Principles of Agency Building 9th Edition May 12,2009 By: Roberto H. Bruce, MS, CLU, ChFC, LUTCF Cavaliers Insurance Marketing Rights Reserved

Agency Building Opportunity Rights Reserved Strong Company Unique Products Ground floor Agency compensation

The Ultimate of Selling is Agency Building Rights Reserved Train Recruit The Ultimate of Selling is Agency Building Sell

Term – Insurance For A Specified Period $ Rights Reserved CCOI $ T T age T1 T2 1 Flexible Premium 2 Adjustable Death Benefit 3 Current Interest Rate 4 Guaranteed Interest Rate UL

Premiums $ M.E.C Net Level 7 Pay Test Tamra 88 Guide Defra 85 Target Rights Reserved YR 1— $5,000— $4,000 $ 2—10,000 — 5,000-9,000 3—15,000 — 7,000-16,000 4—20,000 — 5—25,000 — 6—30,000 — 7—35,000 — Net Level 7 Pay Test Tamra 88 eg. $5,000 M.E.C Annuity Single eg. $25,000 Guide Defra 85 Level eg. $2,000 Target Minimum Premiums

TRA’ 86 INSURANCE ANNUITY 59 ½ - 10% Penalty FIFO LIFO PREM Rights Reserved PREM Interest Income PREM PREM PREM Interest Income FIFO LIFO INSURANCE ANNUITY 59 ½ - 10% Penalty

Life Insurance Tests Guide Premium Corridor – Age 95 Rights Reserved

OPT B Increasing Face Amt or Face Amt + Savings Options Rights Reserved $ 100,000 Amount At Risk OPT A Level Face Amount Savings T t1 95 $ 100,000 OPT B Increasing Face Amt or Face Amt + Savings Amount At Risk Savings T t1

Policy Costs CCOI + Policy Fee + PREM Charge + Charge / $1,000 TCOI = Rights Reserved CCOI + Policy Fee + PREM Charge + Charge / $1,000 TCOI = PREM – TCOI = Policy Fund Cash Accumulation Value Policy Fund – SURR Charge = Cash Surrender Value Cash Value

Hierarchy of Life Plans Rights Reserved Whole Life Universal Life Term

Parties To A Contract Owner Insured Beneficiary Three - Gift Tax Rights Reserved Parties To A Contract Owner Insured Beneficiary Three - Gift Tax One - Estate Tax Two – Recommended Disclaimer, if not taken

Waiver Of Premium In case of disability Always recommend Rights Reserved In case of disability Always recommend Disclaimer, if not taken

Beneficiary(ies) Primary Contingent / Secondary Per Capita Per Stirpes Rights Reserved Primary Contingent / Secondary Per Capita Per Stirpes

Product Spectrum Big Cases  LBL/ANICO Rights Reserved Life DI CI LTC GT 10T 15T 20T 25T 30T GL UL WL Assurity Assurity Assurity AssuritySagicor Par ANICO Assurity ANICO Assurity Sagicor LBL Assurity LBL AF ANICO Assurity Sagicor LBL AF AF ANICO Sagicor LBL ANICO Assurity ANICO LBL Assurity Sagicor Non-Par Simplified Issue Big Cases  LBL/ANICO Small Cases  ANICO/AF/Assurity/Sagicor Preferred/Big Cases  LBL/ANICO Standard & Below  ANICO/AF/Assurity/Sagicor Assurity Sagicor

Annuity 1 or more premiums (accumulation) Rights Reserved 1 or more premiums (accumulation) 1 or more payments (distribution) Tax-Deferred 59 ½ 10% Penalty Ordinary income Capital gains 1 – Single premium Immediate – SPIA Deferred - SPDA 1 or more - Flexible premium FPA/FPDA FIX – General Account VARIABLE – Separate Account QUALIFIED NON - QUALIFIED IRA (Front)-70 1/2 DEDUCTIBLE NON-DEDUCTIBLE ROTH-IRA (Back) DIRECT TRANSFER / ROLLOVER / CONVERSION 1035 Exchange TRADITIONAL IRA / ROTH-IRA / SEP-IRA / SIMPLE IRA INDEX / TREASURY LINKED / MYG/MVA

Annuity Ideal Cases LBL (FPA $100Q/mo; $10,000NQ) Rights Reserved LBL (FPA $100Q/mo; $10,000NQ) Sagicor/Assurity (SPDA $2,000) ANICO (SPDA $4,000Q; $5,000NQ) LBL (SPDA $10,000) LBL (FPA $3,000Q; $10,000NQ)

