AGENT PROCEDURE MANUAL NWL - National Western Life · PDF file♦ Witness any signature relating to the Company’s business that was not affixed in the agent’s presence. ♦ Publish

AGENT PROCEDURE MANUAL (RULES AND REGULATIONS)

SA-8382.Rev.12.11

NWL®

GENERAL INFORMATION

Authorized Acts A-3 Unauthorized Acts A-3 Licensed Territories A-4 Company Communications A-5 & A-6

AGENCY ADMINISTRATION CONTRACTING/LICENSING

Contracting/Licensing General Information B-3 Persistency Requirements B-3 Recontracting and Reinstatements B-3 Licensing Fees and Forms B-3 Contracting/Licensing Document Requirements B-3

Commissions Electronic Funds Transfer B-4 Earned Commission Payments B-4 Frequency of Commission Payments B-4 & B-5 Replacement Commission Payments B-5 Split Commission Payments B-6 Conversion Commission Payments B-6 Addition to Policy Commission Payments B-6 Other Commission Payments B-6 & B-7

Agent Financing Agent Financing General Information B-7 Financing Eligibility Requirements B-7 Not Eligible for Financing B-7 Financing Amount Maximums B-7 & B-8 Financing Chargebacks B-8 Procedure to Request Financing B-9 Frozen Balance Repayment System B-9 Debt Reporting Services B-9

Agent Information Services Agent Address/Phone/E-mail and Fax Changes B-10 Agent Activity Reports B-10 Sample of Duration Score Summary Report B-11 Sample of Progress Detail Report B-12 Sample of Arrears Listing B-13 Account Statement (Description of Key Numbers) B-14 Sample of Account Statement FE-1037-B-15

MARKETING General Information C-3 Sales Conference C-3 Special Sales Campaigns C-3 Agency Bulletins C-3 Welcome Letters C-4 Internet C-4 Agent Supply Orders C-4 Product Software C-5 Advertising Approval Procedures and Guidelines C-5 – C-7

TABLE OF CONTENTS

POLICY BENEFITS Death Claims D-3 Waiver of Premium Claims D-3

POLICYOWNER SERVICES

CLIENT SERVICES-GENERAL INFORMATION Information on Policies E-3 Policyowner Information Available on the Internet E-3 Assignment E-4 Change of Address E-4 Change of Beneficiary E-5 Change of Name E-5 Agent Notification E-5 Extending Maturity Date E-6 Lost Policy E-6 Maturing Policies E-6 Transfer of Ownership of Policy E-7

Client Services-Traditional Life Automatic Premium Loan E-8 Change of Policy by Reduction of Face Amount E-8 Correction of Age E-9 Full Cash Surrender (Traditional Life) E-9 Lapsed Policies E-10 Non-Forfeiture Options E-11 Paid Up Policies E-11 Participating Policies E-11 Policy Loans (Traditional Life) E-12 Redating to Eliminate a Maximum or Near Maximum Loan E-13 Redating Upon Reinstatement E-13 Reinstatement (of Whole Life, Term Policies & ProviderSelect) E-14 Term Conversions E-15

CLIENT SERVICES-UNIVERSAL LIFE Correction of Age E-16 Death Benefit Option Changes E-16 Full Cash Surrender (Universal Life) E-16 Partial Cash Surrender (Universal Life) E-17 Policy Loans (Universal Life) E-17 Reinstatement E-18 To add “Other Insured Rider” E-19 To Delete “Other Insured Rider” E-19 Universal Life Face Amount Changes E-19

Client Services-Annuity Full Cash Surrender E-20 Option Changes on Equity Indexed Annuities E-20 Partial Cash Surrender E-21 Partial 1035 Exchange (Annuities – Non-Qualified Plans) E-21 Policy Loans (Annuities – Non-Qualified Plans) E-22 Policy Loans (Annuities – Qualified Plans) E-22

Premium Collection Preauthorized Check Plan/Electronic Funds Transfer (PAC/EFT) E-23 Ordinary Life Billings E-24 Universal Life Billings E-25 Special List Billings (Salary Saving Groups, Etc.) E-26 Civil Service Electronic Transfer Funds E-26 Military Allotment Electronic Transfer Fund E-26 Dishonored Checks E-26 & E-27

UNDERWRITING/NEW BUSINESS Annuity Underwriting

General Information F-3 Preparing for the Annuity Sale F-3 Application and Other State Required Forms F-3 Completing the Application F-4 Beneficiary Designations F-5 Welcome Letter F-5 Multiple State Sales F-7 Funding the Annuity Policy F-7 Direct Rollovers F-8 IRC 403(b) Rollover into an IRA F-8 Required Minimum Distribution F-8 Amended Applications F-9 Policy Issue F-9

Life Underwriting

Preparing for the Life Sale

Non-Medical Rules F-10 Para-Medical Exams F-10 Medical Examiners F-11 Attending Physicians’ Statements F-11 Inspection Reports F-11 Civilian Aviation F-11 Life Insurance Financial Underwriting F-12

Application

Appropriate Application F-13 Multiple-State Sales F-13 Completing the Application F-14 Temporary Insurance Agreement and Receipt F-15 Beneficiary Designations F-16 Insurable Interest of Owner and Beneficiary F-16 Policy Dating for Life Applications F-17 Effective Date of Coverage F-17 Substandard Risks F-18 Amended Applications F-18 Informal Inquiries F-18 IRC Section 1035 Exchange F-19 General Procedure for Life 1035 Exchanges F-19

COMPLIANCE

Code of Ethics G-3 Anti-Money Laundering Compliance G-3 Privacy Compliance G-3 Suitability G-3 Advertising G-3 Solicitation G-4 Replacement G-5 Claims G-5 Complaint Handling Procedure G-6 Continuing Education G-6 Compliance Bulletins G-6

COMPLIANCE BULLETINS (FILING SECTION)

AGENCY BULLETINS (FILING SECTION)

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AUTHORIZED ACTS An Agent of National Western Life Insurance Company (“the Company”) is authorized to: ♦ Solicit, receive and forward applications for insurance. ♦ Collect the first premium with an application and forward it to the Company. ♦ Perform other duties in connection with the applications as required by the Company. ♦ Receive commissions or commission overrides on business written in a state(s) where the agent holds a valid license. ♦ Respond promptly to any requests for information from the Company. UNAUTHORIZED ACTS An agent of the Company is NOT authorized to: ♦ Accept risks, alter contracts, or make contracts. ♦ Extend the time period for any premium payment. ♦ Act for the Company in connection with any contract or policy unless: (1) the act is

specifically set forth in the agent’s contract; or (2) the agent is given written authorization by a Company officer to perform the act.

♦ Solicit or participate in the solicitation of an application if not appointed with the Company, except in a state that permits the first application to be submitted with appointment papers.

♦ Collect premiums, other than the initial premium, except when given written authorization by a company officer.

♦ Instruct an applicant or insured to make a check, draft, or money order payable to anyone other than National Western Life Insurance Company.

♦ Endorse a check or money order made payable to National Western Life Insurance Company. ♦ Sell a policy that is not approved by the state insurance department in the state where the

policy was sold. ♦ Open a bank account in the name of the Company. ♦ Execute any document, including, but not limited to, Assignments for the Company, the

applicant, annuitant, insured, policyowner, beneficiary, or any assignee. ♦ Witness any signature relating to the Company’s business that was not affixed in the agent’s

presence. ♦ Publish anything concerning the Company unless prior written permission has been obtained from an attorney in the law department of the Company. ♦ Pay a client’s premium with the agent’s funds or the agent’s own check. ♦ Disseminate advertising material relating to the Company or any of its products unless given written authorization by an attorney in the law department of the Company. ♦ Fail to fully and accurately represent the terms of any policy or contract or other document. ♦ Engage in rebating, twisting, or churning. An agent who engages in rebating or twisting will

be dismissed immediately. “Rebating” is giving, or promising to give, something of value, such as part of a commission, to a prospect to induce the purchase of a policy. “Twisting” is attempting to induce a person to drop an existing policy and buy another policy, when such effort is characterized by misrepresentation.

♦ Disclose to a third party, other than authorized Company personnel, any non public personal information concerning an applicant, insured, beneficiary, or claimant.

♦ Alter an application without the applicant’s written consent. ♦ Bring suit in the name of the Company. ♦ Make or execute any contracts or agreements with third parties which abrogate, dilute, or

diminish the rights of the Company in its contract(s) with the Agent.

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♦ Sign an application as the writing agent unless you are in fact the agent that solicited the policy directly from the policyholder.

LICENSED TERRITORIES National Western Life Insurance Company is licensed in: ♦ All states except New York ♦ The District of Columbia ♦ Puerto Rico ♦ U.S. Virgin Islands ♦ Commonwealth of the Northern Mariana Islands ♦ Guam ♦ Republic of Haiti ♦ American Samoa

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COMPANY COMMUNICATIONS Written correspondence should: ♦ Be directed to the proper department. ♦ Be sent with different items on separate memos. ♦ Include AN AGENT NUMBER. ♦ Be addressed to: National Western Life Insurance Company Attention:__________________________ 850 East Anderson Lane Austin, Texas 78752-1602 NWL®’s Website Address: www.nationalwesternlife.com ♦ We’re pleased to introduce BEACON…e-BusinEss trAnsaCtions ON-line! This interactive information system offers you a more secure website accessible with the same PIN that is now used with our voice-response system. BEACON will give you access to a wealth of information regarding NWL® News, Annuity Products, Life Products, Pending Application Status, Active Policy Information, Commission Information, Agency Bulletins, Interest Rates, Asset Fee Rates, Risk Selection, Contracts, Current Sales Conference Production Standings, information on contest and upcoming incentive trips, plus a library of forms you can download and print yourself! Go to www.nationalwesternlife.com and click on US English, Login Access, click Agent.

The Company telephone and fax numbers: ♦ Direct 512-836-1010 ♦ National WATS 800-531-5442 ♦ Agent Only WATS Hotline 800-760-3434 ♦ Client Services Direct Line 800-922-9422 The Company extensions: ♦ ADMINISTRATIVE SERVICES (Fax 512-719-8531) Extension Robin Hulsey, FLMI, ACS, Assistant V.P 248 [email protected] ♦ AGENCY ADMINISTRATION (Fax 512-719-8506) Solmar Arroyo, ACS, Manager of Field Compensation and Contracting 420 [email protected] Judy Edgar, Supervisor, Field Compensation 381 [email protected] Robin Genz, ACS, AIAA, Supervisor, Agent Contracting and Licensing 356 [email protected] ♦ MARKETING (Fax 512-339-8350) Chris Johnson, S.V.P., Marketing 206 [email protected] Paul Garofoli, V.P., Annuity/Life Marketing 207 [email protected] Gary Fischer, V.P., Annuity/Life Marketing 319 [email protected] Scott Blundo, V.P., Annuity/Life Marketing 301 [email protected]

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Lura Rogers, ACS, Assistant V.P., Annuity/Life Marketing 314 [email protected] Sheryl Bostick, Senior Marketing Assistant 221 [email protected] Jennifer Hyatt, Marketing Assistant 226 [email protected] Shelley Logan, Sales Support Coordinator 358 [email protected] Gwen Monroe, Marketing Assistant 214 [email protected] Tim Sekiya, Internal Wholesaler, Annuity/Life Marketing 216 [email protected] Tony Zager, Internal Wholesaler, Annuity/Life Marketing 735 [email protected] ♦ PERSONNEL Linda Wishard, V.P., Human Resources 202 ♦ POLICY BENEFITS (Fax 512-719-8533) Doris Kruse, V.P., Policy Benefits 278

♦ POLICYOWNER SERVICES (Fax 512-719-8512) Larry White, FLMI, V.P. 272 [email protected] Donna Richardson, FLMI, ACS, AIAA, SILAF, V.P. Client Services 369 [email protected] Gayle Morris, FLMI, ACS, Senior Manager, Client Services 421 Client Services Annuities 595 Life 596 ♦ DOMESTIC LIFE UNDERWRITING (Fax 512-719-8507) Linda Diliplane, FLMI, CLU, ACS, AVP, Domestic Life Underwriting, New Business Administration 383 [email protected] Marisol Morales, Underwriter 390 [email protected] ♦ ANNUITY UNDERWRITING (Fax 512-719-8507) Karen Johnston, Assistant V.P. 549 [email protected] Lilly Michel, ACS, Annuity New Business Team Administrator 388 [email protected] Nancy Leos, Annuity Coordinator New Business/Transfers 542 [email protected]

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CONTRACTING/LICENSING CONTRACTING/LICENSING GENERAL INFORMATION ♦ Contracting and licensing documents can be obtained through recruiting general

agents or from the Company Marketing Department. The documents include information that should be retained by the agent for future reference. ♦ A handy checklist is included to ensure that all requirements are complete. ♦ The Company cannot accept life or annuity applications until the agent and Company

have satisfied the appropriate state’s insurance agent licensing and/or appointment regulations. Life or annuity applications submitted prior to appointment will be returned to the agent. The applicant will be notified that the application and any funds accompanying the application have been returned to the agent.

♦ The Company pays commission (and override commissions) only to agents who are duly licensed in the state in which the life or annuity application is solicited and the state where the policy is delivered to the policyowner. Usually, this involves the state in which the applicant resides or is employed.

♦ Vector One is one of the sources used in obtaining investigative background reports. Agents listed on the Vector One report are not eligible for contracting. PERSISTENCY REQUIREMENTS FOR LIFE INSURANCE PRODUCTION ♦ Each agent should strive to maintain a duration score of at least 100. ♦ In order to represent the Company, the agent must maintain duration scores that are at least 90 for 12

months, 80 for 24 months, and 50 for 36 and 60 months. ♦ Agencies are also required to maintain duration scores that are at least 90 for 12 months, 80 for 24 months,

and 50 for 36 and 60 months. RECONTRACTING AND REINSTATEMENTS ♦ Agents terminated because of failure to meet the persistency requirements cannot be recontracted unless the

60-month duration score increases to a score of at least 60 and at least 2 of the remaining 3 score categories meet the minimum duration score requirements.

♦ An agent who fails to pay a prior debit commission balance under the terms of the contract is not eligible for recontracting or reinstatement.

♦ An agent terminated by the Company for cause is not eligible for recontracting or reinstatement. LICENSING FEES AND FORMS ♦ All initial licensing fees are paid by the Company except for the state insurance

department examination fee or fees for license renewals. ♦ The licensing fee will be sent to the state insurance department when all the necessary

contracting requirements have been received. ♦ For current examination fee rates, telephone the Company Licensing Department.

CONTRACTING/LICENSING DOCUMENT REQUIREMENTS The agent’s instructions are to:

1. Complete Agent/Agency Data Sheet (SA-8098). 2. Read and sign the contract. If the agent/agency is a corporation, the Corporate Agency Guaranty

Agreement portion of the contract must be signed, before a witness, by an individual stockholder who is financially responsible for the corporation. The contract also must be signed by the recruiting general agent.

3. Attach copies of current, valid licenses for the states where business will be solicited. 4. If the agent/agency is a corporation, include a copy of the corporation’s Articles of Incorporation.

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COMMISSIONS

ELECTRONIC FUNDS TRANSFER OF COMMISSION PAYMENTS ♦ Commissions payable to the agent can be automatically deposited into the agent’s bank or savings account via electronic funds transfer (EFT). ♦ To request EFT, the agent should complete the EFT Information Form (SA-8786), attach a voided check to the form, and forward them to the Commission Department. ♦ Commissions will be processed via EFT after a prenote testing period of approximately 7 days. ♦ Commissions not paid via EFT will be paid by Company check.

EARNED COMMISSION PAYMENTS ♦ Commissions are determined by the agent’s contract with the Company. ♦ The date on which an application is written will determine the contract from which the commissions will be paid. When the agent’s contract is changed, the same rule applies, unless otherwise noted by the Company. ♦ Commissions and commission overrides are payable to an agent only if the agent is properly licensed in the state in which the application is written at the time the application is written. ♦ Before a commission payment is processed, all debits to the account will be deducted. ♦ The Company reserves the right to defer payment of the commission payable on certain cases, pending the receipt of a Policy Delivery Receipt and the expiration of the “Right to Cancel” period in the policy or perhaps pending receipt of renewal premium. ♦ The Company will defer payment of the commission payable on cases where the agent is writing a policy on the agent’s life or the life of a family member of the agent until the Company is satisfied that any right to cancel period for such policy has expired and no request to cancel the policy has been made.

FREQUENCY OF COMMISSION PAYMENTS ♦ Monthly commissions are calculated at the end of each month and include all commission transactions for the month. In order for a commission check or EFT to be issued, the commission account must have a minimum credit balance of $50. ♦ Semimonthly commissions are calculated on the 15th of the month and at the end of the month. In order for a commission check or EFT to be issued, the commission account must have a minimum credit balance of $50. ♦ Weekly commissions are calculated at the end of each week. A commission statement is prepared on the

first business day of each week (usually Mondays) to include all commission transactions for the previous week. The commission statement for the week will provide detailed information only about the prior week’s transactions. A weekly commission statement is prepared and a check or EFT is forwarded when the agent has a credit balance of at least $50 on the first business day of the week.

