Not approved for advertising use TMK Welcome To Online Training Agent Compensation

Not approved for advertising use TMK Compensation I.Compensation Basics II.Direct Pay Submit Advance Commissions III.Commission Account IV.Production Bonus V.Compensation Example

Not approved for advertising use TMK How our company makes money Expenses incurred to acquire business: Commissions and Bonuses Agents Unit Managers Branch Managers Expenses associated with running the company: Home office expenses Leads Branch expense account Employee Benefits Customer Claims

Not approved for advertising use TMK How our company makes money Agent 60% Annual Premium Commission 40% Annual Production Bonus 15% Lead Account 115% AP Annual Sub-total Unit Manager 40% Annual Premium Commission 24% Annual AP Production Bonus (60% of Agent’s 40%) 64% AP Annual Sub-total

Not approved for advertising use TMK How our company makes money Branch Manager 16% Annual Premium Commission 16% Annual Production Bonus (40% of Agent’s 40%) 8% Annual Z Account 40% Annual Sub-total Home Office & Field Employee Benefits 6% Annual AP 12% Annual AP 18% Annual Home Office Total

Not approved for advertising use TMK How our company makes money 115% Agent Annual Sub-total 64% Unit Manager Annual Sub-total 40% Branch Manager Annual Sub-total 18% Annual Home Office Total = 237% Annual Cost of First Year’s AP + Paying claims PROFIT!

Not approved for advertising use TMK Why it’s important to you 237% Annual Cost of First Year’s AP Almost 2 ½ years to recoup cost of acquiring the business Critical that the business you write stays in force as long as possible for the company to make a profit and continue to pay outstanding commissions and bonuses

Not approved for advertising use TMK Minimum Standards DCN Rate must be 20% or lower Quality of Business Rate must be 56% or greater $320 annual premium issued on 13-week average Must issue one net policy every eight weeks Failure to meet any of these minimum standards may result in termination

Not approved for advertising use TMK Remainder of this training Focus on the quality of business that is written If it’s good for the Agent (commissions, bonus, renewals) It’s good for the Customer (protection) It’s good for the Company (profit) It’s good for the Shareholder (earnings) Quality business results in higher bonuses and more renewals for the Agent!

Not approved for advertising use TMK Compensation Details found in the following documents: Guide to Growth (

Not approved for advertising use TMK Acronyms LNL = Liberty National Life Insurance Company PL = Permanent License QOB = Quality of Business AP = Annual premium

Not approved for advertising use TMK Acronyms (continued) DCN = Declines, Cancellations, Not Takens Declined for underwriting reasons o Medical history or paramed exam o Motor vehicle report Canceled o Customer requests cancellation prior to issue o Underwriting requirements not met Not taken o Customer doesn’t pay initial premium o Customer returns policy during free-look period

Not approved for advertising use TMK DCN Commissions Annual premium from policies that were declined, canceled, or not taken Subject to chargeback from Commission Account Production Bonus DCN Multiplier — factor based on percentage of total submitted premium that was declined, canceled, or not taken

Not approved for advertising use TMK Acronyms (continued) Most business written on these two modes: BB = Bank Budget premium payment mode PD = Payroll Deduction Other payment modes: ANN = Annual premium payment mode SA = Semi-Annual premium payment mode Q = Quarterly premium payment mode

Not approved for advertising use TMK Compensation LNL Agents are independent contractors until they qualify to become employees Hold a PL for Life & Accident and Health Have written applications resulting in the issue of $15,000 Annual Premium LNL employees are eligible for: Employee benefits program Taxes withheld from their paychecks

Not approved for advertising use TMK Review

Not approved for advertising use TMK Detailed information about how Liberty National Agents are compensated can be found in: a)Your contract b)Your Commission Schedule c)Your Bonus Schedule d)Guide to Growth on

Not approved for advertising use TMK Which of the following is NOT a requirement to meet Minimum Standards: a)QOB of 56% or greater b)DCN of 20% or lower c)$100 annual premium issued on 4-week average d)Must issue 1 net policy every eight weeks e)$320 annual premium issued on 13-week average f)All are requirements

