LSW Foundation, Harbor & Horizon

LSW Foundation, Harbor & Horizon Fixed Interest Universal Life Insurance Marketing Guide 62683 MK2269(1108) TC44415(1208) For Agent Use Only Not For Use With The Public Experience Life

For Agent Use Only Not For Use With The Public

LSW s Fixed UL Product Suite: Foundation, Harbor & Horizon are flexible premium, flexible death benefit universal life policies designed to help meet changing customer needs. Whether your customer desires low minimum premiums, tax deferred cash accumulation or a variety of living benefit riders, we have a great solution to offer. Table of Contents Features and Benefits....... 3 Products at a Glance...... 4-7 What is Universal Life?...... 8 Sales Scenarios......... 9-15 Product Specifications.... 16-18 Available Riders....... 19-24 For Agent Use Only Not For Use With The Public 1

LSW s Fixed UL products are... designed to help meet the needs of your clients changing lives with such features as: Premium and Death Benefit flexibility No-additional-cost Accelerated Benefit Riders Other Insured Rider Death benefit blending options for lower premium outlay available with Horizon Waiver of Specified/Target Premium Rider For business planning sales, the option for high early cash values through the Balance Sheet Benefit Rider on Horizon High levels of guarantees Optional Riders for family protection 2 Riders are optional and may be available at additional cost. Not all riders are available in all states. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy and may result in a taxable event. Harbor/Horizon, form series 8514(0707)/8515(0707), LSW Foundation UL, form series8640(0708)/8640id(0708), Universal Life Insurance and applicable riders are underwritten by Life Insurance Company of the Southwest, Dallas, Texas. For Agent Use Only Not For Use With The Public

Flexibility: LSW s Fixed UL Product Suite Features Offer premium flexibility, allowing clients the choice to pay more, pay less, skip or stop premium payments. They also offer the flexibility of either a level death benefit or increasing death benefit. Benefits As your client s needs change, their policy provides the flexibility to help meet their ever-changing insurance needs, all in a single policy. Living Benefits: 1 Offer a wide range of riders to customize your client s insurance needs including a variety of living benefits. Overloan Protection Rider: 2 This rider helps prevent your client s policy from lapsing in situations where loan balances threaten the policy s ability to stay in force. Available on Harbor and Horizon only. Additional Protection Benefit Rider (APB): APB may increase the total death benefit and/or cash value without significantly increasing the cost. Available on Horizon only. Waiver of Specified/Target Premium Rider: Allows your clients to determine how much of their premium will be waived in the event they become disabled. Available on Harbor and Horizon only. Waiver of Target Premium Rider available for Foundation only. Balance Sheet Benefit Rider: This rider provides early duration enhanced policy surrender values which increase the policy s collateral value for business accounting. Available on Horizon only. Guarantees: 5 The guaranteed minimum interest rate for Harbor is 5% for the first 10 years and 3% thereafter. The guaranteed minimum interest rate for Horizon and Foundation is 4.00%. We call it Life Insurance You Don t Have to Die to Use. Your clients can access their policy s benefits while they are still living. Benefits include coverage in case of: Terminal Illness Critical Illness Chronic Illness Disability Policy loans 3 are received income-tax free. If the policy lapses, with outstanding policy loans, there could be taxable income to the policy holder. In the event loan balances threaten the policies s ability to stay in force, and if the terms of the rider are met, the Overloan Protection Rider will restructure the policy so that it is guaranteed not to lapse. The APB rider provides additional permanent coverage on the primary insured at a cost that is generally lower than the cost of the base coverage. With tax-deferred accumulation, your clients can save for retirement. The Waiver of Specified Premium rider can ensure their premium is paid, in the event disability occurs. Your client chooses the level of premium to be paid upon disability. 4 This rider was designed for use in business planning cases. When funding an employee benefit program, this rider may help where there is a need for higher cash surrender value in the early policy years and can also be used in a premium financing situation. Clients can be assured that, regardless of where interest rates move, their policy values will continue to earn an attractive interest rate. 1 If an Accelerated Benefit is paid, the policy cash value and death benefit will be reduced and may result in a taxable event. 2 Limitations apply to exercising the Overloan Protection Rider, including that the policy be in force at least 15 years and the insured having attained the age of 75. Exercising the rider results in a paid-up policy. There is no cost for this optional rider, however, there is a fee when the rider is exercised. 3 Policy loans and withdrawals reduce the policy s cash value and death benefit and may result in a taxable event. Except in the case of a Modified Endowment Contract (MEC), withdrawals up to the basis paid into the policy and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon policy lapse or surrender. For MECs, policy loans and withdrawals are considered taxable income. 4 Cannot exceed the planned periodic premium at issue. Refer to Rider Section for additional limitations. 5 Guarantees are dependent upon the claims-paying ability of the issuing company. For Agent Use Only Not For Use With The Public 3

Products at Product Focus: Issue Ages: Foundation Our lowest cost UL, providing mortgage protection and flexibility 0-85 (age last birthday) Minimum Face Amount: $25,000 Coverage less than $25,000, but not less than $10,000, may be purchased as long as the minimum monthly premium for the entire policy is at least $100.00 Minimum Premium: Minimum Additional Protections Benefit (APB) Face Amount Maximum APB Face Amount No-Lapse Guarantee Rider $25.00/month Not available Not available Not available Rate Classes: - Preferred Non-Tobacco (issue ages 15 85) - Verified Standard Non-Tobacco (issue ages 0 85) - Express Standard Non-Tobacco (issue ages 0 85) - Preferred Tobacco (issue ages 15 85) - Standard Tobacco (issue ages 15 85) The Verified Standard Non-Tobacco or Express Standard Non-Tobacco Class will be used for insureds ages 0 14. Substandard: Pension Initial Face Amount: - Table ratings and flat extras are available with Standard Non-Tobacco Standard Tobacco classes - Temporary flat extras are available with the Verified Standard Non-Tobacco, Express Standard Non-Tobacco and Standard Tobacco Classes. Not available Pension Underwriting: Not available 4 For Agent Use Only Not For Use With The Public

a Glance Harbor Death benefit protection and flexibility with low minimum premium outlay Horizon Cash value accumulation and flexibility, ideal for business planning needs. 0 85 (age nearest birthday) 0 85 (age nearest birthday) $25,000 Coverage less than $25,000, but not less than $10,000, may be purchased as long as the minimum monthly premium for the entire policy is at least $100.00 Washington State Minimum face amount is $25,000 in all cases $25.00/month $100,000 (Base Face Amount plus APB Face Amount) Washington State Minimum face amount is $25,000 in all cases $25.00/month Not available $25,000 Not available Nine times base face amount Not available Available for issue ages 0-85 - Elite Preferred Non-Tobacco (issue ages 20 75) - Preferred Non-Tobacco (issue ages 20 85) - Verified Standard Non-Tobacco (issue ages 0 85) - Express Standard Non-Tobacco (issue ages 0 85) - Preferred Tobacco (issue ages 20 85) - Standard Tobacco (issue ages 20 85) The Verified Standard Non-Tobacco or Express Standard Non-Tobacco Class will be used for insureds ages 0 19. Tobacco users will have a 200% rating applied. - Table ratings and flat extras are available with Standard Non-Tobacco Standard Tobacco classes - Temporary flat extras are available with any rate class. - Elite Preferred Non-Tobacco (issue ages 20 75) - Preferred Non-Tobacco (issue ages 20 85) - Verified Standard Non-Tobacco (issue ages 0 85) - Preferred Tobacco (issue ages 20 85) - Standard Tobacco (issue ages 20 85) The Verified Standard Non-Tobacco Class will be used for insureds ages 0 19. Tobacco users will have a 200% rating applied. - Table ratings and flat extras are available with Standard Non-Tobacco Standard Tobacco classes - Temporary flat extras are available with any rate class. - Standard Rate Classes $5,000 - Preferred Rate Classes $25,000 - Pension Increase in Face Amount $2,000 Washington State Minimum face amount is $25,000 in all cases - Automatic Issue - Guaranteed Issue - Simplified Issue - Standard Rate Classes $5,000 - Preferred Rate Classes $25,000 - Pension Increase in Face Amount $2,000 Washington State Minimum face amount is $25,000 in all cases - Automatic Issue - Guaranteed Issue - Simplified Issue For Agent Use Only Not For Use With The Public 5

Products at Interest Rate Crediting Method: Foundation Portfolio Minimum Guaranteed Interest Rate: 4.00% Surrender Schedule: Level first five years, grades down to zero at the end of year 15 Policy Loans: Withdrawals: Wash loans available after five policy years with evidence of purchasing or refinancing a home (terms vary by state). Available after the first policy year. A $25 withdrawal fee will apply. 1035 Exchanges: Not available with loans Expense Charges: Policy fee: $6.15 per month Premium load: 7.5% of premium Banding: Not available Riders available (where approved): Accelerated Benefits Rider (Chronic, Critical and Terminal Illness) Accidental Death Benefit Rider Children s Term Rider Disability Income Rider (2 year and 5 year) Extension of Benefits Rider Guaranteed Insurability Rider Long-Term Care Rider Other Insured Rider Unemployment Rider Waiver of Target Premium 6 For Agent Use Only Not For Use With The Public

a Glance Harbor Portfolio 5.00% for 10 years and 3.00% thereafter 15 year declining surrender charge Wash loans available in all policy years on a current basis. Horizon Portfolio 4.00% 10 year declining surrender charge Wash loans available in all policy years on a current basis. Available after the first policy year. $25.00 withdrawal fee will apply. Available after the first policy year. $25.00 withdrawal fee will apply. Available loan balances can account for up to 50% of the gross transferred amount. Monthly expense charge is based on issue age, gender, rate class, and face amount Policy fee: $5 per month Premium load: 6% of premium Determined at issue based on the total face amount. Only monthly expense charges and MMP rates will vary by band. Band 1: Min. face amount up to $249,999 Band 2: $250,000-$999,999 Band 3: $1,000,000 and up Available loan balances can account for up to 50% of the gross transferred amount. Monthly expense charge is based on issue age, gender, rate class, and face amount. Policy fee: $5 per month Premium load: 6% of premium Determined at issue based on the total face amount including APB. Only monthly expense charges and MMP rates will vary by band. Band 1: Min. face amount up to $249,999 Band 2: $250,000-$999,999 Band 3: $1,000,000 and up Accelerated Benefits Rider (Chronic, Critical and Terminal Illness) Accidental Death Benefit Rider Children s Term Rider Disability Income Rider (2 year and 5 year) Extension of Benefits Rider Guaranteed Insurability Rider Long-Term Care Rider Other Insured Rider Unemployment Rider Overloan Protection Rider Qualified Plan Exchange Privilege Rider Waiver of Specified Premium Rider Accelerated Benefits Rider (Chronic, Critical and Terminal Illness) Accidental Death Benefit Rider Children s Term Rider Disability Income Rider (2 year and 5 year) Extension of Benefits Rider Guaranteed Insurability Rider Long-Term Care Rider No-Lapse Guarantee Rider Other Insured Rider Unemployment Rider Overloan Protection Rider Qualified Plan Exchange Privilege Rider Waiver of Specified Premium Rider Additional Protection Benefit Rider Balance Sheet Benefit Rider For Agent Use Only Not For Use With The Public 7

LIFE INSURANCE YOU DON T HAVE TO DIE TO USE Disability Income Money to help pay your bills. Cash Value Accumulation Money for future plans. Accelerated Living Benefits Chronic, Critical, or Terminal Illness Riders. Life Insurance Money for your family. Multiple Needs, One Affordable Solution What is Universal Life? Consider the following features shared by all universal life policies Flexibility A policy holder can decide how much life insurance he or she needs (subject to certain requirements and limitations). The death benefit and premium payment can be adjusted to accommodate changing needs. Security Beneficiaries are protected against possible financial hardship in the event of the insured s death. Tax-deferred account value growth The policy s account value earns an interest crediting rate which accumulates income-tax deferred. Tax-free death benefit Under current tax laws, life insurance proceeds are generally paid income-tax free to the beneficiary. Tax-free distributions Under current tax laws, life insurance cash values accessed via loans are generally paid income-tax free. Interest Crediting Interest is credited based on the performance of investments made by the insurance company (usually in high quality bonds and mortgages). For Foundation and Horizon, the minimum guaranteed interest rate is 4%. For Harbor, the minimum guaranteed interest rate for the first 10 years is 5% and then 3% thereafter. The interest rate for Foundation, Harbor and Horizon is credited on a portfolio basis. 8 For Agent Use Only Not For Use With The Public

Sales Scenarios Universal Life Who Are Your Clients? Consumers who are looking for a policy with the potential for high tax-deferred cash value accumulation or a high death benefit for low premium. Specifically, consumers who want: premium and death benefit flexibility; a low premium outlay for their death benefit protection; to accumulate tax-deferred cash value to access at a later date; guarantees in the form of interest rates. Individual Insurance Planning with Harbor Harbor is ideal for individuals who are looking for a low premium insurance policy for survivor protection. Generally, the individual is looking for permanent insurance but is not necessarily planning to fund the policy heavily. Harbor provides a death benefit that is flexible. Your clients can increase or decrease the death benefit coverage as their needs change. Additionally, it offers the ability to change premium payments or skip payments altogether. Furthermore, by paying additional premium payments, individuals can potentially increase death benefit and cash value. Mortgage Protection with Foundation Foundation is an alternative to term for mortgage protection that offers the option to provide permanent benefits and the potential for cash value growth. Foundation provides high death benefit protection with a low premium outlay. It also offers premium and death benefit flexibility so as your clients needs change, their policy can too. Foundation UL is ideal for family s looking for mortgage protection in the event they should die prematurely. Based on current illustration assumptions, paying the minimum premium will provide at least 20 years of coverage. Business Planning with Horizon Horizon is ideal for individuals who are looking for death benefit protection with the potential to build cash value accumulation. This product should be used in situations where the client is looking for permanent insurance and is planning to heavily fund the policy. Life Insurance is also the preferred choice to fund buy-sell agreements, executive bonus plans and non-qualified deferred compensation arrangements. Additionally, qualified plans offer a great opportunity to use tax deductible dollars to pay life insurance premiums. By providing premium flexibility, cash value accumulation and optional benefits to help protect key employees and their families, Horizon is ideal for business planning situations On the following pages, we highlight hypothetical client scenarios which explain how Foundation, Harbor and Horizon can help your clients achieve their individual and business insurance planning objectives. We have also included sample point-of-sale and illustration output pages for use in these scenarios. For Agent Use Only Not For Use With The Public 9

