Informational Booklet

Transcription

1 Informational Booklet for Independent Contractors ED.

2 Foreword At Liberty National, the Agent s compensation is earned from the sales of policies, the servicing of policies, and from bonuses. There is practically no limit to the amount of compensation an Agent can earn. Ours is a sales job. We are in the business of selling insurance. We also must service what we sell so that it will stay in force. The Agent s compensation is a reflection of his/her ability to develop new clients, sell additional business to existing clients as their needs dictate, and to keep the business sold and all business assigned in force. We believe that under this compensation system, those who produce good business and look after their customers will be rewarded. The sale of a policy and the collection of the initial premium are not the whole story. It is just as important, or more so, that the insurance be continued in force and that the customers receive the service to which they are entitled. NOTICE: THIS INFORMATIONAL BOOKLET DOES NOT CONSTITUTE A CONTRACT OF EMPLOYMENT AND IS NOT INTENDED TO ALTER THE TERMS OF YOUR INDEPENDENT CONTRACTOR S AGREEMENT IN ANY MANNER WHATSOEVER. THIS DOCUMENT IS SUBJECT TO MODIFICATION WITHOUT PRIOR NOTICE TO INDEPENDENT CONTRACTORS. REFER TO YOUR INDEPENDENT CONTRACTOR S AGREEMENT, AND APPLICABLE COMMISSION SCHEDULE(S), WITH LIBERTY NATIONAL LIFE INSURANCE COMPANY FOR THE ACTUAL TERMS AND CONDITIONS WHICH APPLY. IN THE EVENT ANY INFORMATION CONTAINED HEREIN CONFLICTS WITH THE INDEPENDENT CONTRACTOR S AGREEMENT, THE INDEPENDENT CONTRACTOR S AGREEMENT SHALL CONTROL ED. ii LNL

3 TABLE OF CONTENTS Independent Contractor Agents I. COMMISSION ACCOUNT 1 A. Credits B. Charges C. Payments from the Commission Account D. Lump Sum Withdrawals E. Transfers of First-Year Commissions II. COMMISSION RULES 2 A. Split Commissions III. WEEKLY PRODUCTION BONUS 2 A. Calculation of Production Bonus B. Term Conversions C. C.O.D. S D. Additional Coverage or Rider added to an existing policy E. Payment of Bonus F. DCN Multiplier for Management Reassigned as Agents G. QOB Multiplier for Management Reassigned as Agents IV. SPECIAL BENEFITS 5 A. Torch Club V. PLATINUM PLUS MEDICARE SUPPLEMENTS 7 Independent Contractor Unit Managers VI. OVERWRITING COMMISSIONS 8 A. Payment of First Year Commissions B. Payments from the Commission Account C. Lump Sum Withdrawals VII. PERSONAL PRODUCTION 8 A. Commissions B. Rules VIII. WEEKLY PRODUCTION BONUS 8 IX. SPECIAL BENEFITS 10 A. Torch Club X. PLATINUM PLUS MEDICARE SUPPLEMENTS 12 Independent Contractors Branch Managers XI. OVERWRITING COMMISSIONS 13 A. Payment of First Year Commissions B. Payments from the Commission Account C. Lump Sum Withdrawals XII. PERSONAL PRODUCTION 13 A. See Unit Managers Section. XIII. BONUS 13 A. Payment of Bonus B. WEEKLY PRODUCTION BONUS C. MONTHLY RECRUITING BONUS XIV. SPECIAL BENEFITS 19 A. Torch Club XV. PLATINUM PLUS MEDICARE SUPPLEMENT ED. iii LNL

4 Explanation of Abbreviations and Terms ANN - Annual Premium Payment Mode AP - Annual Premium ART - Annual Renewable Term BB - Bank Budget Premium Payment Mode DCN - Declines, Cancellations, and Not-Takens FYA - First Year Agent LNL - Liberty National Life Insurance Company MN - Monthly Notice Premium Payment Mode PD - Payroll Deduction Premium Payment Mode RYA - Renewal Year Agent ED. iv LNL