Not approved for advertising use TMK What are the two most common payment modes: a)Annually b)Semi-annually c)Quarterly d)Bank Budget e)Monthly Premium Notice f)Payroll Deduction g)Both D & F

Not approved for advertising use TMK What does DCN stand for? a)Don’t Call Now b)Declines, Cancellations, Not Takens c)Debit Commission Notation d)Default Contract Negotiation e)None of the above

Not approved for advertising use TMK Liberty National Agents are independent contractors and must meet certain criteria to become eligible for employee status. True or False

Not approved for advertising use TMK Compensation I.Compensation Basics II.Direct Pay Submit Advance Commissions III.Commission Account IV.Production Bonus V.Compensation Example

Not approved for advertising use TMK Sources of Agent Earnings Direct Pay Submit Advance Commission Account Draw Renewal Commissions Production Bonus

Not approved for advertising use TMK Formula: Commissions Direct Pay Submit Advance Balance of 1st Year Commissions (Deposited into Commission Account) As-earned Renewals (from 13th month a policy is in force) Commissions

Not approved for advertising use TMK Example: 35-year-old male $50,000 Whole Life policy Annual premium = $1,010 First-year commission rate — Bank Budget mode = 60% See Guide to Growth Appendix on for commission rates

Not approved for advertising use TMK Formula: First-Year Commission Annual Premium Commission Rate First-Year Commission

Not approved for advertising use TMK Example: First-Year Commission Annual Premium Commission Rate First-Year Commission $ % $606

Not approved for advertising use TMK Formula: Direct Pay Submit Advance Commission Annual Premium Commission Rate Direct Pay Submit Advance Commission Submit Advance Percentage (BB)

Not approved for advertising use TMK Direct Pay Submit Advance Percentage Bank Budget and Annual modes70% or 50% PD (Section 125 only)50% or 30% All other modes0%

Not approved for advertising use TMK Example: Direct Pay Submit Advance Commission Annual Premium Commission Rate Direct Pay Submit Advance Commission $ % $ Submit Advance Percentage (BB)70%

Not approved for advertising use TMK Direct Pay Submit Advance Rules Not paid if negative commission account balance – all commissions deposited in commission account Not paid if business violates rules on persons related to Agent by blood/marriage in the Agent’s Instruction Guide Maximum Submit Advance on any one policy is $300 (except policies on annual premium payment mode) After an Agent has been appointed for 13 weeks, if the Commission Account balance falls below $500, the Direct Pay Submit Advance will be reduced by half

Not approved for advertising use TMK Review

Not approved for advertising use TMK The Direct Pay Submit Advance Percentage depends on the premium payment mode of the business. True or False

Not approved for advertising use TMK The Direct Pay Submit Advance will not be paid: a)If there is a negative commission account balance b)If business violates rules on persons related to Agent by blood/marriage in the Agent’s Instruction Guide c)Customer has health problems d)Both A & B e)All of the above

Not approved for advertising use TMK If an Agent has been appointed 13 weeks and the commission account falls below $500, what happens? a)Direct Pay Submit Advance will not be paid b)Direct Pay Submit Advance will be reduced by half c)Any bonus will be deposited into commission account d)None of the above

Not approved for advertising use TMK Compensation I.Compensation Basics II.Direct Pay Submit Advance Commissions III.Commission Account IV.Production Bonus V.Compensation Example

Not approved for advertising use TMK Friday: Submission cut-off is 3:30 p.m. central time Commissions Cycle Calendar May SunMonTuesWedThursFriSat

Not approved for advertising use TMK Saturday – Tuesday: Adjustments occur Commissions Cycle Calendar May SunMonTuesWedThursFriSat

Not approved for advertising use TMK Tuesday Evening: Commissions finalized Wednesday: Reports are published Commission Account Statement Earnings Statement Renewal Statement Friday: Payday Commissions Cycle Calendar May SunMonTuesWedThursFriSat

