Presented by: Shelby J. Smith, Ph.D. Training/Service/Support by: 401k Marketing

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SecurePlus VIP A Fixed Indexed Annuity (FIA)
Exclusively for 401(k) PlansPhase 1 Training

• Presented by Shelby J. Smith, Ph.D.Training/Ser
  vice/Support by 401k Marketing

For Agent Use Only
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The Market Why Now?

• The Market
• Roughly 450,000 401(k) Plans ranging from 1
  employees to millions
• 50 ages own majority of 401(k) assets
• Participating employees about 50 million
• 401(k) assets 3.1 trillion (12.2011) varies
  with stock/bond market changes
• Why Now?
• Recent market volatility aging workforce
• Greatest fear of retirees is outliving money
• Guaranteed lifetime income viewed favorably
• Potential impact of mandated fee disclosures
• Perceived flaws in current 401(k) plans
• Source 2012 Investment Company Fact Book, 52nd
  Edition, Chapter 7
• Source Allianz Life Insurance Company of North
  America, Poll released June 2010 Harris
  Interactive poll conducted 9/2012 for Wells Fargo
  Institutional Retirement Research

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Fixed Indexed Annuity offered by

• Life Insurance Company of the Southwest
• (Rating current as of 12/21/2012)
• A.M. Best A (Excellent)
• SP A (Strong)
• Moodys A2 (Good)
• About National Life
• A Fortune 1000 company serving 840,000 customers
• Founded in 1848
• FIAs since 1996 (first to issue flex FIA)
• LIMRA recognized 1 provider of FIAs for
  employer plans
• Source www.nationallifegroup.com
• LIMRA, U.S. Individual Annuities Executive
  Summary Second Quarter 2011

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SecurePlus VIP FIA Value Income Plan

• Features benefits overview
• Set commissions paid on accumulation value
• No commission on policies to single annuitants
  for amounts over 1,000,000
• Annuitant issue ages 25 75 cumulative max
  premium 500,000 all ages
• Minimum premium 100/mo. salary reduction
  3,000 Q Single Premium
• For 401(k) Plans exclusively
• 10 free w/d of Accumulated Value for transfer to
  other plan options after first year
• Early Withdrawal Penalties 10 years starting at
  10 year 1 and decreasing 1 each year
  thereafter. Initial premium date starts penalty
  period for subsequent premium additions
• Nursing Care at no additional cost Nursing Care
  rider not approved in all states
• Portable by employee upon separation from
  employer any reason
• Lump-sum and additional premiums permitted
  subject to minimum amounts
• Integrated Guaranteed Lifetime Income Rider
  (GLIR)
• Policy Form No. 8891(0910), along with Rider
  Form No. 7965, 7966, or state variations thereof.
  Not approved in all states.
• Single payment of 0.8 in year one at time
  premium accepted and 0.20 policy quarterly in
  subsequent years.
• Must maintain at least 2,500 in SecurePlus
  VIP after withdrawals to keep in force

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The FIA Exclusively for 401(k) Plans

• Integrated Guaranteed Lifetime Income Rider
  (GLIR) Highlights
• Up to thirty year accumulation period for the
  Roll-up Rate
• Initial Roll-up Rate guaranteed for 10 years
  current Roll-up Rate is 6
• Income Calculation Base Adjustment on every fifth
  anniversary through year 30
• Guaranteed Withdrawal Percentage starting at 3
  at age 55 increasing 0.2 each year income is
  deferred up to age 60 thereafter increases 0.1
  annually until age 90.
• Enhanced Withdrawal Benefit that increases the
  Guaranteed Withdrawal Percentage by 2.5 if the
  annuitant qualifies becomes permanently unable
  to perform 2 of 6 ADLs (available only in
  approved states)
• Joint Withdrawal Option is available for male
  female spouses at 0.5 lower than single life and
  based on age of younger spouse. Enhanced benefits
  not available for Joint Withdrawal Option.
• Early withdrawal charges not assessed when GLIR
  activated

• Policy Form No. 8891(0910), along with Rider
  Form No. 7965, 7966, or state variations thereof.
  Not approved in all states.
• Guarantees are dependent on the claims paying
  ability of the issuing Company
• IRS early distribution penalty may apply
  before age 59½

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The FIA Exclusively for 401(k) Plans

• Integrated Guaranteed Lifetime Income Rider
  (GLIR) Highlights
• Withdrawals allowed
• 10 of accumulation value annually without
  penalty after year 1.
• Withdrawals during accumulation period but income
  Calculation Base will be reduced
  proportionally
• Excess Withdrawals during Withdrawal Period but
  Guaranteed Withdrawal Payments reduced
  proportionally. If withdrawal reduces
  Accumulation Value to zero, lifetime income
  stops.
• Stop and restarting income is permitted
• RMD friendly withdrawals are available
• Costs of GLIR
• 0.70 per year for first 20 years 0.80 per
  year after year 20
• Each additional premium is tracked separately and
  the GLIR rider cost based on the elapsed time
  since the premium was received accepted
• SecurePlus VIP is Portable if Annuitant separates
  from employer