Foundation Focus on Mortgage Protection A house is one of the largest purchases most individuals will ever make, and their home mortgage will likely be their largest financial obligation. Maintaining adequate insurance protection will help allow their family to keep their home in the event of a premature death. Foundation can help your clients protect their home, family and income all in one policy. In addition to providing protection against premature death, Foundation offers a host of lifetime living benefit riders to help protect against losses from unemployment, disability or long-term care expenses. Additionally, if your clients rely on two incomes, as so many families do, there is the option for both spouses to be insured under one policy. This product is a great place to begin to build their financial future. Point of Sale Materials Consumer brochure available for presentation on mortgage protection needs catalog #62686 that highlights both Term and Permanent Insurance Options. Compare Foundation to a traditional mortgage insurance plan: Death Benefit: Will be paid directly to the named beneficiary under the policy versus the mortgage holder. Beneficiary has options as to whether to pay off the mortgage or to use death proceeds to help meet monthly mortgage obligations. Tax-Deferred Cash Value: * Can be accessed during lifetime. Can help meet unexpected emergencies, pay off the mortgage balance before scheduled, or provide supplemental retirement income. Traditional mortgage insurance plans often decrease the death benefit and don t offer cash value. Disability Protection: Provides fixed monthly payments, should the insured become disabled and unable to work, benefits that can be used to help meet monthly mortgage obligations. This benefit is not typically available in traditional mortgage insurance plans. 10 For Agent Use Only Not For Use With The Public Accelerated Living Benefits: ** Provides money in the event of a terminal, chronic or critical illness to help pay for nursing home care, home health care, adult day care, medical procedures, drug therapies, household expenses and other quality of life expenditures. Traditional Mortgage insurance plans typically do not provide these types of living benefits.

Harbor Focus on Survivor Protection Harbor can be designed as a high death benefit, low premium policy ideal for individuals who need death benefit protection and premium flexibility. Your clients may be purchasing a home, raising children and saving for college. They understand the need to protect their families and assets against financial loss brought on by premature death. They want life insurance protection that can change as their needs change, and the safety that goes with permanent protection. 63731 / MK3035(0408) / TC40054(0408) Point of Sale Materials You may need a strategy that helps protect your family in the event of your premature death by providing an income tax-free death benefit. Bills Permanent life insurance provides: Protecting the ones who depend on you An income tax-free death benefi t for your family should you die prematurely; Access to cash values, through loans and withdrawals, withdrawals, to meet emergencies, take advantage of opportunities, or draw an income stream; Tax-deferred build-up of policy cash values. Life insurance death benefit Education Mortgage Final expenses expenses Protect the people who depend on you today, plus, build a solid foundation for the future Sample selling system output: Protect Experience Life Consumer flyer available for presentation on survivor needs catalog #63731. Protecting The Ones Who Depend On You Here s how your premium dollars can provide financial security for your family. Distribution Option 1: Lump Sum $100,000 Your beneficiary will receive the death benefit income-tax free and without the delay of probate. The death benefit can be received either: - In a single lump sum, or - As a stream of income, or - Some combination of both a partial lump sum to cover final expenses with the balance used to provide a monthly income. Protect your future today your loved ones depend on you For Agent Use Only Not For Use With The Public Bills Initial Annual Premium $816 Assumes Death At Age 65 Mortgage $100,000 Death Benefit Distribution Option 2: Monthly income for 15 years* Education expenses Final expenses $765 *Income calculated based on Contract Settlement Rates in effect as of the date of this illustration. Amount illustrated is based on a 15 year period certain payout, payable monthly. Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. Harbor for Survivor Protection Death Benefit Protection Provide cash the family needs to pay off debt, meet monthly obligations and maintain their lifestyle. Ensure that funds will be there to help pay the children s future college expenses. Access to Cash Values During Lifetime * Cash value which can be accessed to pay for unplanned expenses or to meet short term income needs. Supplement retirement income. Waiver of Specified Premium upon total disability. Benefits for an unexpected Illness ** Money for a terminal, chronic or critical illness. Pay for costs associated with home health care, medical procedures, drug therapies and other quality of life expenditures. * Policy loans and withdrawals, and receipt of ABR Benefits, will reduce the policy s cash value and death benefit. ** Benefits received from exercising the Accelerated Benefits Rider may be used for any purpose and are not limited to illness-related expenses. 11

Horizon Focus on Cash Value Accumulation Horizon is a cash value policy that s ideal for successful individuals who need both protection and a strategy for accumulating assets on a tax-efficient basis. Your clients may be looking for a tax-favored way to further diversify their savings. Horizon can be a way to ensure both death benefit protection as well as tax-efficient growth of policy cash value, cash value that your clients can access, when they need it, on a tax-favorable basis. This product is a great way to plan for what s on the horizon for business owners. Point of Sale Materials Survivor Protection plus tax-efficient Cash Value accumulation How permanent life insurance can help you achieve your present and future financial goals: Each Premium Payment You Make: Builds cash value income-tax deferred Helping achieve lifetime income needs Provides your family with an income-tax free death benefit that they can use to: Pay taxes and other final expenses Maintain their lifestyle and protect their future financial security Cash value you can use during your lifetime, through income-tax free policy loans and withdrawals, for such needs as: Meeting financial emergencies Paying for a child s college expenses, and Creating a stream of income for retirement Put the power and tax advantages of permanent life insurance to work for you today Pay education expenses for your children Build Consumer flyer available for presentation on survivor needs catalog #63733. Permanent life insurance, an important part of helping you achieve your present and future financial goals Life Insurance Helping achieve lifetime income needs Death Benefit Protection completes this aspect of the retirement funding in the event of premature death. Funding at the maximum levels will provide optimal cash value accumulation potential. Policy loans and withdrawals may be received income-tax free. * Overloan Protection Rider prevents a policy from lapsing when loan balances threaten the policy s ability to stay in force. ** 63733 / MK3037(0408) / TC40055(0408) Experience Life Total Premiums Paid Through Age 64 $37,300 Projected Total Tax-Free Income Distributions starting at age 65 for 20 years $208,840 Remaining Tax Free Death Benefit at end of income period: $32,486 12 Sample selling system output: How it works: Total Combined Benefit $241,326 Total premiums paid into your life insurance policy provide build-up of cash values income tax deferred. Income during your lifetime is provided through loans and withdrawals from you policy s cash values and are received income-tax free. The policy death benefit can also be received income-tax free during lifetime in the case of a critical or terminal condition. Your remaining death benefit, less benefits received during lifetime, will be paid to your beneficiary income-tax free. Life Insurance helping make your financial goals a reality Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. For Agent Use Only Not For Use With The Public * Policy loans and withdrawals reduce the policy s cash value and death benefit and may result in a taxable event. For MECs, policy loans and withdrawals are considered taxable income. ** Exercising the Overloan Protection Rider requires that the policy be in force at least 15 years and the insured having attained the age of 75. Refer to Rider section for additional requirements.

Focus on Living Benefits Protecting against financial loss brought on by the death of an income earner can be crucial. One of the biggest risks for financial loss is the possibility of a chronic, critical, or terminal illness. Health insurance plans may not cover costs associated with a chronic, critical, or terminal illness. How can you help your clients plan for the What ifs in life? LSW s Living Benefits makes it possible to prepare financially against potential chronic, critical or terminal illness, but also gives them options if they never require that protection. Point of Sale Materials Consumer brochure available for presentation on living benefit needs catalog #62824. Did you know: Living Benefits 62824 MK2333(0307) TC30498(0307) A Key to Life Insurance Every 26 seconds, someone suffers from a coronary event. 1 Every 45 seconds, someone suffers a stroke. 1 At age 65 the odds are nearly one in two that you will require nursing home services for at least 21/2 years. 2 An extreme illness can cost well over $100,000 in out-ofpocket expenses. 3 There is no restriction placed on the use of the benefit received and these riders can provide cash for: Living Expenses Nursing Home Care Home Health Care Adult Day Care Medical Procedures Drug Therapies Household Expenses, and Quality of Life Expenditures Life Insurance You Don t Have to Die to Use 1 American Heart Association, Heart and Stroke Statistical Update, 2007. 2 The Looming Crisis, American Health Care Association, 2000. 3 Illness And Injury As Contributors To Bankruptcy, Harvard Study, 2004. * Receipt of the Accelerated Benefits will reduce the contract s cash value and death benefit and may result in a taxable event. All forms of these riders may not be available in all states. For Agent Use Only Not For Use With The Public 13

Horizon Focus on Pre-Retirement Death Benefit Protection Funded Through Qualified Plans Employer sponsored qualified plans such as 401(k), Profit Sharing, Money Purchase and Defined Benefit Plans allow for plan contributions to be used to pay the life insurance premium for plan participants. Life insurance inside a qualified plan is purchased with employer tax deductible plan contributions and is an affordable way of providing death benefit protection. Should a plan participant die before reaching retirement, life insurance ensures the retirement plan will selfcomplete - paying not only the value in the participant s account but an additional income-tax free death benefit. Through the use of the Balance Sheet Benefit (BSB) rider, Horizon can also be structured to maintain a high ratio of cash surrender value to premiums paid. This feature protects employers who sponsor Defined Benefit Advantage plans from having to make unplanned additional contributions. Point of Sale Materials Funding a Qualified Plan with Horizon: ified retirement ars our focus has y held businesses. the expertise to e tax savings and Plan Advisors, an plan services for s and innovative ational Life, with umulation and plan today. ncial services y have. unsel of an estate ed strategies. type and Life Insurance in your qualified plan can help protect the goals and future you are working so hard to achieve. Make your plan the best it can be by including life insurance along with the investments in your plan. Consumer brochure available for presentation of life insurance in qualified plans catalog #68014. Death Benefits complete the plan for beneficiaries in the event of a premature death. Premiums are paid with pre-tax plan dollars. Insurance Death Benefit Received Income-Tax Free. An alternative to group insurance. 9 www.nationallife.com 9-2878 www.lifeofsouthwest.com nd its affi liates. Each company of the d contractual obligations. nce business in New York. 14 For Agent Use Only Not For Use With The Public

Life Insurance helping make your financial goals a reality Horizon Focus on Employee Fringe Benefit Planning Horizon combined with the Balance Sheet Benefit Rider is structured for fringe benefit planning. Your business owner clients may be considering a non-qualified retirement plan to supplement (or as an alternative to) a qualified plan. Horizon combined with the Other Insured Rider or the Balance Sheet Benefit Rider could be the funding solution for their plan. Through the use of the Other Insured Rider, Horizon is an ideal product solution for funding a buy/sell agreement between two or more parties - eliminating the need for multiple policies. For fringe benefit plans, the Balance Sheet Benefit rider provides the ability to have a high ratio of cash surrender value to premiums paid. Point of Sale Materials Business Insurance Planning with a Focus on High Early Cash Value Business and key employee enter into deferred compensation agreement The advantages of this strategy: Key employee is able to defer income taxes to a future year. Provides employee benefi ts on a discriminatory basis. Compensates key employee for inadequate 401(k) deferral opportunities. May be used to attract and retain key employees. Can provide supplementary retirement benefi ts through policy loans. Deferred Compensation Planning The success of your business depends on the expertise of a few key employees Business purchases a permanent life insurance policy insuring the life of the key employee Policy cash value can be a source of benefits paid to key employee at retirement, At employee s death, life insurance company pays tax free death benefit to business Optimize How do you reward and retain the people who are essential to keeping your business successful? Business can use the death benefit to continue paying benefits to key employee s beneficiary Consumer flyer available for presentation on survivor needs catalog #63905. Permanent life insurance, an important part of helping you achieve your present and future financial goals Life Insurance Helping achieve lifetime income needs The Balance Sheet Benefit Rider is ideal for such business insurance planning as: Executive Bonus plans Leveraged Bonus plans Key Person Buy-Sell 63905 / MK3147(0408) / TC41057(0408) Experience Life Total Premiums Paid Through Age 64 $37,300 Projected Total Tax-Free Income Distributions starting at age 65 for 20 years $208,840 Remaining Tax Free Death Benefit at end of income period: $32,486 Total Combined Benefit $241,326 Sample selling system output: How it works: Total premiums paid into your life insurance policy provide build-up of cash values income tax deferred. Income during your lifetime is provided through loans and withdrawals from you policy s cash values and are received income-tax free. The policy death benefit can also be received income-tax free during lifetime in the case of a critical or terminal condition. Your remaining death benefit, less benefits received during lifetime, will be paid to your beneficiary income-tax free. Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. For Agent Use Only Not For Use With The Public 15