Not approved for advertising use TMK Commission Account After Direct Pay Submit Advance is paid, balance of First- Year Commissions is deposited into the Commission Account upon policy issue A percentage of the First-Year Commissions is paid from the Commission Account weekly thereafter No lump sum withdrawals

Not approved for advertising use TMK Commission Account (continued) Amount of First-Year Commissions released based on Commission Account balance: Commission Account Statement on Commission Account Balance % of Balance Pd. Wkly. Less than $3,000 $3,000 to $3,999 $4,000 or more 6% 8% 10%

Not approved for advertising use TMK Example: Commission Account This week: $2,000 First-Year Commission All policies Bank Budget = 70% Direct Pay Submit Advance

Not approved for advertising use TMK Example: Commission Account $2,000 X 70% At Submit Commission Account $2,000 Commissions This Week $1,400 Direct Pay Submit Advance Paid via EFT within two weeks Business keyed in at Home Office & policies issued Mon-Fri $1,400

Not approved for advertising use TMK Non-Direct Pay Submit Advance (Commission Draw): 6%, 8%, or 10%* payments start within two weeks following issue *based on balance $1,400 Direct Pay Submit Advance Paid via EFT within two weeks Example: Commission Account $2,000 X 70% $1,400 At Submit At Issue Commission Account $2,000 – 1,400 $ 600 (30%) $2,000 Commissions This Week Business keyed in at Home Office & policies issued Mon-Fri

Not approved for advertising use TMK Commission Chargebacks DCNs prior to issue Policies that lapse in the first year Policy Delivery Acknowledgement not returned

Not approved for advertising use TMK Commission Chargeback Rates # Months PaidChargeback % 0-2 Months100% 3 Months90% 4 Months80% 5 Months70% 6 Months60% 7 Months50% 8 Months40% 9 Months30% 10 Months20% 11 Months10%

Not approved for advertising use TMK Split Commissions Commissions may be split 50/50 only on policies written on paper application A-250 Applications cannot be split in the e-App system

Not approved for advertising use TMK Formula: Renewal Commissions 2 nd and subsequent years Commission Rate % Premium paid by customer Renewal Commission

Not approved for advertising use TMK Renewal Commissions Renewal commissions are Direct Pay as premiums are paid by the customer For LNL Agents, renewal commissions will be paid to the writing Agent: As long as the business is in force — and — The Agent is with LNL as an Agent, Unit Manager, or Branch Manager See Guide to Growth on for Renewal Commission rates

Not approved for advertising use TMK

Not approved for advertising use TMK

Not approved for advertising use TMK CC20002 (CC202010) Commission Account Statements Weekly

Not approved for advertising use TMK CC (CC170002) Transaction Register Weekly

Not approved for advertising use TMK Transaction Register — Annual Premium Column Reflects increase or decrease in Agent’s in-force AP that affects growth

Not approved for advertising use TMK Transaction Register — Adjustments Column Reflects modifications which may need to be made to ensure items are listed correctly Example: policy incorrectly credited to an Agent Certain policies (like $3,000 accidental death policy, dental, vision) do not credit growth Example: rider added — decrease for old premium, increase for new premium

Not approved for advertising use TMK PY (PY132005) Field Earnings Statements Weekly

Not approved for advertising use TMK Commissions FAQs What happens when there are returned drafts? Reduces gross submit for commission calculation If draft is made good: Does not pay an advance Added to commission account Draft is considered “made good” when policy issues, then commissions paid Returned drafts do not impact Agent’s gross submit for Bonus qualification

Not approved for advertising use TMK Commissions FAQs What causes a policy to be issued COD? A policy is issued COD if: A policy is issued other than that for which the applicant applied A signature is required The bank draft was returned

Not approved for advertising use TMK Commissions FAQs What happens when there is a COD policy? Agent paid Submit Advance when app is submitted Balance of first-year commissions deposited into Commission Account When COD Letter of Transmittal received Payment applied CODs not placed by Branch canceled at 45 days & submit advance commissions will be charged back