5 Independent Contractor Agents Independent Contractor Agents I. COMMISSION ACCOUNT Commissions, whether in the form of Direct Pay or credited to the commission account, shall constitute advanced loans. A. Credits A percentage of the first-year commission will be credited and included as Direct Pay in the Agent s weekly compensation when an application is keyed into the Issue System in the Home Office. This amount is the submitted advance. No submitted advance will be paid if the Agent has a negative commission account or if the application is for personal business. The week of official issue, the full commission will be credited to the commission account and any submitted advance will be charged. The submitted advance percentages are: BB and Annual modes - 70% PD (Sec. 125 only) - 50% MN & PD (Non Sec. 125) - 0% Semi-Annual, Quarterly, and Other modes - 30% Although there is no submitted advance on non-section 125 PD applications, 50% of the commission will be treated as Direct Pay when the first premium is paid and the Transaction Register indicates that the policy has been issued. There will also be Direct Pay on term conversions when the converted policy is issued and settled in the Transaction Register. The balance of the commission will be credited to the commission account. If the Agent writing a policy on an annual premium mode has more than one year of service, the Agent will receive the balance of the commission as Direct Pay when the policy is issued. With the exception of annual premium policies, the maximum amount of Direct Pay on any one application/policy will be $300. Agents may elect to have all their first-year commission credited to their commission account (i.e., no Direct Pay.) If the commission account of an Agent who has been contracted more than 13 weeks falls below $500, the amount of Direct Pay will be reduced by one half. Commissions on placed COD policies will be credited to the commission account one week after the Home Office receives the balance of the COD premium. B. Charges 1. Declines, Canceled & Not Taken If there is a 100% charge back of commissions on a policy that generated Direct Pay, the amount of commissions previously paid as Direct Pay on that policy will be charged against the current week s Direct Pay. (Typically, these are policies that are not taken, ones that have paid less than three month s premium, canceled or declined applications.) If there is not sufficient Direct Pay to cover the charge back for the week, the excess charge will be applied to the commission account ED. 1

6 Independent Contractor Agents 2. Lapsed Policies There will be a commission charge back to the writing Agent on policies lapsing in the first policy year. Lapsed charges will be made the same week of lapse based on the following schedule: Months Premium Paid Charge Back % 0-2 months 100% 3 months 90% 4 months 80% 5 months 70% 6 months 60% Months Premium Paid Charge Back % 7 months 50% 8 months 40% 9 months 30% 10 months 20% 11 months 10% C. Payments from the Commission Account A percentage of the balance in the Agent s commission account will be paid in the form of a loan advance each week according to the following schedule: Commission Acct. Balance % Paid Less than $3,000 6% $3,000 to $3,999 8% $4,000 and over 10% D. Lump Sum Withdrawals There will be no lump sum withdrawals from the commission account. E. Transfers of First-Year Commissions First-year commissions will not be transferred to an active Agent from a terminating Agent or an Agent being reassigned to Management. II. COMMISSION RULES A. Split Commissions Commissions may be split only on policies written on paper application A-250. III. WEEKLY PRODUCTION BONUS A. Calculation of Production Bonus To qualify for a weekly production bonus, an Agent must meet minimum requirements with respect to declines, cancellations, and not-takens (DCN) and the minimum amount of gross submitted premium. The amount of LNL gross submitted Life and Health annual premium required in order to qualify for a bonus in a given week is $1,000. The bonus percentages, also reflected in the bonus commission schedule, are dependent upon the number of consecutive weeks the Agent has qualified for a bonus ED. 2

7 Independent Contractor Agents The DCN component of the bonus is shown in the following table: DCN Multiplier Table BB, MN, Q, SA and A % DCN MULTIPLIER % DCN MULTIPLIER % DCN MULTIPLIER The bonus calculation formula will be as follows: To qualify for the weekly production bonus program, an Agent must gross submit $1,000 or more of annual premium. If not, the Agent does not qualify for the production bonus program that week. Bonus is payable on 100% of the Life net submit annual premium and 20% of the Health net submit annual premium. The Agent s production bonus percentage is based on the number of consecutive weeks the Agent has qualified for the production bonus. For Agents appointed Oct. 5, 2009, or later, 25% of the bonus is deferred until the 10th month. The production bonus is calculated as follows: Example: Agent appointed January 18, $1,000 Health Submit, $1,000 Life Submit, $100 Health DCNs, $200 Life DCNs, Agent is at the 30% bonus level, DCN Production Bonus Multiplier of 1.06 (DCN of 6%) Health Life $1,000 $1,000 Gross Submit Declines, Cancellations, Not-Takens Net Submit Preliminary Bonus Payable $800 Life % Health ($900 x.20 = $180) $980 Total Net Submit x.30 Bonus Percentage (10%, 20%, 30%, 40%) $ Basic Bonus Amount % Deferred Bonus (For Agents appointed 10/05/09 and after) $ Net Bonus x 1.06 Production Bonus Multiplier $ Bonus Payable ED. 3

