed prior to submitting a request. All quotes are tentative, non-binding and subject to change after a full underwriting work up and company retention limits. Requirements needed for a Tentative Quote: Tentative Rating Request (sample on following pages or available on website) or message with details to include: age, sex, height/weight, amount of insurance to be considered, riders requested, medical diagnosis, date diagnosed, treatment and medications, restrictions, prognosis and all other pertinent information for each medical impairment. Requests can be faxed or emailed to National Life Group as follows or obtained via phone directly to your underwriting team: Fax forms to 802-229-4726 mail NBrequirementImages@NationalLifeGroup.com with completed form attached. Please allow 48 hours for reply and send a copy of quote obtained if an application is submitted. 21
Tentative Rating Request Fax to 802-229-4726 or -mail NBRequirementImages@NationalLifeGroup.com Agent: Appt.ate: Client Last Name: Client Age (OB): Sex: M F Height: Weight: Smoker: N Y Plan: Amt. of Insurance: Riders Requested: iagnosis: ate iagnosed: Treatments Received and Medications: Restrictions: Prognosis: Comments: Please allow 48 hours for a reply. 22
Trial Application Introduction Requirements Submission A Trial Application may be submitted for an abbreviated review of a proposed insured s health, financial, or other pertinent history to determine potential underwriting action prior to the formal application process. Any application received will be assigned a policy number and an MIB record is ordered. After initial review we will advise the agent/agency of any requirements such as an attending physicians statement (APS).. Upon completion of the underwriting process, the agent/agency will be notified of a tentative offer which will be subject to any necessary requirements needed for age and amount. Any tentative offer other than standard will require an adverse action letter to be sent when required by statute. Requirements needed for a Trial Application are: New Business Checklist with Trial Application clearly indicated, Fully completed Form 8121 Application for Life Insurance, and Form 8164 HIPPA Complaint Authorization. Important: medical testing should be ordered or money collected. Forms can be faxed or emailed to National Life Group as follows: Fax forms to 802-229-7592 mail forms to NBApplicationImages@NationalLifeGroup.com Important: Forms must be password protected if emailing. 23
Informal Inquiry Introduction An informal inquiry will provide a preliminary review for insurability. A policy number will be assigned. We will advise the agent/agency of any requirements such as attending physicians statement (APS). Upon completion of the underwriting process, the agent/agency will be notified of a tentative offer which will be subject to a formal application and any necessary requirements needed for age and amount. Requirements Identifying Information Submission All quotes are tentative, non-binding and subject to change after a full underwriting work up and company retention limits. Requirements needed for an Informal Inquiry are: Form 1386 Informal Inquiry and Authorization Pursuant to Life Insurance, or a cover letter including identifying information. And Form 8164 HIPPA Complaint Authorization, or a blanket authorization form approved by National Life. Important: Authorization must be dated within last 6 months. When using a cover letter instead of Form 1386 the following identifying information should be included: Agent Name & Number Client s Name & Address Social Security Number ate of Birth Sex Smoker Status Face Amount Policy Funding Total Life Insurance currently in force Identify Companies ates and details of medical conditions of concern esired Premium Class Are there any competitive offers pending? Forms can be faxed or emailed to National Life Group as follows: Fax forms to 802-229-7592 mail forms: NBApplicationImages@NationalLifeGroup.com Important: Forms must be password protected if emailing. 24
tice: ate: Full Name: Informal Inquiry and Authorization Pursuant to Life Insurance A signed 8164 HIPAA Compliant Authorization must accompany this Informal Inquiry and Authorization form. In addition, your agent will supply you with a separate Prenotification form to help you understand the underwriting process. Age: Soc. Security : Address: (Street, City, State, Zip Code) ate of Birth: Place of Birth: Occupation: Insurance esired: Kind? Amount: WP? AB? $ Has any type of product containing nicotine been used by the Proposed Insured within the last 24 months? $ Total Life Insurance currently in force: Name of Soliciting Agent: $ Agent Number: Companies: Company regularly represented? Reason for preliminary inquiry? Proposed Insured's medical and personal history responsible for the presentation of the inquiry: (Please include name and addresses of physicians/medical facilities consulted, along with dates and details of any medical problems. Use reverse side of this form for Additional Remarks. If you would like you can submit a non med Part B with this form to provide more details.) I, the Proposed Insured, authorize any: Physician; Medical practitioner; Hospital; Clinic or other medically related facility; Insurer or reinsurer; MIB, Inc.; Consumer reporting agency; or mployer having information as to: iagnosis, treatment and prognosis of any physical or mental condition of me or any of my minor children on whose life I have applied for insurance; and Any non-medical information of me or such minor children; to give to the Company, or its authorized representative, any and all such information. This information may be used to determine eligibility for life or health insurance or claims for benefits, and I authorize the Company to release any of this information to: MIB, Inc.; Reinsurers; and Other life insurance companies in which I have insurance or seek insurance or benefits from. 1386(0911)A Cat.. 42885 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. ach 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. Centralized Mailing Address: One National Life rive, Montpelier, VT 05604 www.nationallifegroup.com Copies to the Company, the Customer, and the Agent Page 1 of 2 25