Plan Distributions – When to? Rights Reserved Die, Disabled, or severance from employment Plan terminates, no successor plan 59 ½ Financial hardship* *Cannot rollover to IRA

Early Distribution Penalty (Plan, IRA, Annuity) Rights Reserved 10% additional tax on distributions under age 59 ½ In addition to any regular income tax on the amount

Penalty Free Plan Early Distributions Rights Reserved Death or Disability Distributions over life expectancy on termination of employment Service separation after age 55 Qualified domestic relations order Medical expenses over 7 ½ % of AGI Distribution election by March 1, 1986 Dividends on employer securities IRS levy of plan Qualified reservist distributions

IRA Rollover Distribution from one qualified plan Rights Reserved Distribution from one qualified plan Contribution to IRA within 60 days

Types of IRA Rollover Rights Reserved Direct - qualified plan to IRA, no 20% tax withholding Indirect - qualified plan to individual to IRA, with 20% tax withholding

IRA Rollover Exceptions Rights Reserved Series of substantial equal payments based on life expectancy, or 10 or more years period certain Required minimum distribution (RMD) Corrective distribution Loan treated as distribution Hardship distribution Dividends on employer securities Cost of life insurance coverage Distribution to beneficiaries

Penalty Free IRA Early Distributions Rights Reserved Unreimbursed medical expenses over 7 ½ % of AGI Not more than cost of medical insurance Disabled Beneficiary of deceased IRA owner Distribution in form of annuity Not more than qualified higher education expenses Used to build, rebuild first home $10,000 or less IRS levy of qualified plan Qualified reservist distributions

Required Minimum Distributions (RMDs) Rights Reserved Minimum amount to withdraw annually starting with year at age 70 ½ , or if later, year retires (except 5% business owners) Amount not withdrawn taxed at 50%

Issued over submitted apps Rights Reserved Placement Ratio Issued over submitted apps Pre-qualify prospect Concept selling Trial app / no initial premium for borderline cases Initial payment w/ app More apps, e.g., Juvenile plans Case follow-up

Persistency Ratio Active over issued policies Modal payment hierarchy Rights Reserved Persistency Ratio Active over issued policies Modal payment hierarchy Annual, 7 Pay, or Single Monthly bank draft Semi-annual Quarterly Monthly direct billing Client contact/review Improve placement ratio

NO Goal Setting $$$$ Sale/Network Appointment 1. Calls ——————— 3 min Rights Reserved $$$$ Sale/Network Appointment 1. Calls ——————— 3 min NO Name Company Purpose Appt. $ Time Need T1 T2

Goal Setting $250,000 – ESD/SGA $100,000 – MDRT $50,000 – Convention $_______ A.P. Goal ÷$_______ A.P./Sale Sales/Year x_______ Appt/Sale Appts/Year ÷52 Wks 100,000 Rights Reserved 1,000 3 ___ min/call ___ calls/appt ___ hrs/appt ___ appt/sale 20 100 2 2 2 200 1,000 $_____ Annual Prem (A.P.)/Sale 4 Appts/Wk x_______ Calls/Appt 20 80 Calls/Wk x 2 Hrs/Appt x 3(min/call)/60(min/hr) 8 Appt Hrs/Wk 4 Call Hrs/Wk + 12 Hrs/Wk Total

Aalliance Management Expectation/Commitment (Calendar Year) ESD ASM DM Rights Reserved Rights Reserved ESD ASM DM UM How? 1) Recruit One (1) Agent Per Month 3 Agents/QTR 12 Agents/YR Maintain 10 Producing Agents Maintain 6 Producing Agents Maintain 2 Producing Agents 1) Mergers / Acquisitions 2) Advertising 3) Agency Office 4) Seminars 5) Business phone/ pager / 800# / Fax 6) Laptop Computer 7) Partnering 8) Recruiting presentation 9) Annuity / high premium selling 10) Weekly reports 11) Monitor agents 12) Awards / Incentives 13) Referrals / Phone Book / Associations 14) Education (CLU, CFP, LUTCF, ChFC) 15) Concentration 16) Delegation 17) Mailers / Leads 18) Convention 19) Goal Setting 6 Agents Per YR 4 Agents Per YR 2 Agents Per YR 2) Participate in Regional Seminars Yes 3) Conduct Agency Seminars Yes for ESD-Aspirants Participate 4) Provide Agency Sales and Training Support 5) $250,000 Paid Target Premiums/YR $100,000 Paid Target Premiums/YR $60,000 Paid Target Premiums/YR $36,000 Paid Target Premiums/YR 6) $500,000 Total Premiums $250,000 Total Premiums $100,000 Total Premiums $60,000 Total Premiums 7) Quarterly Progress Review With RD With Immediate Manager 8) Annual Review with RD

