SecurePlus Provider Indexed Universal For Agent Use Only- Not For Use With the Public TC28713(0506)

SecurePlus ProviderIndexed Universal

For Agent Use Only- Not For Use With the Public TC28713(0506)

For Agent Use Only-Not For Use With the Public


SecurePlus Provider

• Why IUL?• The Basics of Indexed Crediting• What is SecurePlus Provider?• Policy Mechanics – Premium Flow• Crediting Strategies• Policy Loans• SecurePlus Prospects• Available Riders• Summary

SecurePlus Provider Indexed Universal Life (UIL), form series 8212/8212D(0305), is underwritten by Life Insurance Company of the Southwest, Dallas, Texas. Riders are optional, may require an additional premium and may not be available in all states.


WhyIUL?


IA Sales are exploding!IA Sales are exploding!

$27.2 billion in 2005

Why? – Consumers are looking for “safe money places” with the upside

potential for greater interest than with fixed annuities

Advantage Index Product Sales Report – 4th Quarter 2005, February 2006

Why IUL?


Why IUL?

• Flexible premiums, adjustable benefits

• Interest Crediting Strategies

– Potential to significantly outperform Fixed ULover the long-term

• Appeals to a growing segment of the market


S&P 500 IndexS&P is a general indicator used to measure overallLarge Cap performance of U.S. stock market

Index performance is only used for measurement– An investment cannot be made directly into an index

LSW invests premium received:Large portion is directed to a portfolio of Government Bonds, Corporate Bonds and Mortgages(providing for the guarantees)

Small portion is directed to purchase options

“Standard and Poor’s®,” “S&P®,” “Standard and Poor’s 500,” and “500,” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by National Life Insurance Company. The product is not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing in the Product.

The S&P Composite Index of 500 stocks (S&P500®) is a group of unmanaged securities widely regarded by investors to be representative of large-company stocks in general.


S&P 500 Performance Compared to IUL Performance

IUL S&P 500


IndexedCrediting


The Basics of Indexed Crediting

• Index – For SecurePlus Provider, the index is the S&P 500®

• Indexed Segment – A specific “bucket” of money which earns indexed interest credits

• Indexed Interest – The interest credit earned by an indexed segment for a given year


• Fixed-Interest Strategy – uses an interest rate declared by the Company

• Point-to-Point Strategy – compares the Ending Index Value to the Starting Index Value

• Point-to-Average Strategy – compares the Average Index Value to the Starting Index Value



• Starting Index Value - The value of the Index on the first day of the year-long index crediting period

• Ending Index Value – The value of the Index on the last day of the year-long index crediting period

• Average Index Value – The average daily value of the Index over the 12 month index crediting period

• Annual Reset – at the end of a Policy Segment Year, the Starting Index Value is set equal to the prior year’s Ending Index Value



• Participation Rate – The percentage of the Annual Index Growth that the policyholder is eligible to receive in a given year, subject to application of the Cap

• Cap – The maximum indexed interest credit the policyholder is eligible to receive in a given year, subject to the Participation Rate

• Floor – The minimum indexed interest credit the policyholder is eligible to receive in a given year



1. Calculate the Annual Index Growth

2. Indexed Interest Credit

3. Multiplying this by the Participation Rate

4. Result can be no higher than the Cap and no lower than the Floor



SecurePlusProvider


SecurePlus Provider

• LSW’s next-generation, highly competitive Indexed Universal Life (IUL) product

• A unique and flexible package

• Combines living benefits with LSW’s indexed product expertise

• A product worth getting excited about


SecurePlus Provider

Issue ages: 0- 85 (age last birthday)

Minimum Face Amount: $25,000

Rate Classes: Preferred NonTobacco

Verified & Express Standard NonTobacco

Preferred & Standard Tobacco

Substandard: Table ratings & flat extras available on

Standard NonTobacco and Tobacco

Minimum Premium: $25.00 / month

Surrender Charge Schedule: Ten-year declining charge

Account Value Enhancement: 1.25% beginning at the end of policy year 10

Policy Loans & Withdrawals: Available after the first policy year

(Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event.)