Product Specifications Policy Protection Period The Policy Protection Period helps protect the policy against lapse during the first 5 policy years for Horizon and the first 15 years for Harbor and Foundation. During this period, the policy will not enter a grace period, even if the cash surrender value is not sufficient to cover the monthly deductions, as long as: the sum of premiums paid, less all withdrawals made and less any policy debt, is greater than or equal to the total minimum monthly premiums in effect since the date of issue, and the accumulated value less any policy debt is sufficient to cover the monthly deductions. The Policy Protection Period does not restart after an increase in face amount. Surrender Charges Surrender charges apply during the first ten years of the policy for Horizon and first 15 years for Harbor and Foundation. The surrender charge will be based on issue age, gender, rate class, policy duration and face amount. A face amount increase will have its own surrender charges associated with it. Policy Charges Monthly Expense Charge: based on issue age, gender, rate class and face amount. Policy fee: $5.00 per month for Harbor and Horizon $6.15 per month for Foundation Premium load: 6% of premium for Harbor and Horizon 7.5% of premium for Foundation Banding Harbor and Horizon Only Banding is determined at issue based on the total face amount including APB. Only monthly expense charges and MMP rates will vary by band. Band 1: Min. face amount up to $249,999 Band 2: $250,000-$999,999 Band 3: $1,000,000 and up Premiums Harbor, Horizon and Foundation all have minimum and commissionable target premiums. A premium equal to one minimum monthly premium for each monthly policy date between the effective date and the issue date is due on the date of issue. The commissionable target premium (CTP) is the maximum premium on which the higher compensation rate will apply. The minimum monthly and commissionable target premium will be based on face amount, age, rate class and gender. Payment Mode: Annual, semi-annual, quarterly or check-o-matic. The minimum billed premium amount is $25.00/month. Unscheduled premiums may be paid into the policy at any time. The target premium for the Unemployment Rider and the Waiver of Target Premium is defined as the policy holder s planned periodic premium, up to the policy CTP. Under Section 7702 of the Internal Revenue Code, a policy will be treated as life insurance for federal income tax purposes if it meets the requirements of the guideline premium test (GPT) or the cash value accumulation test (CVAT). Both tests impose a minimum death benefit per dollar of accumulated value (corridor factors). In addition, the guideline premium test imposes limits on the amount of premium that may be paid. If the policy is classified as a modified endowment contract at issue, the policyholder may choose between using the GPT or the CVAT. * This choice is made on the application and is irrevocable. If the policy is not a modified endowment contact at issue, the GPT will be used. Death Benefit Options The policyholder may elect an Option A (level) or Option B (increasing) death benefit. Option A the death benefit is equal to the greater of 1. the face amount, or 2. the accumulated value multiplied by the applicable corridor factor Option B The death benefit is equal to the greater of 1. the face amount plus the accumulated value; or 2. the accumulated value multiplied by the applicable corridor factor 16 * CVAT is not available with Foundation policies. For Agent Use Only Not For Use With The Public

Change in Death Benefit Option The policy s death benefit option can be changed from Option A to B, or B to A, once each policy year after the first policy anniversary. If a change would cause the policy to no longer qualify as life insurance for federal income tax purposes, or if the resulting face amount is less than the minimum face amount, the change will not be allowed. Changing from Option A (level) to Option B (increasing): The face amount of the policy will be reduced by the accumulated value just prior to the effective date of the change. Change from Option B to A: The face amount will increase by an amount equal to the accumulated value just prior to the effective date of the change. In both cases listed above, the death benefit is the same before and after the change. Changes in Face Amount Increase in Face Amount: After the first policy anniversary the policyholder may apply for an increase in coverage subject to the following terms: Satisfactory proof of insurability. The requested increase satisfies the minimum face amount requirements. The change will be effective on the monthly date on or following the approval of the application. Each increase will have its own effective date, set of surrender charges, and monthly expense charge. Decreases in Face Amount: After the first policy anniversary the policyholder may request a decrease in face amount in coverage subject to the following terms. The decrease becomes effective on the monthly policy date or the day following our receipt of the request at the home office. Decreases cannot result in a face amount less than the minimum face amount. Decreases will not be permitted if the decrease causes the policy to no longer qualify as life insurance for federal income tax purposes. The total face amount of the policy following the reduction may be no less than 75% of the largest total face amount in force at any time in the twelve months prior to the request. Decreases do not affect the level of surrender charges on the monthly expense charge. Each change in coverage will cause the Commissionable Target Premium (CTP) and Minimum Monthly Premium (MMP) to be adjusted accordingly. Loans Loans are available at any time after the first policy year. For pension owned policies, loans are available in the first policy year. The policy will serve as the sole collateral for the loan. The amount available for loan on any day will be the surrender value, less three times the monthly deductions due on the last monthly policy date. For Harbor and Horizon, the interest rate charged on the loan will be a variable rate that is based on the Moody s Corporate Bond Yield Average - Monthly Corporates, subject to a minimum rate of 5%. Loaned values are segregated in a Loan Collateral Fund, and credited with the Variable Loan Rate (VLR) less an interest spread. The current interest spread is zero. Preferred loans are available in all policy years on Harbor and Horizon. For Foundation, the interest rate charged on the loan will be a variable rate that is based on Moody s Corporate Bond Yield Average -Monthly Corporates, subject to a minimum rate of 5%. Loaned values are segregated in a Loan Collateral Fund and credited with 4%. Preferred Loans are available beginning on the fifth policy year with verification of refinancing or purchasing a home (terms vary by state). The interest rate charged on preferred loans is 4%. Interest credited on the loan collateral is 4%. Note: increases and decreases in face amounts for pension owned policies can be done in the first year of the policy. For Agent Use Only Not For Use With The Public 17

Product Specifications Loans (continued) All or any loan amount may be repaid at any time prior to the death of the insured or the surrender of the policy. The exception is if the policy is in the grace period, the loan repayment would be considered a premium payment to keep the policy in force unless the policyholder specifies it as a loan repayment. The Overloan Protection Rider, available on Harbor and Horizon, guarantees that the policy will not lapse in situations where loan balances threaten the policies ability to stay in force. * 1035 Exchanges The effective date of 1035 exchanges will be the date the funds are received into the home office. 1035 Exchanges with loans will be permitted for Harbor and Horizon only, as long as the loan transferred does not exceed 50% of the total policy value transferred. Available with Harbor and Horizon only. Withdrawals At any time after the first policy year, or during the first policy year for pension owned policies, the policyholder may make a withdrawal of the policy s cash surrender value subject to the following terms: The amount of withdrawal may not exceed the cash surrender value minus three monthly deductions due on the last monthly policy date. The accumulated value will be reduced by the amount of the withdrawal. The face amount will be reduced by an amount equal to the withdrawal, for option A (level) policies. The Company will charge a $25 fee for each withdrawal made. 18 * Policy loans and withdrawals reduce the policy s cash value and death benefit and may result in a taxable event. Except in the case of a Modified Endowment Contract (MEC), withdrawals up to the basis paid into the policy and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon policy lapse or surrender. For MECs, policy loans and withdrawals are considered taxable income. For Agent Use Only Not For Use With The Public

Available Riders ACCELERATED BENEFIT RIDERS The Accelerated Benefits Riders 1, 2, and 3 all allow accelerated payment of up to 100% of the policy death benefit. Accelerated Benefits Rider 1 (ABR 1) is available in case of a terminal illness; Accelerated Benefits Rider 2 (ABR 2) is available in case of chronic illness; Accelerated Benefits Rider 3 (ABR 3) is available in case of critical illness. The actual payment amount under any of the riders is discounted (the benefit payment is the actuarially discounted value of the death benefit being accelerated less a pro rata portion of any policy debt). There is no limit on how the funds can be used. There is no additional premium for any of the Accelerated Benefits Riders. Riders stay in force as long as the base policy remains in force. All Accelerated Benefit Riders are available at no additional cost. ABR 1 - Terminal Illness Gives the policy owner the option of receiving an accelerated benefit if the insured is terminally ill. Terminal illness is expected to result in death within two years (one year in PA, CT or VT). All or part of the death benefit may be requested early (lump sum). ABR 2 - Chronic Illness Available when the insured is diagnosed as chronically ill: Unable to perform two of the six activities of daily living bathing, continence, dressing, eating, toileting, and transferring without assistance, or With deterioration or loss in intellectual capacity (cognitive impairment). Provides for the payment of the accelerated death benefit in periodic payments. The maximum monthly amount that can be accelerated is 2% of the death benefit. ABR 2 must be in force for two years before benefits are available. ABR 3 - Critical Illness Available when the insured experiences one of the following: Heart attack Major organ transplant Stroke Diagnosis of ALS (amyotrophic lateral sclerosis or Lou Gehrig s Disease) Diagnosis of cancer Diagnosis of end stage renal failure Blindness (corrected vision of no better than 20/200 in both eyes) ABR3 will not pay benefits for qualifying events that occur within 30 days of the effective date unless the qualifying event is directly caused by accidental injury. All qualifying events may not be available in all states. All or part of the death benefit may be requested early (lump sum). The actual payment will vary due to the severity of the disease. If the insured also meets the definition of a terminal illness it will likely be more beneficial to the policy-owner to accept benefits under ABR 1 rather than ABR 3. ABR 3 is not available for substandard policies. Any qualifying event occurring during the first 30 days the rider is in force is not covered, unless it is the result of an accident. These restrictions may not apply in all states. Please see the ABR disclosure forms for more information. The Company reserves the right to set a maximum on the total death benefit that may be accelerated under all accelerated benefits riders. The current limit is $1,000,000 and applies to all accelerated benefit riders applying to the same insured. The limit will be no less than $500,000. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your clients s eligibility for public assistance programs. They should consult their personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect them, their spouse and their family s eligibility for public assistance. For more information about Rider availability in Qualified plans, see Retirement Services Newsletter Product Availability Pension: Profit Sharing Plans. For Agent Use Only Not For Use With The Public 19

Available Riders ACCIDENTAL DEATH BENEFIT RIDER (ADB) The ADB pays an additional death benefit if the insured s death results from an accident. It is not available on insureds rated higher than 200% or a flat rate of more than $5 per thousand for 2 or more years. Not available with certain hazardous occupations. Issue ages 0 60. ADB is available to the Primary Insured as well as the Primary Other Insured (see the Other Insured Rider description). Rider stays in force until the policy anniversary following the insured s 70th birthday, as long as the insured s life insurance coverage and the base policy remain in force. Minimum rider amount is $10,000. Maximum rider amount is the lesser of $250,000 or the insured s life insurance face amount, including Additional Protection Benefit Rider (APB) amounts. Premiums are a level amount per thousand, based on issue age. ADDITIONAL PROTECTION BENEFIT RIDER (APB) Available on Horizon Only The APB Rider is a non-commissionable rider which provides additional permanent coverage on the primary insured. The maximum ratio of APB face amount to base face amount for a single policy will be 9 to 1. The APB rider will be available for all issue ages and rate classifications. The minimum APB face amount is $25,000. For a policy with APB, the maximum Death Benefit eligible for accel eration through use of the Accelerated Benefits Rider (ABR) is equal to the Policy Death Benefit minus 50% of the APB face amount at the time of initial acceleration, subject to maximum benefit amounts. Policies that utilize the APB rider will have slightly lower guaranteed values than policies utilizing all base coverage. BALANCE SHEET BENEFIT RIDER (BSB) Available on Horizon Only The Balance Sheet Benefit Rider eliminates all surrender charges on the units of insurance to which it applies. There will be a monthly charge, based on issue age, sex, and rate class per unit of coverage for the rider. Commissions on units of insurance with the BSB rider will be paid using a different schedule which levelizes the compensation. * In South Carolina, Disability is defined as the insured s inability to perform the duties of his or her own occupation during the first year of disability and the inability to perform the duties of any occupation for which he or she is suited thereafter. 20 For Agent Use Only Not For Use With The Public

Available Riders CHILDREN S TERM RIDER (CTR) The Children s Term Rider provides term life insurance on all of the insured s children until they reach age 23. Each child is covered for the same selected benefit amount. Children born or adopted after issue (after they reach the age of 15 days), and dependent stepchildren living in the insured s home will be covered as well. The children s coverage is convertible without underwriting at any time while the rider is in force for an individual whole life or universal life policy with the same face amount. The children s coverage is convertible for double the rider face amount when the child reaches age 23 or marries, or at the death of the primary insured. Issue ages 15 days 16 years. Rider stays in force until the policy anniversary following the last covered child s 23rd birthday, as long as the base policy remains in force. Minimum rider amount is $5,000. Maximum rider amount is $25,000. Premiums are a level amount per $1,000 regardless of the number of children covered. DISABILITY INCOME RIDER (DIR) Two different DIRs are available, distinguished by a twoyear or a five-year benefit period. Both options provide for a fixed monthly benefit if the insured is totally disabled and unable to work. Both provide coverage for disabilities due to either sickness or accident. DIR coverage is not available on rated classes. Certain occupations are not eligible for coverage. Policy premiums are not automatically waived under the DIR; the Waiver of Specified Premium Rider/Waiver of Target Premium Rider must be in force to waive policy premiums. Issue ages 18 55. DIR is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy. Coverage stays in force until the policy anniversary following the insured s 65th birthday, as long as the insured s life insurance coverage and the base policy remain in force. Available Riders Minimum benefit amount is $300/month. Maximum benefit amount is $2,000/month, subject to underwriting and any state limitations. The DIR benefit amount cannot exceed 66% of gross monthly income (40% in California) or $20 per $1,000 of life insurance. (For example, a $2,000 DIR must be attached to a base policy of at least $100,000). Premiums vary with issue age and remain level for the term of the rider. Rider benefit amounts cannot be increased or decreased after issue. However, an additional DIR may be added after issue, subject to underwriting and the maximum benefit limits. The DIR with the two-year maximum benefit period has a 3-month waiting period. Benefits are paid retroactively after the waiting period, from the date of disability. Disability is defined as the insured being unable to perform the duties of his or her own occupation. * The DIR with the five-year maximum benefit period has a 6-month elimination period with no retroactive payment. Disability is defined as the insured being unable to perform the duties of his or her own occupation for a period of two years, and as unable to perform the duties of any occupation for which he or she is suited for the remaining three years. After-issue changes between the two-year and five-year riders are not permitted. If the insured is receiving benefits under the DIR when he or she reaches age 65, the benefit payments will continue until the end of the disability or the end of the benefit period. Note: An Attending Physician s Statement of Disability from a licensed medical physician will be required for all claims. For Agent Use Only Not For Use With The Public 21