8 Independent Contractor Agents Bonus Calculation Beginning July, 25, 2010 Beginning July 25, 2010, we will use QOB Production Bonus Multipliers to calculate the bonus for Agents appointed 10 months or longer. The QOB component of the bonus is shown in the following table. A QOB rate will be calculated for each Agent, each month. The following chart shows the Agent s QOB multiplier for the following month. QOB MULTIPLIER TABLE BB, MN, Q, SA and ANN - Individual Life; PD Payroll Deduction QOB % MULTIPLIER < QOB % MULTIPLIER QOB % MULTIPLIER Deferred Bonus The 25% deferred bonus will be paid during the Agent s 10th month. To receive the deferred bonus, the Agent must be an active, productive Agent, Unit Manager or Branch Manager at the time of payment. The deferral will not be paid if the Agent is below any minimum standard. Deferred bonus payment will be deposited into the Agent s commission account. There will be no bonus deferrals after the Agent has been appointed 9 months. EXAMPLE Individual $2,500 Total deferral bonus during months 1-9 x 1.08 QOB Production Bonus Multiplier (Agent s QOB is 80%) = $2,725 Agent s Bonus Deferral Recovery (Deposited into Commission Account) B. Term Conversions The annual premium on the increase in premium will be credited to the Gross Submit the same week it is submitted. C. C.O.D. S The amount submitted will be credited to the Gross Submit the same week the app is submitted. The difference between the submitted premium & the issued premium will be adjusted in the Net Submit when the policy is issued. D. Additional Coverage or Rider added to an existing policy The additional premium will be added to the Gross Submit the week that it is submitted ED. 4

9 Independent Contractor Agents E. Payment of Bonus 100% of the production bonus will be direct paid by including it in the Agent s weekly pay statement, subject to the following exceptions. An Agent may elect to have the entire bonus or one-half of the bonus credited to the commission account. Bonus payments are made to the Agent two weeks following the successful submission of the application and drafting of the premium. Bonuses are paid directly to an Agent s paycheck, except when an Agent has a negative commission account. If an Agent has an outstanding bonus overpayment or a negative commission account, the bonus will be credited to the commission account to the extent necessary to bring the commission account back to $0. The balance of the bonus will then be paid in the normal manner. It is important that Agents transmit e-applications daily throughout the week to ensure timely feedback to the Branch if a bank draft does not clear on a submitted application. No production bonus credit, for either gross submit or net submit, will be given for personal business written on an Agent, Unit Manager, Branch Manager, or persons related to them by blood or marriage. For Agents appointed October 5, 2009 and after, during the Agent s first 9 months, 25% of the Production Bonus is deferred until their 10th month. F. DCN Multiplier for Management Reassigned as Agents When a Branch Manager or Unit Manager is reassigned as an Agent, the Agent will be assigned a DCN multiplier of 1.00 for the remainder of that month and the next two full months. At that time, a new DCN will be calculated monthly. G. QOB Multiplier for Management Reassigned as Agents When an Agent is assigned to management, the most recently calculated 4-month QOB rate for the Agent is saved. In the event the individual returns to Agent status, for the first 9 months if there is less than $4,000 AP submitted from which a 4-month QOB rate can be calculated, the saved QOB rate will be used to determine the Agent s QOB multiplier. If no QOB rate was ever calculated for the Agent, a QOB multiplier of 1.00 will be used. At the time of the next monthly QOB rate recalculation, if there is at least $4,000 AP submitted available, a new QOB multiplier will be determined. If during the 9 months following reassignment the AP issue available then falls below $4,000, a multiplier of 1.00 is used. On the 10th month after reassignment, a new QOB rate will be calculated each month regardless of the amount of AP issue available. IV. SPECIAL BENEFITS A. Torch Club 1. Torch Club Qualification To qualify for Torch Club, Agents must have $74,200 ($1,400 per week x 53 weeks) net AP issue and have premium growth during the qualification period. Agents appointed in 2010 can qualify for Torch Club by averaging $1,400 per week net AP issue and have premium growth during the remainder of the year, subject to a minimum total issue of $18,200. In addition, the Agent must meet all current minimum standards. For Liberty National business, the first week s issue and growth included will be those in the Transaction/Production Register dated 01/01/10, and the last week s issue and growth will be ED. 5

10 Independent Contractor Agents those in the register dated 12/31/10. LNL Platinum PLUS Medicare Supplements will count 1/3rd AP credit. For United American business, as well as LNL Platinum PLUS Medicare Supplement business, the convention qualification will be from 01/04/10 thru 01/03/11. UA production counts at 1/4th AP credit on UA Medicare Supplements. Liberty National production, excluding Platinum PLUS Medicare Supplement production, counts at full AP credit. The books will remain open for an additional two months to take not taken policies or any other adjustments into account before determining the final list of qualifiers. Policies issued on an Agent, Unit Manager or Branch Manager or a member of the Agent, Unit Manager or Branch Manager s immediate family will not count for Torch Club. 2. Dates and Location of Torch Club Torch Club will be held at the Caesars Palace Resort in Las Vegas. The dates are July 7 10, Torch Club Expense IRS regulations require that the Company report the approximate cost of sending the qualifier and the qualifier s spouse/guest to Torch Club as taxable wages on the W-2 or 1099 form. 4. Torch Club Attendance To be entitled to attend Torch Club, an Agent must be currently appointed by Liberty National or United American and above all current minimum standards at the end of the contest and at the time of the invitation. No expense allowance or other remuneration will be paid to any Agent or person eligible to attend who does not attend for any reason. The qualifier s spouse, or any person who does not work in a Branch office and who is age 21 or over, may accompany the qualifier to the convention. Torch Club qualifiers who do not attend the convention must re-qualify for any future conventions. 5. Torch Club Honors To be eligible for one of the following honors, an Agent must qualify to attend Torch Club and must be appointed by the Company at the end of the qualifying period. The Company reserves the right to disqualify any Agent. a. Company Chairman & Top 10 Club The top 10 qualifiers in Torch Club production credits will be members of the Chairman s Club, and the leading Agent will be named Company Torch Club Chairman. Management personnel reassigned as Agents May 1 or after are not eligible. b. Honor Club The top 11 through 20 qualifiers in Torch Club production credits will be named members of the Honor Club. Management personnel reassigned as Agents May 1 or after are not eligible. c. Special Honors Leaders Club - 150% of TC requirement President s Club - 200% of TC requirement President s Council - 300% of TC requirement Special badges will be given to qualifiers for the Leaders Club, President s Club and President s Council ED. 6