PolicyMechanics


Premium Flow

1. Premium flows into Basic Strategy

2. Money in excess of anticipated charges swept

3. Sweep dates - 21st of each month

4. Excess funds transferred to chosen interest option(s)

Policy Mechanics



Basic Strategy

• Premium payments are credited to the Basic Strategy

• Fixed crediting rate (2% minimum)

• Monthly policy charges taken from Basic Strategy

• Minimum Value = 12 months of policy charges

• On the 21st of each month, excess funds are transferred (“swept”) to the three interest crediting strategies

• Allocations for future funds can be changed at any time


CreditingStrategies


Fixed-Interest Strategy

• Each transfer creates a new segment

• Each segment has a length of five-years

• 2% minimum interest crediting rate

• Crediting rate for segment subject to reset annually, but anticipated to remain level for full five years

• If crediting rate on segment declines, policyholder has option to transfer funds out

• At the end of five-year term, value is transferred back to Basic Strategy for reallocation


Point-to-Point Strategy

• Each transfer creates a new five-year segment• Index growth calculated annually by comparing

ending S&P 500® value to starting value• Participation Rate, Cap, and Floor applied to Index

Growth to determine annual interest credit• 100% Participation Rate, varying Cap, 0% Floor,

and an Annual Reset



• Participation Rate and Cap are set annually, in advance for each segment

• 2% compounded minimum interest rate over five-year term (10.4%) – guaranteed



Point – To – PointStart Value 1000End Value 1200

S&P 500® Increase 20%

Participation Rate 100% Cap 12%

Interest Credit = 12%

Hypothetical Example

Step 1. Measure the S&P 500® on day of sweep

Step 2. Measure the S&P 500® one year later

Step 3. Determine if there is an increase

Step 4. Apply the Participation Rate, Cap & Floor

1/21/20061/21/2005

1200

1000



Point-to-Average Strategy

• Each transfer creates a new five-year Segment• Index growth calculated annually by comparing starting

S&P 500® value to average daily value• Participation Rate, Cap, and Floor applied to Index

Growth to determine annual interest credit• No Cap, varying Participation Rate, 0% Floor, and an

Annual Reset



• Participation Rate and Cap are set annually, in advance for each segment

• 2% compounded over minimum interest rate over five-year term (10.4%) – guaranteed



Point – To – AverageStart Value 1000

“Average” Value 1100

S&P 500® Increase: 10%

90% Participation RateNo Cap

Interest Credit = 9%

Hypothetical Example

Step 1. Determine S&P 500® value on day of sweep

Step 2. Average the daily S&P 500® values for the year

Step 3. Determine if there is an increase

Step 4. Apply the Participation Rate, Cap and Floor


Average 1100

1/21/2005 1/21/2006

1200

1000


Interest Strategy Considerations

• Point-to-PointSensitive to short-term market movement - both positive or negative

• Point-to-AverageLess sensitive to short-term market moves – more sensitive to overall trend

o Single Premium% to Fixed Interest (to cover future contract charges)


PolicyLoans


Variable Loan Option

Policy loans and withdrawals will reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrawals up to the basis paid into the policy and policy loans thereafter would not create an immediate taxable event, but substantial tax ramifications could result upon policy lapse or surrender. If the policy were classified as a Modified Endowment Contract (MEC) all distributions would be considered taxable income.

Variable loan rate subject to change on anniversary

Variable Loans - Loan amount does not reduce the Fixed Interest or Indexed Account values

Loaned funds continue to earn interest (including indexed credits) as if no loan had occurred


Fixed Net Cost Loan Option

Policy loans and withdrawals will reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrawals up to the basis paid into the policy and policy loans thereafter would not create an immediate taxable event, but substantial tax ramifications could result upon policy lapse or surrender. If the policy were classified as a Modified Endowment Contract (MEC) all distributions would be considered taxable income.