Available Riders ExTENSION OF BENEFITS RIDER 1 (EBR) This is an optional rider that provides the policy owner benefits to help cover expenses incurred for qualified long-term care services once a chronically ill 2 insured s death benefit under the policy has been depleted due to payments made under the Long-Term Care Rider or the Accelerated Benefits Rider. This rider is not available on Horizon policies that have the APB rider. Once benefits are initiated under this rider, they will continue during the lifetime of the insured as long as the insured remains eligible for benefits. The rider pays benefits equal to the actual expenses for covered services, subject to a maximum monthly limit (up to 1% of the policy face amount for nursing home or home health care up to 0.5% for adult day care). Coverage under this rider may be purchased with or without Inflation Protection. This rider provides a non forfeiture benefit for any coverage that lapses after being in force for 3 years. The cost per unit of coverage under this rider is level and is guaranteed not to change. See Issue Guidelines in Long-Term Care Rider section GUARANTEED INSURABILITY RIDER (GIR) The GIR allows the insured to increase insurance coverage without evidence of insurability, during specified option periods. Regular option periods run from the 60th day before to the 31st day after the policy anniversary on which the insured reaches age 25, 28, 31, 34, 37, or 40. Additional option periods are available based on marriage, the birth/ adoption of a child, or purchase or refinancing of a home; there is a limit of two additional options. The GIR is not available on rated cases. Issue ages 0 37. GIR is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy. Rider stays in force until the policy anniversary following the insured s 40th birthday, as long as the base policy remains in force. Minimum option amount is $5,000. Maximum option amount is the lesser of $50,000 or the insured s life insurance amount. Premiums are a level amount per thousand of option amount, based on issue age. LONG-TERM CARE RIDER 1 (LTC) This is an optional rider that allows the policy owner to receive a chronically ill 2 insured s death benefit in periodic payments, while such insured is still living, to help reimburse such insured s expenses for qualified longterm care services. Benefits under this rider begin accruing after a 90-day elimination period and will continue, as long as the insured remains eligible, until the insured s death benefit under the policy has been exhausted. The rider pays benefits equal to the actual expenses for covered services, subject to a maximum monthly limit (up to 2% of the policy death benefit for nursing home or home health care up to 1% for adult day care). Each benefit payment will reduce the insured s death benefit by the same amount. While benefits are being paid under this rider, policy premiums and monthly deductions will be waived. The cost per unit of coverage under this rider is level and is guaranteed not to change. 22 1 Rider names may vary by state. 2 An insured is chronically ill if a licensed health care practitioner has certified the insured as: (1) being unable to perform (without substantial assistance from another person) at least two activities of daily living for a period of at least 90 consecutive days due to a loss of functional capacity; or (2) requiring substantial supervision for a period of at least 90 consecutive days by another person to protect oneself from threat to health and safety due to severe cognitive impairment. The activities of daily living are defined as bathing, continence, dressing, eating, toileting and transferring. For Agent Use Only Not For Use With The Public

Available Riders Issue Guidelines The Long-Term Care Rider and Extension of Benefits Rider are subject to the following issue guidelines: Issue ages: 0 70 Available on the Primary Insured as well as the Primary Other Insured who is covered under an Other Insured Rider. Coverage under an Extension of Benefits Rider is only available to a primary insured or primary other insured who also has coverage under either a Long- Term Care Rider or ABR2. EBR is not available on Horizon policies that include the Additional Protection Benefit Rider (APB) or the No-Lapse Guarantee (NLG) rider. Total life insurance coverage applied for under the policy may not exceed $1,000,000. Not ratable and not available on rated policies. Please refer to the Agent Guide for LSW Long-Term Care Rider and LSW Extension of Benefits Rider, MK2582(0901), Catalog No. 63181, for more in-depth information about the rider benefits, suitability, and disclosure requirements. NO-LAPSE GUARANTEE RIDER (NLG) Available on Horizon only. This optional rider guarantees that the policy, including any riders, will not lapse regardless of the policy s accumulated value so long as the policy is funded at or above the Monthly Guaranteed Premium specified by the rider. This rider does not put any additional restrictions on the loan options available to the policyholder and this rider can be terminated by the policyholder at any time. Issue ages 0-85. There is a monthly charge associated with the rider which varies by issue age, sex and rate class The NLG rider is available on policies issued with a substandard rating This rider is only available on policies with Death Benefit Option A. Any change in the Death Benefit Option from A to B will terminate the NLG Rider The Other Insured Rider (OIR) Balance Sheet Benefit Rider (BSB) and Additional Protection Benefit Rider (APB) are not available on policies with the NLG Rider Rider cannot be added after issue OVERLOAN PROTECTION RIDER (OPR) Available on Harbor and Horizon only. This rider protects your client s policy from lapsing in situations where loan balances threaten the policy s ability to stay in force. If the following terms of the rider are met, the Overloan Protection Rider will restructure the policy as a paid-up policy so that it is guaranteed not to lapse: Policy must be in corridor. Insured is age 75 or older. Policy must be in force for at least 15 years. Loan must exceed fee amount. Loan exceeds 95% of the account value less any surrender charge. The policy holder will be notified when eligibility require ments are met. The rider must be exercised within 60 days of the date we mail the notification. There is no additional cost until rider is exercised. Not available with CVAT. OTHER INSURED RIDER (OIR) The OIR provides low-cost annual renewable term insurance on an individual. The other insured may have any of the following relationships to the primary insured: Primary Insured Spouse Child Business partner Ineligible relationships for OIR coverage include parents, grandparents, siblings and grandchildren. Up to five OIR may be added to the same base policy. One of these OIRs (spouse or business partner only) may be designated as a Primary OIR ; additional riders are available options to the Primary OIR. The OIR is convertible to a permanent policy without evidence of insurability at any time while the rider is in force, or upon the death of the primary insured. For Agent Use Only Not For Use With The Public 23

Available Riders OTHER INSURED RIDER (OIR) (continued) Rider stays in force until the other insured s age 100, as long as the base policy remains in force. Minimum OIR amount may be less than $25,000, but not less than $10,000, if the entire policies MMP is greater than $100. Minimum OIR amount is $25,000 (or the primary insured s face amount, if less than $25,000), for Harbor and Horizon the minimum amount is $5,000 for pension owned policies. When the insured under an OIR is the same as the insured under the base policy, the maximum OIR face amount is two times the base face amount. Otherwise, the maximum OIR face amount is equal to the base face amount. Premiums are based on gender, rate class and age; the same rate classes are available as for the base policy. Benefits Available by Rider on Other Insureds Accelerated Benefits Rider 1 Accelerated Benefits Rider 2 Accelerated Benefits Rider 3 Primary Other Insured Rider Yes Yes Yes Non-primary Other Insured Rider Yes Yes Yes Accidental Death Benefit Yes No Children s Term Rider No No Disability Income Rider Yes No Guaranteed Insurability Rider Yes No Unemployment Rider No No Waiver of Specified Premium Rider Waiver of Target Premium Rider No No No No Long-Term Care Rider Yes No Extension of Benefits Yes No QUALIFIED PLAN ExCHANGE PRIVILEGE (QPEP) RIDER Available on Harbor and Horizon only. For Qualified Pension and Profit Sharing Plan trust owned life insurance, the QPEP rider allows the policy to be surrendered while owned under the qualified plan and elect to have a new policy written outside of the qualified retirement. The face amount of the new Policy cannot be more than the face amount, less the policy s cash value, of the policy being surrendered on the date of exchange. The maximum face amount under the new policy cannot exceed $2,000,000 and must be at least $25,000. No evidence of insurability will be required and the new policy will be issued based on the age the insured has attained on the date of the exchange. The class of risk under the new Policy will be the same as under the pension policy. The new policy date will be the date of the exchange. The new Policy will be issued on a policy form and at a premium rate for the insured s attained age in use by the Company on the New Policy Date. UNEMPLOYMENT RIDER (UR) The Unemployment Rider provides for a one-time lump sum payment into the policy after the insured has been involuntarily unemployed from full-time employment. This rider is automatically included on all non-pension universal life policies issued in states where it is approved. When the primary insured is involuntarily unemployed for three consecutive months, and submits proof such as state or federal unemployment certification, a termination notice or union certification, we will pay three months target premium into the policy s accumulated value. (The target premium is the monthly planned premium, up to 1/12 of the policy CTP.) The policy must be in force when the unemployment begins, and must remain in force during the waiting period. Issue ages 0 60. Rider stays in force until the policy anniversary following the insured s 65th birthday, as long as the base policy remains in force. The benefit will be paid only once. There is no premium for this rider. 24 For Agent Use Only Not For Use With The Public

WAIVER OF SPECIFIED PREMIUM (WSP) RIDER Available on Harbor and Horizon only. Waiver of Specified Premium Rider, available on Harbor and Horizon, allows your client to determine how much of their premium will be waived in the event they become totally disabled. The WSP Rider has a six month elimination period. Thereafter, the monthly benefit amount will be paid as a premium into the accumulated value of the policy during the continuance of the disability. Issue Ages: 15-55 (age nearest birthday) Minimum Annual Benefit: Annualized minimum monthly premium less the annualized minimum monthly premium for the Waiver of Specified Premium Rider. Maximum Annual Benefit: Face Amount <$250,000: lesser of Planned Periodic premium and the CTP excluding the waiver rider. Face amount $250,000: Lesser of planned periodic premium and the guideline level premium (GLP) excluding the waiver rider. The monthly charge for this rider will be the specified rate multiplied by the waiver of premium benefit amount. WAIVER OF TARGET PREMIUM (WTP) Available on Foundation only. Waiver of Target Premium, available on Foundation, pays a waiver of premium benefit as a premium into the policy s accumulated value when the insured is totally disabled. If the policy lapses while this benefit is being paid, the benefit will be paid directly to the policy owner until the disability ends. There is a six-month elimination period from the date of disability before benefits begin. The benefit amount is the target premium (the monthly planned premium, up to 1/12 of the policy CTP). Issue ages 15-55 Rider stays in force until the policy anniversary following the insured s 60th birthday, as long as the base policy remains in force The benefit amount is the entire policy target premium, including any attached riders. Premiums are a level amount per dollar of target premium, based on age If the policy holder has the WTP Rider on a policy, any application for an increase on face amount should include additional WTP coverage also, unless the insured is past the WTP age limit. This rider stays in force until the policy anniversary following the date the insured reaches age 60. Not available on single premium policies. Not available with a table rating greater than 200% or on policies with a flat extra greater than $5.00 per thousand. After Issue Changes The waiver benefit amount will be increased after issue if additional optional benefits results in a minimum benefit amount that exceeds the current benefit amount. Whenever this happens, the waiver benefit amount will be increased to the new minimum benefit amount. The original premium rate will continue to apply to the increased benefit amount. Benefits may not be mutually exclusive and the use of one benefit may affect the availability of another. For Agent Use Only Not For Use With The Public 25

Life Insurance Company of the Southwest was incorporated in 1955. We are licensed in 49 states and the District of Columbia, with our home office in Dallas, Texas. LSW specializes in life insurance and annuity products. Our rating from A.M. Best Company, the oldest rating agency in the industry, is a good reflection of LSW s strength. Best ratings represent an independent opinion of a company s financial strength and ability to meet its obligations to policyholders. Best gives LSW an A (Excellent) rating; this is the third highest of 16 rating categories. * LSW is a wholly owned affiliate of National Life Insurance Company based in Montpelier, Vermont. National Life was founded in 1848 and for over a century and a half has provided insurance protection to individuals, families and businesses. * As of 11/08, ratings are subject to change without notice. Home Office: Dallas, TX; Administrative Office: One National Life Drive, Montpelier, VT 05604 (888)297-3990 www.nationallife.com National Life Group is a trade name of National Life Insurance Company and its affiliates. Each company of the National Life Group is solely responsible for its own financial condition and contractual obligations. LSW is not authorized to sell insurance in New York and does not do any insurance business in New York. For Agent Use Only Not For Use With The Public

SecurePlus Paragon MarKeTing guide 63933 MK3179(0808) TC40166(0808) For Agent Use Only Not for Use with the Public

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SecurePlus Paragon designed to complement the existing LSW indexed product portfolio a potential solution for the most competitive personal sales situations has the flexibility to meet many demanding business case scenarios for producers and their clients who expect more from life Table of Contents Features and Benefits...5 Product at a Glance... 6 What is Indexed Universal Life?... 7 Sales Scenarios... 8 Who Are Your Clients?... 8 Interest Crediting Methodology... 15 Product Specifications...18 Available Riders...21 For Agent Use Only Not for Use with the Public 3