♦ Daily commissions are calculated every business day. Selection of this option allows the agent to enjoy the combined features of weekly and monthly payments PLUS the ability to receive additional commission payments any other business day for which the agent has a credit balance of at least $500. ♦ All active agents will be paid earned commissions on a weekly basis unless the Company is notified by the agent in writing that the commission payment frequency should be changed.

The Company will: 1. Forward commission payments according to the schedule selected by the agent.

a) Commissions forwarded daily include commissions for premiums processed on issued business as of the prior business day. All debits to the account will be deducted, and the total commission due the agent must be at least $500. An account statement explaining the commission payment is available through the website.

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b) Commission forwarded on Mondays include commissions for premiums processed on issued business during Monday – Friday of the prior week. All debits to the account will be deducted, and the total commission due the agent must be at least $50.00. An account statement explaining the commission payment is available through the website.

c) Commissions forwarded semimonthly are based on commissions calculated as of the 15th of the month and at month-end. Commission due active agents must be at least $50.00 in order for payment to be forwarded. An account statement explaining the commission payment is available through the website. d) Commissions at month-end are forwarded by the 7th of the following month and will include

commissions not previously forwarded to the agent during the month. The month-end commission statement lists all commission entries for the entire month. Commission due active agents must be at least $50 in order for payment to be forwarded. The statement can be viewed on the Company website.

REPLACEMENT COMMISSION PAYMENTS ♦ The Company reserves the right to adjust commissions if a new life insurance or annuity policy appears to replace other National Western life insurance or annuity policies. ♦ If new life insurance has been issued within six months before or after a policy is surrendered, allowed to lapse, or changed to extended term or reduced paid-up insurance, the first-year commission payable on the new policy will be adjusted as follows:

PERCENTAGE OF FIRST-YEAR COMMISSION TO BE PAID AFTER CONSIDERING NEW FACE AMOUNT AS A MULTIPLE OF THE FACE AMOUNT FOR THE OLD POLICY(IES).

Months in Force Up to 1.2 Times 1.2 to 1.5 Times 1.5 to 2 Times At Least 2 Times Old Policy(ies) Old Policy(ies) Old Policy(ies) Old Policy(ies) Old Policy(ies) 1-12 10% 15% 20% 25% 13-24 20% 30% 40% 50% 25-36 30% 45% 60% 75% 37-48 40% 60% 80% 100% 49-60 50% 75% 100% 61-72 60% 100% 73-84 70% 85-96 80% 97-108 90% 109 & Up 100%

Note: 100% of the first-year commission is payable if both the face amount and the premium (target premium for universal life) are increased at least 2 times compared to the old policy(ies) irrespective of the years in force for the old policy(ies). ♦ Renewal commissions will be paid on the cash value rolled into a universal life policy as part of the commissions on replacements where universal life is the new policy. ♦ If a policy or rider is discontinued and new insurance is issued within six months before or after such discontinuance, the Company reserves the right to make an adjustment in the amount of the first-year commission to be paid on the new policy. ♦ Compensation payable for annuity values withdrawn, borrowed, or obtained by full or partial surrender of

an NWL® annuity that are used to purchase a new NWL® annuity will be 50% of the standard commission scheduled for the new annuity provided that the funds transferred from the original NWL® annuity are not subject to surrender charge and the new annuity is deemed suitable by NWL®.

♦ Full cash surrender value, partial surrender value, or a loan taken from an NWL® annuity not outside its surrender period provides no compensation if used to fund a new NWL® annuity.

♦ Full commission is paid for annuity values transferred to life insurance. ♦ Full commission is paid in the event that a beneficiary of an NWL® policy uses death benefit proceeds to

purchase a new NWL® annuity or life insurance policy.

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SPLIT COMMISSION PAYMENTS ♦ If two or more agents, licensed and contracted with this Company, secure an application jointly, the credit for such business shall be equally divided (unless otherwise shown on the application) among those whose names appear on the application. Each agent will be paid commissions and receive production credits only on his/her share of the business. ♦ The Company will resolve cases where claims to commissions are disputed or questionable. The Company’s decision is final.

CONVERSION COMMISSION PAYMENTS ♦ CONVERSION OF TERM POLICIES OR TERM RIDERS TO LIFE OR ENDOWMENT PLAN – The

difference in first-year and renewal commissions between the commissions on the old policy and the commissions on the new policy, calculated according to the current contract, will be payable if the conversion is effective with the original issue date. Remaining first-year and renewal commissions will be payable on the new policy from the effective date of the conversions. Full commissions will be payable if the conversion is at the attained age of the insured and the new policy is dated currently. ♦ CONVERSION OF A PERMANENT PLAN TO A LOWER PREMIUM PERMANENT PLAN AT THE ORIGINAL ISSUE DATE – First-year and renewal commissions are continued on the new plan from the

effective date of the conversion and for the remaining commission period, if converted by the original agent. If an orphan policy is converted, such remaining first-year and renewal commissions shall be paid to the agent solely responsible for such conversions. The Company reserves the right to make the final decision concerning the commission payment.

♦ CONVERSION OF A PERMANENT PLAN TO A HIGHER PREMIUM PERMANENT PLAN AT THE ORIGINAL ISSUE DATE – The excess, if any, of the commissions which would have been paid if the policy had originally been issued on the new plan, over the commissions actually paid, will be allowed.

ADDITION TO POLICY COMMISSION PAYMENTS ♦ ADDITION OF TERM RIDERS TO EXISTING UNIVERSAL LIFE POLICIES – First-year commissions on term riders added after the original issue date will be payable to the agent who adds the riders. Commissions will be at the same rate as paid on the basic policy according to the agent’s contract. ♦ ADDITION OF TERM RIDERS TO EXISTING POLICIES (OTHER THAN UNIVERSAL LIFE POLICIES) – First-year and renewal commissions on term riders added after the original issue date, will be payable to the agent who adds the riders. Commissions will be at the same rate as paid on the basic policy according to the agent’s current contract. ♦ ADDITION OF BENEFITS TO EXISTING POLICIES – If the original agent adds disability, payor disability, or double indemnity benefits to an existing policy that has not been in force 12 months, the

additional premium for the benefit is added to the premium for the policy, and remaining first-year and renewal commissions are payable. If the policy has been in force for more than 12 months or if an agent other than the original agent makes the addition at any time, the commission will be 75% of the usual annual commission rate for the benefits as a one-sum first-year commission. The additional premium for the benefit is added to the premium for the policy, and remaining renewal commissions are payable on the total premium to the agent receiving commissions under the policy. OTHER COMMISSION PAYMENTS ♦ ANNUAL PREMIUMS PAID IN ADVANCE – Commissions on premiums paid in advance will be allowed only as they are applied toward payment of the current premium. ♦ REINSTATEMENTS – Upon reinstatement of a lapsed policy, the remaining first-year and renewal commissions will be payable to the agent responsible for the reinstatement. ♦ SERVICE COMMISSIONS ON ORPHAN POLICIES – If an orphan policy (a policy in which no agent, neither writing agent nor any agent in a hierarchy, is receiving commissions on the policy), in immediate danger of termination, is referred to an agent by the Policyowner Services Department for conservation, the Company will pay a service fee on subsequent net premiums (premiums less dividends and/or coupon and

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endowments) received in cash by the Company as a result of the agent’s conservation efforts. The service fee will be determined by the Company. Information is available upon request.

♦ COMMISSION ON PERMANENT RATING – If a universal life insurance policy is issued with a substandard risk rating that requires permanent extra premiums to be charged to the policyowner, the agent will receive first-year commission for these permanent extra premiums on a monthly basis during the first policy year even if the premium mode for the policy is not monthly premium payment. The first-year commission rate applied to the permanent extra premiums is equal to the rate of commission that is applied to the first-year target premium of the universal life policy.

♦ DECREASED FACE AMOUNT – If the face amount of a life insurance policy is decreased, the Company reserves the right to also decrease the first-year commission for the policy.

AGENT FINANCING

AGENT FINANCING GENERAL INFORMATION ♦ If requested by the agent and approved by the recruiting general agent and the Marketing Department, the agent may receive advance payments that are based on a percentage of annualized commissions for new business. These advance payments will be made to the agent in lieu of earned commission payments. ♦ Advances must be repaid to the Company and are due and payable on demand. ♦ The interest charged on debit balances is based on an annual rate of 10% and is payable monthly. ♦ Advance activity is reported on the “Status of Agent Advance” form and is available to the agent the first business day each week. The status includes all transactions for business submitted and/or paid for through

Friday of the previous week. ♦ Advances for universal life policies are based on the lesser of the target premium or the annual premium for the primary insured.

FINANCING ELIGIBILITY REQUIREMENTS ♦ The financing program is available to agents upon approval of the Marketing Department and the recruiting general agent. ♦ In order for any agent to qualify for and remain eligible for any form of financing, the agent’s deferred first-

year commissions must equal a minimum of 75% of any existing debit commission balance. ♦ Advances will not be made to an agent who fails to meet the minimum persistency requirements of the

Company. To qualify for financing, the agent’s 60-month duration score must be at least a score of 70.

NOT ELIGIBLE FOR FINANCING ♦ Financing is not available for:

a) Life and Annuity policies issued on the agent or the agent’s immediate family do not qualify. Immediate family members are defined as spouse, child, parent, brother, sister, grandparent and grandchild. And, in-laws in the same categories.

b) Applications written and processed prior to the approval and effective date of the advance arrangement. c) Applications that are to be paid on a direct billing basis with monthly, quarterly or semiannual mode of payment. d) Riders or benefits added to universal life insurance policies. FINANCING AMOUNT MAXIMUMS ♦ The amount advanced on each policy is calculated on a predetermined percentage of total annualized commissions.

a) General Markets: An advance of 50%, 60% or 70% of the annualized commissions will be made when the policy is issued, the premium is applied, and delivery requirements (if any) are satisfied.

b) Special Markets (Civil Service, AFGE, Salary Savings and Military): 25%, 30% or 35% of annualized commissions will be advanced upon receipt of the application. The balance will be advanced when the first premium is applied, contingent on the completion of delivery requirements, if any.

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♦ There are maximum amounts for payments, according to the type of contract the agent holds. There is a maximum commission advance per policy, and a maximum, total advance per week. If the agent’s advances exceed the standard maximum for a particular week, the excess amount is noted as a “reserve.” This reserve balance is maintained by the Company so that any chargebacks for unearned commissions can be offset by funds on reserve before deductions are made to the agent’s payment. ♦ The maximum advance per policy is $300. This maximum can be removed upon request once the agent has at least 15 policies issued with initial premium payments recorded. The request for removal of this maximum must be made by the agent in writing, and the request must be approved by the recruiting general agent. ♦ The weekly maximum can be increased through the agent’s production if the “(+) reserve” option on the Commission Payment Request (Form SA-5271) has been selected by the agent, with the recruiting general agent’s approval. For agents who select this option, the Company will increase the weekly maximum payment based on the amount in reserve. The new weekly maximum will be the standard maximum plus 50% of the current reserve balance. Please note that no checks or EFT’s are made to the agent for any portion of the reserve. As an example, if the agent has $100 on reserve and has a standard, maximum advance per week equal to $600, the selection of “(+) reserve” would change the maximum advance from the standard $600 to $650. When the agent produces sufficient business to generate at least $650 in advances on commissions, the agent may receive a payment for $650 instead of being limited to the usual maximum of $600. ♦ Maximum debit balances will be set, based on the contract commission schedule as follows:

Level Contract Maximum (max = debit balance max) 1 AG1 $12,000 1 AG2 $12,000 1 AG3 $15,000 1 AG4 $15,000 2 GA $20,000 3 GA $25,000 4 EGA $50,000

FINANCING CHARGEBACKS ♦ PENDING NEW BUSINESS – The submitted advance will be reversed if the policy is not issued and the initial premium is not paid. ♦ NO VALID PAYMENT RECEIVED – The entire amount advanced will be deducted. ♦ NET ADJUSTMENT – If errors occur or requests are received to reduce premium amounts, the resulting adjustment to the advance will be the difference between the amount originally advanced and the corrected

advance amount, if the premium reductions are made in the first year. ♦ LAPSED POLICY – Commissions paid on policies that lapse before 9 monthly premiums have been received will result in chargebacks according to the following formula:

9 – (months paid) 9 X (original advance)

Example: A policy has lapsed after two monthly premiums have been paid. The total advanced to the agent originally is $235.

9 – 2 (months) 9 X ($235) = $182.78 Chargeback ♦ PREMIUM MODE CHANGE – If the mode of premium is changed to a mode that does not provide an advance, any outstanding advance amounts will be reversed.

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PROCEDURE TO REQUEST FINANCING ♦ If a request for advance is being made subsequent to the appointment of the agent, a written request is needed from the recruiting general agent in explanation of the need for financing. ♦ Under usual circumstances, the request for financing will accompany the contract and appointment documents submitted by a new agent.

The agent’s instructions are to:

1. Complete and sign Commisson Payment Request (Form SA-5271). a) This form must also be signed by the recruiting general agent. b) The agent may increase the usual weekly maximum by marking the “(+) reserve” option on

Commission Payment Request (Form SA-5271) 2. Read, sign and attach Advance Agreement (Form SA-8008) to the Commission Payment Request (Form

SA-5271). The Company will: 1. Mail the agent (who qualifies for advance through Thursday of the previous week) a check on the

following Tuesday or have the advance electronically deposited via EFT. 2. Deduct from the advance any charges that may have been incurred by the agent.

FROZEN BALANCE REPAYMENT SYSTEM ♦ The agent may transfer from the advance financing program and repay any deficit balance over a maximum period of 24 months. ♦ Pay back arrangements are subject to new business activity – just as is required by the advance financing

program. The agent must maintain deferred first-year commissions that are at least 75% of the debit commission balance, and the agent’s 60-month duration score must be at least 70.

The Company will as a minimum repayment plan:

1. Establish a monthly payment plan for the agent so that 1/24 of the original debit balance is deducted from commissions each month for 24 months.

2. Deduct the payment from the first commission payment that becomes payable to the agent each month. The agent’s instructions are to:

1. Complete and sign the Commission Payment Request (Form SA-5271) to change the method of payment to the Frozen Balance Repayment System.

a) This form should also be signed by the recruiting general agent. b) The agent may select a monthly payment amount that is greater than 1/24 of the debit balance to

accelerate repayment. The agent may request the payment to be a specific dollar amount or a percentage of the monthly earnings.

DEBT REPORTING SERVICES ♦ National Western Life subscribes to Vector One, Dun & Bradstreet Commercial Collections, and Stuart Allan and Associates, Inc. For information concerning these services, please contact the Commission

Department.

B-10

AGENT INFORMATION SERVICES

AGENT ADDRESS, PHONE, E-MAIL AND FAX CHANGES The agent’s instructions are to:

1. Update the information through the Company website www.nationalwesternlife.com agent BEACON or send the new information in writing to the Agency Administration Department via E-mail, fax, or mail.

2. Include agent account number on all requests. 3. Notify the appropriate state insurance department(s) of any residence address changes.

AGENT ACTIVITY REPORTS ♦ DURATION SCORE SUMMARY REPORT – This report assesses performance by comparing the number

of years that business remains in force with the number of years NWL® expected the business to remain in force. Since the Company has established minimum persistency standards, attention should be given to this report each month so that corrective action can be taken if needed.

♦ PROGRESS DETAIL REPORT – Each month all transactions concerning the agent’s production are reported with the policyowner’s name and policy number and a description of each activity. The information shown will assist in keeping the agent’s records current.

♦ ARREARS LISTING – Any policy which has a mode premium 15 days past due will appear on the weekly report and remain there 60 days unless the premium is collected. The report is a valuable conservation tool.

♦ ACCOUNT STATEMENT – This statement reflects all transactions involving charges to the account, commission credits and the account balance.

♦ EXAMPLES – Illustrations of the above reports are contained in the following pages.

B-11

DURATION SCORE SUMMARY REPORT

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11a&b) (11c) 11(d)

Your duration score summary allows a quick and easy review of the persistency of your business. The duration score is the comparison of the number of years your business remains in force with the number of years that NWL expected your business to remain in force. The report is based on the first-year premiums of your paid business. It displays helpful information concerning the business that you have written as well as business that may have been written through your agency for the prior 12-, 24-, 36-, and 60-month periods of time.

Description of key numbers: 1. Date displayed scores were calculated. 2. Name and account number of producer 3. Amount of first-year premium from producer’s business. 4. Amount of producer’s business that remains in force. 5. Amount of producer’s first-year premium we expected to remain in force. 6. Percentage of producer’s in force premium compared to Company’s expectations. 7. Amount of combined agency production (producer’s production plus subagent production.) 8. Amount of combined agency business that remains in force. 9. Amount of the agency premium that we expected to remain in force. 10. Percentage of the agency’s in force premium compared to Company’s expectations. 11. Options for review of subagents’ duration score information: a. display score information for all subagents, including terminated subagents b. display score information for only the active subagents. c. display score information for only the subagents who report directly to the producer. d. display subagent information for only the subagents who have duration scores.