Provides a true “wash loan”

Available at the beginning of year 10

100% of loaned amount is eligible

Loan interest is credited and charged on the policy anniversary

Contractually guaranteed benefit in contract


Available Riders


SecurePlus Provider Riders

Accelerated Benefits– Terminal Illness– Chronic Illness– Critical Illness

Accidental Death Benefit

Children’s Term

Disability Income2-year

5-year

Extension of Benefits

Guaranteed Insurability

Long-Term Care

Other Insured

Unemployment

Waiver of Target Premium

Overloan Protection NEW!

Riders are optional, may require an additional premium and may not be available in all states. Use of living benefits riders reduce the policy’s cash value and death benefit and may result in a taxable event.


• Terminal Illness resulting in death within two years

• Lump-sum distribution (discounted from death benefit)

• Funds can be used for anything

• No additional cost

Policy form series no. 8052(0798)

Accelerated Benefits Rider 1


• Chronically ill

• Unable to perform 2 of 6 ADLs or cognitive impairment

• 90-day waiting period

• Max. monthly benefit calculated as 2% of the net death benefit (actual payment is discounted)

• Must be in force for two years before benefits become available

• Funds can be used for anything

• No additional costPolicy form series no. 8095(0399)



• Activities of Daily Living• Bathing

• Continence

• Dressing

• Eating

• Toileting

• Transferring

• Cognitive Impairment

Short-term or long-term memory impairment

Loss of orientation to people, places or time

Deductive or abstract reasoning impairment



• Critical Illness• Heart Attack• Stroke• Cancer*• End stage renal failure*• Major organ transplant• ALS (Lou Gehrig’s disease)*• Blindness

• Lump-sum distribution (discounted from death benefit)• Funds can be used for anything• No additional cost

*Upon diagnosisPolicy form series no. 8165(0703) * Upon diagnosis



• Chronically ill

• Unable to perform two of six ADLs or cognitive impairment

• 90-day waiting period

• Max. monthly benefit of 2% of death benefit for nursing home or home health care or 1% for adult day care

• Funds must be used for long-term care costs

• Premium remains level

• Policy premiums or monthly charges are waived while LTC benefits are being paid

• Issue ages 0 - 70May not be available in all states. Rider name may vary by state. Policy form series no. 8096(0899)

Long-Term Care Rider


• Provides LTC benefits after ABR2 or LTC Rider benefits have been exhausted

• Max. monthly benefit of 1% of initial face amount for nursing home or home health care or .5% for adult day care

• Funds must be used for long-term care costs

• Benefits are paid for life

• Premiums remain level

• Inflation protection available

• 5% annual compounded increase

• Starting at policy issue

• Issue ages 0 - 70

May not be available in all states. Rider name may vary by state. Policy form series no. 8097(0899)

Extension of Benefits Rider


• Two-year payout period

• Available to both Primary Insured and Primary Other Insured

• 3-month waiting period

• Benefits paid retroactively

• Own occupation

• Min. monthly benefit = $300

• Max. monthly benefit = $2,000


• Issue ages 18 – 55

• Some occupations are ineligiblePolicy form series no. 8054(0798)

Disability Income Rider


• Five-year payout period

• 6-month waiting period

• No retroactive benefits

• Own occupation first 2 years ~ any occupation suited for thereafter

• Min. monthly benefit = $300

• Max. monthly benefit = $2,000



Disability Income Rider


Waives the policy premium when the insured is totally disabled

6-month elimination period

Premiums remain level

Issue ages 15 - 55


Waiver of Target Premium Rider (WTP)


• Low-cost renewable term insurance

• Spouse

• Child

• Business Partner

• Min. amount = 25,000

• Max. amount = base policy face amount

• Rider stays in force to other insured’s age 100 as long as base policy remains in force

• Issue ages 0 - 85Policy form series no. 8053(0798)

Other Insured Rider


• Provides term insurance on all of the insured’s children until age 23

• Coverage per child:

• Min. = $5,000

• Max. = $25,000

• New children added automatically

• Convertible to whole life or UL at any time or for double the rider face amount at age 23, marriage, or death of the primary insured

• Issue ages 15 days - 17 years


Children’s Term Rider


Accidental Death Benefit Rider1

Guaranteed Insurability Rider2

Unemployment Rider3

Other Riders

1 Form series 8050(0798), 2 Form series 8051(0798), 3 Form series 8058(0798)


NEW! Overloan Protection Rider

Riders are optional, may require an additional premium and may not be available in all states.

