January 2013 Producer Use Only Page 1 of 8

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1 Foresters Contracting & Compensation Reference Guide Contracting Q. How does a producer become contracted with Foresters? A. Contracting with Foresters is easy. All it takes is to complete the contract and appointment package, forward to your upline for completion and then submit to Foresters by at ezcontract@foresters.com or by fax to Q. What forms need to be completed in order to be contracted and where can they be found? A. The complete contract package can be found in the Get Contracted section of the producer website under Toolbox. Q. Are any state forms required to become contracted with Foresters? A. State appointment forms are not required, except in the state of Hawaii, as the appointment process is conveniently handled by Foresters directly with the departments of insurance. Q. Where should contracting forms be submitted to once they have been completed? A. Forms should be collected by the upline for completion. Refer to the Three Easy Steps to Get Contracted with Foresters document, available in the Get Contracted section of the producer website for complete submission information. Q. How does a producer know if Foresters has received their contracting forms? A. Foresters will send a welcome to new producers with a copy to their upline. This will include the producer ID and also provides information about Foresters producer website. Q. When and how do new producers gain access to the Foresters producer website? A. Information is provided about Foresters products, services and the producer website in an that notifies a producer and their upline that Foresters has received and is processing their Application for Contracting and Appointment. Please allow 48 hours from receipt of notification before accessing the site. Q. What are the steps involved in the contracting process? A. Foresters performs background and Vector One checks on the producer, reviews and validates licensing information, reviews and validates E & O coverage, and verifies the completion of Anti-Money Laundering Training. January 2013 Producer Use Only Page 1 of 8

2 Q. What is Vector One? A. It is a service used by insurance companies to register the names of producers/agencies who terminate from an insurance company with an unpaid true commission debt. Q. How long will the background check take? A. The generation and review of the background check report can take anywhere from 5 to 10 business days, depending on the complexity of the producer s background. Q. Do I need to take or show proof of Anti Money Laundering (AML) Training? A. Yes. Federal law requires that all insurance producers complete Anti Money Laundering Training. If you have not completed this training, you are required to take this training through Foresters on-line training course. The course is available without charge and can be accessed through the Producer training portal. You will be provided with an option to print a certificate of AML completion following the successful completion of the course. Q. Are producers required to have Errors & Omissions (E&O) insurance to write business with Foresters and if yes, where can a producer obtain E&O insurance coverage? A. Yes, E&O coverage is mandatory. Producers and GAs can obtain coverage through Foresters group plan, underwritten by CalSurance at competitive rates by visiting Questions regarding coverage or enrollment may be directed to: CalSurance Customer Service Department 681 S. Parker Street, Suite 300 Orange, CA Phone: or info@calsurance.com Q. How long will it take to get contracted with Foresters? A. Providing all required documents are received, including a favorable background check, you can be contracted as early as 4 business days from time of the contracting forms receipt. Q. Is there something that the producer can do to speed up the contracting process? A. Yes. Ensure that all forms are fully completed and signed where required. Be sure that proof of E&O coverage has been submitted (if coverage is with a carrier other than CalSurance) and proof of AML training (or completion of this as early as possible). Refer to the Three Easy Steps to Get Contracted with Foresters document, available in the Get Contracted section of the producer website, to help guide you through the requirements. January 2013 Producer Use Only Page 2 of 8

3 Q. How will a new producer and their upline be notified when a producer is contracted with Foresters? A. Once the background check has been approved and all requirements are received, the individual will be sent an , with a copy to the upline, advising that the individual has been contracted by Foresters. Q. Does a producer or their upline need any other licenses aside from their resident state? A. Producers and uplines wishing to sell for Foresters in any of the states currently available, are required to have either a resident or non-resident license in state(s) in which they intend to write business. Producers and uplines writing business in Connecticut, Massachusetts and New Mexico must secure a fraternal license (a life license in these states is not acceptable when writing business for a fraternal organization). Uplines must hold a valid fraternal license in the state of Massachusetts and New Mexico in order to receive any overrides. Q. What is the process to obtain a Fraternal License? A. Please refer to Get Contracted for the fraternal application forms and instruction for Connecticut, Massachusetts, and New Mexico. Q. Can producers sell in all states? A. Foresters will continue to launch its product offerings to new states as approvals are received. If a producer plans to do business in a strict state; Pennsylvania, Louisiana, Massachusetts, New Mexico or Connecticut, they must be contracted and appointed with Foresters before engaging in sales activities. For all other states, if a producer is licensed in that state, we will automatically process the state appointment when the first piece of business is received. Watch for communications on new state availability. Q. Can Foresters pay commissions to a Producer's corporation? A. Yes, as long as the corporation is life licensed, and the Contracting Agreements are completed in the corporate name and signed by a principal of that corporation. Q. Can multiple producers submit business through the one corporate code? A. Each producer writing for a corporation will be given their own producer ID under that corporation's ID. You cannot write business using a corporate ID. Q. Can a producer assign their business to a third party? A. No. Foresters does not support assignment of commissions. Q. Will an upline automatically receive overrides for their producers? A. A license (resident or non-resident) is not required in states where the Producer License Modeling Act (PLMA) has been adopted. In order to receive overrides for business written in the following states, you must have a valid (resident or non-resident) license. January 2013 Producer Use Only Page 3 of 8