• Policy Form No. 8891(0910), along with Rider
  Form No. 7965, 7966, or state variations thereof.
  Not approved in all states.
• Guarantees are dependent on the claims paying
  ability of the issuing Company
• IRS penalty may apply for withdrawals prior to
  age 59½

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The Solo 401(k) Plan for YOU

• Independent contractors 1099 employees
  generally qualify
• Cannot have full time employees, except spouse
• How is Solo 401(k) funded?
• Rollover other qualified plans into Solo tax
  free if done properly
• Annual contributions
• 17,000 in 2012 (22,500 if age 50 or more)
• 20 to 25 of profits (25 if business pays
  taxes) up to combined total of 50,000 (55,500
  if gt age 50)
• Limit raised to 17,500 (23,000 for ages gt50)
  for 2013 changes annually with inflation
• Amount could be double if your spouse is on the
  payroll one Solo plan with two participants
• If opened by year-end, contributions can be made
  as late as April 15th of following year
• Both voluntary profit sharing contributions are
  discretionary
• Solo 401(k) can be traditional (before tax) or
  Roth (after tax)
• Loan for any use lesser of 50 of assets value
  or 50,000
• Virtually unlimited investment options, including
  FIAs
• ExpertPlan can set up a Solo 401(k) for you

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Payment Options for SecurePlus VIP

• Must be insurance licensed securities
  licensed/registered to offer
• LSW appointment required to offer SecurePlus VIP
  to 401(k) Plans
• SecurePlus VIP cannot be offered outside 401(k)
  plans
• Offering SecurePlus VIP requires approval of BD
  and/or RIA
• If securities licensed (broker dealer)
• Commission of 0.8 paid next commission cycle on
  all premium received during year 1
• After year 1, commission of 0.2 paid on
  accumulation value at policy quarters end
• All SecurePlus VIP commissions paid directly by
  LSW
• If Securities Registered
• Form ADV filed with regulatory authority will
  state fees
• Fees for all assets in the 401(k) plan must be
  equal percentage amount
• Asset fees can different between 401(k) plans,
  e.g., based on aggregate assets of plan
• Maximum fees for SecurePlus VIP FIA cannot exceed
  0.8 annually
• Fees paid to you by LSW not deducted from
  participants accounts

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The Players Construction of 401(k)

• The Players
• Product providers mutual funds, ETF, employer
  stock, FIA more
• Record keeper
• Third Party Administrator (TPA)
• Custodian
• Plan sponsor (employer)
• Plan participant (participating employee)
• Construction
• Bundled
• Unbundled
• Affiliated

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Two Record Keeping Options

• Only ExpertPlan currently provides electronic
  FIA record keeping
• A 401(k) Plan can have only one record keeper
• Option 1
• ExpertPlan will be the record keeper for all
  Plan assets
• Advantage 1 FIA administered same as other
  options costs are lower
• Advantage 2 Single website for account
  access/management
• Advantage 3 You can become broker of record
  for all Plan assets
• Advantage 4 No need to change Third Party
  Administrator (TPA)
• Disadvantage Record keeping must be transferred
  to ExpertPlan
• Option 2
• ExpertPlan will not be the record keeper FIA
  added as brokerage managed account
• Advantage 1 Retain current record keeper TPA
• Disadvantage 1 Administrative fees for managed
  account may be higher
• Disadvantage 2 FIA cannot be accessed/administer
  ed on-line
• Disadvantage 3 Broker of record may oppose
  adding FIA
• Disadvantage 4 You may collect fees/commissions
  only on FIA

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What About TPA?

• Record keeper and TPA can be different
• Current TPA Plan Sponsor must
• Agree that ExpertPlan will be record keeper OR
• Add FIA to the Plan as a managed account
• Note In Bundled Design TPA record keeper may
  be affiliated
• If FIA added as managed account
• Current TPA will receive paper reports (from LSW)
  for administration
• TPA fees for manual administration may be higher
• Paper-based administration means no online
  functionality
• You may or may not be broker of record for Plan
• Note If design is bundled, adding FIA may be
  difficult
• unless record keeper TPA changed

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What are Your Choices?