SecurePlus Paragon SecurePlus Paragon, the latest addition to the Life Insurance Company of the Southwest (LSW) Indexed Product Portfolio. SecurePlus Paragon offers A flexible premium universal life policy with an indexed interest crediting feature Highly competitive lifetime rolling Target Premiums Five interest crediting strategies with the choice of a fixed interest strategy and four index strategies For business planning sales, the option for high early cash values through the Balance Sheet Benefit Rider Death Benefit Blending Options for lower premium outlay through the Additional Protection Benefit Rider 1035 Exchanges with loans Revolutionary no-additional-cost Accelerated Benefit Riders Ten year surrender charge schedule Variable and Fixed Loan Options with the Overloan Protection Rider Full customization with available riders 4 Riders are optional and may be available at additional cost. Riders are not available in all states. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy and may result in a taxable event. For Agent Use Only Not for Use with the Public

SecurePlus Paragon Features & Benefits Five Interest Crediting Strategies: SecurePlus Paragon offers five choices of interest crediting options: One Fixed Interest crediting strategy Your clients can select one or multiple index strategies. Regardless of how they feel the Index will move, they can select strategies that they think will work best for them. Four Index Crediting strategies based on the changes in the S&P 500 Index. Overloan Protection Rider: This rider helps prevent your client s policy from lapsing in situations where loan balances threaten the contract s ability to stay in-force. Policy loans * from SecurePlus Paragon are generally received income-tax free. If the policy lapses, with outstanding policy loans, there could be taxable income to the policyholder. In the event loan balances threaten the contract s ability to stay in force, and if the terms of the rider are met, the Overloan Protection Rider will restructure the policy so that it is guaranteed not to lapse. Additional Protection Benefit Rider (APB): APB may increase the total death benefit and cash value without significantly increasing the cost. The APB rider provides additional permanent coverage on the primary insured at a cost that is generally lower than the cost of the base coverage. Balance Sheet Benefit Rider: This rider provides early duration enhanced policy surrender values which increase the policy s collateral value for business accounting as surrender charges may reduce the policy s cash value in early years. This rider was designed for use in business planning cases. When funding an employee benefit program, this rider may help where there is a need for higher cash surrender value in the early policy years. Guarantees: ** A guaranteed minimum interest rate of 2.5%. Clients can be assured that regardless of the changes in the S&P 500 index, policy values, at death or full surrender will reflect a guaranteed accumulated value calculated at 2.5% ***. *Policy loans and withdrawals reduce the policy s cash value and death benefit and may result in a taxable event. Except in the case of a Modified Endowment Contract (MEC), withdrawals up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon contract lapse or surrender. For MECs, contract loans and withdrawals are considered taxable income. **Guarantees are dependent upon the claims-paying ability of the issuing company. *** Minus any applicable surrender charges. For Agent Use Only Not for Use with the Public 5

Product at a Glance Issue ages: 0 85 (age nearest birthday) Minimum Face Amount: $100,000 (Base Face Amount plus APB Face Amount) Minimum APB Face Amount: $25,000 Maximum APB Face Amount: Maximum Face Amount: Nine times base face amount Amounts greater than $3,000,000 subject to prior approval Rate Classes: Elite Preferred Non-Tobacco User (issue ages 20 75) Preferred Non-Tobacco User (issue ages 20 85) Standard Non-Tobacco User (issue ages 0 85) Preferred Tobacco User (issue ages 20 85) Standard Tobacco User (issue ages 20 85) Standard Non-Tobacco User will be used for insureds ages 0 19 Substandard: Table ratings and flat extras are available with Standard Non-Tobacco User and Standard Tobacco User classes. Temporary flat extras are available with any rate class. Minimum Premium: Surrender Schedule: Expense Charges: Policy Loans: Withdrawals: $25.00 / month 10 year charge schedule Based on age, sex, rate class, and face amount Policy fee: $5 per month Premium load: 6% of premium Available after the first policy year, both variable and fixed Available after the first policy year 1035 Exchanges with Loans: Available loan balances can account for up to 50% of the gross transferred amount Riders available (where approved): Accelerated Benefits Riders (Terminal, Chronic, and Critical Illness) Accidental Death Benefit Rider Additional Protection Benefit Rider Balance Sheet Benefit Rider Children s Term Rider Disability Income Rider (2-year and 5-year) Extension of Benefits Rider Guaranteed Insurability Rider Long-Term Care Rider Other Insured Rider Overloan Protection Rider Unemployment Rider Waiver of Target Premium 6 For Agent Use Only Not for Use with the Public

At its very basic, indexed universal life (IUL) is the same as traditional universal life (UL) with a different way to credit interest. What is Indexed Universal Life? Consider the following features shared by all universal life contracts Flexibility A customer can decide how much life insurance he or she needs (subject to certain requirements and limitations). The death benefit and premium payment can also be adjusted to accommodate changing needs. Security Beneficiaries are protected against possible financial hardship in the event of the insured s death. Tax-deferred account value growth The contract s account value earns an interest crediting rate which is accumulated income-tax deferred. Tax-free death benefit Under current tax laws governing individual life insurance, life insurance proceeds are generally paid income-tax free to the beneficiary. Tax-free distributions Under current tax laws governing individual life insurance, life insurance cash values accessed via loans are generally paid income-tax free. IUL Interest Crediting (Upside Potential) In a traditional UL contract, interest is credited based on the performance of investments made by the insurance company (usually in high quality bonds and mortgages). In an IUL contract, the customer has this fixed interest option as well as the option to have interest credited based on the changes in the S&P 500 Index. * IUL Guarantees (Downside Protection) Each Index Segment has a 1-year term. During that period it is expected that the value of the S&P 500 will change, either positively or negatively. In the event that market values decline, SecurePlus Paragon has a built-in 0% interest crediting floor. This means that no matter what happens to the change in the S&P 500 values each year, policy values can never be lost due to a decline in the Index. SecurePlus Paragon provides additional downside protection with a lifetime 2.5% guaranteed interest crediting rate which will be applied in case of death or full surrender only if the policy return is less than the 2.5% guarantee. *The Policy does not directly participate in any stock or equity investment. For Agent Use Only Not for Use with the Public 7

Sales Scenarios Indexed Universal Life Who Are Your Clients? Specifically, customers who have a need for life insurance, and who: focus on cash value with the possibility of accessing policy cash values at a later date, if available; are willing to give up some guarantees often found in other fixed life insurance contracts for the upside interest-crediting potential and downside risk protection. IUL has a customer risk profile that lies somewhere between a fixed UL contract and a variable UL contract. Because of this, an IUL contract is generally less volatile than a variable UL contract. Individual Insurance Planning Clients who are looking for death benefit protection and the accumulation of cash value to assist with education costs, and/or provide supplemental retirement income are candidates for this product. The tax-deferred accumulation of cash value and tax-favored distributions makes SecurePlus Paragon an effective vehicle to build cash value. Clients also may want to use their cash value to reduce premium payments during their retirement years and the potential for higher cash value accumulation can improve their ability to do so. Estate Planning Large estates can be exposed to significant settlement costs whether through gift or estate taxes, probate expense or costs to administer the estate. SecurePlus Paragon s death benefit provides liquidity to help cover these costs and protect assets that may otherwise have to be sold in less than ideal conditions. On the following pages we highlight hypothetical client scenarios which explain how SecurePlus Paragon can help your clients achieve their individual and business insurance planning objectives. Business Market Life insurance is often the preferred choice in funding buysell agreements, executive bonus plans, and non-qualified deferred compensation arrangements. By providing premium flexibility, upside cash value performance through the indexed strategy accounts and optional benefits to help protect key employees and their families, SecurePlus Paragon is ideal for business planning situations. Upside Potential with Downside Protection. 8 For Agent Use Only Not for Use with the Public

Access to cash values, through loans and withdrawals, - Some combination of both a partial lump sum to cover final expenses with the balance used to provide a monthly income. Protect your future today your loved ones depend on you SecurePlus Paragon Focus on Survivor Protection SecurePlus Paragon can be designed as a high death benefit contract ideal for successful individuals who need a substantial amount of protection. Your clients are raising families, saving for college, and planning for retirement. They also understand the need to protect their families and assets against financial loss brought on by premature death. However, they want life insurance protection that can change as their needs change. Use of the APB rider may increase the total death benefit and cash value without significantly increasing the cost. Point of Sale Materials Consumer flyer available for presentation on survivor needs catalog #63731. You may need a strategy that helps protect your family in the event of your premature death by providing an Protect Protecting the ones who depend on you SecurePlus Paragon for Survivor Protection Death Benefit Protection Provide cash the family needs to pay off debt, meet monthly obligations, and maintain their lifestyle. Ensure that funds will be there to help pay the children s future college expenses. income tax-free death benefit. Life insurance death benefit Education Bills Mortgage Final expenses expenses Permanent life insurance provides: An income tax-free death benefi t for your family should you die prematurely; Sample ICS output: Lifetime Access to Cash Values Cash value which can be accessed to pay for unplanned expenses or to meet short term income needs. Access to cash values, through loans and withdrawals, Access to cash values, through loans and withdrawals, to meet emergencies, take advantage of opportunities, or draw an income stream; Tax-deferred build-up of policy cash values. Protect the people who depend on you today, plus, build a solid foundation for the future Supplement retirement income. 63731 / MK3035(0408) / TC40054(0408) Experience Life Protecting The Ones Who Depend On You Here s how your premium dollars can provide financial security for your family. Distribution Option 1: Lump Sum Initial Annual Premium $816 Assumes Death At Age 65 $100,000 Death Benefit Distribution Option 2: Monthly income for 15 years* $100,000 $765 Education Bills Mortgage expenses Final expenses Your beneficiary will receive the death benefit income-tax free and without the delay of probate. The death benefit can be received either: - In a single lump sum, or - As a stream of income, or Waiver of Target Premium Rider upon total disability. Benefits for Chronic or Terminal Illness * Money for a terminal, chronic, or critical illness. Pay for costs associated with home health care, medical procedures, drug therapies and other quality of life expenditures. *Income calculated based on Contract Settlement Rates in effect as of the date of this illustration. Amount illustrated is based on a 15 year period certain payout, payable monthly. Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. * Benefits received from exercising the Accelerated Benefits Rider may be used for any purpose and are not limited to illness-related expenses. For Agent Use Only Not for Use with the Public 9

Total premiums paid into your life insurance policy provide build-up of cash values income tax deferred. Income during your lifetime is provided through loans and withdrawals from you policy s cash values and are received income-tax free. The policy death benefit can also be received income-tax free during lifetime in the case of a critical or terminal condition. Your remaining death benefit, less benefits received during lifetime, will be paid to your beneficiary income-tax free. Life Insurance helping make your financial goals a reality which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. SecurePlus Paragon Focus on Cash Value Accumulation SecurePlus Paragon can also be structured as a cash value contract that can be ideal for successful individuals who need both protection and a strategy for accumulating assets on a tax-efficient basis. Your clients may be looking for a tax-favored way to further diversify their savings. SecurePlus Paragon can be a way to ensure both death benefit protection as well as tax-efficient growth of policy cash value. Cash value that your clients can access, when they need it, on a tax-favorable basis. Point of Sale Materials Consumer flyer available for presentation on cash value accumulation catalog #63733. Build Helping achieve lifetime income needs Survivor Protection plus tax-efficient Cash Value accumulation Death Benefit Protection completes this aspect of the retirement funding in the event of premature death. Funding at the guideline/mec levels will provide optimal cash value accumulation potential. How permanent life insurance can help you achieve your present and future financial goals: Each Premium Payment You Make: Provides your family with an income-tax free death benefit that they can use to: Pay taxes and other final expenses Maintain their lifestyle and protect their future financial security Pay education expenses for your children Sample ICS output: Policy loans and withdrawals may be received income-tax free. Choice between Fixed and Variable net cost loan options. 63733 / MK3037(0408) / TC40055(0408) Builds cash value income-tax deferred Cash value you can use during your lifetime, through income-tax free policy loans and withdrawals, for such needs as: Meeting financial emergencies Paying for a child s college expenses, and Creating a stream of income for retirement Put the power and tax advantages of permanent life insurance to work for you today Permanent life insurance, an important part of helping you achieve your present and future financial goals Life Insurance Helping achieve lifetime income needs Overloan Protection Rider for when loan balances threaten the contract s ability to stay in-force. Experience Life Total Premiums Paid Through Age 64 $37,300 Projected Total Tax-Free Income Distributions starting at age 65 for 20 years $208,840 Remaining Tax Free Death Benefit at end of income period: $32,486 Total Combined Benefit $241,326 How it works: Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration 10 For Agent Use Only Not for Use with the Public

SecurePlus Paragon Focus on Living Benefits Protecting against financial loss brought on by the death of an income earner can be crucial. One of the biggest risks for financial loss is the possibility of a chronic, critical, or terminal illness. Health insurance plans may not cover costs associated with a chronic, critical, or terminal illness. Which explains why individuals are looking for a strategy that will not only help protect them financially against potential terminal, chronic, or critical illness, but also give them options if they never require that protection. Point of Sale Materials Consumer brochure available for presentation on living benefits catalog #62824. Living Benefits 62824 MK2333(0307) TC30498(0307) A Key to Life Insurance Did you know: About every 26 seconds, an American will suffer a coronary event, and about every minute someone will die from one 1. On average, every 40 seconds someone in the United States has a stroke 1. At age 65, the odds are nearly one in two that you will require nursing home services for at least 2.5 years 2. Providing for heirs and protecting assets from expenses associated with a chronic, critical or terminal illness with: Accelerated Benefits Rider (ABR) * Chronic Critical Terminal Rider benefits that can provide cash for: Living Expenses Nursing Home Care Home Health Care Adult Day Care Medical Procedures Drug Therapies Household Expenses, and Quality of Life Expenditures 1 American Heart Association, American Stroke Association, Heart Disease and Stroke Statistics, 2008 update. 2 Medicare, US Department of Health and Human Services, 2007. There is no restriction placed on the use of the benefit received. * Receipt of the Accelerated Benefits will reduce the contract s cash value and death benefit. For Agent Use Only Not for Use with the Public 11