B-12

PROGRESS DETAIL REPORT This report is designed to give detailed information on the current month’s activity. This copy has been keyed with explanations. NO. 6000 LEVEL 2 (1) (3)National Western Life Insurance Company (4) Date 11/30/01 Page 1 Doe, John (2) (Progress Detail)

(5) (6) (7) (8) (9) (10) (11) (12) (13) (14) Pol. No. Description Type App

Mo-Day Entry Issue

Mo-Day-Yr Applicant Name App Cr Volume Premium

00055933 Submitted Life 11-12 11-24 Barbara Brown 1.000 20,000 641.78 00055690 Conv-New No. Life - 11-21 11-21-01 Victor Ross 1.000 10,000 335.00 00055714 Submitted Life 10-31 11-11 - Denise Boyd 1.000 33,280 511.47 00055722 Submitted Life 10-31 11-11 - Joanna Boyd 1.000 12,450 306.06 00055582 Paid Life - 11-10 11-01-01 Howard Smith 1.000 10,000 261.18 00055480 Declined Life 10-15 11-13 - Lee Jones .500- 5,000- 330.25- 00055481 Paid Life - 11-21 10-27-01 Lee Brown .500- 10,000 118.29 00055389 Cancelled Life 10-09 11-25 - Janie Hawkins .500- 13,500- 252.83- 00055463 Paid Life - 11-19 09-07-01 Lewis Posey .500 18,500 487.34 00055291 Paid Life - 11-06 10-03-01 Lela Jackson .500 2,016 93.36 00055292 Paid Life - 11-06 10-03-01 Henry Jackson .500 10,000 476.25 00055098 Paid Life - 11-16 09-08-01 James Edwards .500 12,500 160.38 00055617 Submitted Life 09-17 11-04 - Rose Cooper .500 15,280 313.45 00054366 Paid Life - 11-03 08-06-01 Ed Jenkins .500 5,000 195.63 00054367 Paid Life - 11-24 11-14-01 IIa Tucker .500 4,250 147.55 00047722 Lapsed Life - 11-68 10-01-99 W.P. Tucker .500 4,000 171.99-

(15)Submitted This Month 4.500 92,510 2,216.92 (16)Not Issued or Not Paid 1.000- 18,500- 583.08 (17)Paid This Month 4.500 72,266 1,939.98 (18)In Force Adjustments 5.000 78,266 2,102.99 (19)Lapses This Month .500- 4,000- 171.99-

DECRIPTION OF KEY NUMBERS

(1) Agent number and level of contract

(2) Agent’s name

(3) Company name

(4) Last business day covered by report

(5) Policy number

(6) Description of transaction

(7) Type of policy

(8) Date of application

(9) Date transaction occurred in Home Office

(10) Issue date of policy

(11) Applicant’s name

(12) Application credit (.500 designates 50/50 split case)

(13) Face amount of policy (volume) (14) Annualized premium (15) Submitted business this month expressed in number of apps, volume, and annualized premium (16) Cancelled and/or declined applications (17) Paid apps, volume, and annualized premium on current month transactions (18) In force adjustments representing the net value of additions and/or reductions in the in force apps, volume and annualized premiums (19) Lapses can be identified by policy from the description column

B-13

ARREARS LISTING

The arrears report displays all policies with premiums at least 15 days past due which remain on the report until premiums are 60 days past due. At the end of 60 days, if the premiums still remain unpaid and premium loans cannot be effected, the policy is terminated from the master file and the final disposition (lapsed) is listed. As a policy approaches 31 days (the grace period) in arrears, you should immediately contact the policyowner to obtain the payment due since the liberalized reinstatement (late pay offer) is still effective. After 45 days expire, normal reinstatement procedures are required. A universal life policy will be shown on this report when a planned modal premium is not received, regardless of the amount of values currently in the fund. Under the heading of “notes”, “code 4” advises that the cash value may be inadequate for monthly expenses, and “code 5” denotes that values are adequate to pay the next month’s expenses. Universal life policies have 60-day grace periods.

ARREARS LISTING AS OF 10-00-01

44444 33333 22222 11111 03/21/94 $139.03 A REG LIFE 09/77 0100111111 GEORGE WASHINGTON 5 P.O. BOX PENNY WASHINGTON, D.C. 44444 32323 23232 21212 03/21/94 $152.75 A REG LIFE 09/77 0100222222 JOHN DOE SMITH 5 1111 FIRST ST. WASHINGTON, D.C. 44444 32323 23232 21212 02/01/94 $28.09 M AFGE 03/78 0100333333 JOSEPH CLIENT 4 PAYROLL LANE WASHINGTON, D.C. 44444 33333 22222 00000 03/07/94 $132.50 Q SPLIT LF 03/78 0100444444 MARY JONES 4 CAPITAL GROVE WASHINGTON, D.C.

01-44444 JOHN D. MANAGER #1 INCHARGE ST. WASHINGTON, D.C. NOTES LEGEND 1 = SERVICE AGENT 2 = POLICY SUSPENDED 3 = SPLIT CASE 4 = UL – VALUES MAY BE INADEQUATE FOR MONTHLY EXPENSES 5 = UL – PLANNED PREM NOT RECEIVED – VALUES ADEQUATE

Hierarchy Mode Issue Policy Name & Address Notes

LEV 4 LEV 3 LEV 2 LEV 1 DUE DATE PREMIUM MARKET DATE NUMBER

B-14

ACCOUNT STATEMENT

DESCRIPTION OF KEY NUMBERS

(See Sample Commission Statement on Following Page)

1) Entry of check or EFT issued for previous month’s credit balance. 2) Entry of check or EFT issued for credit balance as of September 16. 3) Correcting entries for Policies 0100000208 and 302. 4) Taxable earnings entry for $50 prize. 5) 1st year commissions totals for the month. 6) Renewal commissions totals for the month 7) Total 1st year commission earnings year-to-date. 8) Total renewal commission earnings year-to-date. 9) Interest charged to agent’s account 10) Total taxable earnings for the month. (Includes prizes) 11) Total taxable earnings for the year. 12) Ending account balance for the month. (-) Designates deficit balance. 13) Reminder notice appears if commissions are electronically deposited in the agent’s bank or savings and

loan account.

Types of transactions that appear on statements most frequently:

Misc.: A journalized accounting entry. Miscellaneous entries include:

(a) commission checks or EFT’s processed for the agent during the period of time covered by the statement, (b) credits or charges for policy cancellation fees and not taken policy fees, (c) credits or charges for policy medical fees, and (d) credits or charges for any difference between premiums remitted and premiums due for a specific policy.

1st Year Life: Commission entry for premium processed during the first policy year of a life insurance policy. 1st Year Annuity: Commission entry for premium processed during the first policy year of an annuity. Ren. Life: Commission entry for a renewal premium of a life insurance policy. Ren. Annuity: Commission entry for a renewal premium of an annuity.

B-15

ACCOUNT STATEMENT

REMINDER YOUR COMMISSIONS ARE DEPOSITED VIA EFT. (13) NATIONAL WESTERN LIFE INSURANCE CO. 850 EAST ANDERSON LANE AUSTIN, TX 78752-1602 FE-1037

AGENT NO

POLICY OR REFERENCE

NO.

NAME OR DESCRIPTION

ISSUE MO DAY YR.

DUE MO. DAY

ACCTG MO. DAY

M

OD

E

TYPE OF TRANSACTION

LEVEL

TAXABLE EARNINGS

COMMISSION

PREMIUM RATE

AMOUNT

007 007

0100003129

BEGINNING ACCOUNT BALANCE MONTHEND COMM FOR AUGUST (1)

08 09

31 01

CREDIT MISC.

1543 1543

28 28-

007 007

0100005824 0109058818

MTD COMM FOR SEPT. (2) 0100000208 CORRECTION (3)

09 09

16 05

MISC. MISC.

8

90

2163 8

73-90

007 007

0109248812 0100006009

0100000302 CORRECTION PRIZE (4)

09 09

24 15

MISC. MISC.

600 50

00 00

600

00

007 007

0100000015 0100000018

DOE, DONNA ** DOE, JUDY **

02 02

25 16

95 95

09 09

15 16

09 09

26 24

REN. LIFE REN. LIFE

1 1

4 4

00 75

80 95

00 00

05 05

00 00

4 4

00 75

007 007

0100000025 0100000032

DOE, VEDIA ** DOE, DAPHNE **

03 04

01 03

95 95

09 09

01 03

09 09

10 14

01 01

REN. LIFE REN. LIFE

1 1

7 3

00 75

140 75

00 00

05 05

00 00

7 3

00 75

007 007

0100000053 0100000054

DOE, LUPE ** DOE, ROBIN **

05 05

02 02

95 95

09 09

02 02

09 09

10 10

01 01

REN. LIFE REN. LIFE

1 1

4 3

13 40

82 68

50 00

05 05

00 00

4 3

13 40

007 007

0100000412 0100000412

DOE, JOHN ** DOE, JOHN **

01 01

02 02

96 96

09 09

02 02

09 09

05 15

01 01

1ST YEAR LIFE 1ST YEAR LIFE

1 1

6 6

50 50-

13 13

00 00-

50 50

00 00

6 6

50 50-

007 007

0100000413 0100000413

DOE, JANE ** DOE, JANE **

01 01

07 07

96 96

09 09

07 07

09 09

08 16

01 01


1 1

12 12

50 50-

25 25

00 00-

50 50

00 00

12 12

50 50-

007 007

0100000603 0100000809

DOE, BARRY ** DOE, ELMO **

03 04

06 05

96 96

09 09

06 05

09 09

10 10

01 01


1 1

26 6

00 50

52 13

00 00

50 50

00 00

26 6

00 50

007 007

0100000810 0100000811

DOE, FLO ** DOE, ZEKE **

04 04

05 05

96 96

09 09

05 05

09 09

10 10

01 12


1 1

52 1994

50 50

105 3989

00 00

50 50

00 00

52 1994

50 50

007 007

0100000811 0100000811

DOE, ZEKE ** DOE, ZEKE **

04 04

05 05

96 96

09 09

05 05

09 09

10 24

12 12


1 1

1994

55 50-

11 3989

00 00-

05 50

00 00

1994

55 50-

007 007

0100000811 0100000811

DOE, ZEKE ** DOE, ZEKE **

04 04

05 05

96 96

09 09

05 05

09 09

24 18

12 12


1 1

1250

55- 00

11 2500

00- 00

05 50

00 00

1250

55- 00

007 007

0100000902 0100000903

DOE, MARY ** DOE, BLAKE **

06 06

12 12

96 96

09 09

12 12

09 09

15 15

03 03


1 1

17 26

50 50

35 53

00 00

50 50

00 00

17 26

50 50

LIFE SINGLE PREMIUM ANNUITY

(5) 1,379.00

(6 ) 27

.03

ANNUITY YTD TOTAL COMMISSION

(7) 10,428.92

(8) 564

.92

YEAR-TO-DATE INTEREST PAID TOTAL CURRENT EARNINGS

(9) 15 .24 2,064.93 (10)

TOTAL YTD EARNINGS ENDING ACCOUNT BALANCE

9,826.74 (11)

(12)

148

80-

POST, WILLIAM 303 BONNY VIEW PLACE ANYWHERE, TX 78329

01-007 CONTROL

NO.

09 30 1996 MO. DAY YEAR

PERIOD ENDING

1 PAGE

NO.

---------------------------------STATEMENT TOTALS---------------------------------------------------------------------------------------------------------1ST YEAR-----------------------------------RENEWAL-----------------------------------------

C-3

MARKETING GENERAL INFORMATION The function of the Marketing Department is to provide support for sales activities. This support includes market identification, product design, preparation of sales materials, and coordination of field sales and service activities with all departments within the Company. For assistance and information, the agent should contact the recruiting National Marketing Organization. If the manager is not available for an immediate need, the agent should contact the Marketing Department for assistance. The telephone numbers are: Agents only – toll-free Hotline: 1-800-760-3434, main number toll-free: 1-800-531-5442 or Direct: 1-512-836-1010. The general marketing e-mail address is [email protected]. SALES CONFERENCE • Sales Conference qualifiers and their spouses will be awarded trips to conferences

held each year throughout the world. Sales Conferences have taken place in Japan, Vienna, Spain, Alaska, Australia, Paris, Hawaii, Puerto Rico, Canada, Acapulco, Barbados, London, Switzerland and other outstanding locations.

• Sites and qualifications will be announced at the beginning of each qualifying period. • The qualifier may bring one guest. This guest may not be another agent licensed by

the company. Premium will determine sales conference qualification only. Other agent incentive programs will be based on individual specific qualification criteria. Attendance at the sales conference will be by invitation only. Only those agents who receive a formal invitation and are in good standing with the company at the time of the sales conference will be allowed to attend. An invitation to a couple includes air travel and accommodations for two. Married agents will be invited as a couple, regardless of individual contracting or qualification status.

• Life and Annuity policies issued on the agent or the agent’s immediate family do not qualify. Immediate family members are defined as spouse, child, parent, brother, sister, grandparent and grandchild. And, in-laws in the same categories.

SPECIAL SALES CAMPAIGNS PRODUCTION CONTESTS – Sales campaigns will be announced from time to time and prizes for outstanding production of agents and agencies will be awarded. AGENCY BULLETINS • Information on changes in Company policy, procedures, product information, and

other items will be communicated by agency bulletins. • Agency bulletins should be immediately reviewed and kept available for reference

because of the significant nature of the information they contain. A special section has been provided in the back of this manual for filing agency bulletins.

C-4

WELCOME LETTERS • When the appointment or license has been received and an agent control number has

been assigned, a letter will be sent to the appropriate person and manager. • The letter will include a file copy of the contract, the agent control number, and any

specific compliance information relative to the state of residence of the appointee. • The Welcome Letter will provide a PIN to provide access to the National Western

Life web site. • A new agent marketing kit with product information and material will provide needed

startup supplies for your state specific market. INTERNET • National Western Life’s website address is www.nationalwesternlife.com. There is

limited product information available for the general public, however, we have developed an extensive interactive information system for our agents to use as a valuable resource. Go to www.nationalwesternlife.com and click on US English. This system is authorized only to furtherance of National Western business.

• BEACON…e-BusinEss trAnsaCtions ON-line, is accessible with your Agent Number and the same Pin that is now used with our voice-response system. BEACON will give you access to a wealth of information regarding NWL® News, Annuity Products, Life Products, Pending Application Status, Active Policy Information, Commission Information, Agency Bulletins, Interest Rates, Asset Fees, Risk Selection, Contracts, Illustration Software, Information on contest current production standing and upcoming incentive trips, plus a library of forms you can download and print yourself! If you have any questions or comments regarding the website or BEACON, e-mail the Marketing Department at [email protected].

• Much of this information is confidential and proprietary to National Western Life. Access under your agent number and pin number is limited to your use only and use by others is not authorized. You are liable for all unauthorized activity under your agent number and pin number.

AGENT SUPPLY ORDERS To order or download forms online:

1. Access Beacon on the NWL® website 2. Go to www.nationalwesternlife.com 3. Select US English 4. Go to LOGIN ACCESS 5. Click on Agent 6. Tab to the Agent Number Box and type in your Agent Number 7. Tab to the PIN Box and type in your PIN 8. Click on Log in (you will then be at your Beacon homepage) 9. Look over to the left hand side of the screen in the blue shaded area 10. Click on Forms 11. Click on Forms Ordering OR Forms Products by State

If you are a current NWL® Domestic Agent and do not know your PIN, please contact the Domestic Marketing Department at (800) 760-3434 or e-mail us at [email protected].