• If Plan Sponsor (employer) is willing to change
  record keeper TPA
• Discuss circumstances with your marketing
  representative
• ExpertPlan marketers will help you prepare
  proposal to present to employer
• Highlight benefits of making the change
• Establish a date for the changes work with
  assigned ExpertPlan marketer
• If Plan Trustee is willing to change record
  keeper but not TPA
• Confirm the current TPA will work with ExpertPlan
• Discussions between TPA and ExpertPlan will occur
• Get proposal, present highlights set dates for
  changes
• If Plan Trustee is not willing to change record
  keeper or TPA
• Confirm that current TPA will add FIA as managed
  account
• Highlight benefits of adding FIA to the Plan
• Identifying the product provider, record keeper
  TPA

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Getting Started with Prospecting

• What about a Solo 401(k) for you (and your spouse
  if on the payroll)?
• Do you have business owner(s) client(s)
  sponsoring 401(k)?
• Do you know decision makers or executives of
  businesses with 401(k)?
• Is record keeper or TPA for prospected plan
  ExpertPlan or Ascensus?
• Size does matter! May want to start with Solo or
  small plans.
• Direct mail program
• Preapproved prospecting direct letter available
  from marketer
• Customize a letter for use must be approved by
  distributor before using
• Can 401k Marketing be your mail house?
• Can you sponsor a 401(k) workshop for business
  owners self-employed?
• Are you a member of a business" or trade
  association?
• Do you belong to the Chamber of Commerce?
• Do you do radio or TV programs?
• More prospecting methods covered in Phase 2
  Training

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Why ExpertPlan?

• ExpertPlan record keeper for 16,000 plans
• Specialty is micro and small plans your market
• Can provide all current mutual funds and ETF in
  plans to be transferred
• In process of merging with Ascensus
• Record keeper for 27,000 defined contribution
  plans
• Administers over 1.5 million IRAs
• A division of Crump Group, Inc. largest U.S.
  insurance wholesale distributor
• Dedicated wholesale staff
• Six internal wholesalers with phone access
• Six external (field) wholesalers to assist you
  from start to finish
• As agent/advisor in FIA/401(k) program you will
  have
• Advisor site that tracks all your 401(k) Plans
• Demonstration sites for plan sponsors plan
  participants
• Access to internal external ExpertPlan
  wholesaler

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Why ExpertPlan?

• Your assignment
• Visit www.expertplan.com and review, especially
  SmartPlan Advisor DEMO
• Will need to register as financial partner to
  obtain proposals no cost
• Visit and review following demonstration sites
• https//www.expertplan.com/secureplusvip.jspuser
  name/password Secureadvisor/Password1
• or Securesponsor/Password1 for plan sponsor or
  employee (all are case sensitive)
• LSW private label site for employee, employer
  advisor
• What you can offer your 401(k) clients
• Full menu of Mutual funds stock, bonds more
• Full menu of Exchange Traded Funds (ETF)
• Managed account of specialty constructed
  portfolios
• Managed portfolios from your RIA or others
• SecurePlus VIP fixed indexed annuity from LSW
• ETF versus mutual funds

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ExpertPlan Fees
Plan assets 0 - 1 million 1 - 4 million 4 - 8 million
New Plan Set-Up Fee 750 N/A N/A
Conversion Plan Set-Up Fee 1,250 1,250 Waived
Annual Administration Fee 975 975 Waived
Annual Participant Fee 39 29 19

• 375 initial plan set-up fee for Non Standardized
  plans
• 250 annual fee for plans that contain more than
  20 investments
• 15 annual fee for participant quarterly home
  mailed statements
• 75 one time loan set up deducted from loan
  check (no loans available on FIA)
• 50 annual loan maintenance paid by the
  participant (not applicable to FIA)
• 65 per distribution processing and reporting
  ExpertPlan deducts these fees from the
  distribution or participants account
• 25 Replacement check charge for lost loan and
  distribution checks.
• Client shall enter into a service agreement
  directly with TD Ameritrade Trust Company to pay
  for custodial services. (separate fee schedule)
• 250 for post implementation mapping of plan
  assets
• 1,250 de-conversion fee 150 per hour for
  customized de-conversion reports
• ExpertPlan receives revenue sharing reimbursement
  on mutual funds, ETFs and FIA
•  
• Custom pricing is always considered on a per plan
  basis
•  

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Getting Started with Prospecting

• Define your target market
• Develop your marketing strategy
• Contact prospects set an appointment
• Cover the list of advantages for your
  involvement
• No current service, high fees, market exposure
• Hands-on service/support/advice lower cost/fees
• Not reducing investment menu, just adding FIA
  with GLIR
• Boost welfare/morale of those approaching
  retirement risk averse
• Not removing options, just adding lifetime income
• Comparison proposal from ExpertPlan is free

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What are the Hurdles?

• Longer sales cycle
• Your broker-dealer or RIA must approve FIA
• Must learn 401(k) market dealing with
  businesses
• Level commission is only option
• Securities licensed/registered required
• Why follow up service support is required
  critical

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What are the Opportunities?

• Working with groups
• Including 401(k) Plans in your practice
• Recurring commission potential
• Potential opportunity for new business outside
  401(k)
• Create your own Solo-401(k)
• Learn FIA/401(k) market before your competitors

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Questions?

• Call Help Desk at 401k Marketing at 877.319.2078
  for details. Talk to your marketer Andy Alvis,
  Celeste duPreez or Rebecca Brundage
• To do list
• Start prospecting for 401(k) plans to add FIA
• Training session 2 proposal prospecting
  process
• Training session 3 enrollment process
• Training session 4 follow up servicing