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03-02-09 Ed. LNL0924

i

LIBERTY NATIONAL LIFE INSURANCE COMPANY

INFORMATIONAL BOOKLET

for

UNITED AMERICAN

AGENTS

UNIT MANAGERS

BRANCH MANAGERS

03-02-09 Ed. LNL0924

ii

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.

03-02-09 Ed. LNL0924

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TABLE OF CONTENTS

AGENTS

I. COMMISSION ACCOUNT

A. Credits ......................................................... 1

B. Charges ......................................................... 2

C. Payments from the Commission Account ............................ 2

D. Lump Sum Withdrawals ............................................ 2

E. Transfers of First Year Commissions ............................. 2

II. COMMISSION RULES

A. Split Commissions ............................................... 2

III. WEEKLY PRODUCTION BONUS

A. Calculation of Bonus ............................................ 2

B. Payment of Bonus ................................................ 4

C. DCN Multiplier for Management Reassigned as Agents .............. 4

IV. SPECIAL BENEFITS

A. Torch Club ...................................................... 4

UNIT MANAGERS

V. OVERWRITE COMMISSIONS

A. Payment of First Year Commissions ............................... 7

B. Payments from the Commission Account............................. 7

C. Lump Sum Withdrawals ............................................ 7

VI. PERSONAL PRODUCTION

A. Commissions ..................................................... 7

B. Rules ........................................................... 7

VII. WEEKLY PRODUCTION BONUS

A. Payment of Bonus ................................................ 7

VIII. SPECIAL BENEFITS

A. Torch Club ...................................................... 7

BRANCH MANAGERS

IX. OVERWRITE COMMISSIONS

A. Payment of First Year Commissions ............................... 10

B. Payments from the Commission Account ............................ 10

C. Lump Sum Withdrawals ............................................ 10

X. PERSONAL PRODUCTION ................................................ 10

XI. BONUS

A. Weekly Production Bonus ......................................... 10

XII. SPECIAL BENEFITS

A. Torch Club ...................................................... 10

03-02-09 Ed. LNL0924

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Explanation of Abbreviations and Terms

ANN - Annual Mode

AP - Annual Premium

ART - Annual Renewable Term

BB - Bank Budget Mode

DCN - Declines, Cancellations, and Not-Takens

FYA - First Year Agent

LNL - Liberty National Life Insurance Company

PD - Payroll Deduction Mode

RYA - Renewal Year Agent

03-02-09 Ed. LNL0924

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United American Agents

I. COMMISSION ACCOUNT

All annual 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 & Other PD - 0%

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.

03-02-09 Ed. LNL0924

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B. Charges

1. Declines, Cancelled & 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.

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 Charge Months Premium Charge

Paid Back % Paid Back %

0-2 months 100% 7 months 50%

3 months 90% 8 months 40%




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 Unit Manager.

II. COMMISSION RULES

A. Split Commissions

Commissions may be split only on policies written on application A-250.

III. WEEKLY PRODUCTION BONUS

A. Calculation of 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.

03-02-09 Ed. LNL0924

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The amount of gross submitted annual premium required in order to qualify

for a bonus in a given week is based on the Agent’s length of service

with Liberty National’s affiliate United American, and is reflected in

the bonus commission schedule attached to your Independent Contractor’s

Agreement.

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.

The DCN component of the bonus is shown in the following table:

DCN MULTIPLIER TABLE

(For Agents appointed April 28, 2008 and after)

DCN

%

MULTIPLIER DCN

%

MULTIPLIER DCN

%

MULTIPLIER

29> .00 19 .94 9 1.11

28 .65 18 .96 8 1.13

27 .70 17 .98 7 1.16

26 .73 16 1.00 6 1.19

25 .76 15 1.01 5 1.22

24 .79 14 1.02 4 1.26

23 .82 13 1.03 3 1.30

22 .85 12 1.05 2 1.35

21 .88 11 1.07 1 1.35

20 .91 10 1.09 0 1.35

The bonus calculation will be as follows:

First, if the first year agent gross submits $950 or more annual

premium, the agent qualifies for a bonus. If not, the agent does not

qualify for a bonus.

If an Agent gross submits $950 or more, then we determine how many

weeks in a row the agent has qualified for a bonus and apply the

applicable percentage rate to the net submitted premium. Net

submitted premium is calculated as follows:

Net submitted premium = Gross submitted premium minus declines,

cancellations & not-takens.

The DCN multiplier is then applied.

Net submitted premium

x Bonus Percentage based on consecutive weeks gross submitting $850

x DCN Multiplier

Weekly Production Bonus payable to the agent

Example 1: A FYA has qualified for a bonus for the previous 3 weeks.

This week, the FYA gross submits $950. The agent has no declines,

cancellations or not-takens this week. The Agent’s 3-month DCN rate is

12%, so the DCN multiplier is 1.05.