Not approved for advertising use TMK Commissions FAQs What happens when commissions are assigned to an unlicensed Agent? Commission posted to Agent’s escrow account Once Agent is licensed or expired license is renewed, commissions released from escrow 70% Direct Pay 30% deposited in Commission Account

Not approved for advertising use TMK Review

Not approved for advertising use TMK Agents should hold all apps until Friday afternoon for upload to the Home Office. True or False

Not approved for advertising use TMK Which of the following is true about an Agent’s Commission Account? a)After Direct Pay Submit Advance is paid, balance of First-Year Commissions is deposited into the Commission Account upon policy issue b)A percentage of the First-Year Commissions is paid from the Commission Account weekly after the Submit Advance c)Agents can withdraw funds at will from the Commission Account d)A and B only e)All of the above

Not approved for advertising use TMK If your Commission Account balance is more than $4,000, your weekly commission draw would be what percentage of the balance: a) 6% b) 8% c)10%

Not approved for advertising use TMK Commissions may be split 50/50 only on policies written on paper application A-250. True or False

Not approved for advertising use TMK Your Commission Account is subject to chargebacks for: a)DCNs prior to issue b)Returned bank drafts c)Policies that lapse in the first year d)Policy Delivery Acknowledgement not returned to the Home Office e)All of the above

Not approved for advertising use TMK Which one of the following information is NOT found in the Transaction Register? a)Individual and Worksite business issued for the week b)Submitted policies c)Lapsed policies d)Changes to payment modes e)Transfers

Not approved for advertising use TMK Returned drafts reduce the gross submit for commission calculation, but do not affect qualification for production Bonus. True or False

Not approved for advertising use TMK What causes a policy to issue COD? a)A policy is issued other than that for which the applicant applied b)A signature is required c)Returned bank draft d)All of the above e)None of the above

Not approved for advertising use TMK Compensation I.Compensation Basics II.Direct Pay Submit Advance Commissions III.Commission Account IV.Production Bonus V.Compensation Example

Not approved for advertising use TMK Friday: Submission cut-off is 3:30 p.m. central time Commissions Cycle Calendar May SunMonTuesWedThursFriSat

Not approved for advertising use TMK Production Bonus Cycle Calendar Wednesday: Bonus Detail Report is published Wednesday – Tuesday: Adjustments are made to Gross Submit to determine Net Submits May SunMonTuesWedThursFriSat

Not approved for advertising use TMK Production Bonus Cycle Calendar Tuesday Evening: Bonus finalized on Net Submit Friday: Payday May SunMonTuesWedThursFriSat

Not approved for advertising use TMK Production Bonus Minimum requirements DCN or QOB Minimum amount of gross submitted premium Bonus percentages depend on # of consecutive weeks Agent has qualified for Bonus Bonus payment cycle runs week following the commission cycle

Not approved for advertising use TMK Production Bonus Bonus qualification based on the Agent’s gross submitted premium To count toward that week’s gross submit, applications must be processed in the Home Office by Friday, 3:30 p.m. central time and premiums must be successfully bank drafted Excluded from the calculation are annuities, group dental, group vision, discount cards, auto-issue accident policies and similar products on which a commission is not paid

Not approved for advertising use TMK Production Bonus Life and Accidental Death Policies – Complex Beneficiary (CX) (Three or more beneficiaries or Other) Application requires additional day for underwriting Must be received by Home Office by Thursday, 3:30 p.m. central time to count towards that week’s gross submit for bonus calculation purposes Complex beneficiary apps submitted after Thursday, 3:30 p.m. will not count toward current week’s gross submit for bonus purposes

Not approved for advertising use TMK Production Bonus If any applications submitted that week are declined or canceled, or if premium cannot be deducted due to invalid account numbers, insufficient funds, etc., before bonus processing the following Tuesday, gross-submitted premium will be reduced by amount of annual premium for that policy Agents should verify all bank account information and check for accuracy to avoid invalid account numbers