11 Independent Contractor Agents In addition, extra Torch Club credit is posted to the qualifier s record. Leaders Club Torches President s Club Torches President s Council Torches d. Rookie of the Year Agents contracted April 2009 through March 2010 will be eligible for the Rookie of the Year award. Re-contracted Agents are not eligible. The Agent cannot have been licensed and appointed with any company prior to Liberty National or United American. The leading eligible Agent in 2009 Torch Club credits will be named Rookie of the Year. e. Senior Liberty Underwriter Agents and Unit Managers who qualify for Torch Club ten or more times (Liberty or UA qualifications) are named Senior Liberty Underwriters. Senior Liberty Underwriter is the highest honor the Company confers on Unit Managers and Agents. Branch Managers who have been reassigned as a Unit Manager or Agent cannot qualify for the SLU designation until the completion of twelve months service from the date of reassignment and until they qualify after reassignment for one additional Torch Club as an Agent or Unit Manager. The following items are furnished to the new SLU: 1. SLU ring 2. Business cards as required Re-appointed Agents who have previously earned the SLU designation will have their designation restored at the completion of their first anniversary of date of last appointment. 6. Physical Examinations The Company will reimburse active SLUs between the ages of 40 and 65 up to $200 of outof-pocket expense for a physical exam every other year. The Company will notify the SLU qualifier when an exam may be scheduled. The SLU qualifier will determine what tests, lab work and procedures will be included in the exam. The qualifier will pay the doctor for the full cost of the exam, then request reimbursement from the Company. Any costs above $200 will be the qualifier s responsibility. The qualifier will discuss the results of the exam with the doctor. The results will not be sent to the Home Office. V. PLATINUM PLUS MEDICARE SUPPLEMENTS Sections I (Commission Account) and III (Weekly Production Bonus) shall not apply to Platinum Plus Medicare Supplement sales. Agents should refer to the Medicare Supplement Commission Schedule attached to their Liberty National Independent Contractor s Agreement for commission rates, terms, and conditions applicable to Platinum PLUS Medicare Supplement sales ED. 7

12 Independent Contractor Unit Managers Independent Contractor Unit Managers VI. OVERWRITING COMMISSIONS Commissions, whether in the form of Direct Pay or credited to the commission account, shall constitute advanced loans. A. Payment of First Year Commissions Unit Managers receive Direct Pay in the same manner as Agents, but only on Agents who are in their first 52 weeks following appointment. After 52 weeks, commissions are deposited in the commission account. B. Payments from the Commission Account Each week Unit Managers will be paid 8% of the balance in their commission account in the form of a loan advance. C. Lump Sum Withdrawals Lump sum withdrawals will not be permitted. VII. PERSONAL PRODUCTION A. Commissions Commissions and charges on personal production will be the same as those applicable to Agents. B. Rules 1. Management personnel must take credit for any personal business written (on self or family) regardless of the size of the policy. 2. Commissions may be split between a member of management and an Agent only on products written on paper application A-250. Policies where the commissions are to be split will be assigned to the Agent for service. 3. Agents must not pay any part of their commissions to a member of management for policies written jointly by them. VIII. WEEKLY PRODUCTION BONUS The Unit Manager is eligible for a weekly production bonus that is a percentage of any weekly production bonus received by an Agent on the Unit Manager s group. The percentage will depend on the number of 1st time 40% bonus earners during a rolling 8 weeks every Friday. Unit Manager overrides can be increased based on the number of new 1st time 40% bonus earners in a rolling 8-week time period ED. 8