Agency Building Blocks Rights Reserved 1) Recruit - Producer, Recruiter 2) LEG 3) Magnificent “Seven” 4) Rule of “Three” 5) Principle of the understudy 6) Bottom/Top Approach 7) Recruit-Train-Sale Cycle 8) Teamwork/Involvement 9) Lead from the front 10) Quality vs. Quantity – Collect/Select 11) Generalization-Specialization Cycle 12) Simplify - KISS 13) Sowing/Reaping - Stout-Hearted 14) Set the example 15) Go forth and multiply 16) Numbers game - +/-, Attrition, Prime, Progression 17) Curves- Straight line, Pulse, Supply, Ravine / Death-defying, Crash-landing, Sine, Square, Cubic 18) Anarchy a) Absence of Rules b) Rules are impossible to implement c) Nobody is implementing the rules d) Rules are being violated with impunity 19) Five Pillars - Professionalism, Persistency, Perseverance, Production, Proficiency 20) Management Cycle - Planning, Organizing, Staffing, Directing, Controlling 21) Goal Setting 22) 7 C’s of Success - Commitment, Competence, Concentration, Consistency, Creativity, Control, Conduct 23) Maximin = Minimax

Recruit A recruit is not a recruit without a recruit Rights Reserved Recruit A recruit is not a recruit without a recruit A recruit is both a producer and a recruiter

A leg is not an effective leg without another leg Rights Reserved LEG A leg is not an effective leg without another leg

Magnificent “Seven” Tested to be the most efficient Rights Reserved Magnificent “Seven” Tested to be the most efficient Seven members of a squad Seven days in a week Less-not enough, inefficient More-Too much to handle

Out of the seven, select your best three Rights Reserved Rule of Three Out of the seven, select your best three

Principle of the Understudy Out of your best three, select your understudy that can duplicate or replace you Rights Reserved

Service the bottom Inform all at the top Bottom/Top Approach Rights Reserved Service the bottom Inform all at the top

Cycle of Success RECRUIT Marketing Structure Professional Development Rights Reserved RECRUIT Marketing Structure Professional Development Financial Independence TRAIN SELL

Teamwork/Involvement Rights Reserved No man is an island The whole is more than the sum of its parts Congregation

Lead from the front in sales, recruiting, and training Rights Reserved Set The Example Lead from the front in sales, recruiting, and training

Collect and collect; and then select Quality vs. Quantity Rights Reserved Collect and collect; and then select

Generalization/Specialization Cycle Rights Reserved

Keep It Simple and Sincere Rights Reserved Simplify K I S S Keep It Simple and Sincere

Sowing/Reaping What you sow you reap a thousand times Rights Reserved Sowing/Reaping What you sow you reap a thousand times Stout hearted men

The ultimate of selling is in agency building Rights Reserved Go Forth and Multiply The ultimate of selling is in agency building If you don’t talk about recruiting, it will never happen

Numbers Game +/- Attrition Prime Progression Arithmetic Geometric Rights Reserved Numbers Game +/- Attrition Prime Progression Arithmetic Geometric

Curves Straight Line Square $ Pulse Supply Sine Ravine/Death Defying Rights Reserved Straight Line $ y Cubic $ y Supply $ y Sine $ y Pulse $ y Ravine/Death Defying $ y Square $ y Crash Landing $ y

Why Anarchy? Absence of Rules Rules are impossible to implement Rights Reserved Why Anarchy? Absence of Rules Rules are impossible to implement Nobody is implementing the rules Rules are being violated with impunity

Five Pillars Professionalism Persistency Perseverance Production Rights Reserved Five Pillars Professionalism Persistency Perseverance Production Proficiency

Management Cycle Planning Organizing Staffing Directing Controlling Rights Reserved Management Cycle Planning Organizing Staffing Directing Controlling Always go back to planning every time there is a hitch

Book of Success Front Cover: Goal Setting Body: 7 C’s of Success Rights Reserved Book of Success Front Cover: Goal Setting Body: 7 C’s of Success Commitment Creativity Competence Control Concentration Conduct Consistency Back Cover: Maximin=Minimax Maximize profit, subject to minimum utilization of your own resources Minimize cost, subject to maximum utilization of other people’s resources Should be balanced