4 Florida, Georgia, Kentucky, Massachusetts, Montana, New Mexico, Pennsylvania, Virginia, West Virginia. Incorporated insurance agencies in the State of Florida do not have to be licensed to receive override commissions. If your agency is not incorporated you will require a resident or non-resident license to receive overrides. Please refer to Override Commission Notice found in Get Contracted section for more details. Q. How are changes to personal information submitted? A. Changes to personal information can be submitted to Foresters via: AgencyAdmin@Foresters.com Fax: Or Mail to: Foresters P.O. Box 179 Buffalo NY Q. How are changes to producer bank accounts submitted? A. Complete the Direct Deposit Change form available on the producer website (My Business/Compensation Details or, Toolbox/Get Contracted), attach a sample of check marked Void and fax to (Attn: Compensation Services). Compensation Q. When are commissions paid? A. Commissions can be paid either daily or weekly by direct deposit (EFT) to the producer s bank account. The weekly commission run is every Wednesday and the bank deposit is generally processed on Fridays, depending on your bank. Smaller banks and Credit Unions may take an extra day. Q. Is there a minimum amount of commissions payable in a given pay period? A. The minimum payment is $50. Any amount below $50 will accrue until the minimum payment is reached. Q. What are First Year Commissions (FYCs)? A. FYCs are a percentage of the first year premium payable to the writing producer. January 2013 Producer Use Only Page 4 of 8

5 Q. What are First Year Overrides (FOVs)? A. FOVs are a percentage of the first year premium payable to the upline(s) and the business channel within the same hierarchy as the writing producer. Q. When are first year commissions paid on a certificate? A. Generally, FYCs are paid when the first premium has been paid where the certificate is issued standard as applied for and all requirements have been received by Foresters. FYCs are paid at delivery upon submission of outstanding requirements such as life amendments, premium shortages greater than $5.00, as well as COD cases. Q. Is my commission rate the same for all product types? A. No. Commission rates vary by product and your commission schedule should be consulted for rates and additional information. Q. How is the applicable commission rate for the producer and upline determined for each certificate? A. The application signed date determines which Commission Schedule record is used in order to apply the correct rate for first year and renewal year commissions. If a producer or upline has changed contract levels, the application signed date is compared to the effective dates of the multiple Commission Schedule records to determine the appropriate commission rate. Q. How does the annualization dollar and percentage cap apply to my advance on business submitted? A. Compensation is calculated based on a pre-determined percentage of the annualized premium, up to a maximum dollar amount on a per case basis. The remaining first year compensation will be paid on an as earned basis. The cap does not apply when the full annual premium is paid. Q. How is compensation paid when there is a change in the producer s annualization cap or when the advance is changed from as earned to annualize? A. Compensation will be paid based on the issue date of the certificate (not the application signed date). Q. How can a producer change their contract level with Foresters? A. The upline or Agency Manager should be consulted by the producer to address this issue. Once a decision is reached, the required paperwork should be submitted to AgencyAdmin@Foresters.com for appropriate action. Q. Where can a producer find the details of their compensation? A. Commission statements are available on the producer website only and can be accessed by producers who have their User ID and Password. Uplines who have producers reporting to them will be able to view their own and their producers statements. January 2013 Producer Use Only Page 5 of 8