* Life policy is owned outside of insured s estate. 1 11 22 34 45 $ 56,980 $211,665 81,155 223,395 22th 108,149 243,942 81,647 206,865 45,204 155,881 Withdrawals are taken from the account and gifted outside of your estate. Gifts are then used to pay an insurance premium. SecurePlus Paragon Focus on Wealth Transfer As they approach retirement, most people want to ensure that the assets they ve accumulated will not only last for the rest of their lives, but upon their death, will be passed to their heirs quickly, privately, and as tax-efficiently as possible. That puts clients who ve accumulated sizeable retirement assets and who don t need them to meet their ongoing living expenses in a difficult position. By using distributions from accumulated assets, whether qualified or non-qualified, to purchase a SecurePlus Paragon policy, clients can leverage those assets, which may lose substantial value at death due to taxes, allowing them to increase the amount they leave to their family. Point of Sale Materials Consumer flyer available for presentation on Leveraged Asset Transfer catalog #63745. Leverage your assets through the purchase of life insurance. Leveraged Asset Transfer You want your family to enjoy the benefi t of your assets, while retaining control over how and when they receive them. By leveraging your asset transfer plan with life insurance, you can replace assets that may lose substantial value at your death due to taxes, allowing you to increase the amount you leave to your family. Transfer SecurePlus Paragon can provide them with similar benefits as an annuity but with the added protection of: 1 An income-tax free death benefit that will be substantially greater than the premium dollars used to pay for it, allowing them to provide a greater legacy to their heirs; and Riders that allow access to the death benefit if diagnosed with a chronic or terminal illness. 2 63745 / MK3049(0408) / TC40058(0408) Dollars Without Planning Leveraged Asset Transfer Plan 1 5 10 15 20 25 Years Without proper planning, as much as 70% of your assets could be lost to taxes Assumes qualifi ed asset; current income tax bracket of 36%; post 2010 estate tax bracket of 55%; applicable exclusion is not applied to this asset. Sample ICS output: Permanent Life Insurance Preserving your assets and creating greater wealth transfer Current Net To Heirs Proposed Net To Heirs* $400,000 $360,000 $320,000 Leverage Asset Transfer Without proper planning, as much as 70% 3 of your client s assets could be lost to taxes. SecurePlus Paragon provides an income-tax free death benefit that can leverage their assets and increase the amount they leave to their family. Experience Life $280,000 $240,000 $200,000 $160,000 $120,000 $80,000 $40,000 0 Current Proposed Year Net To Heirs Net To Heirs Insuring Your Wealth Transfer Plan: 12 Insurance provides an income tax free death benefit and is not included in your taxable estate. Insurance proceeds replace assets used to pay taxes and final expenses. Remaining proceeds are paid to your family or favorite charity. If your wealth transfer plan is not insured the assets you intend to leave your family may need to be used to pay taxes and final expeneses resulting in a smaller legacy for your family The use of gifts and trusts involves complex tax rules and regulations. You are advised to consult with your legal or tax advisor prior to implementing any estate planning strategy. Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. For Agent Use Only Not for Use with the Public 1 Only an annuity guarantees the principal paid into the contract. With the life insurance policy, it could lapse from not paying the premiums. 2 Use of the Accelerated Benefits will reduce the policy s cash value and death benefit. 3 Assumes qualified asset; current income tax bracket of 36%; post 2010 estate tax bracket of 55%; applicable exclusion is not applied to this asset.

Reduce the risk your business will face following the death of a key employee. Cover costs, expenses and potential loss of revenue. Provide funds to recruit, hire and train a new employee. Protect your business today against the future loss of a key employee SecurePlus Paragon Focus on Key Person Protection Much of a business success depends on their key people. Whether it is a part owner or an important employee, the business must plan for the continued success in the event of the loss of their key person s expertise. You can help your clients indemnify the financial loss their business would experience at the premature death of a key employee. Key Person insurance can be used to keep lines of credit open, train another employee for the same specialized skills and expertise, and help assure the completion of ongoing projects and initiatives. Consider the use of the Balance Sheet Benefit Rider for when the company needs to demonstrate a high ratio of Cash Surrender value for premium outlay on the company s balance sheet. Point of Sale Materials Consumer flyer available for presentation on Key Person Protection catalog #63866. Key Person Life Insurance If the success of your business depends on a few key people Protect SecurePlus Paragon for Key Person Protection Death Benefit: Provides funds needed to hire and train new employees. Replaces lost profits. Tax-Deferred Cash Value which can be: Accessed to fund unplanned business expenses. Used for supplemental retirement income. You want to make sure that your business continues to be successful, even if you lose their expertise. At death of Business Life insurance key employee, purchases life company issues income-tax free insurance policy policy covering death benefit on key employee key employee paid to business The advantages of this strategy: Life insurance lets you reduce, or even eliminate, some of the risk your business may face following the death of a key employee. Sample ICS output: Disability Protection Waiver of Target Premium Rider upon total disability of the Key Employee will continue to fund the policy. 63866 / MK3124(0408) / TC41055(0408) The costs, expenses, and potential loss of revenue resulting from the death of a key employee are no longer unexpected or unmanageable. Funds are available to hire and train a new employee. The plan is completely selective cover only those employees you feel are most important to the ongoing success of your business. Life insurance benefi ts are received income-tax free by the business. Experience Life Here s how your premium dollars can provide financial security for your business. Assumes Client s Death At Age 65 $100,000 Death Benefit Employer Annual Outlay $816 OR Protecting Your Business In Year 10 $3,976 Projected Cash Value Supplement key Recruit and hire Keep credit Use for business employee replacement lines open cash needs retirement Collateral Replace for securing lost profits future loans Benefits for Chronic or Terminal Illness Accelerated Death Benefit if the key employee becomes chronically or terminally ill *. Company can choose to keep ABR benefits paid or pay Key Employee. Benefits paid to Key Employee will be received as ordinary income. A stategy to help: Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. * Receipt of the Accelerated Benefits will reduce the contract s cash value and death benefit. For Agent Use Only Not for Use with the Public 13

Total premiums paid into your life insurance policy provide build-up of cash values income tax deferred. Income during your lifetime is provided through loans and withdrawals from you policy s cash values and are received income-tax free. The policy death benefit can also be received income-tax free during lifetime in the case of a critical or terminal condition. Your remaining death benefit, less benefits received during lifetime, will be paid to your beneficiary income-tax free. Life Insurance helping make your financial goals a reality which provides more details and disclosure regarding policy values and benefits and is an integral part of this presentation. Sales Scenarios SecurePlus Paragon Focus on Employee Fringe Benefit Planning SecurePlus Paragon combined with the Balance Sheet Benefit Rider is structured for fringe benefit planning. Your business owner clients may be considering a non-qualified retirement plan to supplement (or as an alternative) their qualified plan. SecurePlus Paragon combined with the Balance Sheet Benefit rider is a funding solution for their plan. Life insurance is one of the only financial vehicles that a company can own and have cash values grow tax-deferred. Through the addition of the Balance Sheet Benefit rider, the policy can be designed to have a cash surrender value as high as 90% of the premiums paid which is highly desired for business accounting purposes. Point of Sale Materials Business Life Cycle Flyer catalog # 63905: Optimize Deferred Compensation Planning The success of your business depends on the expertise of a few key employees How do you reward and retain the people who are essential to keeping your business successful? Business Insurance Planning with a Focus on High Early Cash Value The Balance Sheet Benefit Rider is also ideal for such business insurance planning as: Executive Bonus plans Leveraged Bonus plans Key Person 63905 / MK3147(0408) / TC41057(0408) Business and key employee enter Business purchases a permanent life insurance policy into deferred insuring the life of the key employee compensation agreement Policy cash value At employee s death, life insurance company can be a source pays tax free death benefit to business of benefits paid to key employee at retirement Business can use the death benefit to continue paying benefits to key employee s beneficiary The advantages of this strategy: Key employee is able to defer income taxes to a future year. Provides employee benefi ts on a discriminatory basis. Compensates key employee for inadequate 401(k) deferral opportunities. May be used to attract and retain key employees. Can provide supplementary retirement benefi ts through policy loans. Sample ICS output: Permanent life insurance, an important part of helping you achieve your present and future financial goals Life Insurance Helping achieve lifetime income needs Buy-Sell The Balance Sheet Benefit Rider offers a permanent insurance solution to business planning. Experience Life Total Premiums Paid Through Age 64 $37,300 Projected Total Tax-Free Income Distributions starting at age 65 for 20 years $208,840 Remaining Tax Free Death Benefit at end of income period: $32,486 Total Combined Benefit $241,326 How it works: Policies are underwritten by National Life Insurance Company, Montpelier, VT. The benefits and values are not guaranteed, the assumptions of which they are based are subject to change by the insurer, and actual results may be more or less favorable. This summary is not valid without the accompanying illustration 14 For Agent Use Only Not for Use with the Public

Interest Crediting Methodology Basic Strategy All premiums paid by the client are allocated into the Basic Strategy and a rate of interest declared by the company is credited to the account. This rate for the Basic Strategy is guaranteed to be not less than 2.5%. The Basic Strategy must maintain a minimum value. This minimum value is determined at the start of each policy year and is an estimate of the amount required to fund the monthly deductions for the policy year. This amount will change each policy year on the policy anniversary. Once per month, on the 21 st, any Basic Strategy value in excess of the Basic Strategy minimum value will be transferred to the other strategies based on the allocation specified by the policyholder. Interest Crediting Strategies LSW s SecurePlus Paragon contract has five different interest crediting strategies available to provide maximum flexibility for your customer. These strategies are: 1. The Fixed-Term Strategy 2. Point-to-Point, Cap Focus Index Strategy 3. Point-to-Point, Participation Rate Focus Index Strategy 4. Point-to-Point, No Cap Index Strategy 5. Point-to-Average Index Strategy Fixed-Term Strategy Each transfer to the Fixed-Term Crediting Strategy creates a distinct fixed-term segment. Each fixed-term segment will have a crediting period of one year. A rate of interest declared by the company is credited to the account daily. The minimum rate of interest credited is 2.5%. At the end of each fixed-term segment period, the funds will be transferred back to the basic strategy. Available Index Strategies Point-to-Point, Cap Focus Index Strategy The Cap Focus Index Strategy guarantees that the Participation Rate will always be greater than or equal to 100%. This strategy will always provide a higher Cap than the Participation Rate focused Index strategy. The guaranteed minimum Cap is 3.1%. Point-to-Point, Participation Rate Focus Index Strategy The Participation Rate Focus Index strategy guarantees that the Participation Rate will be at least 110%. Since this strategy is designed to provide a higher Participation Rate, it will have a lower Cap. The guaranteed minimum Cap is 3.0%. Point-to-Point, No Cap Index Strategy The No Cap Index strategy applies no Cap and is, therefore, balanced by a lower Participation Rate. The guaranteed minimum Participation Rate is 25%. The Point-to-Average Index Strategy The Point-to-Average Index Strategy is guaranteed to have no Cap. The guaranteed minimum Participation Rate is 30%. For Agent Use Only Not for Use with the Public 15

Interest Crediting Methodology Index Strategies Each transfer to an Index Strategy creates a distinct Index Segment. Each Index Segment will have a crediting period of one year. Index Earnings are credited to each Index Segment at the end of the crediting period. Each Index Segment will have a Participation Rate and a Cap, which is determined in advance for each crediting period. The Index for the strategies will be the S&P 500. On each anniversary of an Index Segment, the Index Growth for that segment will be calculated as a function of the changes in the Index over the crediting period. Interest Earnings for each Index Segment are calculated at the end of the crediting period of such segment as follows: 1. Index Growth multiplied by the segment s Participation Rate, adjusted so that the rate is no greater than the segment s Cap, and no less than 0%; multiplied by 2. The value in the applicable Index Segment. SecurePlus Paragon has three Point-to-Point Index Strategies and a Point-to-Average Index Strategy. The Point-to-Point method measures the change in the index value from the start of the segment (Starting Index Value) to the value of the Index 12 months later (Ending Index Value). The change in the index value is divided by the Starting Index Value to determine the Index Growth. The Point-to-Average method measures the change in index value from the Starting Index Value to the Daily Average of the Index over the next 12-month period. The difference between the Daily Average of the Index and the Starting Index Value is divided by the Starting Index Value to determine the Index Growth. The Index Growth is then multiplied by the Participation Rate (the resulting value will never be less than zero). There is no Cap for this strategy. For example, assume an Index Segment has a Participation Rate of 110%. If the Index Growth, comparing the Starting Index Value to the Daily Average of the Index, is 10%, that Index Segment would be credited 11% (10% increase times 110% Participation Rate with no Cap). Annual Reset At the end of each index segment period, the funds, including any interest credits, will be transferred back to the basic strategy for reallocation. The Starting Index Values are reset after each reallocation. This ensures that decreases in the S&P 500 Index do not have to be made up before additional interest can be earned. The Index Growth is then multiplied by the Participation Rate (the resulting value will never be less than zero). The Participation Rate is the rate that the policyholder shares in the Index Growth. Once the Participation Rate is applied to the Index Growth, the result is compared to the Cap. In no instance will the earnings for the segment exceed the Cap. For example, let s assume an Index Segment has a Participation Rate of 100% and a Cap of 12%. If the Index Growth is 10%, the Index Segment would be credited 10% (10% increase times a 100% Participation Rate falls below the 12% Cap). 16 For Agent Use Only Not for Use with the Public

