EXPLANATION OF POLICY ILLUSTRATION Plan Description Important Facts About This Illustration Custom TermGUL is a universal life product, issued on form series LS167, that provides a death benefit upon the death of the insured person. This policy is guaranteed to remain in force for 15 years subject to the payment of a minimum premium as shown in the Minimum Premium section of this illustration. This illustration shows you how your universal life insurance policy works based on the information shown in the "" section at the top of the page, and any loans, withdrawals and other policy changes assumed in this illustration. It is only an example. Your policy will not work exactly as it is shown in this document because the actual values in your policy will vary based on: the amount of the premium payments you make; when you make the premium payments; the actual cost of insurance; actual policy expenses; loans, withdrawals and other policy changes not shown in this illustration; the actual rate at which interest is credited to your policy. We guarantee that we will credit interest on the unloaned portion of the policy's account value at an annual rate of at least 2.50%. The actual rate at which interest is credited may vary from time to time and will be determined at our sole discretion, subject to (i) the guaranteed interest rate and (ii) our guarantee to credit interest at a rate not less than the current interest rate in effect on the policy issue date for the first policy year. We have considered various factors in setting the current interest rate, including yields obtained on our investments. The factors we consider in setting the current interest rate may vary from time to time, and there is no assurance that any interest will be credited in the future at a rate in excess of the policy's guaranteed interest rate. If this illustration assumes that a policy loan is made, then the rates at which interest will be credited on loaned amounts are set forth under the caption "Loans". In this illustration we show you how your policy would work if we charged you the maximum amount for your cost of insurance and policy expenses (such as administrative expenses), and paid you the minimum rate of interest on your policy value. We guarantee these values, and they are shown in the "Guaranteed" columns of the Tabular Detail pages. Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 1 of ## 11
EXPLANATION OF POLICY ILLUSTRATION (CONT.) We also show you how your policy would work if the cost of insurance and policy expenses were the same as today s rates (which are lower than the maximum amount we could charge you in some or all years), and the interest rates were as set forth in the Numeric Summary as the basis for the non-guaranteed values. We do not guarantee these values, and they are shown in the Non-Guaranteed columns of the Tabular Detail pages. The rates, costs and expenses assumed in computing the non-guaranteed values are subject to change by North American. This illustration assumes that the currently illustrated non-guaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown. Please be aware that any changes to your Policy, including but not limited to planned premium amount, premium mode, premium duration or death benefit amount, do not happen automatically and must be requested by the Owner (regardless of whether those changes are reflected in this illustration). Please contact your agent or for information regarding changes to your policy. This illustration is not a contract. If there are any differences between this document and your insurance policy, your policy will take precedence. This illustration is based on a reasonable interpretation of current income tax laws, and we do not guarantee the tax treatment of any policy. We recommend that you consult a tax advisor about your personal circumstances. Interest Bonus Minimum Premium Premium Outlay We will credit a conditionally guaranteed interest bonus to your policy s account value if we declare a current interest rate that is higher than the guaranteed rate. The current bonus rate is 1.00% in years 11 and beyond. The interest bonus percentage is subject to change; however, once a policy is issued, the percentage will not change. The minimum premium payment that will guarantee that this policy will stay in force for 15 years is $526.56 annually. This premium assumes that there are no policy changes during the guarantee period. Policy changes such as increasing or decreasing the death benefit, changing the death benefit option or adding or removing a rider will change the minimum premium that is required to maintain this guarantee. The premium amount that appears in any given year on the Tabular Detail pages is the sum of the payments you plan to make each year. Based on the payment frequency you selected for this illustration, the Annual premium for the first year is $2,135.00. This illustration assumes that all scheduled premium payments are received on the first day of each payment frequency period. Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 2 of ## 11