Not approved for advertising use TMK Production Bonus Qualifications Minimum $1,000 gross annual submitted premium Bonus calculated on: 100% of net annual submitted Life premium 20% of net annual submitted Health premium DCN and QOB rates include Life and Health premium to determine Production Bonus Multipliers

Not approved for advertising use TMK Production Bonus Qualifications Agents Contracted Oct. 5, 2009, or later 25% of earned Bonus deferred to 10th month At 10 th month, deferred Bonus deposited into Commission Account After 10 th month, no portion of Production Bonus deferred — Agent receives 100% of Bonus as earned

Not approved for advertising use TMK Production Bonus Qualifications Calculating DCN Agents use a DCN multiplier of 1.0 for their first 2 months Annual premium from months 1&2 will count in the DCN Production Bonus Multiplier calculation All Agents build to a 3-month DCN roll After initial 2 months, if Agent production in DCN calculation period is less than $1,000, maximum DCN multiplier Agent can qualify for is 1.0

Not approved for advertising use TMK Production Bonus Qualifications All Agents transition to a 4 month QOB rate for Production Bonus Multiplier calculation on their 10th month

Not approved for advertising use TMK Month DCN Roll January 25 February 25 March 25 April 25 May 25 June DCN Multiplier Calculated 1 23 PRODUCTION 1 23 DECLINES, CANCELLATIONS, NOT TAKENS 4 Used to calculate Bonus

Not approved for advertising use TMK Example: 3-Month DCN Roll January 25 February 25 March 25 April 25 May 25 June DCN Multiplier Calculated 1 23 PRODUCTION 1 23 DECLINES, CANCELLATIONS, NOT TAKENS 4 Used to calculate Bonus $4,000 $100$350 $200

Not approved for advertising use TMK DCN Multiplier Table BB, PD, MN, Q, SA, and A DCN %MultiplierDCN %MultiplierDCN%Multiplier 21% %.82 5% %.54 12%.86 4% %.58 11%.90 3% %.62 10%.94 2% %.66 9%.97 1% %.70 8% % %.74 7% %.786%1.06 No Bonus will be paid to Agents with DCN rates higher than 20%

Not approved for advertising use TMK Formula: DCN Percentage Gross Submitted Premium Declines, Cancellations, Not Takens DCN Percentage

Not approved for advertising use TMK Formula: DCN Percentage Gross Submitted Premium Declines, Cancellations, Not Takens DCN Percentage $1,000 $12,000 8%

Not approved for advertising use TMK DCN Multiplier Table BB, PD, MN, Q, SA, and A DCN %MultiplierDCN %MultiplierDCN%Multiplier 21% %.82 5% %.54 12%.86 4% %.58 11%.90 3% %.62 10%.94 2% %.66 9%.97 1% %.70 8% % %.74 7% %.786%1.06 No Bonus will be paid to Agents with DCN rates higher than 20%

Not approved for advertising use TMK QOB Multiplier Table BB, PD, MN, Q, SA and A QOB %Mult.QOB %Mult.QOB %Mult.QOB%Mult.QOB%Mult. <54%.00 62%.77 71%.9880%1.0889% %.50 63%.77 72% %1.0990% %.56 64%.80 73% % % %.59 65%.83 74% %1.1192% %.62 66%.86 75% % % %.65 67%.89 76% % %.68 68%.9277% % %.71 69%.9478% % %.74 70%.9679%1.0788%1.21 No Bonus will be paid to Agents with QOB rates lower than 54%

Not approved for advertising use TMK Formula: QOB Percentage Gross Submitted Premium Business issued & paid 4 mos. or longer QOB Percentage

Not approved for advertising use TMK Formula: QOB Percentage Gross Submitted Premium Business issued & paid 4 mos. or longer QOB Percentage $10,080 $12,000 84%