Interest Crediting Methodology Indexed Interest Crediting Glossary of Terms Annual Reset: means that at the end of each Index Segment Year, the Starting Index Value for that Policy Segment will be reset to the Ending Index Value from the prior year. Basic Strategy: the account where all premiums are initially deposited. Charges are taken from the Basic Strategy. If value in the Basic Strategy is not enough to cover the charges, charges will be allocated to the Fixed-Term Strategy and then the Index Strategies. Basic Strategy Sweep Date: the 21 st of the month. This is the date that funds in the Basic Strategy, in excess of the minimum value, will be allocated to the chosen Interest Crediting Strategies. Cap: the maximum annual effective interest rate that can be credited to an Index Segment. Daily Average of the Index: the arithmetic average of all the published daily ending values of the Index for a 12-month period. Ending Index Value: the value of the Index at the end of the day an Index Segment ends. Fixed-Term Strategy: a rate of interest declared by the company will be credited to the account daily. Guaranteed Interest Rate: is 2.5%. Index: for SecurePlus Paragon, the Index is defined as the S&P 500 Index, excluding dividends. Indexed Interest: the interest credited to an Index Segment using either the Point-to-Point or Point-to-Average strategy. Interest Crediting Strategy: one of the five available methods used to calculate how interest is credited to the Policy. The five choices are Fixed-Term, Point-to-Average and three Point-to-Point strategies. Participation Rate: the percentage applied to the Index Growth used in the formula to calculate the Indexed Interest for an Index Segment. Point-to-Average Strategy: compares the Starting Value of the Index to the Daily Average of the Index to determine the Index Growth. Point-to-Point Strategy: compares the Starting Value of the Index to the Ending Value of the Index to determine the Index Growth. Index Segment: each time premiums are transferred from the Basic Strategy into an Index Strategy a new Index Segment is created. Policy Segment Year: the 12-month periods, beginning when an Index Segment is created, used to determine the Indexed Interest earned on the value of the Index Segment. Starting Index Value: the value of the Index at the end of the day an Index Segment begins. For Agent Use Only Not for Use with the Public 17

Product Specifications Policy Protection Period The Policy Protection Period helps protect the policy against lapse during the first 5 policy years. During this period, the policy will not enter a grace period, even if the cash surrender value is not sufficient to cover the monthly deductions, as long as: the sum of premiums paid, less all withdrawals made and less any policy debt, is greater than or equal to the total minimum monthly premiums in effect since the date of issue, and the accumulated value less any policy debt is sufficient to cover the monthly deductions The Policy Protection Period applies to the first 5 policy years only, and does not restart after an increase in face amount. Monthly Cost of Insurance Each month the cost of insurance (COI) is deducted from the accumulated value. Guaranteed maximum COI rates shown in the policy are based on the 2001 CSO mortality tables and are higher than what we currently charge. Current COI rates are select and ultimate, and vary by age, sex, and rate class. The current COI rate is guaranteed for the first ten years. Surrender Charges Surrender charges apply during the first ten years of the policy. A dollar amount per thousand of face amount will be based on issue age, sex, rate class, and policy duration. A face amount increase will have its own surrender charges associated with it. The surrender charge will be capped at one target premium in year one. Expense Charges Based on age, sex, rate class, and face amount. Policy fee: $5.00 per month. Premium load: 6% of premium. Premiums This universal life policy has both minimum and commissionable target premiums. A premium equal to one minimum monthly payment is due on the date of issue. The commissionable target premium (CTP) is the maximum premium on which the higher compensation rate will apply. The minimum monthly and commissionable target premium will be based on the face amount, age, rate class, and gender. The minimum billed premium amount is $25.00/month. Payment of the minimum premium for the first five years guarantees that the policy will stay in-force during that time, unless the minimum premium is reduced as the result in a reduction in coverage. Unscheduled premiums may be paid into the policy at any time. The target premium for the Waiver of Target Premium Rider and the Unemployment Rider is defined as the policyholder s planned periodic premium, up to the policy CTP. The minimum monthly premium will be based on the face amount, age, rate class, and gender. With SecurePlus Paragon the customer may choose which premium test will be used to keep the contract within the federal definition of life insurance. Under Section 7702 of the Internal Revenue Code, a policy will generally be treated as life insurance for federal tax purposes if at all times it meets either (1) the guideline premium test or (2) the cash value accumulation test. In general, the cash value accumulation test will allow you to make higher premium payments during early years. The cash value accumulation test will only be available if the premium payments create a Modified Endowment Contract (MEC) at issue. The guideline premium test may allow you to maintain a higher cash value in relation to the face amount. Customers must choose either the guideline premium test or the cash value accumulation test when the policy is issued. Once the policy is issued, the customer may not change to a different test. 18 For Agent Use Only Not for Use with the Public

Product Specifications Death Benefit Options The policyholder may elect an Option A (level) or Option B (increasing) death benefit option. Option A the death benefit is equal to the greater of 1. the face amount; or 2. the accumulated value multiplied by the applicable corridor factor Option B The death benefit is equal to the greater of 1. the face amount plus the accumulated value; or 2. the accumulated value multiplied by the applicable corridor factor Change in Death Benefit Option The policy s death benefit option can be changed from Option A to B, or B to A, once each policy year after the first policy anniversary. If a change would cause the contract to no longer qualify as life insurance for federal income tax purposes, the change will not be allowed. Changing from Option A (level) to Option B (increasing): The face amount of the policy will be reduced by the accumulated value just prior to the effective date of the change. Decreases in Face Amount: After the first policy anniversary the policyholder may request a decrease in face amount in coverage subject to the following terms: The decrease becomes effective on the monthly policy date on or after the receipt of the request at the home office. Decreases cannot result in a face amount less than $25,000. Decreases will not be permitted if the decrease causes the policy to no longer qualify as life insurance for federal income tax purposes. The total face amount of the policy plus any additional riders may be no less than 75% of the largest total face amount in-force at any time in the twelve months prior to the request. Decreases do not affect the level of surrender charges. Each change in coverage will cause the Commissionable Target Premium (CTP) and Minimum Monthly Premium (MMP) to be adjusted for each new segment of coverage. Change from Option B to A: The face amount will increase by an amount equal to the accumulated value just prior to the effective date of the change. In both cases listed above, the death benefit is the same before and after the change. Changes in Face Amount Increase in Face Amount: After the first policy anniversary the policyholder may apply for an increase in coverage subject to the following terms: Satisfactory proof of insurability. The requested increase meets or exceeds $25,000. The change will be effective on the monthly date on or following the approval of the application. Each increase will have its own set of surrender charges and monthly per thousand of face amount administration charges. For Agent Use Only Not for Use with the Public 19

Product Specifications Loans Loans are available at any time after the first policy year. The policy will serve as the sole collateral for the loan. The amount available for loan on any day will be the surrender value, less three times the monthly deductions due on the last monthly policy date. The interest rate charged on the loan will be a variable rate that is based on the Moody s Corporate Bond Yield Average Monthly Corporates, subject to a minimum rate of 3%. SecurePlus Paragon offers two loan options: 1. Variable Net Cost Loan 2. Fixed Net Cost Loan Both options will be available at the start of policy year 2 (at issue for loans resulting from 1035 exchanges). The loan option is selected by the policyholder at the time a loan is first taken. All outstanding loans must use the same option. The policyholder may switch all existing loans from one option to the other on the policy anniversary. Interest credited on loaned funds 1. Variable Net Cost Loans loaned values continue to earn interest/index earnings as if no loan had been taken from the policy. 2. Fixed Net Cost Loans loaned values are removed from the crediting strategies and segregated in a Loan Collateral Fund, and credited with: a. The Variable Loan Rate (VLR) minus 1.25% in year 1-10; and b. The Variable Loan Rate (VLR) in years 11+ ( Wash Loan ). Overloan Protection Rider This rider guarantees that the policy will not lapse in situations where loan balances threaten the contract s ability to stay in-force. Policy loans from SecurePlus Paragon are received income-tax free. If the policy lapses, with outstanding policy loans, there could be taxable income to the policyholder. In the event loan balances threaten the contract s ability to stay in-force, and if the terms of the rider are met, the Overloan Protection Rider will restructure the policy so that it is guaranteed not to lapse. Withdrawals At any time after the first policy year, the policyholder may make a withdrawal of the policy s cash surrender value subject to the following terms: The amount of withdrawal may not exceed the cash surrender value minus three monthly deductions due on the last monthly policy date. The accumulated value will be reduced by the amount of the withdrawal. The face amount will be reduced by an amount equal to the withdrawal, for option A (level) contracts. The Company will charge a $25 fee for each withdrawal made. 1035 Exchanges The effective date of 1035 exchanges will be the date the funds are received into the home office. 1035 Exchanges with loans will be permitted, as long as the loan transferred does not exceed 50% of the total policy value transferred. Loans reduce cash surrender value and death benefit. All or any loan amount may be repaid at any time prior to the death of the insured or the surrender of the policy. The exception is if the policy is in the grace period, the loan repayment would be considered a premium payment to keep the policy in-force unless the policyholder specifies it as a debt repayment. 20 For Agent Use Only Not for Use with the Public

Available Riders LIFE INSURANCE YOU DON T HAVE TO DIE TO USE Disability Income Money to help pay your bills. Retirement Income Money for a secure retirement. Accelerated Living Benefits Chronic, Critical, or Terminal Illness Riders. Life Insurance Money for your family. ACCELERATED BENEFIT RIDERS The Accelerated Benefits Riders 1, 2, and 3 all allow accelerated payment of up to 100% of the policy death benefit. Accelerated Benefits Rider 1 (ABR 1) is available in case of a terminal illness; Accelerated Benefits Rider 2 (ABR 2) is available in case of chronic illness; Accelerated Benefits Rider 3 (ABR 3) is available in case of critical illness. The actual payment amount under any of the riders is discounted (the benefit payment is the actuarially discounted value of the death benefit being accelerated less a pro rata portion of any policy debt). There is no limit on how the funds can be used. There is no additional premium for any of the Accelerated Benefits Riders. Riders stay in-force as long as the base policy remains in-force. All Accelerated Benefit Riders are available at no additional cost. ABR 1 Gives the policy owner the option of receiving the death benefit early if the insured is terminally ill. Terminal illness is expected to result in death within two years (one year in PA, CT or VT). All or part of the death benefit may be requested early (lump sum). ABR 2 Available when the insured is diagnosed as chronically ill: Unable to perform two of the six activities of daily living bathing, continence, dressing, eating, toileting, and transferring without assistance, or With deterioration or loss in intellectual capacity (cognitive impairment). Provides the option of receiving the death benefit in periodic payments after a 90-day waiting period. The maximum monthly amount that can be accelerated is 2% of the death benefit. ABR 2 must be in-force for two years before benefits are available. For Agent Use Only Not for Use with the Public 21

Available Riders ABR 3 Available when the insured experiences one of the following qualifying events: Heart attack Major organ transplant Stroke Diagnosis of ALS (amyotrophic lateral sclerosis or Lou Gehrig s Disease) Diagnosis of cancer Diagnosis of end stage renal failure Blindness (corrected vision of no better than 20/200 in both eyes) All qualifying events may not be available in all states. All or part of the death benefit may be requested early (lump sum). The actual payment will vary due to the severity of the disease. If the insured also meets the definition of a terminal illness it will likely be more beneficial to the policyowner to accept benefits under ABR 1 rather than ABR 3. ABR 3 is not available for substandard SecurePlus Paragon policies. Any qualifying event occurring during the first 30 days the rider is in-force is not covered, unless it is the result of an accident. * * These restrictions may not apply in all states. Please see the ABR disclosure forms for more information. The Company reserves the right to set a maximum on the total death benefit that may be accelerated under all accelerated benefits riders. The limit will be no less than $500,000. ACCIDENTAL DEATH BENEFIT RIDER (ADB) The ADB pays an additional death benefit if the insured s death results from an accident. It is not available on rated policies. Issue ages 0 60 ADB is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy Rider stays in-force until the policy anniversary following the insured s 70th birthday, as long as the insured s life insurance coverage and the base policy remain in-force Minimum rider amount is $10,000 Maximum rider amount is the lesser of $250,000 or the insured s life insurance face amount Premiums are a level amount per thousand, based on issue age ADDITIONAL PROTECTION BENEFIT RIDER (APB) The APB Rider is a non-commissionable rider which provides additional permanent coverage on the primary insured. The maximum ratio of APB face amount to base face amount for a single policy will be 9 to 1. The APB rider will be available for all issue ages and rate classifications. The minimum APB face amount is $25,000. For a policy with APB, the maximum Death Benefit eligible for acceleration through use of the Accelerated Benefits Rider (ABR) is equal to the Policy Death Benefit minus 50% of the APB face amount at the time of initial acceleration, subject to maximum benefit amounts. Policies that utilize the APB rider will have slightly lower guaranteed values than policy s utilizing all base coverage. 22 For Agent Use Only Not for Use with the Public