13 Independent Contractor Unit Managers UM s Bonus Override % of Agent s Bonus Rolling 8 weeks Agent s Weeks of Service # NEW 1st Time 40% Weeks Bonus earners: 0 40% 15% 10% 1 60% 15% 10% 2+ 80% 15% 10% The All-Agent s All-Business DCN Production Bonus Multipliers will be used to calculate the bonus for all Unit Managers until July 25, Beginning July 25, 2010, we will only use the All-Business QOB Production Bonus Multipliers for Unit Managers assigned 10 months or longer. If a Unit Manager submits an application for personal commission credit, no Production Bonus is payable to the Unit Manager. Newly appointed Unit Managers 1. Newly appointed Unit Managers will be given a Production Bonus Multiplier (PBM) of 1.00 until they have completed two months of service as a Unit Manager. 2. For the next seven months of service as a Unit Manager, the Unit Manager s multiplier will be determined based on the All-Agent All-Business DCNs for the Unit Manager s group. 3. After the initial two-month period, if the Unit Manager s production in the DCN calculation period is less than $2,000, the maximum DCN multiplier he/she can qualify for will be To qualify for a DCN multiplier of greater than 1.00, the net DCN submitted premium during the calculation period must be $2,000 or more as shown on the DCN Summary Report. 4. Beginning on the Unit Manager s 10th month, the Unit Manager s multiplier will be based on the group s All-Agent All-Business QOBs. Once the PBM has been established for a Unit Manager, the Unit Manager s bonus will be calculated by applying the Unit Manager s PBM to each agent bonus payable in that unit as follows: Agent Bonus before Agent multiplier UM override % PBM for the unit = Unit Manager s Production Bonus All Production Bonus Multipliers for Unit Managers will be based on tables for ALL-Agent DCN/QOB percentages: ALL-Agent DCN and QOB percentages (beginning the 10th month after appointment as a Unit Manager) include both Active and Terminated Agents ED. 9

14 Independent Contractor Unit Managers Production Bonus DCN Multipliers BB, MN, Q, SA and A % DCN MULTIPLIER % DCN MULTIPLIER % DCN MULTIPLIER Production Bonus 4 Month QOB Multipliers BB, MN, Q, SA and ANN - Individual Life; PD Payroll Deduction QOB % MULTIPLIER < QOB % MULTIPLIER QOB % MULTIPLIER Payment of Bonus 100% of the production bonus will be paid direct by including it in the Unit Manager s weekly pay statement, subject to the following exceptions. A Unit Manager may elect to have the entire bonus or one-half of the bonus credited to the commission account. If the Unit Manager has an outstanding bonus overpayment or a negative commission account, the weekly production bonus will paid into the commission account to reduce the amount of overpayment or debit balance. IX. SPECIAL BENEFITS A. Torch Club 1. Torch Club Qualification To qualify for Torch Club, a Unit Manager must have $212,000 in Net AP Issue* for the year ($4,000 per week x 53 weeks.) Half of this requirement ($2,000 per week) must be FYA Production. In addition, the Unit Manager must meet all current minimum standards, and the Unit must have premium growth ED. 10

15 Independent Contractor Unit Managers For Liberty National business, the first week s issue and growth included will be those in the Transaction/Production Register dated January 1, 2010, and the last week s issue and growth will be those in the register dated December 31, LNL Platinum PLUS Medicare Supplements will count 1/4 th AP credit. * UA production, as well as LNL PLUS Medicare Supplement production, counts at 1/4th AP credit on UA Medicare Supplements on both the previous and the current year. Liberty National production, excluding Platinum PLUS Medicare Supplement production, counts at full AP credit for both the previous and the current year. 2. Torch Club Honors To be eligible for one of the following honors, a Unit Manager must qualify to attend Torch Club and must be appointed as a Unit Manager at the end of the qualifying period. Also, the date of assignment to Unit Manager must be prior to July 1 of the current Torch Club qualifying period. The Company reserves the right to disqualify anyone. a. Company Chairman & Chairman s Club The top 10 qualifiers in Torch Club production credits automatically qualify for convention, provided they meet minimum standards in regards to QOB and DCN, and will be members of the Chairman s Club. The leading Unit Manager will be named Company Torch Club Chairman. b. Honor Club The top 11 through 20 qualifiers in Torch Club production credits will be named members of the Honor Club. c. Special Honors Leaders Club - 150% of TC requirement President s Club - 200% of TC requirement President s Council - 300% of TC requirement d. Rookie Unit Manager of the Year Leading Unit Manager in 2010 Torch Club production credits who was newly appointed as a Unit Manager between April 1, 2009 and March 31, 2010 will be eligible for Rookie Unit Manager of the Year. The Rookie Unit Manager cannot have been appointed as a Unit Manager in the past. e. Senior Liberty Underwriter See Agents Section. f. Management Achievement Award This award is presented in recognition of sustained success as a Unit Manager. To be eligible, an individual must qualify for Torch Club as a Unit Manager six times (Liberty or UA qualifications). To count as a Unit Manager Torch Club qualification for purposes of this award, an individual must be a Unit Manager for at least six months during the Torch Club qualification period and must be in management at the end of the qualification period. To receive the Management Achievement Award, an individual must remain continuously in management from the end of the qualification period that established his or her eligibility until the award is presented at Torch Club ED. 11