C-5

PRODUCT SOFTWARE Software for Life, Deferred Annuity and Single Premium Immediate Annuity products is available at no cost for agents on NWL® agent website. Agents may download illustration software from our Agent friendly website through the Beacon agent section at www.nationalwesternlife.com. Agent’s instructions are to:

• Go to www.nationalwesternlife.com • Select “US English” • Go to LOGIN ACCESS • Click on “Agent” • Tab to the Agent Number Box and type in your Agent Number • Tab to the PIN Box and type in your PIN • Click on “Log In” (you will then be at our homepage) • Look over to the left hand side of the screen in the blue shaded area • Click on Software

For assistance please contact the Marketing Department at 1-800-760-3434 or email at [email protected]. ADVERTISING APPROVAL PROCEDURES & GUIDELINES All advertising use of National Western Life’s name, products, or opportunities must be approved by NWL® in advance (even if using one of NWL®’s “pre-approved” ad ideas). Advertising means any communication which is intended to or likely to generate interest in the sale of any NWL® product or service, for either a public or agent audience. Advertising is a communication in any form, including anything printed or faxed, any electronic presentation, web site information, and all audio or video messages. All advertising must meet both state advertising regulations and NWL® advertising policies. We have a variety of “pre-approved” ad slicks available on the website through BEACON. To use one of these, you must still follow the Advertising Approval Procedures. To access BEACON-Agent, go to www.nationalwesternlife.com, click US English, Login Access, click Agent. All advertisements must first be seen by the Marketing Department. With the advertisement, you should attach a cover memo stating: the type of advertisement (consumer or agent recruiter), in which states it will be distributed, and the manner of distribution (flier, newspaper, magazine, spreadsheet, fax broadcast, e-mail blast, Flash media, web site, etc.) Any advertisements that are mailed, e-mailed, or faxed directly to the Compliance Department will be forwarded to the Marketing Department. After the Marketing Department reviews the advertisement and makes any needed changes, it will be submitted to the Advertising Compliance Department. Once the advertising is submitted by Marketing to the Advertising Compliance Department, they intend to complete their review rapidly. If there are any changes or corrections that need to be made to the advertising copy, the marketing company or

C-6

agency will be notified as soon as possible by fax, e-mail or by mail. The revised advertising copy must be resubmitted to NWL® for final approval before use. If you make changes other than those requested by the Advertising Compliance Department, a full review of the advertisement will take place each time it is submitted to the Company for review. Once any corrections/revisions have been made and the advertisement is resubmitted, the Advertising Compliance Department will again review the advertisement. If the advertisement meets all review requirements, the Advertising Compliance Department will forward to the Marketing Department an Approval Letter addressed to the Marketing Organization who submitted the advertisement. The Approval Letter will be sent by fax, or email to the National Marketing Organization. Advertising compliance is most important for avoiding all manner of trouble and for maintaining good working relationships with carriers, producers and regulators. Below you will find general advertising guidelines to show you what is required on most advertisements. If you have any questions, please call Marketing @ 800-760-3434 or email at [email protected]. All ads contain the following information in the disclosure at the bottom of the advertisement: - the product name - the policy number - “Issued by National Western Life Insurance Company” - “Certain limitations and exclusions apply.” - “See policy for details.” - “Product not available in all states.” - Florida requires each solicitation of coverage of a Florida resident be from and

contain the name of the Florida licensed agent. If the advertisement is an agent recruitment/training ad and/or shows a commission amount, the disclosure at the bottom of the ad must contain the following: - “Producer commission levels are based on a General Agent (Level 3) Contract.” “For Agent Use Only – This document has not been approved under the advertising

laws of your state for dissemination to individual purchasers.” If the advertisement shows an interest rate or first year return, the disclosure at the bottom of the ad must contain the following: - “Interest rates effective (date) and subject to change.” - Also, the guaranteed interest rates must be equally prominent in the body of the ad. All ads must be clear as to purpose and be fair and honest as to content.

C-7

The following disclosures are examples of what should be on the advertisements for the particular products (the target audience and content of the specific ad determine the exact wording of the disclosure): For Agent Use Only-This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. The NWL® Ultra Future (01-1137-04 and state variations) is issued by National Western Life Insurance Company, Austin, Texas. Product not approved in all states. See Policy for complete information and Policy benefits and limitations. Certain limitations and exclusions apply. Rates are current as of the date of publication and are subject to change. *Excluding DE, MA, WA, PA, MN, IL, NJ, and IN version. **In VA & VT no loans until after after premiums have been paid for at least three full years then up to 100% Cash Surrender Value Policy Loan; see endorsement 01-4087P-VA for details. 100% Fixed Option only. May vary by state. ***Commissions based on a General Agent (Level 3) Contract. These commissions apply to all currently approved states except DE, MA,WA, PA, MN, IL, and IN. ****The Income Outlook - Withdrawal Benefit Rider (01-3128-07 and state variations) is not available in all states. See rider for qualifications and requirements. Review DM-1049 Consumer Disclosure Brochure for more details. For Agent Use Only - This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. NWL® Global Lookback (form 01-1144-07 and state variations) is a flexible premium deferred fixed indexed annuity issued by National Western Life Insurance Company, Austin, Texas. *The Income Outlook- Withdrawal Benefit Rider (01-3128-07 and state variations) is not available in all states. See rider for qualifications and requirements. Review DM-1049 Consumer Disclosure Brochure for more details. Product not approved in all states. Certain limitations and exclusions apply. See policy for complete information and details. **Commissions based on a General Agent (level 3) contract. “Standard & Poor’s®”, “S&P®”, “S&P 500®”, “Standard & Poor’s 500”, and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by National Western Life Insurance Company. The Product is not sponsored, endorsed, sold, or promoted by Standard & Poor’s® and Standard & Poor’s® makes no representation regarding the advisability of purchasing the Product. The EURO STOXX 50® is the intellectual property (including registered trademarks) of Stoxx Limited, Zurich, Switzerland (the “Licensors”), which is used under license. The Product is in no way sponsored, endorsed, sold or promoted by the Licensor and the Licensor shall have no liability with respect thereto. The copyright relating to the Nikkei Stock Average (“NSA”) and intellectual property rights as to the indications for Nikkei Inc. (“Nikkei”) and the NSA and any other rights shall belong to Nikkei. Nikkei shall be entitled to change the details of the NSA and to suspend the announcement thereof. All the businesses and implementation relating to the license agreement between National Western Life Insurance Company (“NWL®”) and Nikkei Digital Media, Inc. shall be conducted exclusively at the risk of NWL®, and Nikkei and Nikkei Digital Media, Inc. shall assume no obligation or responsibility therefor. Hang Seng Indexes Company Limited and Hang Seng Data Services Limited do not sponsor, endorse, sell, or promote the Product and make no representations or warranties with respect thereto.

D-3

POLICY BENEFITS DEATH CLAIMS In the event of the death of a policyowner, the agent’s or beneficiary’s instructions are to:

1. Notify the Policy Benefits Department of the policy number, insured’s full name, date of death, and cause of death (natural or accidental).

2. Indicate whether the Company should send the “Claimant’s Statement-Death Claim” (Form PB-1002 for life insurance) to the agent or the beneficiary.

3. Annuity death claims require “Claimant Statement-Annuity Death Claim” (Form PB-1001) and include a W-9 Taxpayer Identification Form. Other forms may be needed depending on the method of settlement elected by the beneficiary.

After the agent or beneficiary has received the “Claimant’s Statement-Death Claim” from the Company, the following items must be forwarded to the Policy Benefits Department:

4. The completed “Claimant’s Statement-Death Claim”. 5. A certified copy of the death certificate. 6. Return the policy.

a. If the policy has been lost, the Company will return an “Affidavit for Lost Policy” to the agent or beneficiary, as requested.

b. If the death claim check is to be delivered by the agent, it will be the agent’s responsibility to have the “Affidavit for Lost Policy” signed by the beneficiary and returned to the Company.

If any additional information is needed, notification will be sent by the Policy Benefits Department. WAIVER OF PREMIUM CLAIMS In the event a policyowner becomes disabled, the agent’s or insured’s instructions are to:

1. Notify the Policy Benefits Department of the policy number, insured’s full name, and approximate date the disability began.

2. Indicate whether the Company should send “Application for Disability Premium Waiver Benefits” (Form PB-1000) to the agent or the insured.

After the agent or insured has received the “Application for Disability Premium Waiver Benefits” from the Company:

3. Have forms completed and forwarded to the Policy Benefits Department for consideration.

If any additional information is needed, notification will be sent by the Policy Benefits Department. IMPORTANT NOTICE: The insured should continue to pay premiums until notified by the Policy Benefits Department that the claim is approved and that future premiums falling due during the disability will be waived by the Company.

E-3

CLIENT SERVICES – GENERAL INFORMATION Information on Policies The agent's or policyowner’s instructions are to:

l. Contact the Client Services Department with any questions pertaining to policy services except when filing death or disability claims, which are handled by Policy Benefits.

2. Include the policy number, full name of the insured and current address on all inquiries.

3. The agent toll-free number is 800-760-3434. The client toll-free number is 800-922-9422. The Client Services Representatives are available Monday – Thursday 8:00 AM to 5:00 PM Central Time and 8:00 to 3:00 PM on Friday. The toll-free automated voice response number is 1-888-695-5001. This number is available to active agents and policyholders to access policy information and to request statements of account for policies other than fixed-indexed policies.

4. Only agents actively appointed to represent the Company and who are listed in the agent hierarchy are eligible to receive information regarding a particular policy.

The Company will: 1. Send needed information directly to the agent or the policyowner. 2. Send a copy of the information (provided to the policyowner) to the agent,

provided the agent’s contract is on active status. POLICYOWNER INFORMATION AVAILABLE ON THE INTERNET BEACON…e-BusinEss trAnsaCtion ON-line; a secure website accessible with your agent number is now used with our voice-response system.

Active policy information is available to the policyowner and to the (active) writing agent on the internet through our website www.nationalwesternlife.com. Policyowners can access the information through BEACON-Policyholder and the writing agent (if active) can access the information through BEACON-Agent. Many of the company service forms are available to agents on the BEACON-Agent site. For your annuity policy, you will see your policy/certificate type, issue date, maturity date, account balance, writing agent name and phone number (if still active), loan information, surrender value of policies other than fixed-indexed policies, last deposit, last withdrawal, and accumulation rate. For your life insurance policy, you will see your policy type, issue date, maturity date, surrender value, last deposit, last withdrawal, accumulation rate, riders/supplemental benefits, planned premium, and scheduled coverage.

A current statement of account can be ordered by the active writing agent or policyholder.

Policyowners with problems accessing policy/certificate information, should contact NWL® Client Services Department at (800) 922-9422. Agents with problems accessing policy/certificate information, should contact NWL® Marketing Department at (800) 760-3434.

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ASSIGNMENT All assignments are subject to any indebtedness to the Company secured by the policy. No assignment will be binding on the Company unless it is in writing and until it is filed with the Company. The Company will not assume responsibility for the validity or sufficiency of any assignment unless otherwise provided in the assignment. The interest of any revocable beneficiary shall be subordinate to the interest of any assignee, whether the assignment was made before or after the designation of the beneficiary. The assignee shall receive any sum payable to the extent of the indebtedness. The rights and privileges of the policyowner are limited in an assigned policy without consent of the assignee. There are two forms of assignment:

a. Collateral assignment is used when the policy is assigned as security for indebtedness. At death the assignee is entitled only to the amount of the indebtedness. The remainder of the proceeds of the policy, if any, are payable to the beneficiary.

b. Absolute assignment is rarely applicable and is best affected by a change in ownership of the policy. The absolute assignee has all rights and privileges, including that of receiving the policy proceeds.

The policyowner’s instructions are to:

1. Complete the assignment on Form SP-7064. 2. Send to the Company

The Company will:

1. Record the assignment. 2. Complete tax reporting to the prior owner. 3. Return the original assignment to the assignee and copy to owner.

CHANGE OF ADDRESS: A change of address will be made only on the policy or policies specified. Failure to include a policy number in the change of address notification, or delay in sending such notification to the Company, could result in a loss of protection due to non-receipt of premium notice. The policyowner’s instructions are to:

1. Send notification to the Company immediately. 2. Give the policy number and the name of the insured for all policies for which

the change applies.

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CHANGE OF BENEFICIARY The policyowner’s instructions are to:

1. Complete “Change of Beneficiary”(Form SP-7161) and send to the Company. The policy should not be sent to the Company a. If the present beneficiary is irrevocable, the beneficiary must sign

“Change of Beneficiary” form b. Require spouse’s signature any time a spouse is being removed or percent

is being changed (see back of form). c. In the event of a divorce, the entire divorce decree, including the property

settlement is required. d. If a trust is named as beneficiary, we require Trust Information Form

DM-1094. e. The company will endorse the change and return a copy to the

policyowner to be attached to the policy. CHANGE OF NAME The policyowner’s instructions are to:

1. Complete Section 2 of the “Policyowner’s Change Request” (Form SP-8123) to notify the Company of a change in the name of the insured, owner, payor or beneficiary and send to the Company. (This section should not be used to request a change in the person designated as the named insured or annuitant.)

2. Notify the Company of any change of name by marriage or divorce by indicating the policy number, the previous name and the present name.

3. Send the Company a copy of the court order or legal evidence if the reason for the change of name is other than marriage or correction. The policy is not required for any of the above changes.

4. If name change of the owner is due to divorce, a divorce decree will be required before any further changes will be processed.

The Company will either:

1. Record the change in name and return a copy of the form to be attached to the policy as evidence of change, or

2. Complete “Change of Name Endorsement” (if notified of change of name by marriage or divorce) and return a copy to the policyowner to be attached to the policy as evidence of the change.

AGENT NOTIFICATION

• To assist the agent, the Company may notify the agent of possible replacements and surrender requests, provided the agent’s contract is on active status.

• The agent should review the policy with the policyowner to determine whether any of the non-forfeiture provisions could be exercised in order to keep the contract in force.

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• For Annuity and selected Life “Not-Taken” requests that qualify for a full refund under the free-look provision, a Fax Notification will be sent to the National Marketing Organization and the writing agent, if a fax number is available. The request will be held for five business days to allow the agent to contact the policyowner. If no response is received within the 5 days, the refund will be processed with a commission chargeback.

EXTENDING MATURITY DATE

• If a policy contains a provision for extending the maturity date an extension may be elected.

• The policy does not need to be returned to the Company. The policyowner’s instructions are to:

1. Complete Section 5 of “Policyowner’s Change Request” (Form SP-8123).

2. Send the form to the Company. The Company will send an endorsement stating the new maturity date. LOST POLICY

• The validity of a life insurance contract is not affected if the policy is lost or destroyed.

• A “Certificate for Lost Policy” will be issued if a written request is received from the policyowner.

• To receive a duplicate copy, the policyowner should complete Section 9 of “Policyowner’s Change Request and Endorsement of Policy " (Form SP-7117) and return the form to the Company with the $25 fee to cover the preparation cost. NOTE: The Company has assumed many policies through the merger of other companies. Duplicate policy forms are not available for many such plans of insurance.

MATURING POLICIES The Company will:

1. Send a notification of the pending maturity of a policy to the policyowner, with a copy to the agent, approximately 60 days prior to the maturity date. The notice will request that the policyowner review the maturity options and notify the Company of the option elected.

2. Send “Request for Installment Certificate” (Form SP-7389) and IRS Forms W4P after receiving notification from the policyowner.

3. Election of Distribution Method Form SP-8165 may also be required for certain qualified plans.

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The policyowner’s instructions are to: 1. Complete “Request for Installment Certificate” and IRS forms W-4P. 2. Enclose the forms with the policy and send to the Company.

The Company will send an “Installment Certificate” outlining the provisions of the settlement option, after the election is processed. TRANSFER OF OWNERSHIP OF POLICY

• Successive owners may be designated with an automatic transfer of ownership if the first owner dies before the insured.

• An owner may be designated for a limited period of time (during minority, until a specified date, or the occurrence of a specified event) with an atutomatic transfer of ownership thereafter.

• Ownership will pass through the estate of the owner should the owner die before the insured, unless provided otherwise in the policy. Naming a Contingent Owner would eliminate this procedure.

• If ownership should be acquired by a minor, it may be necessary to act through an authorized guardian in exercising any of the rights and privileges of the policy.

• The owner can transfer only the interest he/she has in the policy. • Generally, proceeds of life insurance payable to a named beneficiary (other than

the insured’s estate) are not included in the federal taxable estate of the insured, if, at the time of the insured’s death, the insured did not own the insurance. It is recommended that the insured consult an attorney before affecting a transfer of ownership for this purpose.

• In the event of a divorce, the entire divorce decree including the property settlement is required. On some Qualified plans, a Qualified Domestic Court Order may be required. In the event of the death of the owner, the death certificate is required.

• Trust being named – need form DM-1094 and copy of Trust. • May be taxable to the prior owner


1. Complete Section 1 of “Policyowner’s Change Request” (Form SP-8123). (This form will provide blocks to be completed to indicate the succession of ownership.)

2. Send the form to the Company. The Company will:

1. Record the transaction. 2. Complete tax reporting 3. Send the policyowner a copy of the form to be filed with the policy as an

endorsement of the policy.

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CLIENT SERVICES – TRADITIONAL LIFE AUTOMATIC PREMIUM LOAN

• The amount of the premium is automatically advanced as a loan if the premium is not paid within the grace period (provided the cash value is sufficient to cover the premium).

• The automatic premium loan option must be elected by the policy owner on the application or prior to a past due premium.

• The Company will add a rider to provide this option if it is not contained in the policy.


1. Complete Section 3 of “Policyowner’s Service Request” (Form SP-7117) to elect the automatic premium loan option.


1. Record the transaction. 2. Return a copy of the form to be filed with the policy as an endorsement to the

policy. CHANGE OF POLICY BY REDUCTION OF FACE AMOUNT

• Reduction of face amount involves a surrender of part of the policy. The face amount may not be reduced to an amount which is lower than the minimum applicable to the plan on which the policy is written.