To prevent a tax liability from a policy loan

Policy becomes “paid-up” at the point that the policy is about to lapse

Features:

Age 75 or greater and policy in force for at least 15 years

Policy in the corridor

Loans at least equal to 95% of policy’s accumulated value

Not available on CVAT

No additional cost until the rider is exercised

Policyholder will be notified when eligibility requirements are met


Additional Enhancements


Additional Enhancements

Surrender Charge Cap

Additional Point-to-Point Strategy NOW available


Prospects


SecurePlus Provider Prospects

Individuals

Death benefit protection with tax deferred cash accumulation

Retirement Income

Funding Education Costs

Emergency Fund


Individuals

Protection of existing assets from erosion due to final expensesLong-term care expense reimbursement through the LTC riderAcceleration of the death benefit in cases of chronic or terminal illness through the ABR riders



Business Market

Buy-Sell Agreements

Executive Bonus Plans

Non-Qualified Deferred Compensation

Key Employee Protection



Estate Planning

Management of Estate Taxes

Settlement Costs

Probate Expense or Estate Administration Costs

Liquidity to Protect Assets from Forced Sale



Summary


SecurePlus Provider

Options – provide the best plan for your clients

Three interest crediting strategies:

1. Point-to-Point (2 options)

2. Point-to-Average

3. Fixed Interest

Total customization with available riders

Two death benefit options

Two loan options


Guarantees* – provide certainty in an uncertain world

100% Participation Rate (Point-to-Point)

No Cap (Point-to-Average)

2% minimum interest rate on Basic and Fixed Interest strategies

Guaranteed interest of at least 2% annually over a five year segment for indexed strategies

Five-year policy protection period

SecurePlus Provider

*Guarantees are dependent upon the claims-paying ability of the issuing company. *Guarantees are dependent upon the claims-paying ability of the issuing company.


SecurePlus Provider

Flexibility – provide the ability to meet your clients changing needs

Powerful loan options

1035 Exchanges with existing loans

Access to death benefit for “Living Benefits”


Value – competitive premiums with potential for excellent performance

Ten-year declining surrender charge

125 bps credited to accumulated cash value starting at the end of contract year ten

Revolutionary no-cost living benefit riders

SecurePlus Provider


The Competition

Competition

AmerUS / Indianapolis Life

Allianz

American General

F & G

National Western Life

Pacific Life

Union Central


Competitive Advantages

• High lifetime rolling targets

• Ten-year surrender period

• No surrender charges on excess premium

• Three interest crediting strategies

• 125 bps account value enhancement

• Revolutionary rider suite

• 1035 Exchanges with loans (50%)

• Marketing materials

• 2 Loan options


SecurePlus Provider RatesAs of August 1, 2006

Point-to-Point Strategy Participation Rate

Guaranteed 100%

Cap

12%

Illustrated – 8.0%

Participation Rate

Guaranteed 140%

Cap

10%

Illustrated – 7.4%


Participation Rate

130%

Cap

Guaranteed No Cap

Illustrated Rate – 8.9%

Fixed Interest Rate – 4.75 Basic Strategy - 4.75%

Illustration system will automatically “blend” rate based on allocation chosen

Minimum Guaranteed Cap 3%; Minimum Guaranteed Participation Rate 30%*The 4% planned rate is not guaranteed. Actual interest credited may be higher or lower*The 4% planned rate is not guaranteed. Actual interest credited may be higher or lower..

A

B

Thank You!

For Agent Use Only-Not For Use With The Public

Documents

SecurePlus Provider Indexed Universal For Agent Use Only- Not For Use With the Public TC28713(0506)