Not approved for advertising use TMK QOB Multiplier Table BB, PD, MN, Q, SA and A QOB %Mult.QOB %Mult.QOB %Mult.QOB%Mult.QOB%Mult. <54%.00 62%.77 71%.9880%1.0889% %.50 63%.77 72% %1.0990% %.56 64%.80 73% % % %.59 65%.83 74% %1.1192% %.62 66%.86 75% % % %.65 67%.89 76% % %.68 68%.9277% % %.71 69%.9478% % %.74 70%.9679%1.0788%1.21 No Bonus will be paid to Agents with QOB rates lower than 54%

Not approved for advertising use TMK Production Bonus Percentages Based on number of consecutive weeks Agent has qualified for Bonus Consecutive Weeks Gross Submit $1,000 Annual Premium Production Bonus % 00% 110% 220% 330% 4+40%

Not approved for advertising use TMK Production Bonus Percentages If a 40% bonus Agent misses a week of $1,000 required gross submit, bonus percentage that week is 0%. If Agent submits required $1,000+ the next week, bonus percentage that week will be 30% Week Gross Submit Bonus Percentage 1$1,000+10% 2$1,000+20% 3$1,000+30% 4$1,000+40% 5$9000 6$1,000+30% 7$1,000+40%

Not approved for advertising use TMK Production Bonus Percentages If a 40% bonus Agent misses required $1,000 gross submit level a second consecutive week, Agent drops to 0% bonus level Week Gross Submit Bonus Percentage 1$1,000+10% 2$1,000+20% 3$1,000+30% 4$1,000+40% 5$ $1,000+10%

Not approved for advertising use TMK Example: Calculating Production Bonus Agent appointed in last six months $1,000 Life Submit $1,000 Health Submit $100 Health DCNs $200 Life DCNs Agent at 30% Bonus Level DCN Production Bonus Multiplier 1.06 (DCN 6%)

Not approved for advertising use TMK Example: Calculating Production Bonus Formula: Net Submit Gross Submit Declines, Cancellations, Not Takens Net Submit

Not approved for advertising use TMK Example: Calculating Production Bonus Net Submit Gross Submit Net Submit $1,000 $900 DCNs $100 HealthLife $1,000 $800 $200

Not approved for advertising use TMK Example: Calculating Production Bonus Net Submit Net Submit Bonusable Net Submit $900 $180 DCNs 20% HealthLife $ %

Not approved for advertising use TMK Example: Calculating Production Bonus Net Submit Net Health Submit Total Bonusable Net Submit $180 $980 Net Life Submit $800

Not approved for advertising use TMK Example: Calculating Production Bonus Formula Net Submit Bonus Payable (Round down to whole dollars) Basic Bonus Amount Production Bonus Multiplier 25% of Basic Bonus Amount (deferred to 10 th month) Bonus Percentage Level (10%, 20%, 30%, 40%) Net Bonus

Not approved for advertising use TMK Example: Calculating Production Bonus Net Submit Bonus Payable (Round down to whole dollars) Basic Bonus Amount DCN Production Bonus Multiplier 25% of Basic Bonus Amount (deferred to 10 th month) Bonus Percentage Level (10%, 20%, 30%, 40%) Net Bonus $ $ $ $ % $ $233

Not approved for advertising use TMK Weeks Bonus % Extra % Total % 1 st Time 40% Bonus Earner’s Double Bonus 12 40% +40% 80% 2 nd Time 40% For 1st time 40% Bonus earners only 11 40% 1 st time at 40%  4 40% +40% 80% 1 st Time 40% 8 Consecutive weeks after 1 st time at 40%  10 40% % 2 20% 1 10%

Not approved for advertising use TMK Example: Calculating Production Bonus Step 1 — Paid Weekly Plus 1st Time 40% Bonus Earner’s Double Bonus $1,300 Net Submit (all Life premium) 40% Bonus Percentage Level 40% Calculated Bonus 40% First-time Double Bonus Basic Bonus Amount 25% of Basic Bonus Amount (deferred to 10 th month) Net Bonus DCN Production Bonus Multiplier Agent’s Weekly Bonus Paid 40% $520 $1,040 $260 $ $850