• The amount terminated by reduction cannot be reinstated. Subject to certain conditions, the Company will consider splitting an in-force policy into two policies on a premium due date where:

a. One policy for part of the face amount would be continued on a premium-paying basis. One of the conditions is that the face amount must be for at least $5,000, but not less than the minimum face amount applicable to the plan on which the policy is written.

b. A second policy for the balance of the face amount (to be either endorsed as reduced paid-up insurance or continued as extended term insurance) will be issued if:

1. That balance is not less than the minimum face amount applicable to the plan on which a policy is written.

2. The amount of reduced paid-up insurance applicable to such second policy would be $1,000 or more, and

3. The amount and period of extended insurance would justify issuance of a second policy as determined by the Company’s rules then in effect.

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The policyowner’s instructions are to: 1. Request a change in plan by completing Section 2 of “Request for Change in

Policy” (Form SP-7241). 2. Sign, date and return the form.

The Company will:

1. Reissue the policy. 2. Return the new policy(ies) to the policyowner.

CORRECTION OF AGE

• When the age of the insured has been misstated, the amount payable will be such as the premium paid would have purchased at the correct age. Regardless of the amount stated in the policy, the Company’s actual risk from issuance of the policy is the amount which would have been purchased by the premiums paid.

• If the insured’s age has been OVERSTATED, the amount of insurance will be adjusted upward. Such an adjustment is provided because the premium paid would have purchased a greater amount of insurance at the correct age than that issued originally on the misstated age.

• If the insured’s age has been UNDERSTATED, the amount of insurance will be adjusted downward. Such an adjustment is provided because the premium paid would have purchased less insurance at the correct age than that issued originally on the misstated age.

• A non-contractual change will be made (whenever feasible) if the policyowner requests that the policy be rewritten for the same face amount as originally issued (instead of the corrected face amount). In such case, the policyowner is allowed the cash value (if any, at the correct age) for the difference between the face amount to which he/she was entitled for the premium paid and the actual face amount for which the policy was written.

• Insurability of the insured becomes important if the Company’s risk is substantially increased. However, most corrections of age change involve a very small increase in net risk, and evidence of insurability is not generally required.

• If the correction of age results in a higher premium, the policyowner will be charged the difference between the premium on the new policy and the premium on the original policy, with interest, from the due date of each premium to the date of change.


1. Complete Section 6 of “Request for Change in Policy” (Form SP-7241) to request a correction in age and enter the date of birth.

2. Return the completed form for reissue.

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FULL CASH SURRENDER (TRADITIONAL LIFE)

• Cash values for the various policy years are shown in the table of guaranteed values in the policy.

• Loan indebtedness will be deducted from the cash value. • Under the Tax Equity and Fiscal Responsibility Act (TEFRA), all life policies are

subject to withholding of federal income tax and state tax if required, on the taxable distribution. The completed surrender request should indicate whether or not the policyowner elects to withhold federal income tax from the distribution check. (Withholdings are based on flat percentages and this does not necessarily fulfill the policyowner’s personal tax requirements.)

The policyowner’s instructions are to: 1. Complete current “Life Surrender Request” (Form SP-8261, Form W-9, the IRS Form for Social Security Number) to request the surrender of a life insurance policy. Note: Only a current original Form SP-8261 will be accepted.

2. Make sure the surrender request is signed by: (a) The irrevocable beneficiary, if any. (b) Both the policyowner(s) and the assignee, if required. (However, many

assignments require only the signature of the assignee.) (c) Form must be dated. (d) Owner’s date of birth must be on Surrender Form.

3. Indicate whether or not federal income tax is to be withheld. 4. Send required forms to the Company. No faxed forms will be accepted for full

surrenders. LAPSED POLICIES

• If the renewal premium is not paid within the grace period, the policy lapses unless the automatic premium loan is in effect and there is sufficient cash value to maintain the policy in force.

• The grace period is 31 days past the due date of any unpaid premiums • The date of the payment will be determined by the postmark on the envelope. • Checks postdated after the expiration of the grace period are not acceptable as

payment within the grace period. • A special late payment offer will be mailed if payment is not received within a

limited number of days after the end of the grace period. • If the past due premium is not paid within 60 days from the premium due date, a

notice of lapse with an application for reinstatement on the reverse side will be sent to the policyowner. A copy of the lapse notice will be sent to the agent.

The Company will:

1. Send a late payment offer to the policyowner after the end of the grace period and send a copy to the writing agent and general agent manager.

2. Send a notice of lapse (after 60 days from the premium due date) to the policyowner and a copy to the writing agent.

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NON-FORFEITURE OPTIONS

• The policy may be surrendered for cash (refer back to Full Cash Surrender). • Extended term insurance may be purchased. a. The net cash surrender value is applied as a single premium to purchase term

insurance for the full amount of the policy (plus any dividend additions and less any loan indebtedness) for as long a period as the available cash value will purchase.

b. Any supplementary benefits are cancelled when this provision becomes effective. c. Most standard policies will provide that extended term insurance is the non-

forfeiture option (subject to payment of such premium by automatic premium loan).

• Paid-up insurance may be purchased. a. The net cash value is applied as a net single premium to purchase a fully paid-up

policy for a reduced amount payable at the same time as the original policy. b. If there is loan indebtedness, the policyowner may elect that the gross cash value

be used to purchase a larger amount of paid-up insurance. The policyowner’s instructions are to:

1. Complete Policyowner’s Endorsement of Policy (Form SP-7120) to elect a non-forfeiture option.


1. Record the transaction. 2. Return a copy of the form to be filed with the policy as an endorsement to the

policy. PAID UP POLICIES The Company will:

1. Send a letter to the policyowner when a premium paying period is completed. 2. Send a copy to the agent, if on active status.

PARTICIPATING POLICIES (Dividends, Credits, Endowments and Coupons)

• The following are dividend options available in participating policies. a. Payable in cash b. Applied toward payment of premium c. Applied to purchase paid-up additions d. Left on deposit with interest. If no option has been elected, the deposit with

interest option will apply. • Dividend credits (deposits plus the cash value for paid-up additions) may be

applied to make a policy a fully paid-up participating policy of the same kind and for the face amount or ultimate amount as provided.

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• The policy may be matured as an endowment by application of the outstanding dividend credits when the policy tabular cash value together with dividend credits equals or exceeds the Face Amount or the ultimate amount on the policy.

• Coupons must be surrendered to the Company to be paid in cash, applied toward payment of premium or used to purchase paid-up additions. If not surrendered, the amount of the coupons will remain on deposit, subject to withdrawal.

• The dividends, endowments or coupons on deposit and the cash value for paid-up additions are defined as a part of the cash value in exercising the policy loan, automatic premium loan and the non-forfeiture provisions.


1. Elect options in writing within 31 days of premium due date. a. Section 2 of “Policyowner’s Service Request” (Form SP-7117) is used to request

that dividends, endowments or coupons on deposit or the cash value of paid-up additions be (1) applied to reduce a loan (2) applied to pay premium or (3) paid in cash. In addition, this section is used to request a change in the option. The form must be signed by the policyowner.

b. Section 6, box “other” of “Request for Change in Policy” (Form SP-7241) is used to request that dividends, endowments or coupon accumulations be used to purchase paid-up additions to the policy. The reverse side of the form is completed for evidence of insurability on the insured. The policyowner must sign both sides of this form.

2. Send the information to the Company. POLICY LOANS (TRADITIONAL LIFE)

• When the policy has a cash value and is not on extended term insurance, the policyowner may obtain a loan from the Company on the sole security of the policy.

• The loan value is the cash value as of the next premium due date or next anniversary date (if the policy is paid-up).

• Any past due premium in the grace period is deducted from the loan. • Loans may be repaid in full or in part at any time provided that:

a. The amount to be credited to the loan is at least $10 b. Payment is made before the death of the insured or prior to the maturity

date of the policy. • Loan agreements are not required for cash loan amounts for less than $5000,

unless the policy is assigned. • The interest is deducted in advance from the date the loan is processed to the next

policy anniversary date. Interest is due on each subsequent policy anniversary date. Interest due will be added to the loan and will bear interest at the same rate as long as there is sufficient loan value. Otherwise, the policy lapses for nonpayment of interest.

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• Although the Company has never exercised the privilege, the policy provides that loans may be deferred for a period of 6 months unless the proceeds are to be used to pay premiums.


1. Complete Section 1 of “Policyowner’s Service Request” (Form SP-7117) or “Policy Loan Agreement” (Form SP-7116).

2. Send the form to the Company The Company will:

1. Send the loan check to the policyowner. 2. Request the personal endorsement of each payee, since these endorsements

constitute completion of the loan agreement on the back of the check. REDATING TO ELIMINATE A MAXIMUM OR NEAR MAXIMUM LOAN

• Redating to eliminate a loan may be used only on those policies 5 years old or older which have a maximum or near-maximum loan and on which no repayment has been made for at least one year.

• Redating to eliminate a loan is available only one time on each policy. • A cash value for a new age and date of issue is calculated to approximately equal

the net equity. • The difference between the new cash value and the net equity (if not equal) plus a

mode premium at the new age is required. The policyowner’s instructions are to:

1. Complete Section l of “Request for Change in Policy” (Form SP-7241). Health questions on the reverse side of the form should be completed for the insured. The form must be signed by the insured and the policyowner.

2. Return the policy and the completed form to the Company. 3. Complete Section 6 of “Policyowner’s Service Request” (Form SP-7117), if the

original policy has been lost or destroyed. The Company will:

1. Record the transactions. 2. Send the reissued policy to the policyowner.

REDATING UPON REINSTATEMENT

• The Company will consider reinstating a lapsed policy by redating, if reinstatement cannot be accomplished according to regular procedures.

• The premium for a reissued policy is based on the insured’s age at the new policy date. Instead of paying the delinquent premiums, the insured pays only the difference in premium if the age of the insured has increased (for the number of months credited), plus interest and the current modal premium.

• Redating to reinstate is not acceptable if:

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a. The policy has not been in force for at least three months. b. The policy has not been lapsed for at least three months. c. The policy has a history of previous lapses or insufficient checks. d. The policy was previously reinstated and redated under this plan. e. The policy is not on a life or endowment plan. f. The policy is for less than $2000. g. The policy had a non-forfeiture value at the time of lapse.


1. Complete Section l of “Request for Change in Policy” (Form SP-7241). Also, complete the reverse side, sign and date the form

2. Return the form, one mode premium and the policy to the Company. The Company will:

1. Record the transaction. 2. Return the reissued policy to the policyowner.

REINSTATEMENT (OF WHOLE LIFE, TERM POLICIES & PROVIDER SELECT)

• Policies cannot be reinstated that have: a. Been surrendered for their cash values. b. Matured as endowments. c. Expired as term policies. d. Been lapsed more than 5 years.

• A lapsed policy may be reinstated (including any policy in force under the extended term and reduced paid-up insurance options) provided:

a. All back premiums are paid to bring the policy from the lapse date to the current date, plus two months.

b. Interest on the past due premium is paid if the policy has been lapsed more than 90 days.

c. Loan interest is paid if a paid-up policy has lapsed due to nonpayment of loan interest.

d. Any loan indebtedness on the policy, at the time of lapse, plus accumulated interest thereon, is either repaid or restored as a loan against the reinstated policy. All or part of the payment required to reinstate a policy may be charged against the policy as a loan if the resulting loan indebtedness does not exceed the loan value on the date to which the premiums are paid.

e. Evidence of insurability is provided. The agent’s instructions are to:

1. Send an application for reinstatement. a. The application must be dated and signed by each person insured and the

policyowner. b. Within 90 days after the due date of the first premium in default, any short form of

application for reinstatement may be used.

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c. After 90 days after the due date of the first premium in default, use “Life Reinstatement Application” 01-S003 applicable in your state. Use 01-S003-MO in MO, 01-S003-SC in SC and 01-S003-CO in CO, 01-S003-FL in FL, and 01-S003-WI in WI. Use SP-8111 in MN.

d. Form SP-7241 can be used as an application for reinstatement except in the states shown on Item C above.

2. Provide a medical examination form and a urine specimen container if required. A medical examination is usually required if the amount of insurance is not within the non-medical limits at the then attained age of the insured and the policy has been lapsed for more than twelve months from the due date of the first premium in default.

TERM CONVERSIONS • Generally, any term policy and term rider may be converted (without evidence of

insurability) to any permanent plan of insurance then customarily issued by the Company. The policy should be consulted for full information on conversion provisions.

• The policyowner may elect to have the new policy dated currently at the attained age, or dated as of the date at the original issue age (except for decreasing term policies or term riders, which are converted at the attained age and dated currently).

• If a portion of the term policy or term rider only is converted, the remaining term insurance may be continued in force, if not less than the minimum amount issued on that plan.

• Supplementary benefits such as waiver of premium and accidental death may be included in the new policy, provided the benefit is available at the insured’s attained age and subject to evidence of insurability.


1. Complete Section 2 of “Request for Change in Policy” (Form SP-7241). 2. Return the proper changes indicated above.

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CLIENT SERVICES – UNIVERSAL LIFE CORRECTION OF AGE

• If age has been UNDERSTATED, we will request the difference in the premium charges from the client.

• If the age is OVERSTATED, the excess premium charges will be credited back to the Account Balance.


1. Complete Section 6 of “Request for Change Form SP-7241 to request a correction in age and enter the date of birth.

2. Return the policy along with the completed form and any premium due for correction.

The Company will:

1. Make the age correction 2. Send a new policy to the policyowner.

DEATH BENEFIT OPTION CHANGES

• Usually after the first policy year, the option may be changed. Review the policy contract for specific information.

• The change from Option 1 to 2 will require evidence of insurability. • The change from Option 2 to 1 will result in a smaller death benefit and will not

require evidence of insurability. • Complete Form SP-7241 Section 2 requesting Change of Option and evidence of

insurability on reverse side if necessary. The policy contract is not required for an option change.

• The Company will change the option and send an endorsement to the policyowner.

FULL CASH SURRENDER (UNIVERSAL LIFE)

• Loan indebtedness will be deducted from the cash value. • Under the Tax Equity and Fiscal Responsibility Act (TEFRA), all policies are

subject to withholding of federal income tax on the taxable distribution and state tax, if required. The completed surrender request should indicate whether or not the policyowner elects to withhold federal income tax from the distribution check. (Withholdings are based on flat percentages and this does not necessarily fulfill the policyowner’s personal tax requirements.)

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The policyowner’s instructions are to: 1. Complete current “Life Surrender Request” (Form SP-8261 and Form W-9. the

IRS Form for Social Security Number to request the surrender of a life insurance policy.

NOTE: Only a current original Form SP-8261 will be accepted. 2. Make sure a surrender request is signed by:

a. The irrevocable beneficiary, if any. b. Both the policyowner(s) and the assignee, if required. (However, many

assignments require only the signature of the assignee.) c. Form must be dated.


surrenders. PARTIAL CASH SURRENDER(UNIVERSAL LIFE)

• A partial cash surrender is available under universal life policies. • The policy provisions will provide further information on partial surrenders

(charges, fees, etc.). The policyowner’s instructions are to:

1. Complete “Life Partial Surrender Request” (FormSP-8262), including the federal income withholding election) and a Form W-9 to request a partial surrender from a life policy. No other form number will be accepted.

2. Send the required forms to the Company. The policy is not required. POLICY LOANS (UNIVERSAL LIFE)

• When the policy has a cash value the policyowner may obtain a loan from the Company on the sole security of the policy.

• Loans may be repaid in full or in part at any time provided that: a. The amount to be credited to the loan is at least $10. b. Payment is made before the death of the insured or prior to the maturity

date of the policy. • Loan agreements are not required for cash loan amounts for less than $5,000,

unless the policy is assigned. • The interest is deducted in advance from the date the loan is processed to the next

policy anniversary date. Interest is due on each subsequent policy anniversary date. Interest due will be added to the loan and will bear interest at the same rate as long as there is sufficient loan value. Otherwise, the policy lapses for nonpayment of interest.

• Although the Company has never exercised the privilege, the policy provides that loans may be deferred for a period of 6 months unless the proceeds are to be used to pay premiums.

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The policyowner’s instructions are to: 1. Complete Section 1 of “Policyowner’s Service Request” (Form SP-7117) or

Policy Loan Agreement (Form SP-7116) 2. Send the form to the Company.

The Company will: 1. Send the loan check to the policyowner. 2. Request the personal endorsement of each payee since these endorsements constitute

completion of the loan agreement on the back of the check. REINSTATEMENT

• Policies cannot be reinstated that have been surrendered for their cash value. • If the application for reinstatement is approved, the policy will be reinstated and

paid. • If there are outstanding expense charges still due when the policy is reinstated

they will be collected from future premiums. Reinstatement Requirements For:

• Policies with a “minimum premium paying period” with the grace period provision such as Life 100 and Protector require completion of the reinstatement application for approval and payment of all back minimum premium payments, plus two (2) months. If the policy is out of the “minimum premium paying period”, we require completion of the reinstatement application for approval and payment of the current billable premium payment, plus two (2) months or the COI, whichever is greater.