16 Independent Contractor Unit Managers g. Management Development Award The Management Development Award will be presented to the Unit Manager who, in the Company s opinion, has provided the most outstanding example of commitment and dedication to the training and development of new agents. FYA production and the number of promotions to Unit Manager (not UMITS) will be two of the factors used to select the winner. X. PLATINUM PLUS MEDICARE SUPPLEMENTS Sections VI (Overwriting Commissions) and VIII (Weekly production Bonus) shall not apply to Platinum PLUS Medicare Supplement sales. Unit Managers should refer to the Medicare Supplement Commission Schedule attached to their Liberty National Independent Contractor s Agreement for commission rates, terms, and conditions applicable to Platinum PLUS Medicare Supplement sales ED. 12

17 Independent Contractors Branch Managers Independent Contractors Branch Managers XI. OVERWRITING COMMISSIONS Commissions, whether in the form of Direct Pay or credited to the commission account, shall constitute advanced loans. A. Payment of First Year Commissions Branch Managers receive Direct Pay in the same manner as Agents, but only on Agents who are in their first 52 weeks following appointment. After 52 weeks, commissions are deposited in the commission account. B. Payments from the Commission Account Each week Branch Managers will be paid 8% of the balance in their commission account as a loan advance. C. Lump Sum Withdrawals Lump sum withdrawals will not be permitted. XII. PERSONAL PRODUCTION A. See Unit Managers Section. XIII. BONUS A. Payment of Bonus 100% of the production bonus will be paid direct by including it in the Branch Manager s weekly pay statement. A Branch Manager may elect to have the entire bonus credited to the commission account. B. WEEKLY PRODUCTION BONUS The Branch Manager is eligible for a weekly production bonus that is 65% of any weekly production bonus (before DCN or QOB) received by a Unit Manager or UMIT (if the UMIT receives the UM s bonus) in the office. For open Units, the Branch Manager is paid as if there was a UM in the position. Life and Health premium for all Agents (active and terminated) will be used to determine DCN/QOB: 1. Life and Health premium will be used to determine DCN/QOB 2. The DCN rate is based on 3 months of submit and 4 months of declines, cancels and nottakens 3. The All-Agent/All-Business DCN production bonus multipliers will be used to calculate the bonus for all Branch Managers until July 25, Beginning July 25, 2010 we will use All- Business production bonus multipliers for Branch Managers assigned 10 months or longer. 4. Newly appointed Branch Managers will be given a PBM of 1.00 until they have completed two months of service as a Branch Manager. 5. After the initial two month period, if the Branch Manager s production in the DCN calculation period is less than $4,000, the maximum DCN multiplier he/she can qualify for will be To qualify for a DCN multiplier of greater than 1.00, the net DCN submitted premium during ED. 13

18 Independent Contractors Branch Managers the calculation period must be $4,000 or more as shown on the DCN Summary Report. 6. Beginning on the Branch Manager s 10th month, the Branch Manager s multiplier will be based on the Branch s All-Agent Life-only QOBs. The Branch Manager s bonus will be calculated by applying the Branch Manager s PBM (based on All Agents in the Branch - active and terminated) to each Unit Manager s bonus, payable as follows: Unit Manager s Bonus before Agent multiplier 65% (BM override %) All-Agent All-Business PBM for the Branch = Branch Manager s Production Bonus 1. Payment of Bonus 100% of the production bonus will be paid direct by including it in the Branch Manager s weekly pay statement, subject to the following exceptions. A Branch Manager may elect to have the entire bonus credited to the commission account. If the Branch Manager has an outstanding bonus overpayment or a debit balance due to management guarantees, the weekly production bonus will be used to reduce the amount of overpayment. 2. Changes in Management When there is a change in management, the new Branch Manager assumes the bonus on the Monday that the change becomes effective. All Production Bonus Multipliers for Branch Managers will be based on tables for ALL-Agent DCN/QOB percentages: ALL-Agent DCN (first 9 months) and All-Agent QOB percentages (beginning the 10th month after appointment as a Branch Manager) include both Active and Terminated Agents ED. 14