Informal Inquiry and Authorization Pursuant to Life Insurance - Continued I authorize the Company to redisclose the information to: Any person performing a business or legal function for its benefit; An attending physician for diagnostic or treatment purposes; Government authorities to prevent insurance related illegal activities; Persons conducting medical or statistical studies for the Company; Persons having an authorization specifically permitting the redisclosure; and when required by law. This authorization shall remain valid for 30 months from the date shown below. I authorize the Company to obtain an investigative consumer report. I understand that I am entitled to be interviewed by the consumer reporting agency that prepares any such report, as long as I can reasonably be contacted during normal business hours. I wish to be interviewed if an investigative consumer report is prepared. I understand I have a right to receive a copy of this authorization. I acknowledge receipt of copies of the prenotifications relating to investigative consumer reports and MIB, Inc. A copy of this authorization shall be as valid as the original. Signature of Proposed Insured: ate: (mm/dd/yyyy) 1386(0911)A Page 2 of 2 26
Field Underwriting LSW s isability Income Rider The primary concerns in underwriting IR include qualification for: Build Medical History Maximum Amount ligible based on income/face amount of life coverage Occupation Build Refer to the Height and Weight chart in this guide. There is no flexibility in the maximum weight listed. Medical History Certain medical impairments will prohibit approval of IR. A general listing of medical conditions is listed in the section on probable action relating to IR. Basically, any medical impairment that may generate a substandard premium rate would not be eligible for IR. Whenever possible, the Underwriter will consider excluding an impairment or body part from the IR rather than denying the rider. Any injury or impairment within two years of the application will likely be excluded from the IR depending on severity. If a prospect is currently disabled for any reason, we are unable to consider for IR. All in force isability coverage with all companies will be taken into consideration when calculating the total amount eligible based on income (the 66% or 40% whichever applies). Short-term or long-term disability coverage is included in these calculations based on the scale below: Less than six months won t count towards maximum available; Six months up to but not including one year count at 50% One year or more count at 100% Occupations Part-time employees (less than 30 hours per week) and certain occupations are not eligible for IR coverage. See listing on next page. Ineligible occupations may be due to hazards, persistency of business, seasonal/ migrant work, or based on claims experience within the industry or company. This list is periodically updated. Self employed persons are considered on an individual basis by the underwriter. oes the client work from his/her own home? If so, what is the percent of time spent out of the home office? oes he/she travel to meet with clients? Could they do the job without leaving the home at all? It is crucial that the agent obtain accurate and detailed medical information when IR is being requested so that the Underwriter may make a fair assessment. If few details are provided, additional requirements will be requested that will delay approval. Whenever possible, an Underwriter will use a questionnaire in lieu of an Attending Physician Statement (APS). Maximum Amount Available The maximum monthly benefit available from LSW is $2,000/month, subject to underwriting and state limitations. The monthly amount cannot exceed 66% of gross monthly income (40% in California; except for 1099 employees); or $20 per $1,000 of the LSW face amount life insurance applied. (For example, a $2,000 IR must be attached to a base policy of at least $100,000.) Is their occupation otherwise eligible for IR if not for self employment? Self employed consultants, graphic designers, (and other occupations who don t need to leave their home office to do their work) and working from their own home are not eligible for IR. Federal and Municipal employees are eligible for IR, but only up to the amount of their home mortgage payments or $2,000/month, whichever is less. We would require a copy of their mortgage statement to consider. Please feel free to contact your underwriter with questions. 27
isability Income Riders (IR) 1 Two different IRs are available on LSW Term, UL and IUL policies, providing coverage for disabilities due to either sickness or accident. Please see the Agent Guides for detailed information on the IR. These riders are not approved in all states of for all products; see the Naitional Life website for availability. Part-time employees (less than 30 hours per week) and certain occupations shown below are not eligible for IR coverage: Actor/Actress Air Traffic Controller Amusement Park mployee Armed Forces or Coast Guard Artist/Musician Asbestos Worker Athletic Coach or Instructor Auto Body Repair Blaster Bowling Alley mployee Bridge or am Worker Bus Boy Bus river Cab river Carpet/Floor Installer Casino mployee Chauffeur/Limo river Circus mployee elivery Person ishwasher iver omestic Servant (Maid, Butler, etc.) rivers (local delivery or long-distance) xotic ancer FBI Agent Federal or Municipal mployee 7 Fire Fighter Fisherman/Seaman Flight Attendant Forest Ranger Game Warden Golf Pro Housewife Immigration Officer Life Guard Logging mployee Longshoreman Migrant Worker Mine Worker Movie Industry mployee Nature/Adventure Guide Nurse Peddler Piano Mover/Safe Mover Pilot Police Officer Prison/Corrections mployee Professional Athlete Racing mployee (dog or horse) Rodeo Rider or Clown Roofer School Teacher 8 (public or private) Security Guard (armed) Self-mployed (call with specific info) Skating Rink mployee Steeplejack (Billboard Worker) Structural Iron Worker Subway or Tunnel Construction Worker Theater Industry mployee Truck river Vending Machine Worker 28 6 In South Carolina, isability is defined as the insured s inability to perform the duties of his or her own occupation during the first year of disability and has the inability to perform the duties of any occupation for which he or she is suited thereafter. 7 May purchase IR up to monthly home mortgage amount. 8 Only IR5 available.