EXPLANATION OF POLICY ILLUSTRATION (CONT.) Cash Value Accumulation Test The Cash Value Accumulation Test determines the qualifying status of your policy as a life insurance contract. If at any time the Account or Surrender Value is greater than the amount required under the Cash Value Accumulation Test of Section 7702 of the Internal Revenue Code, the policy s death benefit may be automatically increased to qualify your policy as life insurance. For this illustration, the Annual premium that must be paid to guarantee coverage for the duration of your policy is $9,916.00. The calculation of this premium is based on the following assumptions: guaranteed interest rate, guaranteed mortality charges and guaranteed expenses; premiums are paid in all years to age 100, regardless of the premium payment pattern shown in the Tabular Detail pages, to generate at least $1.00 of Surrender Value at age 120; pour-ins and 1035 exchange amounts, if any, are not included; policy changes, withdrawals, and loans are not included. Any of these transactions combined with the calculated premium may cause the policy to lapse prior to age 120 on a guaranteed basis. riders and ratings, if illustrated, are included. Modified Endowment Contract Based on the premium payments and exchange information used in this illustration, this policy is not a Modified Endowment Contract. MEC premiums are computed according to Internal Revenue Code guidelines. According to the Internal Revenue Code, a life insurance policy is considered a Modified Endowment Contract ( MEC ), and loses certain tax advantages, if the accumulated premiums paid at any time during the first 7 policy years exceed the sum of the MEC premium of $6,889.06 for the same period. Also, if you are exchanging a modified endowment contract for a new life insurance policy, the new policy will automatically be a modified endowment contract regardless of the amount of premiums paid. Proposal Values Policy values and death benefits shown are end-of-year values. Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 3 of ## 11
EXPLANATION OF POLICY ILLUSTRATION (CONT.) Life Insurance Benefit The initial death benefit is: $250,000. The increasing death benefit illustrated is the amount payable to the named beneficiary at the death of the insured while this policy is in force. The death benefit is the greater of the initial death benefit plus the account value in the policy, or the account value multiplied by the corridor percentage shown in the Schedule of Policy Benefits. The actual amount payable may be lower if you reduce your death benefit, take a policy loan or make a withdrawal. It may be higher if you increase your death benefit. If you would like to see an illustration for a death benefit amount other than what is shown here, please discuss it with your North American representative. Underwriting Class Account Value The underwriting class used in this illustration is Super Preferred Non-Tobacco. Actual premiums for the proposed insurance coverage will ultimately depend on the outcome of the underwriting process and may vary from this illustration. If so, you will receive a revised illustration with your insurance contract. The account value is the amount we use to calculate the interest that we credit to your policy. Your account value is equal to: the total of all of the premium payments you've made; minus the cost of insurance charges; minus policy expenses; minus the cost of any additional insurance or benefits; minus any withdrawals; plus any interest credited. Because this is a flexible premium policy, you have the option to stop or reduce premium payments for a period of time. Even if this illustration shows premium payments for just one year or several years only, North American will continue to deduct the cost of insurance and policy expenses from your policy s account value each month. Depending on actual results, you may need to continue or resume premium outlays. If at any time the account value is not sufficient to cover the monthly charges and expenses, and absent an applicable no lapse guarantee, you would have to make sufficient premium payments to cover the charges and expenses in order to continue coverage. Surrender Value The surrender value is the amount you receive if you cancel your policy. Your surrender value is equal to: your account value; minus any outstanding policy loans and loan interest; minus surrender charges. Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 4 of ## 11