• Policies with “no minimum premium paying period” such as Omega Blue, LACOP, Benefactor Select and Payroll Benefit require completion of the reinstatement application for approval and payment of current billable, plus two(2) months or COI, whichever is greater.

• The Lifetime Series requires the minimum monthly continuation premium as stated on Page 3 of the policy contract for the Guaranteed no lapse period multiplied by the number of months since the policy date (including the current month) plus two (2) additional months.


1. Send an application for reinstatement. a. An application for reinstatement is required on each life insured under the

policy for $25,000 coverage or greater. b. The form must be dated and signed by each person insured and the

policyowner.

2. Provide a medical examination form and a urine specimen container if required. A medical examination is usually required if the amount of insurance is not within the non-medical limits at the then attained age of the insured and the policy has been lapsed for more than twelve months from the due date of the first premium in default.

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The Company will: 1. Underwrite the reinstatement application. 2. Send acknowledgement to the policyowner. 3. Send a copy of the notification to the agent.

TO ADD “OTHER INSURED RIDER” The agent’s instructions are to:

1. Complete a separate application for each applicant (in order to designate a beneficiary) including the smoker/non-smoker and medical information sections.

2. Return the completed, dated, signed application and any increase in premium. TO DELETE “OTHER INSURED RIDER”

1. Complete Request for Change in Policy Form SP-7241 Section 3 requesting deletion and Section 5, if necessary, requesting a change in billable premium.

2. Return completed Form SP-7241 and any additional premium necessary. The Company will; 1. Send an endorsement for the addition or deletion to the policyowner. UNIVERSAL LIFE FACE AMOUNT CHANGES

• Universal Life plans permit changes in the initial face amount. The waiting period for such changes varies by policy form. Therefore, the policy should be reviewed for the time period.

• Face amount DECREASES will not require evidence of insurability. A decrease will not be allowed if the resulting face amount is less than the minimum face amount. A face amount change endorsement will be issued for each approved decrease.

• Face amount INCREASES will require evidence of insurability and must be requested on a separate application. If the increase is approved, a face amount change endorsement will be issued showing the new face amount and the charge made for the increase.

• A change from a smoker to a nonsmoker plan involves re-issuance of the policy and requires that evidence of insurability be completed on “Request for Change in Policy” (Form SP-7241) along with Section 4. The form must be signed by the insured and the policyowner. A change from smoker to non-smoker requires change of plan of insurance reducing COI. A policy endorsement will be returned to the policyowner.

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CLIENT SERVICES - ANNUITY FULL CASH SURRENDER:

• Cash values for the various policy years are shown in the table of guaranteed values in the policy.

• Loan indebtedness will be deducted from the cash value. • Under the Tax Equity and Fiscal Responsibility Act (TEFRA) all annuities

(qualified and nonqualified), are subject to withholding of federal income tax and state income tax, if required, on the taxable distribution. The completed surrender request should indicate whether or not the policyowner elects to withhold federal income tax from the distribution check. (Withholdings are based on flat percentages and this does not necessarily fulfill the policyowner’s personal tax requirements.)

• Under the Unemployment Compensation Act (UCA) CERTAIN QUALIFIED PLANS are subject to a mandatory 20% withholding.


1. Complete current “Annuity Surrender Request” (Form SP-7356). “Election of Distribution Method” (Form SP-8165) may also be required for certain qualified plans, (Form “W-9” – IRS Form for Social Security Number) to request the surrender of an annuity policy. NOTE: Only a current ORIGINAL Form SP-7356 will be accepted.

2. Make sure the surrender request is signed by: a. The irrevocable beneficiary, if any. b. Both the policyowner(s) and the assignee, if required. (However, many

assignments require only the signature of the assignee.) c. Form must be dated. d. Owner’s date of birth and phone number is required.


surrenders. OPTION CHANGES ON EQUITY INDEXED ANNUITIES

• Pre-anniversary notices are mailed to the policyholder 30 days prior to the policy anniversary. A copy of this letter is mailed to the active writing agent.

• A letter or fax signed by the policyholder will also be accepted for change of option

• Failure to return the option change by 5 business days before the policy anniversary will result in the request not being honored. We must strictly enforce the 5 business days cut-off to allow for the appropriate financial transactions to take place for the selected option.

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The policyowner’s instructions are to: 1. Upon receipt of the option change notice, review and immediately forward to the

Company by fax or mail. The Company will:

1. Make the requested option change. 2. Send written confirmation of the change to the policyowner and the active

writing agent. PARTIAL CASH SURRENDER

• A partial cash surrender is available under certain flexible annuities. • The policy provisions will provide further information on partial surrenders


1. Complete “Annuity Partial Surrender Request” (Form SP-8215, including the federal income tax withholding election), owner’s date of birth and phone number, and a Form W-9 to request a partial surrender from an annuity policy. No other form number will be accepted. The Election of Distribution Method Form SP-8165 may also be required for certain qualified plans.

2. Send required forms to the Company. The policy is not required. 3. Reused forms will not be accepted.

The Company will:

1. Process the withdrawal, including any applicable surrender charges. 2. Send a check to the policyowner.

PARTIAL 1035 EXCHANGE (ANNUITIES – NON-QUALIFIED PLANS)

• A partial cash surrender is available under certain flexible annuities. • The policy provisions will provide further information on partial surrenders


1. Complete “Annuity Partial Surrender Request” (Form SP-8215, including the federal income tax withholding election), and a Form W-9 to request a partial surrender from an annuity policy. No other form number will be accepted.

2. Have a Transfer/Partial 1035 Exchange request form signed by an authorized signer from the exchange company.

3. Send required forms to the Company. The policy is not required. The Company will:

1. Process the withdrawal, including any applicable surrender charges. 2. Send a check to the exchange company.

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POLICY LOANS (ANNUITIES – NON-QUALIFIED PLANS)

• Certain non-qualified annuity policies have a loan provision. You should contact Client Services if you have a question about a loan provision. Non-qualified Annuity Loan Agreement (Form SP-8239.Rev.05/06) should be completed by the policyowner and returned to the Company.

POLICY LOANS (ANNUITIES – QUALIFIED PLANS)

• The policyowner may obtain a loan from their policy by completing a “Loan Agreement” (Form SP-7360 Rev.02/09). The amount of the loan available is subject to IRS Guidelines. You should contact Client Services to check for loan availability.

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PREMIUM COLLECTION PRE-AUTHORIZE CHECK PLAN/ELECTRONIC FUNDS TRANSFER (PAC/EFT)

• This plan will not be available through any bank that requires the Company to pay fees on checks written or that requires a minimum deposit by the Company.

• The PAC/EFT plan can be sold on any mode of premium preferred by the client – monthly, quarterly, semi-annually or annually.

• The second month’s premium will be drawn from the policyowner’s bank account by PAC/EFT, if the policy is issued as applied for and there are no supplements required, and provided the issuance is not delayed beyond the due date of the second month’s premium

• Unless the applicant requests otherwise, the Company will process one transaction monthly covering two or more policies, thus holding bank charges for checks to a minimum.

• Policies on the lives or more than one person, such as a husband, wife and children, can be covered by one draft transaction provided, of course, the monthly premiums are to be paid from the same bank account by the same individual.

• There is no minimum monthly premium per policy for special monthly billings such PAC/EFT, salary savings and government allotment. The minimum monthly direct mode premium is $10 per policy.

• The Company reserves the right to terminate the PAC/EFT plan of payment with any poicyowner upon written notice.

• If a policyowner is changing banks and an agent is not available, the policyowner should be instructed to complete all of the PAC/EFT information and list all policy numbers, names, amount of payment and date to be drafted from the bank. Designate whether it is a loan payment ort premium payment or both and send to NWL.

The applicant should:

1. Pay the first month’s premium (at the PAC/EFT rate) in cash or by personal check.

2. Furnish the agent with a blank, voided personal check. 3. Fill in and sign both parts of the PAC/EFT Authorization (Form SP-8207).


1. Submit the authorization form, a blank, voided, personal check, the application and the first premium to the Company.

a. More than one monthly premium should be collected if the policy is to be backdated.

b. It is the agent’s responsibility to collect enough premiums to cover the period to the date when the next premium can be collected through PAC/EFT plan.

c. If supplements must be completed on delivery of the policy and are not completed before the second premium is due, the agent must collect the

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second month’s premium and submit it to the Company along with the completed supplements.

d. If the policy is issued at an increased premium, the balance of the first monthly premium must be collected on delivery. If, at the time of delivery, the second or subsequent monthly premiums are already due, the agent must collect the premiums.

2. Have the applicant complete and sign “Authorization Agreement for Automated Billing” (Form SP-8207).

a. The signature should be exactly the same as the one appearing on the applicant’s bank records. This may be different from his/her signature on the application

b. The bank account number, the bank transit number and the bank route symbol must be indicated on the PAC/EFT authorization.

c. If the premium is to be drawn on a special date, such date should be placed on the blank provided on the PAC/EFT authorization. (This special date should be placed under special requests on the insurance application.)

The Company will:

1. Handle applications for insurance under this plan the same as any other application.

2. File the authorization in the Company files. 3. Write a check or electronically transfer the premium each month on the proper

date. The amount of the premium will be adjusted whenever the premium is changed, whether automatically or as a result of a change requested subsequent to issue (e.g., reduction in the amount of insurance).

ORDINARY LIFE BILLINGS • Notices billed together must be paid before the next billing date or before the

special payment offer goes out, 35 days after the issue date. All special late payment offers are mailed on each individual policy and will not be combined with other policy on that control number.

• Premium billing notices are mailed 15 days prior to the premium due date. Upon request, notices can be mailed earlier.

• Special late payment offers are mailed 35 days after the premium due date. • Multiple policies can be billed on one notice. The lowest policy number and the

insured’s name will be on the notice. • Notices are mailed with return envelopes. • Address changes can be made on the reverse side of the notice.


1. Return the left portion of the billing notice with the payment.

2. Remit the correct amount of the elected mode with a note to change future billings (if the payment mode is to be changed at the time a payment is being made).

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UNIVERSAL LIFE BILLINGS

• Universal Life policies on PAC must draft three days before the due date (which is the same as the issue date) because these policies update on the monthly anniversary. When paying the minimum premium, the policy will not update if it is drafted after the due date.

• Premium billing notices are mailed 15 days prior to the premium due date. Upon request, the notices can be mailed earlier.

• Multiple policies can be billed on one notice. The lowest policy number and the insured’s name will be on the notice.

• Notices are mailed with return envelopes.

• Address changes can be made on the reverse side of the notice.

The Company will:

1. Send a minimum notice to the insured requesting the balance of the minimum requirement plus two months’ premium if the plans that have minimum premium requirements do not have sufficient premium paid on the due date.

2. Send a minimum notice to the insured requesting the current planned premium (on those plans that do not have a minimum premium requirement) if there is not sufficient value in the account balance to pay the monthly expense charge on the due date.


1. Return the left portion of the billing notice with the payment.

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SPECIAL LIST BILLINGS

• Premiums must be paid each pay period. Otherwise, the policy will be changed to direct pay and the Company will send the individual insured a premium due notice.

• If the insured wants to be placed back on the list billing, the premiums must be paid current.


1. Complete the “Salary Savings Deduction Authorization” (Form SP-8105) and send to the employer.

2. Complete “Authorization for List Fill” (Form SP-7378) and return to the Company with the original application.

3. Notify the Company when the first deduction will be sent to the company. CIVIL SERVICE ELECTRONIC TRANSFER FUNDS

• Retired employees must pay by direct pay or pre-authorized check plan. They cannot use payroll deduction.


1. Complete PS1199A (white form) or 1199A (green form) and send to the Company with the original application, including full name and address for the pay center.

2. Complete a new PS1199A (white form) or 1199A (green form) (when pay centers or deductions are changed) and send to the Company with complete mailing instructions including the full name and address of the pay center.

3. When canceling payroll deductions at Frost Bank and changing to Bank One, complete a Special 1199A (green form) preprinted, under name and address of financial institution “Frost Bank formerly First City National Bank”. This special 1199A form is not to be used when beginning a new payroll deduction, since the word CANCEL is preprinted in block G.

MILITARY ALLOTMENT ELECTRONIC TRANSFER FUNDS

The agent’s instructions are to: 1. Provide the client with the Blanket Code and bank information. 2. Ask the client to provide his/her pay center with the Blanket Code and bank

information. The client’s pay center sets up the electronic transfers.

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METHODS OF TENDER As a reminder, an agent should never use his or her own personal funds to pay for a client’s premium. Additionally, National Western will not accept money orders or cashier’s checks purchased by a writing agent with a client’s funds. The following methods of premium payment will be accepted by the Company.

1. Money orders purchased by the policyholder (no more than $700 total) 2. Cashier’s checks purchased by the policyholder 3. Personal checks written by the policyholder 4. Checks issued by another company (other than the agent) “For the Benefit Of” the

policyholder DISHONORED CHECKS

• Insufficient drafts or personal checks are automatically redeposited by the Company’s bank before being returned to the Company.

• Checks or drafts returned for any reason other than insufficient funds are changed to direct pay and a billing is sent to the payor.

• Insufficient drafts must be replaced by the payor before a draft for the next month can be processed. Otherwise, an automatic premium loan will be processed for 1 month (if the policy has the automatic premium loan provision). Drafting will be resumed on the next due day.

• When a return check letter is mailed, a copy is forwarded to the writing agent if the agent’s contract is on active status.

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ANNUITY UNDERWRITING GENERAL INFORMATION The Annuity Underwriting department is divided into three sections: New Business, Policy Issue and Transfers. The New Business team reviews the annuity applications and any additional paperwork for completeness, notifies the writing agent for missing information, and inputs the data from the application into the computer system used to generate the annuity policy. The Policy Issue team performs the final quality review check, issues, assembles and mails the policy to the writing agent for delivery. The Transfer team is responsible for reviewing the transfer documents and any additional required paperwork for completeness and accuracy and for notifying the writing agent of any missing information needed to process the transfer. When the transfer documents are in good order, the Transfer team sends the completed transfer requests to the previous carrier and follows up on the request until the funds are transferred to NWL. In order to expedite your annuity business, be sure to include the required paperwork specific to the product and the state it was sold and thoroughly review the paperwork prior to submission for missing information. Missing and/or incomplete forms delay processing turn around, policy issue and payment of commissions. PREPARING FOR THE ANNUITY SALE Visit NWL’s Website Address: www.nationalwesternlife.com for access to BEACON. BEACON is a secure website that was developed for our agents to provide information and tools to assist in selling NWL annuity and life insurance products. From the BEACON website, the agent can determine what application form, other state required forms, and any additional form(s) required to sell a specific product in a specific state and more valuable information. Agents writing one of the NWL Equity Indexed Annuity (EIA) products for the first time must submit the Equity Indexed Product Agent Acknowledgement form SA-9939 with the application. The acknowledgment is kept on file at the company. APPLICATION AND OTHER STATE REQUIRED FORMS Regulations vary from state to state, some states require specific forms therefore, it is important that the agent use and submit the correct application and other required forms. Incorrect application and/or any other incorrect state specific forms will not be processed. In addition to state filed forms such as the annuity application and replacement notification, depending on the product sold, the tax status and the age of the annuitant and/or owner, additional processing forms could be required. (See BEACON for required forms by state and product).

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COMPLETING THE APPLICATION Completion of the application and any additional required forms in full is an important step in avoiding processing delays. The application is part of a legal contract and approved by the various state insurance departments. Prior to submission, review the documents thoroughly for completeness and verify that no information has been omitted. Pay close attention to the following:

• Use black or dark blue ink only when filling out the application and/or forms. Colors other than black ink do not image well. Applications completed in ordinary pencil will not be accepted.

• Do not use highlighter. Highlighter does not image and will block out crucial information needed for the contract.

• DOB of Owner if other than annuitant. • DOB of Joint Owner if applicable. • Include full name of beneficiary and his/her relationship to the annuitant. (See

Beneficiary Designation section for additional information.) • Plan Name- Provide the full Plan/Product Name • Tax Status- Check applicable box. NOTE: NWL does not issue IRC 403(b) tax

sheltered annuities. • Replacement Question (Client Response) • Include the amount of premium submitted with the application or an estimated dollar

amount of any incoming transfer. • The application is signed and dated in the town and state where the application was

written. • The application has all necessary signatures

Signature of annuitant age 18 or over. Signature of parent or guardian if under age 18. Signature of owner if other than insured. If policy is owned by a trust,

trustee(s) signature is required. Signature of joint owner if applicable. Signature of writing agent.

• Replacement Question (Agent Response) • Writing Agent Signature in “Agent Section” of the application form. • Writing Agents agent number. • Agent phone number. • If commissions are to be split, include the agent number, agent name and % of

commission for each agent. • The applicant must initial and date any change on the application. Do not use

white out.

