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

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

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

4. Term – Insurance For A Specified Period T1T1 T2T2 T age CCOI $ T 1 Flexible Premium 2 Adjustable Death Benefit 3 Current Interest Rate 4 Guaranteed Interest Rate UL $ Rights Reserved

5. Premiums $ Tamra 88 Defra 85 Net Level 7 Pay Test Guide Target Minimum Premiums Single Level eg. $5,000 eg. $25,000 eg. $2,000 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 — M.E.C Annuity Rights Reserved

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

7. Life Insurance Tests 1. Guide Premium 2. Corridor – Age 95 Rights Reserved

8. Options t1t1 95 T $ $ T Savings OPT A Level Face Amount OPT B Increasing Face Amt or Face Amt + Savings 100,000 t1t1 Rights Reserved Amount At Risk

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

10. Hierarchy of Life Plans Whole Life Universal Life Term Rights Reserved

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

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

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

14. Product Spectrum Life DILTC10T AF ANICO Assurity Sagicor LBL 15T AF Assurity LBL 20T AF ANICO Assurity Sagicor LBL AF ANICO Sagicor LBL 30TT95 AF UL ANICO LBL Assurity Par ANICO Assurity Simplified Issue Assurity Non-Par AF Sagicor Big Cases  LBL/ANICO Small Cases  ANICO/AF/Assurity/Sagicor Preferred/Big Cases  LBL/ANICO Standard & Below  ANICO/AF/Assurity/Sagicor WL CI Assurity Rights Reserved 25T AF GT AssuritySagicorAssurity

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

16. Annuity Ideal Cases AFA (FPA $25/mo - $10,000/yr) Sagicor/Assurity (SPDA $2,000) ANICO (SPDA $4,000Q/$5,000NQ) LBL (SPDA $10,000) LBL (FPA $3,000Q/$10,000NQ) Rights Reserved

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

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

19. Penalty Free Plan Early Distributions 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 Rights Reserved

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

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

22. IRA Rollover Exceptions 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 Rights Reserved

23. Penalty Free IRA Early Distributions 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 Rights Reserved

24. Required Minimum Distributions (RMDs) 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% Rights Reserved

25. 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 Rights Reserved

26. Persistency Ratio Active over issued policies Modal payment hierarchy 1. Annual, 7 Pay, or Single 2. Monthly bank draft 3. Semi-annual 4. Quarterly 5. Monthly direct billing Client contact/review Improve placement ratio Rights Reserved

27. Goal Setting 4.$$$$ 3.Sale/Network 2.Appointment 1. Calls ——————— 3 min NO $ Time Need Name Company Purpose Appt. T1T1 T2T2 Rights Reserved

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

29. ESDASMDMUMHow? 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 YR4 Agents Per YR2 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 Yes 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 With Immediate Manager Aalliance Management Expectation/Commitment (Calendar Year) Rights Reserved

30. Agency Building Blocks 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 Rights Reserved

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

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

33. 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 Rights Reserved

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

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

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

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

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

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

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

41. Generalization/Specialization Cycle Rights Reserved

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

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

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

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

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

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

48. Five Pillars Professionalism Persistency Perseverance Production Proficiency Rights Reserved

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

50. Book of Success Front Cover: Goal Setting Body: 7 C’s of Success CommitmentCreativity CompetenceControl ConcentrationConduct 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 Rights Reserved