Weekly Production Bonus = $950 x 40% x 1.05 = $399.00

03-02-09 Ed. LNL0924

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This week, the FYA gross submits $950. The agent has $100 in

declines, cancellations or not-takens this week. The Agent’s 3-month

DCN rate is 12%, so the DCN multiplier is 1.05.

Since the agent gross submitted $950 or more, the Agent is eligible

for a bonus. The actual bonus paid is based upon the net submitted

premium. Net submitted premium equals $850 ($950-$100).

Weekly Production Bonus = $850 x 40% x 1.05 = $357.00


This week, the FYA gross submits $600. The agent has $100 in

declines, cancellations or not-takens this week. The Agent’s 3-month

DCN rate is 12%, so the DCN multiplier is 1.05.

Since the agent did not gross submit $950 or more, the Agent is not

eligible for a bonus. To be eligible for a bonus in the future, the

Agent must submit $950 or more.

B. Payment of Bonus

Subject to the following exceptions, 100% of the production bonus will be

paid direct by including it in the Agent’s weekly pay statement.

If an Agent has 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.

C. 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.

IV. SPECIAL BENEFITS

A. Torch Club

1. Torch Club Qualification

To qualify for Torch Club, Agents must have $72,800 ($1,400 per

week) net AP issue and have premium growth during the qualification

period. Agents employed in 2009 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

01/02/09, and the last week’s issue and growth will be those in the

register dated 12/25/09.

03-02-09 Ed. LNL0924

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For United American business, the convention qualification will be

from 12/25/08 thru 12/24/09. UA production counts at 1/4th AP credit

on CS1,GSP3, GSP2, GSP1, HSXC, MMXC, SHXC and Medicare Supplements.

Liberty National 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 manger 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 Fontainebleau Hilton Resort in Miami.

The dates are July 8 – 11, 2010.

3. 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 time of the meeting. 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

03-02-09 Ed. LNL0924

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Special badges will be given to qualifiers for the Leaders' Club,

President's Club and President's Council.

In addition, extra Torch Club credit is posted to the qualifier's

record.

Leaders' Club - 1.5 Torches

President's Club - 2.0 Torches

President's Council - 3.0 Torches

c. Rookie of the Year

Agents contracted April 2008 through March 2009 will be eligible

for the Rookie of the Year award. Re-contracted Agents are not

eligible. The Agent cannot have been licensed 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.

d. 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

employment.

6. Physical Examinations

The Company will reimburse active SLUs between the ages of 40 and 65 up

to $200 of out-of-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.

03-02-09 Ed. LNL0924

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United American Unit Managers



V. OVERWRITING COMMISSIONS

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 26 weeks of service.

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.

VI. PERSONAL PRODUCTION

A. Commissions

Commissions and charges on personal production will be the same as those

payable 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 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.

VII. WEEKLY PRODUCTION BONUS

A. Payment of Bonus

100% of the production bonus will be paid direct by including it in the

Unit Manager’s weekly pay statement. A Unit Manager may elect to have

the entire bonus credited to the commission account.

V. SPECIAL BENEFITS

A. Torch Club


To qualify for Torch Club, a Unit Manager must have $208,000 in Net AP

Issue* for the year ($4,000 per week.) Half of this requirement

($2,000 per week) must be FYA Production. In addition, the Unit

03-02-09 Ed. LNL0924

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Manager must meet all current minimum standards, and the unit must

have premium growth.





*UA production counts at 1/4th AP credit on CS1, GSP3, GSP2, GSP1,

MMXC, HSXC, SHXC AND Medicare Supplements on both the previous and the

current year. LNL production counts at full AP credit for both the

previous and the current year.


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 will be

members of the Chairman’s Club, and 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




d. Rookie Unit Manager of the Year

Leading Unit Manager in 2009 Torch Club production credits who was

newly appointed as a Unit Manager between April 2008 and March 2009

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 Agent's 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.

03-02-09 Ed. LNL0924

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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.

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.

03-02-09 Ed. LNL0924

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United American Branch Managers



IX. OVERWRITING COMMISSIONS

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 26 weeks of contracting.

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.

X. PERSONAL PRODUCTION

See Unit Managers Section.

XI. 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.

XII. SPECIAL BENEFITS

A. Torch Club


Branches have been divided into three flights based on 13-week All

Agent average production. 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.



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.

03-02-09 Ed. LNL0924

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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.





*UA production counts at 1/4th AP credit on CS1, GSP3, GSP2, GSP1,

MMXC, HSXC, SHXC AND Medicare Supplements on both the previous and the

current year. LNL production counts at full AP credit for both the

previous and the current year.


To be eligible for one of the following honors, a Branch Manager must

qualify to attend Torch Club and must be employed as a 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.

03-02-09 Ed. LNL0924

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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




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