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NOTE: IF A TRUST IS NAMED AS OWNER ON THE APPLICATION, WE REQUIRE A COPY

OF THE TRUST CERTIFICATION FORM DM-1094 OR, THE PERTINENT PAGES FROM THE TRUST, SUCH AS THE FACE (OR DECLARATIONS) PAGE, THE SIGNATURE PAGE AND ANY PAGE THAT SPECIFICALLY MENTIONS THE TRUSTEE(S) POWER TO EXECUTE INSURANCE OR ANNUITY TRANSACTIONS.

BENEFICIARY DESIGNATIONS

• The full name of the beneficiary and his/her relationship to the insured must be given. • It is essential that the full name of all beneficiaries be legibly written and spelled

correctly. • When two or more beneficiaries are to share the proceeds, percentages should follow

their names (i.e. 50%), instead of a dollar amount of the total proceeds. • A specific person should be named as beneficiary whenever possible. Some

examples of commonly used beneficiary designations are:

TYPE OF BENEFICIARY WORDING TO BE USED One beneficiary Primary: Mary Edna Doe, wife of insured Two beneficiaries Primary: John A Doe, father 50%, and Mary E Doe, mother 50%, equally, or the survivor One primary and one contingent beneficiary Primary: Mary E Doe, wife of insured

Contingent: Peter John Doe, son of insured One primary and two contingent beneficiaries Primary: Mary E Doe, wife of the insured Contingent: Peter John Doe, son 50%, and Dorothy Lynn Doe, daughter 50%, equally, or the survivor Trust: ABC Trust, under Trust Agreement dated _____________, and known as Trust No. ____________________________.

WELCOME LETTER New Business prepares a “Welcome Letter” which is sent to the applicant with a copy provided to the writing agent. The “Welcome Letter” provides important information to the applicant. The letter serves as notification that NWL received their annuity application and it is being processed, provides them with the name and phone number of the writing agent, and informs them about the policy issue process. Additionally, if the annuity application being applied for is an IRA, a product specific IRA disclosure is sent along with the “Welcome Letter”.

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MULTIPLE-STATE SALES

• National Western will accept for processing any application signed in a state where the company is licensed to conduct business, provided the plan is approved for that state, the agent is properly licensed in that state and form SA-9988 Confirmation or Sale and Delivery form (or appropriate state specific form) is submitted with the application1. This keeps in line with a citizen’s right to travel freely out of state and to enter into a contractual obligation without restrictions.

• An agent may not solicit business in a state where he/she is not licensed. The definition of solicitation must be applied in its broadest terms. An agent licensed only in state A cannot make calls, advertise, or solicit in any manner within state B.

• An approved policy must be mailed to the agent for delivery in the same state where it was written.

FUNDING THE ANNUITY POLICY NWL offers many options for funding an annuity policy. Those options include: cash with the application (CWA), rollover from an existing account, IRC section 1035 Exchange (full or partial), Direct Rollover of a qualified retirement plan into a traditional IRA, IRC 403(b) to IRA and/or a combination of the above.

IRC Section 1035 EXCHANGE The 1035 Exchange procedure is sometimes used when exchanging one life insurance or annuity policy for another, to avoid recognizing a gain in policy values as current income or to carry forward an outstanding loss to offset future gains. The cost basis of the original policy is transferred to the new policy.

• A 1035-exchange applies only to a tax-free exchange of a non-qualified life or annuity contract.

• In order for the transfer to qualify under Section 1035 from an annuity contract to an annuity contract, the ownership must be “like to like”.

• In order for the transfer to qualify under Section 1035 on a life contract to an annuity contract, the ownership and insured(s) must be “like to like”.

• If the 1035 exchange is for the full policy amount then it must be assigned to NWL. Submit an annuity application, any additional state required forms, the Authorization to Transfer funds form SA-8600, the policy to be exchanged or mark the lost policy statement on the SA-8600.

• If the 1035 exchange is for a portion of the existing policy, there is no assignment to NWL.

• Be sure to include a replacement form if the NWL annuity will replace part or the entire amount of another life insurance or annuity contract. In most states, a partial withdrawal from one life or annuity contract to purchase a new life or annuity contract is considered a replacement. Refer to the “Agency bulletin”

1 Not Applicable to Utah Residents

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section of BEACON, the “Compliance bulletin” section of the agent manual, the NMO or the state board of insurance in a particular state for further information.

DIRECT ROLLOVER A direct rollover is a direct payment of the amount of your qualified plan (“Plan”) benefits that is eligible to rollover to a traditional IRA. This type of transfer is from one qualified retirement plan to a traditional qualified IRA. .

• Submit an annuity application, any additional state required forms, the Authorization for Transfer form SA-8600.

• If the Plan is a 401(k) or other Employer owned/sponsored retirement plan, be sure to contact the plan administrator for specific distribution forms. The distribution forms should be forwarded to the plan administrator.

IRC 403(b) Rollover into an IRA IRC 403(b) funds may be rolled into an IRA if the participant has a “Qualifying Event”.

• Submit an annuity application, any additional state required forms, the Authorization for Transfer form SA-8600.

QUALIFYING EVENT- One of the three events listed below must occur for the 403(b) to be eligible to rollover.

• Applicant must be age 59 ½ or older or • Applicant is terminated from service from the employer where the IRC

403(b) was originally set up or • Disabled.

REQUIRED MINIMUM DISTRIBUTION For qualified accounts, if the annuitant is age 70 or older, he/she must satisfy the Minimum Required Distribution requirement imposed by the IRS. The distribution is not required to come from the NWL annuity but must be taken from one of the annuitant’s qualified account. The annuitant must indicate on the SA-8600 how this requirement will be satisfied. Listed below are the three ways to satisfy the RMD requirement.

• Have the RMD withheld from the rollover amount by the previous carrier. • If the RMD for the year has been satisfied, specify on the SA-8600. • Indicate RMD will be satisfied from another qualified account on the SA-

8600.

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AMENDED APPLICATIONS

• A change in plan, tax status, annuitant and/or owner information, age and/or date of birth, beneficiary, or any omission on the application will result in the contract being issued with an amendment.

• The amendment will be mailed with the contract to the agent for delivery. • The agent, annuitant and owner if other than annuitant, must sign the amendment

form 01-S002, return a copy to the Company and leave one copy attached to the contract.

• Commissions are released once the signed amendment is received by the Company. POLICY ISSUE Once the premium and any outstanding requirement necessary to issue a policy are received, the Policy Issue team performs the final quality assurance check. Once the data is verified and correct, the policy is issued. The Annuity policies are assembled and placed in NWL policy folders along with valuable information for the annuitant/owner and mailed to the writing agent for delivery. Included in the policy folder are the following items.

• Welcome to NWL- General Company information. • Annuity Buyer’s Guide. • NWL Company Privacy Policy SP-8253. • New Customer Service Options form SP-8249- Introduces the customer to the NWL

website, how to request a PIN, and introduces the AVR (automated voice response) phone system.

• Annuity Policy. • Policy Transmittal Notice for Delivery Requirements (if applicable). • Application Amendment form 01-S002 (if applicable)

IMPORTANT NOTE: In some situations, a policy delivery requirement is necessary. The Policy Issue team will generate the requirement, indicate the requirement on the policy transmittal, and mail it along with the policy to the agent to obtain the owner’s signature. If the delivery requirement is not properly executed and received by the Company within 30 days of the policy having been mailed to the agent, the Company will charge back all commissions paid on the policy, will deliver the policy directly to the owner, and may terminate the agent for breach of the agent’s contract. NOTE: All NWL Fixed Indexed Annuity (FIA) policies are issued once the

minimum premium for the product is received based upon the published FIA schedule. (See the Annuity Resource section in BEACON for FIA Issue Procedures form SA-9165 and the monthly Index calendar).

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LIFE UNDERWRITING PREPARING FOR THE LIFE SALE NON-MEDICAL RULES

• The agent should refer to the appropriate plan guidelines to determine age and amount limits. This information is also available on our Beacon website.

• Only risks that the agent believes to be insurable on a standard basis may be solicited on a non-medical basis.

• Risks known to have been declined, postponed, or rated by NWL® or any other carrier cannot be considered on a non-medical basis.

• Subsequent applications may be submitted non-medically as long as the total amount issued is within the non-medical limits.

• The agent must refer to the non-medical limit chart currently in effect for the plan of insurance being written. Special limits may apply to preferred risk plans, older age plans and for policies sold outside the United States.

PARA-MEDICAL EXAMS

• The agent should use one of the listed para-medical companies (when available) for all exams, Home Office Specimens, EKG’s, blood profiles or other required tests.

APPS (American Para Professional Systems) ONE JERICHO PLAZA JERICHO, NEW YORK 11753 PHONE : (800) 727–2101 or (516) 822-6230 FAX :( 516)822-6241 WEBSITE: www.appsnational.com EMSI (Examination Management Services, Inc.) 3003 LBJ Freeway, Suite 100 Dallas, TX 75234 PHONE: (800) 530-0560 or (800) 872-3674 FAX: (866) 728-0881 WEBSITE: www.emsinet.com PORTAMEDIC/ HOOPER HOLMES 170 MT. AIRY ROAD BASKING RIDGE, NJ 07920 PHONE : (800) 782-7373 or (908) 766-5000 FAX : (908) 953-6304 WEBSITE: www.hooperholmes.com EXAMONE (A Quest Diagnostics Subsidiary) 10101 RENNER BLVD LENEXA, KS 66219 PHONE: (877)933-9261 WEBSITE: www.examone.com

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MEDICAL EXAMINERS • Medical examiners are not appointed by the Company. The agent should use

doctors that are available through para-medical service companies. • The Company may request a specialist to perform the medical examination

when deemed necessary. • If the applicant is a member of the U.S. Military Service, the Company will

accept a medical examination from a military doctor, a physician’s assistant or an emergency medical technologist.

ATTENDING PHYSICIANS’ STATEMENTS

• Attending physicians’ statements are currently requested through our retrieval service PARAMEDS.com. Due to cost accounting, imaging and workflow requirements, we prefer to use one retrieval system and request all physicians’ statements through our office. Agents can call 718-575-2000 and request a username and password to view statuses on their cases. We encourage you to do this. Delays are not usually the fault of the retrieval company, but are usually due to physician’s priorities in handling their current caseload as opposed to their insurance business. An agent will not be reimbursed for a physician’s statement submitted directly to National Western without prior approval. Physician’s statements submitted for informal or trial inquiries will not be reimbursed.

INSPECTION REPORTS

• All Inspection reports will be ordered by the Home Office. It is best to make sure that all your clients are aware that a phone interview may be conducted, regardless of age, face amount, or plan of insurance.

CIVILIAN AVIATION

• If the application cannot be approved on a standard basis due to the proposed insured’s aviation activities, full coverage may be available for an additional premium, or the aviation exclusion rider may be issued as an alternative. The rider may be best whenever (1) the applicant’s plans are indefinite and/or the extent of his potential aviation hazard is unknown; or (2) the applicant’s ratable flying activities have been terminated within a year and the applicant no longer intends to engage in such activity.

• In general, passengers and pilots on commercial airlines are accepted standard.

• An aviation questionnaire must be completed for all applications when the applicant is, has been, or intends to be, a pilot or crew member on any type of aircraft.

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LIFE INSURANCE FINANCIAL UNDERWRITING National Western will make every effort to work with producers in placing their business, however if the amount applied for appears out of line with the applicant’s income and net worth, the underwriters will pursue additional financial information. Please be aware of the following issues when submitting an application:

• To avoid speculation, the amount of all insurance benefits must bear a reasonable relationship to the proposed insured’s income and net worth. Prudent underwriting prohibits “over-insuring” a client to protect all those involved.

• The total amount of family insurance must not exceed the proposed insured’s needs or ability to pay. As a general rule, the following multiples of income are acceptable. Amounts include all insurance in force and applied for:

Up to age 40 20 X income Ages 41-50 15 X income Ages 51-60 10 X income Ages 61-65 7 X income Ages 66 and up Individual consideration

If the amount applied for exceeds the stated guidelines, the producer should submit a cover letter with the application, explaining the need and purpose of the insurance and how the amount of insurance applied for was determined.

• For individual applicants, the annual premium should not exceed a maximum of 20-30% of their income and the face amount should be reasonable in comparison to their overall financial status and age. If the amount of premium exceeds 30% of the proposed insured’s income, the producer should submit a cover letter with the application, explaining the source of the premium and who will be paying the premium, along with how the face amount applied for was determined.

• When submitting an application for business insurance, the following information will assist you in preparing documents for the underwriters. Keyman insurance is underwritten on the basis of that person’s worth to the business with a traditional multiple for justifying coverage of between 5 to 10 times the income. Income is usually defined as salary, bonuses, deferred comp or stock options. Keyman coverage is only justified on those individuals whose loss would impair the continued profitable functioning of the business. Buy-Sell agreements should identify business owners and their ownership interests and percentage of the company. Additional information regarding the business and verification that all owners are being insured for proportionate amounts will be required.

• In estate planning, the amount needed for taxes and final expenses should be justified in a cover letter from the producer, submitted with the application, explaining the need and purpose of the insurance, along with any calculations

F-13

used to determine the death benefit. An acceptable amount of insurance for estate planning is calculated using the client’s life expectancy (not to exceed 10 years, 5 years for age 80 and up), an accumulation factor (currently 6%), the client’s current net worth and a multiplier of the future value of the estate (currently 50%). On applicants age 80 and over, the multiplier may be reduced. The client’s net worth should be documented on the state specific Financial Supplement, 01-S013-06.

• STOLI (Stranger Owned/Originated Life Insurance), IOLI (Investor Owned/Originated Life Insurance), Charitable giving premium financing and insurance applied for with the intent of selling or transferring the policy to a Life Settlement Company, Viatical Company, investor or other third party, will not be accepted and should not be submitted.

• Term insurance (OIR) on children is limited to a maximum of $50,000. Greater amounts on Cash Value plans will be considered subject to the amount in force on the parents and other children and the family’s overall financial position.

THE APPLICATION APPROPRIATE APPLICATION

• Since regulations vary from state to state, application forms are not standard. Therefore, it is extremely important that the agent choose the correct application form for the particular state in which the application is to be written.

• The application guidelines are the only source of information regarding applications. The Company updates these guidelines as needed.

MULTIPLE-STATE SALES National Western will accept for processing any application signed in a state where the company is licensed to conduct business, provided the plan of insurance is approved for that state, the agent is properly licensed in that state and form SA-9988 Confirmation of Sale and Delivery form (or appropriate state specific form) is submitted with the application. (1) This keeps in line with a citizen’s right to travel freely out of state and to enter into a contractual obligation without restrictions. The application, examination, HIV testing consent form, policy forms, or any other required forms will be those that are required for the state where the application is signed. An approved policy must be mailed to the agent for delivery in the same state where it was written.

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An agent may not solicit business in a state where he/she is not licensed. The definition of solicitation must be applied in its broadest terms. An agent licensed only in state A can not make calls, advertise, or solicit in any manner within state B. (1) Not applicable for Utah residents

COMPLETING THE APPLICATION Completion of the application in full is an important step in avoiding delays in processing your business. The application is part of a legal contract and all questions are carefully developed by NWL® and approved by the various state insurance departments. Omissions and changes to the application will result in questions by the underwriting staff and may result in delivery amendments. Prior to submitting the application the agent should make sure that:

• The application is printed in ink, preferably black. Colors other than black do not scan as well. Applications completed in ordinary pencil will not be accepted.

• Do not use highlighter. Highlighter does not scan and will block out crucial information needed for the contract.

• Indicate the plan of insurance (universal life is not a plan, NWL Life 100® is a plan), the amount of insurance desired and the planned premium. These items are necessary to code your application to the system.

• All questions must be fully and correctly answered. • The application is properly dated. • The application is signed and dated in the town and state where the application

was written. • The application has all necessary signatures.

Signature of each proposed insured age 18 or over. Signature of parent or guardian if under age 18 Signature of owner if other than insured. Signature of spouse if proposed for insurance.

• Applications without the proper signatures, place signed and dates should not be submitted.

• The agent must witness the insureds’ signatures. • The agent’s report is completed and signed by the agent. • Any change on the application must be initialed by the applicant. Do not use

white out. • The Temporary Insurance Agreement and Premium Receipt is completed and

given to the applicant if the full mode premium is submitted with the application. • The application must be signed by the agent(s) taking the application. • The names and agent numbers of those who are to be included in the commission

split should be clearly listed near the writing agent’s signature. (It is extremely helpful to the new business staff to also legibly print your name as well as your signature)

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• The agents’ account numbers and the percentages of the split should be indicated on the application. (The percentages shown will apply to the distribution of premium.)

• Applications over 30 days old, will not be accepted and should not be submitted. If an application over 30 days old is submitted a new currently completed and dated application will be required.

TEMPORARY INSURANCE AGREEMENT AND RECEIPT

• This receipt must be left attached to the application if the full first mode premium is not received. If the electronic application is used, submit the blank temporary insurance agreement and indicate “COD”.

• When the first mode premium is received, the agent must read and explain the terms of the receipt to the proposed owner. Additionally, both the agent and proposed owner must sign the receipt.

