CORRECTION: Internal Exchange Compensation Rules
In the eNews distributed yesterday, June 3, a link was included to National Life Group’s Position Statement on Replacements at NationalLife.com. Commission information in that statement is outdated and no longer applicable. Please refer to the Rules below for the most up-to-date compensation policies and procedures for replacement business.
We, as an organization, believe that the best interests of our customers must always be given the first and highest priority and our replacement policies reflect that commitment.
Internal Exchange Rules
National Life Group’s internal exchange rules for annuities (fixed, fixed indexed, variable) are divided into two parts: The first set of rules address an exchange of a policy or monies from a policy to which no withdrawal charges apply. The second set of rules involves the exchange of a policy or monies from a policy to which withdrawal charges do apply.
Part I
After the Withdrawal Charge Period (Liquid)…
- The issuing Company will pay the agent 80 percent of the customary commissions on the new policy when the exchange is from a traditional fixed or variable annuity to another annuity.
- When the exchange is from an indexed annuity to another annuity, the issuing Company will pay 80 percent of the customary commission on the new policy provided the exchange is on the existing policy’s Index Account anniversary date.
- If the exchange from an indexed annuity does not take place on the policy Index Account anniversary, the issuing company will pay the agent 70 percent of the customary commission.
- For flexible premium indexed annuities, the policy Index Account anniversary will be the 21st of the month following the issue date.
Part II
During the Withdrawal Charge Period …
- Commissions on the new policy are 2/3 of the standard commission subject to the reductions stated below.
- Any commission otherwise payable on the new policy is first used to offset and reduce any withdrawal charges to the policyowner that would occur because of policy surrender. The commission reduction to offset withdrawal charges may not be enough to fully eliminate the withdrawal charge.
- The commission amount may be reduced further if the existing policy is an indexed annuity. In such case, LSW’s Actuarial Department in Dallas will calculate the exact charge.
- The balance of any commission will be payable according to the commission structure
- We highly discourage any transfer of a policy which surrender charges are applicable.
Questions
Exchanges involving annuities can be complicated! Please contact LSW’s Agent Service Department at 800-228-4579 for questions regarding transfers affecting newly issued LSW policies and National Life Agent Services at 800-536-5934 for newly issued National Life policies. When you contact an Agent Service representative, please provide the policy number of the existing policy and the type of new policy that will be used.
Replacement Forms
Replacement forms may be required by your state. Check the website for any needed forms at LifeofSouthwest.com. There, you can print off any necessary forms.
Internal Exchange Form Required
The Internal Exchange Form (Form No. 2804) must be completed and submitted with any requested internal exchange involving a fixed or fixed indexed annuity of National Life and/or LSW. Form 2804V should be used for an internal exchange involving any variable annuity.
Commissions and Convention/Incentives
The above rules were made a part of your commission schedule by notification on May 29, 2009. Single case commission agreements are not necessary. Please write in the “Remarks Section” of the application for the new policy that you desire an internal exchange for policy number (old policy number) into this application. The percentage of first-year commission paid to the writing agent is the percentage of commission credited for all sales incentive purposes.
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