19 Independent Contractors Branch Managers Production Bonus DCN Multipliers BB, MN, Q, SA and A % DCN MULTIPLIER % DCN MULTIPLIER % DCN MULTIPLIER Production Bonus 4 Month QOB Multipliers BB, MN, Q, SA and ANN - Individual Life; PD Payroll Deduction QOB % MULTIPLIER < QOB % MULTIPLIER QOB % MULTIPLIER C. MONTHLY RECRUITING BONUS The monthly recruiting bonus provides a progressive cash reward for higher levels of recruiting and producer growth as well as a regressive charge that will be incurred for lack of recruiting and producer growth. An Agent achieving both the $1K and $5K levels will count fully towards the recruiting bonus in the bonus month in which he/she achieves each level. The company reserves the right to modify the bonus as company averages increase or eliminate it entirely if it is determined that the company s objectives to retain agents and increase profitable production are not being achieved - in any Branch. As always, any manipulation whatsoever of any bonus remains unacceptable and will be quickly addressed. The monthly recruiting bonus has four (4) components (A, B, C, D): 1. Part A - a credit of $200 for each new $1K producer added during the month, beginning with the second $1K producer*; however, if 4 or more new $1Ks are achieved in a month, the credit for each new $1K over 3** will be $250 (for example, $200 will be credited for the 3rd new $1K, but $250 will be credited for the 4th new $1K, $250 for the 5th new $1K, etc.(in other words, no extra credit for any of those under 4*) ED. 15

20 Independent Contractors Branch Managers CUMULATIVE TOTAL New $1K Agents Added Part A Bonus 0 $0 1 $0 2 $ $600 (*$200 each under 4, but only if more than 1) $850 (**$250 for each one over 3 only) 5 $1,100 6 $1,350 7 $1,600 8 $1,850 9 $2, $2, $2, $2, $3, $3, $3,600 plus $250 per $1K for each one over 15** 2. Part B - An additional credit is paid when an Agent reaches the required $5K production level, BOTH Life and Health net production counts. For Agents who are only appointed with Liberty National, the Part B amount payable is determined by the number of appointed Agents who achieve the new $5K bonus level for the first time during the month. The $1K or $5K production levels must both be achieved within 8 weeks of the first submitted premium week to qualify for any Recruiting Bonus credit ED. 16

21 Independent Contractors Branch Managers The following schedule will apply to the Part B calculation: # of appointed 1st time $5k Producers within 8 weeks of 1st submit per month Bonus Cumulative Total Part B 0 $0 $0 1 $500 for the first new $5K qualifier $500 2 $1,000 for the second new $5K qualifier $1,500 3 $1,500 for the third new $5K qualifier $3,000 4 $2,000 for the fourth new $5K qualifier $5, $2,000 for each additional new $5K $7,000+ Example #1: if you have 4 new first time $5K Producers during the month, the $5K producer component of the bonus will be $5,000 ($500 + $1,000 + $1,500 + $2,000 = $5,000). Example #2: if you have 6 new first time $5K producers during the month, the Part B component of the bonus will be $9,000 ($500 + $1,000 + $1,500 + $2,000 + $2,000 + $2,000 = $9,000). 3. Part C - P-Ls: 1-3 P-Ls =$0 4 P-Ls =$500 ($125 per) 5 P-Ls =$750 ($150 per) 6 P-Ls =$1,200 ($200 per) 7 P-Ls =$1,750 ($250 per) 8 P-Ls =$2,400 ($300 per) 9 P-Ls =$3,150 ($350 per) 10+ P-Ls =$4,000 ($400 per) Producer Rule: The P-L bonus will not be released OR PAID in any given month unless there are one or more $1Ks or $5Ks generated that SAME month. Agents previously appointed with Liberty National or United American, will not be included in the Recruiting Bonus P-L calculation. To be counted, any $1Ks, $5Ks must be achieved within 8 weeks after the Agent s first submitted premium. Example #1: If you have 4 P-Ls during the month and 1 or more $1Ks or $5Ks (in their first 8 weeks), the P-L Part C component of the bonus will be $500 ($125 x 4 = $500). Example #2: If you have 6 P-Ls during the month and 1 or more $1Ks or $5Ks (in their first 8 weeks), the P-L Part C component of the bonus will be $1,200 ($200 x 6 = $1,200). Example #3: If you have 12 P-Ls during the month and 1 or more $1Ks or $5Ks (in their first 8 weeks), the P-L Part C component of the bonus will be $4,800 ($400 x 12 = $4,800) ED. 17

22 Independent Contractors Branch Managers 4. Part D - a monthly recruiting charge of $400 will be applied to cover a portion of the amount the Company spends on recruiting advertising on behalf of Branches each month. EXAMPLES TOTAL BONUS PAYABLE (Part A + Part B + Part C Part D) Example 1 of Total Bonus payable: During the current month the Branch added 5 $1K Agents, 3 new appointed first time $5K producers, and received a bonus for 10 new P-Ls. Bonus for 5 new $1K Agents $1,100 Bonus for 3 new first time $5K producers $3,000 Bonus for 10 new P-Ls $4,000 Current Ad Charge -$400 Net bonus payable +$7,700 Example 2 of Total Bonus payable: During the current month the Branch added 3 $1Ks,1 new first time $5K producer, and received a bonus for 7 new P-Ls: Bonus for 3 new $1K Agents $600 Bonus for 1 new first time $5K producers $500 Bonus for 7 new P-Ls $1,750 Current Ad Charge -$400 Net bonus payable +$2,450 Example 3 of Total Bonus payable: During the current month the Branch added 1 $1Ks, 0 new first time $5K producers, and received a bonus for 3 new P-Ls: Bonus for 1 new $1K Agents $0 Bonus for 0 new first time $5K producers $0 Bonus for 3 new P-Ls $0 Current Ad Charge -$400 Net bonus payable -$ ED. 18