EXPLANATION OF POLICY ILLUSTRATION (CONT.) The surrender charge reduces to zero at the end of 20 years. Processing Changes at Age 100 The normal maturity date for your policy is the policy anniversary nearest your age 120. If your policy is in force at age 100, death benefit coverage will continue to age 120 unless the accrued value of any outstanding loan causes the policy to lapse prior to age 120. Certain changes will occur for the years beyond age 100: No mortality or expense charges will be deducted, and no further premium payments will be accepted. Loan repayments will be accepted, and loan interest will continue to accrue. Rider charges, if any, will continue to be assessed. We will credit the current interest rate on non-loaned values. We will credit the guaranteed interest rate on loaned values. Accelerated Benefit Endorsement This endorsement provides access to up to 75% of your policy s specified amount, up to a maximum of $250,000, if you are diagnosed with a terminal illness. Note that this endorsement will not waive any premium payments. The Accelerated Benefit Endorsement is automatically part of your policy at issue, provided that you are not assigned a rating higher than Table 4 or assessed with a flat extra premium for medical reasons as a result of the underwriting process. There is no cost to have this endorsement as part of your policy. Refer to the Accelerated Benefit Endorsement form for additional details regarding this benefit. Chronic Illness Accelerated Benefit Rider This rider provides access to a portion of your policy s death benefit should you develop a covered chronic illness or condition after the effective date of the rider. Note that this rider will not waive any monthly deductions. However, the policy will stay in force while accelerated benefits are being paid. The Chronic Illness Accelerated Benefit Rider is automatically part of your policy at issue, provided that you are not assigned a rating higher than a Table 4 or assessed with a flat extra premium for medical reasons as a result of the underwriting process. Note that if you are converting a North American term policy to this universal life plan, the Chronic Illness Accelerated Benefit Rider is only available if requested by you and evidence of insurability is provided. There is no additional premium to have this rider as part of your policy, but there is an administrative fee when benefits are elected. The death benefit will be reduced by the amount of the death benefit accelerated. Since the benefits are paid prior to death, a discount will be applied to the death benefit accelerated. As a result, the actual amount received will be less than the amount of the death benefit accelerated. Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 5 of ## 11
EXPLANATION OF POLICY ILLUSTRATION (CONT.) To qualify for benefits under the terms of this rider, a physician must certify that you are chronically ill for at least 90 consecutive days after the effective date of the rider. Chronically ill means being unable to perform at least two Activities of Daily Living (which includes bathing, continence, dressing, eating, toileting or transferring) without substantial assistance from another person, or that you suffer from severe cognitive impairment that requires substantial supervision by another person. The minimum benefit amount that you can access at each election is the lesser of 5% of the policy s death benefit on the initial election date or $75,000. The maximum benefit at each election is the lesser of 24% of the death benefit on the initial election date or $240,000. Benefits and limitations may vary by state. Refer to the Chronic Illness Accelerated Benefit Rider form for additional details regarding this benefit. Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 6 of ## 11