Foreign National Guidelines Contents: Section 1. efinition of Foreign Nationals Section 2. Foreign Nationals Living Inside of the United States Section 2.1: Green Card Holders Section 2.2: Visa s Section 3. Foreign Nationals Living Outside of the United States Basis for Underwriting ecisions: Country of Origin Refer to the U.S. epartment of State travel warnings list for problematic countries (available via internet) Reason in the U.S. Future plans mployment Section 1: efinition For purposes of an insurance application with National Life (NL) & Life Insurance Company of the Southwest (LSW), a foreign national is a citizen of a foreign country. A foreign national may travel to the U.S. as a non immigrant or reside in the U.S. on a permanent basis as an immigrant. Section 2: Foreign Nationals Living Inside of the United States Section 2-1: Green Card Holders: If an alien holds a Green Card permanent residency and is, therefore, able to provide an Alien Registration number on the application, we will treat the same as if they are a U.S. Citizen for insurance purposes. Please provide the Green Card/Alien Registration number on the application. Section 2-2: Visa s: If an alien does not have a Green Card and therefore cannot provide an alien registration number, we must obtain a copy of their Visa. A foreign national questionnaire (form 8327, catalog #50038) is required. Any offer will depend upon the country of origin, the connection to the U.S., and the need for insurance. An H1 Visa is typically the only accepted Visa, and that is on a case-by-case basis. Property ownership/verifiable business interests Connection to the state of execution is required Company Guidelines: Face amount limit $1,000,000 per life Minimum face amount $100,000 Permanent plan of insurance only (no term) riders (all riders are unavailable, including ABR, unemployment, etc) Standard class, at best. preferred or elite available Minimum age is 18 (no children under age 18 will be considered) mployed full-time Residents of Colombia, Cuba or Haiti are not insurable on any basis Foreign travel guidelines will apply. Underwriting requirements: Copy of visa Foreign national questionnaire (Form 8327) Proof of property ownership (example: copy of mortgage statement or deed) Any medical testing required must be completed in the U.S. Important: If an alien is in the U.S. Illegally, no offer can be made. 29
Section 3: Foreign Nationals Living Outside of the United States Marketing Objectives: An agent must sell insurance primarily to individuals who are citizens or permanent residents of the U.S. Applications on clients who live outside of the U.S. should be a small ratio of the agent s total business. An agent cannot solicit business outside of the U.S. An agent must have a primary residence in the U.S. The client must be affluent, wealthy individuals (not blue collar workers). The client must meet category I or II criteria for Foreign Nationals. Categories of Foreign National Business: Category I: The Company will consider applications on Foreign Nationals if the proposed insured demonstrates (and it is verifiable by the Company) that the proposed insured: 1. Owns a U.S. residence, substantial other properties or verifiable substantial business interests in the U.S.; 2. Is a key person in a U.S. Corporation and is frequently in the U.S. on business; or; 3. Is a key person in a foreign domiciled corporation that is admitted to do business and has offices in the U.S. and who is frequently in the U.S. on business (four or more times per year). Requirements for Category I: ssentially treated as U.S. Nationals All transactions and interactions with NL & LSW must be in nglish U.S. Trust required U.S. address required for billing/administration purposes at time of issue Premiums must be paid in U.S. dollars. Category II: If not in Category I, the Company will consider applications on Foreign Nationals if the proposed insured is a professional or business person who can demonstrate (and it is verifiable by the Company) that he/she conducts business (i.e. banking) in the U.S. and/ or travels to the U.S. on a frequent and regular basis (four or more times per year). Basis for Underwriting ecisions: Country of origin refer to the U.S. epartment of State travel warnings list for problematic countries (available via internet) Reason in the U.S. Future plans mployment Property ownership/verifiable business interests Connection to the state of execution is required Requirements for Category II: All transactions and interactions with NL & LSW must be in nglish oes require a U.S. Institutional Trust (bank or trust company) with a U.S. sitused trustee (via an endorsement) An irrevocable trust is not necessary, however, as U.S. sitused trust must remain in existence for the life of the policy for purposes of: stablishing jurisdiction in the U.S. for policy issuance and any potential future litigation; Maintaining a U.S. address for purposes of billing/ administration; and Having a U.S. Trustee for collection of death proceeds. Foreign address or ownership changes will not be permitted Trust must meet requirements of state where established Premiums paid in U.S. dollars. 30