6 Q. How is compensation paid on business written on producer s life, their spouse/partner or their children/step-children or, if the producer is the payer, policy owner or beneficiary? A. This is considered controlled business and compensation will be paid as earned regardless of the producer s compensation arrangement. Q. How is compensation paid if a member pays by quarterly or semiannual PAC or billing? A. Compensation will only be paid advanced if member pays by monthly mode. Payment by quarterly or semi-annual mode will generate as earned commission, regardless of the producer s compensation arrangement. Q. Can compensation be paid to an agency name? A. Yes, FYCs can be paid as long as the agency is licensed and appointed in the appropriate state(s). A license (resident or non-resident) is not required in states where the Producer License Modeling Act (PLMA) has been adopted. In order to receive overrides for business written in the following states you must have a valid license: Florida, Georgia, Kentucky, Massachusetts, Montana, New Mexico, Pennsylvania, Virginia, West Virginia. Incorporated insurance agencies in the State of Florida do not have to be licensed to receive override commissions. If your agency is not incorporated you will require a resident or non-resident license to receive overrides. Please refer to Override Commission Notice found in Get Contracted section for more details. Q. Can a producer assign personal compensation to an unlicensed corporation? A. No. Foresters does not support assignment of commissions. Q. How can I change my banking information? A. Complete the Direct Deposit Change form available on the producer website (My Business/Compensation Details or, Toolbox/Get Contracted), attach a sample of check marked Void and fax to (Attn: Compensation Services). Q. How is commission charged back if a certificate lapses, cancels or is surrendered in the first year? A. The amount charged back is the difference between the commission advanced less the portion of commission earned on premiums paid to Foresters. If the producer has been paid as earned, no first year commissions are charged back, unless the certificate is not taken or rescinded. January 2013 Producer Use Only Page 6 of 8

7 Q. When first year commissions are charged back on a lapsed, cancelled or surrendered certificate and a producer now has a debit balance, will funds be taken out of the producer s bank account? A. No. Future first year commissions on new business and renewals will be used to offset the debit balance. Q. How is first year commission credited on a reinstatement? A. The amount of first year commission charged back at the time of lapse will be re-credited to the producer and the uplines when the certificate is reinstated. Q. How is compensation paid on a certificate that is replacing an existing Foresters certificate? A. First year compensation on replacements of any business from products provided by Foresters is based on the increase in annualized commissionable premium only. This is applicable to all replacements identified as such at the time of submission and for partial or full term conversions where the old certificate has been in force for less than 24 months. Any certificate that issued within 13 months of a lapsed certificate on the same life (either pre- or post-application date) will be considered a replacement and first year compensation will be reduced. No first year compensation is paid on internal rollover money. Additional information regarding Replacement Rules can be found in the Compensation Details section. Q. What is the contact information for the Compensation Services Team? A. FieldComp@Foresters.com Fax: Or Mail to: Foresters P.O. Box 179 Buffalo NY Attn: Compensation Services Q. What is Vector One? A. It is a service used by insurance companies to register the names of producers/agencies who terminate from an insurance company with an unpaid, true commission debt. Q. When is a producer registered with Vector One? A. A producer who is terminated and has a debt balance will be registered with Vector One. Q. What type of payments can be used to repay debt? A. Debt repayments can be made by personal check and credit card (Visa, MasterCard and Discover). Cash or debit card payments are not an option at this time. January 2013 Producer Use Only Page 7 of 8

8 Q. How do I know how much debt I owe? A. To review and clarify your current balance, you can access your latest commission statement by logging on to the producer website and selecting My Compensation to launch FASAT. Under Reporting, click on Report Repository and select the commission statement for the desired pay period. You can also use the Foresters Debt Report. Select My Compensation to launch FASAT. Under Reporting, click on Report Repository. Select Foresters Debt Report from the Display Report drop down box. Select the Foresters Debt Report for the desired period. Q. Can I monitor how long my debt has been outstanding? A. Yes. Foresters Debt Reports and Foresters Debt Roll Up and Recovery Reports can be found on the producer website. Select My Compensation to launch FASAT. Under Reporting, click on Report Repository. Select Foresters Debt Report or Foresters Debt Roll Up and Recovery Report from the Display Report drop down box. Select the report for the desired period. For more information on these reports, please see Compensation Details under My Business. In the Navigation FASATweb section you will find a link to the Foresters Debt Management Program document which contains step by step instructions for using these reports as well as other valuable information related to debt management. Q. What happens if a debt remains unpaid? A. If a debt remains outstanding, a series of letters will be sent to the producer with an to their upline advising of this and requesting repayment. If the debt continues to remain unpaid, Foresters will take further action, possibly including termination of the producer s contract. Please see Foresters Debt Management Program Document on the producer website for detailed information. Go to Compensation Details under My Business to locate this document in the Navigation FASATweb section. January 2013 Producer Use Only Page 8 of 8