NUMERIC SUMMARY This summary is based on the premium outlay as shown on Tabular Detail pages. Guaranteed Non-Guaranteed Midpoints Non-Guaranteed End of End of Account Death Account Death Account Death Year Year Age Value Benefit Value Benefit Value Benefit 5 35 8,115 258,115 8,628 258,628 9,160 259,160 10 40 19,045 269,045 20,746 270,746 22,564 272,564 20 50 66,138 316,138 78,582 328,582 93,138 343,138 40 70 393,852 662,459 515,350 866,819 688,129 1,157,433 Lapse Year NA NA NA The Guaranteed Values are based on the lowest possible interest rates of 4.35% in years 1 through 1, 2.50% in subsequent years and the highest possible cost of insurance rates. Actual credited interest rates may be higher; actual cost of insurance rates may be lower. The midpoint values are based on an interest rate which is midway between the guaranteed and non-guaranteed rates used in this illustration, and an average of non-guaranteed and guaranteed charges. The non-guaranteed values are based on the non-guaranteed cost of insurance rates and the following interest rate(s) used in this illustration: Years 1 through 10: 4.35% Years 11 through 90: 5.35% The currently declared interest rate is 4.35%. The interest rate(s) shown above for years 11 and beyond include a conditionally guaranteed bonus rate of 1.00%, provided that the illustrated non-guaranteed interest rate used in each of those years is greater than 2.50%. I have received a copy of this illustration and understand that this illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown. Applicant/Policyowner Date I have not made any statements to the applicant as to the likelihood of the non-guaranteed elements actually being paid or credited. Agent Date Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 7 of ## 11
TABULAR DETAIL Guaranteed Non-Guaranteed 4.35% / 2.50% Interest Rate 4.35% / 5.35% Interest Rate End of End of Premium Account Surrender Death Account Surrender Death Year Yr Age Outlay Value Value Benefit Value Value Benefit 1 31 2135.00 1557 0 251557 1679 0 251679 2 32 2135.00 3151 0 253151 3432 0 253432 3 33 2135.00 4785 585 254785 5260 1060 255260 4 34 2135.00 6430 2317 256430 7168 3056 257168 5 35 2135.00 8115 4090 258115 9160 5135 259160 10,675.00 6 36 2135.00 9843 5993 259843 11237 7387 261237 7 37 2135.00 11584 7909 261584 13405 9730 263405 8 38 2135.00 13368 9868 263368 15668 12168 265668 9 39 2135.00 15167 11842 265167 18029 14704 268029 10 40 4270.00 19045 15895 269045 22564 19414 272564 23,485.00 11 41 4270.00 22991 20016 272991 27715 24740 277715 12 42 4270.00 27004 24204 277004 33140 30340 283140 13 43 4270.00 31088 28463 281088 38857 36232 288857 14 44 4270.00 35213 32850 285213 44879 42516 294879 15 45 4270.00 39380 37280 289380 51192 49092 301192 44,835.00 16 46 4270.00 43622 41784 293622 57843 56006 307843 17 47 4270.00 47909 46334 297909 64820 63245 314820 18 48 4270.00 52242 51017 302242 72169 70944 322169 19 49 4270.00 56653 55778 306653 79881 79006 329881 20 50 9540.00 66138 65700 316138 93138 92701 343138 71,455.00 21 51 9540.00 75799 75799 325799 107105 107105 357105 22 52 9540.00 85641 85641 335641 121788 121788 371788 23 53 9540.00 95639 95639 345639 137225 137225 387225 24 54 9540.00 105795 105795 355795 153426 153426 408267 25 55 9540.00 116054 116054 366054 170444 170444 439065 119,155.00 Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 8 of ## 11 Proposal Code:1087.50CT
TABULAR DETAIL (CONT.) Guaranteed Non-Guaranteed 4.35% / 2.50% Interest Rate 4.35% / 5.35% Interest Rate End of End of Premium Account Surrender Death Account Surrender Death Year Yr Age Outlay Value Value Benefit Value Value Benefit 26 56 9540.00 126418 126418 376418 188284 188284 469956 27 57 9540.00 136889 136889 386889 207019 207019 500779 28 58 9540.00 147441 147441 397441 226661 226661 531746 29 59 9540.00 158105 158105 408105 247216 247216 562663 30 60 19800.00 178634 178634 428634 278786 278786 615837 177,115.00 31 61 19800.00 199465 199465 449465 311859 311859 668626 32 62 19800.00 220575 220575 470575 346509 346509 721432 33 63 19800.00 241910 241910 491910 382812 382812 774429 34 64 19800.00 263377 263377 518062 420802 420802 827717 35 65 19800.00 284931 284931 545357 460560 460560 881512 276,115.00 36 66 19800.00 306551 306551 571104 502125 502125 935458 37 67 19800.00 328245 328245 595765 545585 545585 990236 38 68 19800.00 350032 350032 619207 591038 591038 1045546 39 69 19800.00 371901 371901 641529 638533 638533 1101470 40 70 19800.00 393852 393852 662459 688129 688129 1157433 375,115.00 41 71 19800.00 415820 415820 682361 739940 739940 1214242 42 72 19800.00 437775 437775 701316 793917 793917 1271856 43 73 19800.00 459539 459539 719178 850412 850412 1330895 44 74 19800.00 481141 481141 735664 909348 909348 1390393 45 75 19800.00 502529 502529 752529 970798 970798 1452314 474,115.00 46 76 19800.00 523458 523458 773458 1034923 1034923 1515127 47 77 19800.00 543854 543854 793854 1101841 1101841 1578938 48 78 19800.00 563493 563493 813493 1171722 1171722 1645098 49 79 19800.00 582176 582176 832176 1244768 1244768 1712801 50 80 19800.00 599607 599607 849607 1320895 1320895 1783208 573,115.00 Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page ## 9 of ## 11 Proposal Code:1087.50CT