Not approved for advertising use TMK Formula: Production Bonus Step 2 — Deferral Paid at 10 th Month 25% Deferral QOB Production Bonus Multiplier Agent’s Bonus Deferral (Rounded down to whole dollars) Deposited into Commission Account

Not approved for advertising use TMK Example: Production Bonus Step 2 — Deferral Paid at 10 th Month 25% Deferral QOB Production Bonus Multiplier (Round down to whole dollars) $ $ Agent’s Bonus Deferral Deposited into Commission Account $291

Not approved for advertising use TMK

Not approved for advertising use TMK CC (CC340503) Bonus Detail Report Weekly

Not approved for advertising use TMK CC (CC341505) Bonus Detail Report Adjusted (DMSM) Weekly

Not approved for advertising use TMK PY (PY132005) Field Earnings Statements Weekly

Not approved for advertising use TMK Review

Not approved for advertising use TMK Which of the following is NOT true about the production Bonus? a)The threshold to qualify for Bonus is $1,000 Gross Submit b)Returned drafts do not lessen Gross Submit for Bonus qualification c)Returned drafts reduce Net Submit d)Production Bonus is calculated on Gross Submit

Not approved for advertising use TMK The percentage of Bonus an Agent receives depends on the number of consecutive weeks the Agent has qualified for Bonus. True or False

Not approved for advertising use TMK What day and time each week is the cut off for application submission for gross submit for Bonus calculation purposes? a)3:30 p.m. Central Thursday b)4:00 p.m. Central Friday c)3:30 p.m. Central Friday

Not approved for advertising use TMK Which of the following is true about the Production Bonus? a)Life & Health Submit counts toward Bonus qualification b)No bonus will be paid to Agents with a DCN rate higher than 20% c)No bonus will be paid to Agents with a QOB rate lower than 54% d)All of the above

Not approved for advertising use TMK Which online report will show which Declines, Cancels, and Not Takens will reduce the Agent’s payable Bonus. a)Bonus Detail Report Adjusted b)Bonus Detail Report c)Field Earnings Statement d)Transaction Register

Not approved for advertising use TMK Compensation I.Compensation Basics II.Direct Pay Submit Advance Commissions III.Commission Account IV.Production Bonus V.Compensation Example

Not approved for advertising use TMK Example: Calculating Agent’s Total Compensation Calculations are done automatically at Home Office Online Field Reports ( Commission Account Statement Field Earnings Statement Bonus Detail Report Bonus Detail Report Adjusted

Not approved for advertising use TMK Meet Carl — Appointed 3 months ago Sixth consecutive week to qualify for Bonus (40% Bonus level) $200 Life DCNs $100 Health DCNs Individual Life DCN = 6% (DCN Individual Production Bonus Multiplier = 1.06)

Not approved for advertising use TMK Carl’s Sales This Week $30,000 Whole Life – Age 35BB$38.56 Individual Cancer – Age 52 BB$32.00 $10,000 Whole Life – Age 46BB$38.04 $30,000 Group Term Life – Age 40 (Section 125)PD$33.28 $25,000 Group Term Life – Age 29 (Section 125)PD$16.36 MODE MONTHLY PREMIUM* Family Hospital Intensive Care – Age 36BB$16.50 Life Health *Premiums shown are for illustrative purposes only.

Not approved for advertising use TMK Carl’s Annual Premium & Gross Submit Individual Cancer – Age 52 Family Hospital Intensive Care – Age 36 $ $ $ $ $ MODAL FACTOR ANNUAL PREMIUM $1, $ Life Gross Submit Health Gross Submit Total Gross Submit $1, $38.56 $33.28 $38.04 $32.00 $16.50 MONTHLY PREMIUM.09 $30,000 Whole Life – Age 35 $10,000 Whole Life – Age 46 $30,000 Group Term Life – Age 40 (Section 125) $25,000 Group Term Life – Age 29 (Section 125) $ $181.78