23 Independent Contractors Branch Managers Example 4 of Total Bonus payable: During the current month the Branch added 7 new appointed $1K agents, 5 new first time $5K producers, and received a bonus for 13 new P-Ls. Bonus for 7 new $1K Agents $1,600 Bonus for 5 new first time $5K producers $7,000 Bonus for 13 new P-Ls $5,200 Current Ad Charge -$400 Net bonus payable +$13,400 To qualify for the Recruiting Bonus, the newly appointed $1Ks and new $5K producers must appear on reports dated no later than the last Friday of the month. To receive the bonus, the Branch Manager must still be the Branch Manager at the time the bonus is paid. XIV. SPECIAL BENEFITS A. Torch Club 1. Torch Club Qualification Branches have been divided into three flights based on 13-week All Agent average production as calculated in December. For qualification, branches in each flight will then be ranked based on Total Production. Flight 1 the top 30 branches will automatically qualify, provided they have an increase in Total Net Production* over the previous year. In addition, any remaining office in Flight 1 with an increase of more than 15% in Total Production over the previous year will qualify. Flight 2 the top 20 branches will automatically qualify, provided they have an increase in Total Net Production* over the previous year. In addition, of the remaining branches in Flight 2, the top 7 (ranked by % increase) with an increase of more than 20% over the previous year will qualify. Flight 3 the top 10 branches will automatically qualify, provided they have an increase in Total Net Production* over the previous year. In addition, of the remaining branches in Flight 3, the top 10 (ranked by % increase over their baseline) with an increase of more than 25% over their baseline will qualify. The baseline will be the previous year s average Total Production per week or $3,000 Total Production per week, whichever is the greater. In addition, the Branch Manager must meet all current minimum standards, and the Branch must have premium growth. For Liberty National business, the first week s issue and growth included will be those in the Transaction/Production Register dated 01/01/10, and the last week s issue and growth will be those in the register dated 12/31/10. LNL Platinum PLUS Medicare Supplements will count 1/4th AP credit. * UA production, as well as LNL Platinum PLUS Medicare Supplement production, counts at 1/4th AP credit on UA Medicare Supplements on both the previous and the current year. Liberty National production, excluding Platinum PLUS Medicare Supplement production, counts at full AP credit for both the previous and the current year ED. 19

24 Independent Contractors Branch Managers 2. Torch Club Honors To be eligible for one of the following honors, a Branch Manager must qualify to attend Torch Club, must meet all Minimum Standards at the end of the contest or at time of invitation, and must be an active Branch Manager at the end of the qualifying period and at the time of convention. Also, the date of assignment to Branch Manager must be prior to July 1 of the current Torch Club qualifying period. The Company reserves the right to disqualify anyone. a. Leading Branch of the Company - Company Chairman The Branch that leads all Torch Club qualifiers in premium growth will be named the Leading Branch of the Company, and the Branch Manager will be named Company Torch Club Chairman. b. Chairman s Club - Company Co-Chairman The top 10 qualifiers based on Total Production credits for the year will be named members of the Chairman s Club and will be recognized at the awards ceremony. In the event that the Company Torch Club Chairman (determined by growth) is not the leader of the Chairman s Club, the leader of the Chairman s Club will be named Company Torch Club Co-Chairman. c. Honor Club The top 11 through 20 qualifiers in Torch Club production credits will be named members of the Honor Club. d. Rookie Branch Manager of the Year Leading Branch Manager in 2009 Torch Club production credits who was newly appointed as a Branch Manager between April 2008 and March 2009 will be eligible for Rookie Branch Manager of the Year. The Rookie Branch Manager cannot have been appointed as a Branch Manager in the past. The leading eligible Branch Manager in Torch Club production credits will be named Rookie Branch Manager of the Year. e. Management Development Award The Management Development Award will be presented to the Branch Manager who, in the Company s opinion, has provided the most outstanding example of commitment and dedication to the training and development of Unit Managers. FYA production and the number of promotions to Branch Manager will be two of the factors used to select the winner. f. Special Honors Leaders Club - 150% of TC requirement President s Club - 200% of TC requirement President s Council - 300% of TC requirement XV. PLATINUM PLUS MEDICARE SUPPLEMENT Sections XI (Overwriting Commissions) and XIII (Weekly production Bonus) shall not apply to Platinum PLUS Medicare Supplement sales. Branch Managers should refer to the Medicare Supplement Commission Schedule attached to their Liberty National Independent Contractor s Agreement for commission rates, terms, and conditions applicable to Platinum PLUS Medicare Supplement sales ED. 20