TABULAR DETAIL (CONT.) Guaranteed Non-Guaranteed 4.35% / 2.50% Interest Rate 4.35% / 5.35% Interest Rate End of End of Premium Account Surrender Death Account Surrender Death Year Yr Age Outlay Value Value Benefit Value Value Benefit 51 81 19800.00 615604 615604 865604 1400185 1400185 1856645 52 82 19800.00 629860 629860 879860 1482762 1482762 1932039 53 83 19800.00 642212 642212 892212 1568672 1568672 2011038 54 84 19800.00 652430 652430 902430 1658014 1658014 2092414 55 85 19800.00 660159 660159 910159 1750854 1750854 2176312 672,115.00 56 86 19800.00 665005 665005 915005 1849013 1849013 2265041 57 87 19800.00 666503 666503 916503 1951219 1951219 2359024 58 88 19800.00 664176 664176 914176 2057675 2057675 2456864 59 89 19800.00 657626 657626 907626 2169013 2169013 2559435 60 90 19800.00 646443 646443 896443 2286407 2286407 2668237 771,115.00 61 91 19800.00 630206 630206 880206 2410181 2410181 2783759 62 92 19800.00 608999 608999 858999 2540665 2540665 2906521 63 93 19800.00 582419 582419 832419 2677949 2677949 3034117 64 94 19800.00 549997 549997 799997 2821543 2821543 3168592 65 95 19800.00 511126 511126 761126 2971741 2971741 3304576 870,115.00 66 96 19800.00 465276 465276 715276 3129761 3129761 3445866 67 97 19800.00 412626 412626 662626 3296749 3296749 3590160 68 98 19800.00 352482 352482 602482 3470189 3470189 3730453 69 99 19800.00 284099 284099 534099 3650104 3650104 3900104 70 100 19800.00 206593 206593 456593 3834550 3834550 4084550 969,115.00 71 101 0.00 211757 211757 461757 4039698 4039698 4289698 72 102 0.00 217051 217051 467051 4255821 4255821 4505821 73 103 0.00 222477 222477 472477 4483507 4483507 4733507 74 104 0.00 228039 228039 478039 4723374 4723374 4973374 75 105 0.00 233740 233740 483740 4976074 4976074 5226074 969,115.00 Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page 10 ## of ## 11 Proposal Code:1087.50CT
TABULAR DETAIL (CONT.) Guaranteed Non-Guaranteed 4.35% / 2.50% Interest Rate 4.35% / 5.35% Interest Rate End of End of Premium Account Surrender Death Account Surrender Death Year Yr Age Outlay Value Value Benefit Value Value Benefit 76 106 0.00 239584 239584 489584 5242294 5242294 5492294 77 107 0.00 245573 245573 495573 5522756 5522756 5772756 78 108 0.00 251712 251712 501712 5818223 5818223 6068223 79 109 0.00 258005 258005 508005 6129497 6129497 6379497 80 110 0.00 264455 264455 514455 6457425 6457425 6707425 969,115.00 81 111 0.00 271066 271066 521066 6802896 6802896 7052896 82 112 0.00 277843 277843 527843 7166851 7166851 7416851 83 113 0.00 284789 284789 534789 7550276 7550276 7800276 84 114 0.00 291908 291908 541908 7954215 7954215 8204215 85 115 0.00 299206 299206 549206 8379765 8379765 8629765 969,115.00 86 116 0.00 306686 306686 556686 8828082 8828082 9078082 87 117 0.00 314353 314353 564353 9300383 9300383 9551494 88 118 0.00 322212 322212 572212 9797953 9797953 10052700 89 119 0.00 330267 330267 580267 10322142 10322142 10572142 90 120 0.00 338523 338523 588523 10874376 10874376 11124376 969,115.00 Date: 8/4/2014 This is an illustration and not a contract, and is not complete without all pages. Page 11 ## of ## 11 Proposal Code:1087.50CT
TRADITIONAL UNDERWRITING REQUIREMENTS Requirements The underwriting requirements based on this illustration are: NOTE: In addition to the requirements below, please complete Part A of the application and Part B. Blood/HOS Physical Measurements Motor Vehicle Reports will be ordered for all applicants that are of driving age and have a valid driver's license. The Home Office reserves the right to order additional requirements deemed necessary. TRADITIONAL REQUIRED FORMS Standard Form(s) Accel. Benefit Endorsement Discl. Notice L-2966ANS (07-10) Chronic Illness Accelerated Benefit Disclosure L-3178ILNS (07-10) Civil Union NoticeLR353A12 (01-12) Consumer Protection Notice L-2978 (01-09) Life Agent Report O-2724 (06-10) Life Insurance Application ICC13L3208 (5-14) Life Insurance Buyers Guide BYG76NA (12) (06-06) NAC HIPAA Authorization L-3100 (11-11) Transmittal Report O-922 (R11) (09-11) Supplemental Form(s) 1035 Exchange L-2008 (R9) (7-13) Certificate of Trust Agreement L-3172A (R2) (8-13) COLI Consent Form L-3168 (11-09) Credit Card Billing Authorization L-2856 (5-14) Electronic Fund Transfer Authorization L-1683 (1-14) L-3204 and DD Form 2885 Military Sales Disclosures L-3204 and DD Form 2885 Non-Resident Verification Form O-2824 (04-12) Pension Max Disclosure Statement O-2792 (07-08) Policy Change Application ICC13L3187B (8-13) Replacement Form (External Replacement 2) O-2328 (R3) (10-09) Replacement Form (External Replacement) O-2309(12) (10-09) Replacement Form (Internal Replacement 2) O-2328 (R3) (10-09) Replacement Form (Internal Replacement) O-2309(12) (10-09) Request to Exchange Coverage O-2793 (R1) (12-11) Statements About Illustrations L-2766 (04-02) Temporary Life Insurance Agreement L-2977B (8-13)