Available Riders BALANCE SHEET BENEFIT RIDER (BSB) The Balance Sheet Benefit Rider eliminates all surrender charges on the units of insurance to which it applies. There will be a monthly charge, based on issue age, sex, and rate class per unit of coverage for the rider. Commissions on units of insurance with the BSB rider will be paid using a different schedule which levelizes the compensation. CHILDREN S TERM RIDER (CTR) The Children s Term Rider provides term life insurance on all of the insured s children until they reach age 23. Each child is covered for the same selected benefit amount. Children born or adopted after issue (after they reach the age of 15 days), and dependent stepchildren living in the insured s home will be covered as well. The children s coverage is convertible without underwriting at any time while the rider is in-force for an individual whole life or universal life policy with the same face amount. The children s coverage is convertible for double the rider face amount when the child reaches age 23 or marries, or at the death of the primary insured. Issue ages 15 days 16 years Rider stays in-force until the policy anniversary following the last covered child s 23rd birthday, as long as the base policy remains in-force Minimum rider amount is $5,000 Maximum rider amount is $25,000 Premiums are a level amount per $1,000 regardless of the number of children covered DISABILITY INCOME RIDER (DIR) Two different DIRs are available, distinguished by a two-year or a five-year benefit period. Both options provide for a fixed monthly benefit if the insured is totally disabled and unable to work. Both provide coverage for disabilities due to either sickness or accident. DIR coverage is not available on rated classes. Certain occupations are not eligible for coverage. Policy premiums are not automatically waived under the DIR; the Waiver of Target Premium Rider must be in-force to waive policy premiums. Issue ages 18 55 DIR is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy Coverage stays in-force until the policy anniversary following the insured s 65th birthday, as long as the insured s life insurance coverage and the base policy remain in-force Minimum benefit amount is $300/month Maximum benefit amount is $2,000/month, subject to underwriting and any state limitations. The DIR benefit amount cannot exceed 66% of gross monthly income (40% in California) or $20 per $1,000 of life insurance. (For example, a $2,000 DIR must be attached to a base policy of at least $100,000.) Premiums vary with issue age and remain level for the term of the rider Rider benefit amounts cannot be increased or decreased after issue. However, an additional DIR may be added after issue, subject to underwriting and the maximum benefit limits The DIR with the two-year maximum benefit period has a 3-month waiting period. Benefits are paid retroactively after the waiting period, from the date of disability. Disability is defined as the insured being unable to perform the duties of his or her own occupation. * * In South Carolina, Disability is defined as the insured s inability to perform the duties of his or her own occupation during the first year of disability and the inability to perform the duties of any occupation for which he or she is suited thereafter. For Agent Use Only Not for Use with the Public 23

Available Riders The DIR with the five-year maximum benefit period has a 6-month elimination period with no retroactive payment. Disability is defined as the insured being unable to perform the duties of his or her own occupation for a period of two years, and as unable to perform the duties of any occupation for which he or she is suited for the remaining three years. After-issue changes between the two-year and five-year riders are not permitted. If the insured is receiving benefits under the DIR when he or she reaches age 65, the benefit payments will continue until the end of the disability or the end of the benefit period. Note: An Attending Physician s Statement of Disability from a licensed medical physician will be required for all claims. Occupations ineligible for DIR Actor/Actress Air Traffic Controller Amusement Park Employee Armed Forces or Coast Guard Artist/Musician Asbestos Worker Athletic Coach or Instructor Auto Body Repair Blaster Bowling Alley Employee Bridge or Dam Worker Bus Boy Bus Driver Cab Driver Carpet/Floor Installer Casino Employee Chauffeur/Limo Driver Circus Employee Delivery Person Dishwasher Diver Domestic Servant (Maid, Butler, etc.) Exotic Dancer FBI Agent Federal or Municipal Employee ** Fireman Fisherman/Seaman Flight Attendant Forest Ranger Game Warden Golf Pro Housewife Immigration Officer Lifeguard Logging Employee Migrant Worker Mine Worker Movie Industry Employee Nature/Adventure Guide Nurse) Peddler Piano Mover/Safe Mover Pilot Policeman Prison Employee Professional Athlete Racing Employee (Dog or Horse) Rodeo Rider or Clown Roofer School Teacher *** (Public or Private) Security Guard (Armed) Self Employed (call with specific info) Skating Rink Employee Steeplejack (Billboard Worker) Structural Iron Worker Subway or Tunnel Construction Worker Theater Industry Employee Truck Driver Vending Machine Worker EXTENSION OF BENEFITS RIDER 1 (EBR) This is an optional rider that provides the policy owner benefits to help cover expenses incurred for qualified long-term care services once a chronically ill 2 insured s death benefit under the policy has been depleted due to payments made under the Long-Term Care Rider or the Accelerated Benefits Rider 2. Once benefits begin accruing under this rider, they will continue during the lifetime of the insured as long as the insured remains eligible for benefits. The rider pays benefits equal to the actual expenses for covered services, subject to a maximum monthly limit (up to 1% of the policy face amount for nursing home or home health care up to 0.5% for adult day care). Coverage under this rider may be purchased with or without Inflation Protection. This rider provides a nonforfeiture benefit for any coverage that lapses after being in-force for 3 years. The cost per unit of coverage under this rider is level and is guaranteed not to change. Issue Guidelines The Long-Term Care Rider and Extension of Benefits Rider are subject to the following issue guidelines: Issue ages: 0 70 (age last birthday). Available on the primary insured as well as the primary other insured (covered under an Other Insured Rider). Coverage under an Extension of Benefits Rider is only available to a primary insured or primary other insured who also has coverage under either a Long-Term Care Rider or Accelerated Benefits Rider 2. Extension of Benefits Rider is not available when using the Additional Protection Benefit Rider. Total life insurance coverage applied for under the policy may not exceed $1,000,000. Not ratable and not available on rated policies. Please refer to the Agent Guide for LSW Long-Term Care Rider and LSW Extension of Benefits Rider, MK2582(0901), Catalog No. 63181, for more in-depth information about the rider benefits, suitability, and disclosure requirements. 1Rider names may vary by state. 2 An insured is chronically ill if a licensed health care practitioner has certified the insured as: (1) being unable to perform (without substantial assistance from another person) at least two activities of daily living for a period of at least 90 consecutive days due to a loss of functional capacity; or (2) requiring substantial supervision for a period of at least 90 consecutive days by another person to protect oneself from threat to health and safety due to severe cognitive impairment. The activities of daily living are defined as bathing, continence, dressing, eating, toileting, and transferring. ** May purchase DIR up to monthly home mortgage amount. *** Only DIR 5 available. 24 For Agent Use Only Not for Use with the Public

Available Riders GUARANTEED INSURABILITY RIDER (GIR) The GIR allows the insured to increase insurance coverage without evidence of insurability, during specified option periods. Regular option periods run from the 60 th day before to the 31 st day after the policy anniversary on which the insured reaches age 25, 28, 31, 34, 37, or 40. Additional option periods are available based on marriage, the birth/adoption of a child, or purchase or refinancing of a home; there is a limit of two additional options. The GIR is not available on rated cases. Issue ages 0 37. GIR is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy. Rider stays in-force until the policy anniversary following the insured s 40th birthday, as long as the base policy remains in-force. Minimum option amount is $5,000. Maximum option amount is the lesser of $50,000 or the insured s life insurance amount. Premiums are a level amount per thousand of option amount, based on issue age. LONG-TERM CARE RIDER 1 (LTC) This is an optional rider that allows the policy owner to receive a chronically ill 2 insured s death benefit in periodic payments, while such insured is still living, to help cover such insured s expenses for qualified long-term care services. Benefits under this rider begin accruing after a 90-day elimination period and will continue, as long as the insured remains eligible, until the insured s death benefit under the policy has been exhausted. The rider pays benefits equal to the actual expenses for covered services, subject to a maximum monthly limit (up to 2% of the policy death benefit for nursing home or home health care up to 1% for adult day care). Each benefit payment will reduce the insured s death benefit by the same amount. While benefits are being paid under this rider, policy premiums or monthly deductions will be waived. The cost per unit of coverage under this rider is level and is guaranteed not to change. OVERLOAN PROTECTION RIDER This rider guarantees your client s policy will not lapse in situations where loan balances threaten the contract s ability to stay in-force. If the following terms of the rider are met, the Overloan Protection Rider will restructure the contract as a paid-up policy so that it is guaranteed not to lapse: Policy must be in corridor. Loans must equal 95% of policy s accumulated value. Insured is age 75 or older. Policy must be in-force for at least 15 years. The policyholder will be notified when elegibility requirements are met. There is no additional cost until rider is exercised. Not available with CVAT. OTHER INSURED RIDER (OIR) The OIR provides low-cost annual renewable term insurance on an individual. The other insured may have any of the following relationships to the primary insured: Spouse Child Business partner Ineligible relationships for OIR coverage include parents, grandparents, siblings and grandchildren. Up to five OIR may be added to the same base policy. One of these OIRs (spouse or business partner only) may be designated as a Primary OIR ; additional riders are available options to the Primary OIR (see chart on page 26 for rider availability). The OIR is convertible to a permanent policy without evidence of insurability at any time while the rider is in-force, or upon the death of the primary insured. Issue ages 0 85 (age last birthday). Rider stays in-force until the other insured s age 100, as long as the base policy remains in-force. Minimum OIR amount is $25,000 (or the primary insured s face amount, if less than $25,000). Maximum OIR amount is the base policy face amount. 1Rider names may vary by state. 2 An insured is chronically ill if a licensed health care practitioner has certified the Premiums are based on sex, rate class and age; the same insured as: (1) being unable to perform (without substantial assistance from another rate classes are available as for the base policy. person) at least two activities of daily living for a period of at least 90 consecutive days due to a loss of functional capacity; or (2) requiring substantial supervision for a period of at least 90 consecutive days by another person to protect oneself from threat to health and safety due to severe cognitive impairment. The activities of daily living are defined as bathing, continence, dressing, eating, toileting, and transferring. For Agent Use Only Not for Use with the Public 25

Available Riders Benefits Available by Rider on Other Insureds Primary Other Insured Rider Accelerated Benefits Rider 1 Yes Yes Accelerated Benefits Rider 2 Yes Yes Accelerated Benefits Rider 3 Yes Yes Accidental Death Benefit Yes No Children s Term Rider No No Disability Income Rider Yes No Guaranteed Insurability Rider Yes No Unemployment Rider No No Waiver of Target Premium Rider No No Long-Term Care Rider Yes No Extension of Benefits Yes No Non-primary Other Insured Rider UNEMPLOYMENT RIDER (UR) The Unemployment Rider provides for a one-time lump sum payment into the policy after the insured has been involuntarily unemployed from full-time employment. This rider is automatically included on all universal life policies issued in states where it is approved. When the primary insured is involuntarily unemployed for three consecutive months, and submits proof such as state or federal unemployment certification, a termination notice or union certification, we will pay three months target premium into the policy s accumulated value. (The target premium is the monthly planned premium, up to 1/12 of the policy CTP.) The policy must be in-force when the unemployment begins, and must remain in-force during the waiting period. WAIVER OF TARGET PREMIUM RIDER (WTP) The WTP Rider waives the policy premium actually pays a waiver of premium benefit into the policy s accumulated value when the insured is totally disabled. If the policy lapses while this benefit is being paid, the benefit will be paid directly to the policyowner until the disability ends. There is a six-month elimination period from the date of disability before benefits begin. The benefit amount is the target premium (the monthly planned premium, up to 1/12 of the policy CTP). Issue ages 15 55. Rider stays in-force until the policy anniversary following the insured s 60 th birthday, as long as the base policy remains in-force. The benefit amount is the entire policy target premium, including any attached riders. Premiums are a level amount per dollar of target premium, based on age. If the policyholder has the WTP Rider on a policy, any application for an increase in face amount should include additional WTP coverage also, unless the insured is past the WTP age limit. Issue ages 0 60 (age last birthday). Rider stays in-force until the policy anniversary following the insured s 65 th birthday, as long as the base policy remains in-force. The benefit will be paid only once. There is no premium for this rider. 26 For Agent Use Only Not for Use with the Public

SecurePlus Paragon 27

LIFE INSURANCE COMPANY OF THE SOUTHWEST was incorporated in 1955. We are licensed in 49 states and the District of Columbia, with our home office in Dallas, Texas. LSW specializes in life insurance and annuity products. Our rating from A.M. Best Company, the oldest rating agency in the industry, is a good reflection of LSW s strength. A.M. Best ratings represent an independent opinion of a company s financial strength and ability to meet its obligations to policyholders. A.M. Best gives LSW an A (Excellent) rating; this is the third highest of 15 rating categories.* LSW is an affiliate of National Life Insurance Company based in Montpelier, Vermont. National Life was founded in 1850 and for over a century and a half has provided insurance protection to individuals, families, and businesses. * As of 06/07. Ratings are subject to change without notice. LSW SecurePlus Paragon, form series8387(0606)/ 8387ID(0606), Indexed Universal Life Insurance and applicable riders are underwritten by Life Insurance Company of the Southwest, Dallas, Texas. An additional premium is charged for some riders. Product is not available in all states. Riders are optional and may not be available in all states. Benefits and terms may vary by state. Standard and Poor s, S&P, Standard and 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 S&P and S&P makes no representation regarding the advisability of investing in this Product. The S&P 500 Index does not reflect dividends paid on the stocks underlying the index. National Life Group is a trade name of National Life Insurance Company and its affiliates. Each company of the National Life Group is solely responsible for its own financial condition and contractual obligations. Home Office: Dallas, TX Administrative Office: Montpelier, VT 1-800-536-5934 www.nationallife.com Life Insurance Company of the Southwest A member of Copyright 2008, Life Insurance Company of the Southwest. All Rights Reserved.