• The conditions that must be met before the Temporary Insurance Agreement is in effect are: 1. The application is fully completed, including any amendments required by

National Western; 2. the initial premium has been paid; and 3. all medical examinations or tests required by National Western are completed;

and 4. as of the date of this Agreement, the proposed insured must be insurable at

standard rates for the plan number and amount of insurance applied for.

• The Temporary Insurance will end on the earliest of the following dates: 1. the date insurance begins under the policy applied for; 2. the date this application is cancelled or declined; or 3. 60 days have passed since the date of application.

• The face amount of Temporary Insurance is the lesser of; (a) the amount of

insurance applied for; or (b) $50,000 on each proposed; or (c) $250,000 in the aggregate for all insureds listed on the application.

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BENEFICIARY DESIGNATIONS

• The full name of the beneficiary and his/her relationship to the insured must be given.

• It is essential that the full name of all beneficiaries be legibly written and spelled correctly.

• When two or more beneficiaries are to share the proceeds, percentages should follow their names (i.e. 50%), instead of a dollar amount of the total proceeds.

• A specific person should be named as beneficiary whenever possible. Some examples of commonly used beneficiary designations are:

TYPE OF BENEFICIARY WORDING TO BE USED One beneficiary Primary: Mary Edna Doe, wife of insured Two beneficiaries Primary: John A Doe, father 50%, and Mary E Doe, mother 50%, equally, or the survivor One primary and one contingent beneficiary Primary: Mary E Doe, wife of insured

Contingent: Peter John Doe, son of insured One primary and two contingent beneficiaries Primary: Mary E Doe, wife of the insured Contingent: Peter John Doe, son 50%, and Dorothy Lynn Doe, daughter 50%, equally, or the survivor One primary and unnamed children as Primary: Mary E Doe, wife of the insured Contingent beneficiaries Contingent: Children born or legally adopted of the Insured and said wife, or the survivors, equally, or the survivor. Trust: ABC Trust, under Trust Agreement dated _____________, and known as Trust No. ____________________________. Creditor ABC Bank of Austin, Texas, creditor, as its interest may appear; the balance, if any to Mary E Doe, wife. (In this situation it is preferable to name Mary as the primary beneficiary and to use a Collateral assignment after the policy has been issued.)

INSURABLE INTEREST OF OWNER AND BENEFICIARY

• An applicant may request a person other than a parent, spouse, child or grandchild to be named primary beneficiary or to own the policy. Examples of other than routine beneficiaries/owner are brothers/sisters, grandparents, cousins, aunts/uncles, charities, business partners, trust and a bank or other creditor.

• National Western Life will honor such requests when they are fully explained in the Agent’s Report or in a letter accompanying the application providing all other requirements are fulfilled. The explanation must define the relationship between the beneficiary/owner and the insured, and explain the economic loss the beneficiary would experience upon the death of the insured.

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POLICY DATING FOR LIFE APPLICATIONS

• The Policy Date is used to determine premium due dates, lapse dates, maturity dates, provision dates, and other in force policy periods. This date must not be used to determine the effective date of coverage.

• Policies issued on a military government allotment basis will be dated according to pre-arranged agreement with the agency and National Western.

• Bank draft and direct modes that are COD, sub-standard, issued with a requirement of Statement of Insurability or an Amendment will be dated 10 days in advance of the new business department mailing date.

• Prepaid policies issued standard on bank draft and direct modes will show a policy date to coincide with the approval date, provided no other date has been requested.

• Salary saving policies, COD issue, will be dated the common due date for the group that is at least 45 days after the issue date but not more than 60 days. For each month of CWA, the policy date should be advanced one month.

• Government employee allotment, COD issue, will be dated on the 1st month following the date the first allotment is to be received. Normally, will be dated on the 1st of the month that is not less than 45 days or more than 75 days from the date of allotment.

EFFECTIVE DATE OF COVERAGE The effective date of coverage is the actual date that all requirements stated in the application have been met. The effective date of coverage is the date when:

• The application is approved at the Company office in Austin, Texas; • The Company delivers the policy; • The initial mode premium has been paid, and • Each of the prior three conditions is satisfied while the proposed insured is alive

and that person’s health and insurability is as described in the application.

The effective date of coverage must not be interpreted to be the Policy Date printed in the policy.

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SUBSTANDARD RISKS

• The Company insures certain lives with an extra premium due to substandard health, occupational risk or other reasons.

• Extended insurance under the nonforfeiture options of Whole Life policies will not be granted when the table rating exceeds table two, or the flat extra premiums exceed $5.

• Since premiums for the table ratings differ by age and plan on Universal Life policies, the agent will be notified of the rating and a new proposal must be generated at the substandard rate quoted.

AMENDED APPLICATIONS

• A change in face amount, rate classification, plan of insurance, supplemental benefits; a clarification of age and date of birth, beneficiary, owner or any omission on the application will result in the contract being issued with an amendment.

• The amendment will be mailed with the contract to the agent for delivery. • The amendment form must be signed by the owner, insured (unless a minor) and

the agent, before delivery of the policy is made. • If there is no change in insurability, return one copy to the Company and leave

one copy attached to the policy. • If there has been a change in insurability, return the entire policy to the

Home Office with details of the insurability change. IMPORTANT NOTE: In some situations, a policy delivery requirement is necessary. The Policy Issue team will generate the requirement, indicate the requirement on the policy transmittal, and mail it along with the policy to the agent to obtain the owner’s signature. If the delivery requirement is not properly executed and received by the Company within 30 days of the policy having been mailed to the agent, the Company will charge back all commissions paid on the policy, will deliver the policy directly to the owner, and may terminate the agent for breach of the agent’s contract. INFORMAL INQUIRIES

Informal Inquiries submitted by email with a brief summary of an individual’s health history are accepted on a limited basis. Please contact the Marketing Department prior to submitting any informal inquiries and they will approve submission and provide instruction on how to submit informal inquiries. We do not accept Attending Physician’s Statements without a formal application being submitted.

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IRC Section 1035 EXCHANGE

• The 1035 Exchange procedure is sometimes used when exchanging one life insurance or annuity policy for another, to avoid recognizing a gain in policy values as current income or to carry forward an outstanding loss to offset future gains. The cost basis of the original policy is transferred to the new policy.

Policies may be exchanged using the 1035 procedure, only as follows:

1. Life to Life 2. Life to Endowment 3. Life to Annuity 4. Endowment to Endowment 5. Endowment to Annuity 6. Annuity to Annuity

NOTE: For purposes of exchange, universal life is considered to be an Endowment policy.

GENERAL PROCEDURE for LIFE 1035 EXCHANGES • The “Exchange” requires that the life insurance policy being exchanged, be

assigned to the Company for a new contract to be issued. • An application will be necessary along with a completed “Authorization to

Transfer Funds”, SA-8600 and any state required replacement forms. In addition submit the policy being exchanged or complete the Lost Policy Statement on the SA-8600.

• For a Life application, both the insured and owner must be the same as that of the policy being exchanged. Once the Life application is received in the Home Office and entered into the new business system, underwriting will begin. The application is subject to normal underwriting requirements. The exchange processing will not begin until the new application has been approved and any amendments required are signed and returned to the Home Office.

• As a general rule, the policy will not be placed in force until after all exchanges have been received by National Western. This practice was initiated in New Business to avoid reissues when the 1035 amounts are other than anticipated and result in an adjustment to the face amount of the policy.

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CODE OF ETHICS Many government agencies, in conjunction with the courts, impose a duty on insurers and agents to conduct their business according to a variety of laws and regulations. National Western Life (“NWL®”) takes this duty very seriously and is firmly committed to making certain that we, as a company, and the agents/brokers who distribute our products, comply with these requirements. Many of these laws and regulations deal with “market conduct,” that is, the ways that insurance companies and their agents deal with current and prospective customers. In recent years, market conduct has become a central focus of the insurance industry. In response to this attention, the American Council of Life Insurance has formed the Insurance Marketplace Standards Association (IMSA). IMSA is a voluntary group of insurance companies that aims to help its members develop sales and marketing strategies that benefit and protect the consumer. IMSA is built around six core ideals, the “Principles of Ethical Market Conduct”:

1. To conduct business according to high standards of honesty and fairness. 2. To provide competent and customer-focused sales and service. 3. To engage in active and fair competition. 4. To provide advertising and sales materials that are clear as to purpose and honest and fair as to

content. 5. To provide for fair and expeditious handling of customer complaints and disputes. 6. To maintain a system of supervision and review of honesty and fairness.

NWL® supports each of these principles and is committed to conducting its business in accordance with them. NWL® also expects its licensed agents to observe these principles in their business. ANTI-MONEY LAUNDERING COMPLIANCE ♦ All agents are required to follow National Western’s policy and procedures with respect to

compliance with all applicable U.S. anti-money laundering laws.

PRIVACY COMPLIANCE ♦ All agents are required to safeguard the privacy of NWL® policyholders. State-specific privacy

notices are available on the NWL® website, and agents are required to be familiar with the notices applicable to their state(s) as well as any applicable procedures at all times.

SUITABILITY ♦ All applicants for annuities must complete the Annuity Suitability Questionnaire.

Please consult compliance bulletins for details. ADVERTISING ♦ All advertising pieces referencing NWL® products must be reviewed by NWL® prior to use.

Agents may fax advertisements to the Marketing Department at (512) 339-8350. ♦ Please refer to the Advertising Approval Procedures and Guidelines section on page C-5.

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SOLICITATION Once an agent has obtained the appropriate state license and has been properly appointed by NWL®, the agent will be ready to present NWL® product information. 1. Before commencing a life insurance sales presentation or taking an application, the agent must

first inform the prospective purchaser that the agent is acting as an insurance agent appointed by, and give the prospective purchaser the full name of, National Western Life Insurance Company.

2. Agents are required to leave copies of the appropriate brochure and the disclosure statement at the end of said brochure with each applicant.

3. When making a sales presentation, the agent must always conduct himself/herself in an ethical manner. The agent must not violate the Unfair Trade Practices Act or similarly named act of the state in which they are licensed.

4. Agents are required to adhere to the following: ♦ The agent cannot make any misrepresentations or misleading, false, or deceptive statements. ♦ The agent cannot use words or phrases that exaggerate any benefits or limitations, exceptions,

or reductions of benefits. ♦ The agent cannot describe any policy provision or benefit without fairly and accurately

describing the limitations, exceptions, or reductions of benefits. ♦ The agent cannot use words or phrases that would cause applicants to believe that they might make a profit from being hospitalized. ♦ The agent cannot use any insurance words, phrases, or other terminology that the applicant might not clearly understand. ♦ The agent cannot make any unfair or incomplete comparison of other insurers, their policies,

benefits, agents, services, or method of marketing, or compare unlike policies. ♦ The agent cannot make an impression to prospective insureds that any division or agency of the state or federal government endorses or accredits the insurance product. ♦ The agent cannot represent that the insurance product is an introductory, initial, or special offer or that the applicants will receive substantial advantages given only to a specified group of individuals, unless this is fact. ♦ The agent is prohibited from making any statement or implication to the effect that only a

specific number of polices will be sold or that it will be sold for a limited time, unless this is fact. ♦ When the agent establishes contact with a person because of acquiring that person’s name from

a lead-generating device, the agent will disclose that fact in the initial contact with the person. ♦ The agent cannot use the existence of any state’s Guaranty Association for inducing the purchase of insurance. ♦ The agent cannot knowingly lead applicants to believe they will receive something other than life insurance or annuities. The agent must always identify the product as “life insurance” or an

“annuity.” ♦ The agent cannot identify himself/herself as an estate planner, financial planner, investment advisor, or financial consultant unless the agent is so designated by the appropriate licensing

agency/organization. ♦ The agent cannot use senior-specific certifications or professional designations in contravention

of state law or department of insurance prohibition. ♦ The agent cannot present policy cash values showing guaranteed and nonguaranteed elements unless these cash values are shown with equal prominence and are contained within the same policy presentation.

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♦ The agent cannot compare life insurance policies or cash values to savings, savings accounts, stocks, bonds, or any other financial instrument or investment so that it may mislead a person as to the true nature of life insurance, surrender values, or other policy benefits. ♦ The agent cannot use terms such as “deposit,” “deposit premium,” “investment,” or similar

misleading or confusing terms when referring to amounts that are in fact premiums for life insurance coverage.

♦ The agent cannot use life insurance indexes that are misleading in comparing life insurance policies.

♦ NWL® expects the agent, throughout the sales process, to focus on the customer’s insurable needs and financial objectives. NWL® also expects the agent to ensure that the product being sold is appropriate for that customer. The agent is encouraged to use Form #SA-8844 (Insurable Needs and Financial Objective Analysis) to aid in obtaining relevant information.

♦ The agent is encouraged to use other fact-finding tools for determining customers’ insurable needs and financial objectives.

♦ The agent may contact the Marketing Department with questions or comments about the use of fact-finding tools for the determination of insurable needs and financial objectives.

♦ The agent is prohibited from “bashing,” or the making of unfair or incomplete comparisons regarding other insurers or their products.

♦ By law, the insurance agent is prohibited from making misleading, derogatory, false, or maliciously critical statements about the financial condition of another insurance company. This includes repeating market rumors or questioning a competitor’s solvency.

REPLACEMENT ♦ Agents must not replace life insurance policies and annuity contracts without first

communicating to the customer the information needed to determine whether such replacement may be appropriate.

♦ Agents must comply with all applicable state requirements regarding replacement of life insurance and annuities. Questions regarding these requirements may be directed to the New Business Department.

♦ Agents are strictly prohibited from “twisting.” Twisting means misrepresenting a policy or misstating the facts or giving an incomplete comparison of policies to induce the insured to give up a policy in one company for taking insurance with another company.

♦ Churning is the practice of inducing an insured or annuitant to purchase a new life insurance or annuity policy using values of an existing life insurance or annuity policy, including cash values, or dividend values done for the sole purpose of earning new first year commissions or other compensation that results in no benefit to the customer. NWL® strictly prohibits churning.

CLAIMS In order for NWL® to comply with the requirements of the Unfair Claims Settlement Practices Act, which all states have adopted in some form, it requires agents to follow certain procedures so that the Home Office can process claims in an efficient, timely, and compliant manner. For specific procedures, please refer in this manual to the section on Policy Benefits.

A. Proper Claims Practice: Agents must adhere to the following procedures:

1. All claim questions, materials, and information given to an agent by the policy holder must be reported and/or submitted to the Home Office Policy Benefits Department promptly upon receipt of the information. NWL® records all notifications of claims to

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assure that it complies with state regulatory requirements, which state generally that the Company must acknowledge a claim within 15 days of notification.

2. Agents must not commit NWL® to the payment of a claim by promising that a claimant will receive a certain benefit amount or coverage. Agents must refer the claimant to the Home Office concerning these matters.

3. All claim forms must be ordered from the Home Office. 4. All claim forms must be fully completed by the beneficiary and returned to NWL®’s

Home Office in Austin, Texas, by the beneficiary or the agent. a. It is the policyholder’s (and/or the beneficiary’s) responsibility to collect and submit all

information requested by the Home Office Policy Benefits Department. This includes taking the Attending Physician’s Statement form to the policyholder’s physician, obtaining requested information, etc.

b. Any questions the beneficiary may have during this process should be directed to the Home Office. Always refer the policyholder to the Policy Benefits Department, as necessary.

B. Improper Claims Practice

Any of the following acts are improper claims practices. They include, but are not limited to, the following:

1. Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to the coverage at issue;

2. Failing to inform NWL®’s office, with reasonable promptness as specified above, of pertinent communications with respect to claims arising under NWL®’s policies;

3. Attempting to settle a claim instead of referring the claimant to NWL®’s Home Office; 4. Advising the policyholder to submit false claims to the Company; 5. Altering a claim form or other forms submitted with a claim.

COMPLAINT HANDLING PROCEDURE A complaint is defined as any oral or written communication representing dissatisfaction regarding any area of the insurance field. Various departments of NWL® handle Consumer and Insurance Department complaints. NWL®’s Complaint Committee, or its representative, gathers the information necessary for analyzing and monitoring complaints.

1. The Compliant Committee, or its representative, will also keep track of complaints by state, agent, and nature of the complaint to detect, correct, and monitor problem areas or trends.

2. Most states require that an agent’s statement relating to each complaint be provided and that the insurers respond within a certain period, which may vary from 7 to 15 days. Therefore, when any NWL® Department requests an agent’s statement, it must be signed, dated, and returned promptly within the time requested. Failure to do so could result in the agent’s termination for cause.

CONTINUING EDUCATION ♦ Distributors and Agents are encouraged to participate in continuing education programs

applicable to the sale of life insurance and annuities. ♦ Failure to participate adequately in continuing education programs may result in loss of the

agent’s state license and therefore termination of the agent’s appointment with NWL®.

Documents

AGENT PROCEDURE MANUAL NWL - National Western Life · PDF file♦ Witness any signature relating to the Company’s business that was not affixed in the agent’s presence. ♦ Publish