Not approved for advertising use TMK Carl’s Annualized Commission Individual Cancer – Age 52 Family Hospital Intensive Care – Age 36 $ $ $ $ $58.67 COMMISSION RATE ANNUALIZED COMMISSION $ $ Total Annualized Life Commission Total Annualized Health Commission Total Annualized Commission $1, $ $ $ $ $ ANNUAL PREMIUM $30,000 Whole Life – Age 35 $10,000 Whole Life – Age 46 $30,000 Group Term Life – Age 40 (Section 125) $25,000 Group Term Life – Age 29 (Section 125) $ $113.61

Not approved for advertising use TMK Carl’s Direct Pay Submit Advance Commission on Bank Budget Mode Premium $ $ $ $30,000 Whole Life – Age 35 Annualized Commissions on Bank Budget Mode Premium $10,000 Whole Life – Age 46 $ $58.67 Individual Cancer – Age 52 Family Hospital Intensive Care – Age 36

Not approved for advertising use TMK Carl’s Direct Pay Submit Advance Commission on Bank Budget Mode Premium $ $ % Annualized Commission on Bank Budget Mode Premium Direct Pay Submit Advance Commission Bank Budget Mode Premium Submit Advance Percentage (BB)

Not approved for advertising use TMK Carl’s Direct Pay Submit Advance Commission on Payroll Deduction Section 125 Premium $ $ $ $30,000 Group Term Life – Age 40 Annualized Commissions on Payroll Deduction Section 125 Mode Premium $25,000 Group Term Life – Age 29

Not approved for advertising use TMK Carl’s Direct Pay Submit Advance Commission on Payroll Deduction Section 125 Premium $ $ % Annualized Commission on Payroll Deduction Section 125 Premium Direct Pay Submit Advance Commission Payroll Deduction Section 125 Premium Submit Advance Percentage (PD – Section 125)

Not approved for advertising use TMK Carl’s Direct Pay Submit Advance Commission $ $ $ Direct Pay Submit Advance Commission (BB) Direct Pay Submit Advance Commission Direct Pay Submit Advance Commission (PD-Section 125)

Not approved for advertising use TMK Deposited into Carl’s Commission Account $1, $ $ Total Annualized Commissions Deposited into Commission Account Direct Pay Submit Advance Commission Commission account draw 6%, 8%, 10% depending on balance

Not approved for advertising use TMK Carl’s Net Life Submit $1, $ $1, Gross Life Submit Life DCNs Net Life Submit

Not approved for advertising use TMK Carl’s Net Health Submit $ $ $ Gross Health Submit Health DCNs Subtotal $ % Net Health Submit (for Production Bonus calculation) % Net Health Submit on which Bonus is calculated

Not approved for advertising use TMK Carl’s Net Submit Premium $1, $1, $87.18 Net Life Submit Total Net Submitted Premium Net Health Submit (20% of total)

Not approved for advertising use TMK Carl’s Individual Production Bonus Step 1 — Paid Weekly $1, $ $ $ % $ Net Submit (Round down to whole dollars) Basic Bonus Amount DCN Production Bonus Multiplier Basic Bonus Amount (deferred to 10 th month) Bonus Percentage Level Net Bonus $410Agent’s Weekly Bonus Paid

Not approved for advertising use TMK Carl’s Earnings from This Week $ $ $1, $ Direct Pay Submit Advance Commission Production Bonus Paid Total First-Year Commissions and Bonus Deposited into Commission Account

Not approved for advertising use TMK Carl’s Sales This Week $1, First-Year Commissions and Bonus Earnings This Week So how does the amount of business written equate to the amount of money earned? Total Gross Weekly Submit $1, Total Gross Monthly Premium $174.74

Not approved for advertising use TMK Carl’s Sales This Week $ 1, First-Year Commissions and Bonus Earnings This Week 52 Weeks $79, Don’t Forget: 10 th month: Deferred Production Bonus 13 th month: Renewals on in-force business

Not approved for advertising use TMK Congratulations!