All of North American's life division agents and agencies will be assigned new agent codes to conduct life insurance business. These new codes will replace your current code and will follow you through the entirety of your relationship with North American. Agent codes will now be permanent, regardless of changes that may occur to your agent contract including reporting relationships and compensation. As long as your contract status remains active with the company, your new life division agent code will remain unchanged.

Your unique agent code will be emailed to you in early April. This new agent code is only for your life insurance business and will not affect any annuity codes or business.

Please use this new code on any documents, including New Business and Policy Change policy applications, starting May 1, 2020.

Some additional points of reference:

• Based on your original contract date, your new code may be similar to the code you use today or one you have used previously.
• For agents with multiple active agent codes today, you will receive a new agent code that replaces each of your current active codes. For your convenience, the new codes will contain a similar letter/number structure. You will receive a distinct email communication for each agent code.
• Update your agent code within iPipeline to avoid delays in processing e-Applications.

To provide a single view for all of your compensation activity, commission payments from North American's life division will now be reported through a single consolidated commission statement. All of your compensation will pay to a single bank or credit union account of your choice.

Additional points for consideration:

• All life insurance compensation the agent receives from North American's life division will be reported in a single, unified commission statement. This will consolidate compensation earned under multiple agent codes.
• Compensation statements will continue to be found on the North American life division website. Once you log in, go to My Business > Producer Profile. Select the drop-down arrow to the left of Summary and select Statements & Correspondence.
• We will continue to offer downloadable statements so you can easily import your commission data into Excel or your accounting software.
• To ensure that we have the most accurate EFT information, please login to www.northamericancompany.com and validate your current bank information.
  • Select the My Business tab at the top and click on the Producer Profile link
  • Confirm that you are on your current, active life code by viewing the Summary page
  • To view your EFT information, select the financial option from the drop down menu next to Summary.
  • You can click on the “unlock” icon next to the Bank Account Number to view.
  • If you have more than one bank account associated with your Life business, please contact our agency services team to choose one primary account.

In our current process, North American’s life division pays Trails to its agents on an annual basis, each January, based on the cash value of eligible policies as of December 31st the prior year. Eligibility for this form of trail compensation is only available after a policy has met its first anniversary and is active on that following calendar year-end.

Because of this, eligible policies written in 2019 would pay Trails in January of 2021 (23 months later), even if the policy written in 2019 was written in January of that year.

North American’s life division will now pay Trails on a monthly basis. Trails will be payable beginning in the 13th month of each eligible policy and will continue annually in the same month for all future anniversaries. The Trails will also be included once a month in your regularly scheduled commission cycle and include policy level detail. Please see the example below.

In order to support the transition to this enhanced payment timing, policies paying in the first twelve months after implementation of this change will pay on a prorated basis prior to resuming standard yearly payment on the policy’s second anniversary in 2021. On December 31, 2019, all policies that have already met their first anniversary will generate a full annual payment. This will close out our last calendar year-end process. Upon implementation of our system upgrade in May 2020, all policies that have reached their first anniversary between January 2020 and April 2020 will receive a prorated trail. Going forward, any policies that reach their anniversary after April 2020 will be subject to a proration and is demonstrated on the chart below.

North American's life division is simplifying how we account for earnings received by corporations and their officers who also hold separate agent codes. Additionally, we are making updates to our method of reporting for annualized compensation.

For corporations and officers

Currently, when a Principal Writing Agent is contracted to their corporation, commissions are generated under the officer’s agent code. In a second step, North American’s life division then transfers the tax liability to the corporation.

In May, each officer will report as a Principal Writing Agent on policies written under the contract hierarchy, yet commissions will generate only under the corporation’s agent code. This change will improve transparency as to which entity is responsible for the earnings. This will also simplify the commission reporting process as detail will only display on the statement for the corporation where the earnings are paid.

For annualized policies

North American will implement a change to its method of reporting taxes for annualized compensation. Currently, when compensation is annualized to North American’s life division agents, the taxes are reported on the full annualized payment. Taxes for annualized compensation will now be reported as they are earned.

In May, all agent copies of inforce policy correspondence (statements, grace notices, lapse notices, letters, etc.) will be kept on the website and made available to you whenever you need them. We have integrated notification technology on our website that can alert you via email when a piece of client correspondence is being mailed, thus giving you a preview of the letter the customer will receive. To ensure you continue to receive notifications of inforce correspondence, please review your website access and sign up for notifications.

After May 1st, copies of correspondence can only be obtained online at www.northamericancompany.com.

• This section of the website can be viewed by logging in - selecting “My Business” on the top of the webpage and then selecting “Inforce Correspondence” within the dropdown.
• Search result listings will display up to 200 documents from the last 30 days. A search can be completed on the same page for specific correspondence types, date ranges, or policy numbers.
• In the search tool, additional correspondence types have been created to make identifying the correspondence that you are looking for a simple process.
• Notifications and alerts can be established for correspondence and other policy events by selecting “My Business” on the top of the webpage and then selecting “Notifications” within the menu. View step-by-step instructions for setting up notifications.

The following are some other notable benefits of electronic copies of correspondence:

• Reduction in paper that is sent to your office that needs to be sorted by you or your staff.
• Elimination of the mailing delay that exists today. Electronic versions will be available to you before they are mailed to your client.
• Easy access to inforce correspondence for each of your policies will be available for viewing online.
• Easy navigation as correspondence categories can be selected and documents can be viewed by document type.

Our upgraded system will ensure all parties are compliant on every sale. All agents must maintain the appropriate licenses and appointments in order to receive commissions on any life insurance sales. Several processes will be enhanced to ensure agent and client information continues to be properly validated in accordance with all state regulations.

Important notes about agent validation rules with North American’s life division:

• For new policy applications, we validate that the agent writing the application and all upline agent/agencies in the hierarchy hold active licenses (and appointments where applicable) in the policy application state. Inactive or missing state licenses or appointments for an upline agent/agency where one is required will not hold up policy issuance; however, it will prevent the upline from receiving commission.
• For agent of record changes, North American’s life division will validate the agent license against the client’s new state of residence if the client requests a change after they have moved to a new state. This differs from our current process, which validates the license against the original application signed state.

North American’s life division is enhancing the contract level structure for our agent and agency base. With the growing business climate of acquisitions, mergers, and transfers, North American is introducing a new single-channel contract structure to replace the current model. This will provide expanded level options and increased flexibility to meet your business needs. These new levels are for our life division only and has no impact on your North American annuity hierarchy structure.

As of May 1st, the North American Performance Bonus of 20% will be eliminated and those funds will be redirected into our commission structure. Our new structure is called MGA130, which is based on the top-level compensation available to our core MGA’s. The MGA130 rate is the all-in commission available from North American. Since the 20% was inserted into the commission schedule, you will receive top-level override compensation at each commission cycle, instead of monthly with the Performance Bonus. If you choose to annualize your MGA commissions, the override commissions are also annualized providing flexibility with how and when you receive your compensation.

The MGA130 contract structure will provide a total of 15 levels to increase the choices for your downline hierarchy. Each level, GA120 – GA95 and WA90 - WA60 plus Licensed only, corresponds roughly to the percentage of compensation paid on our permanent products (i.e. GA110 = 110% on IUL). As a core MGA, you are given greater autonomy to structure your downline agents and agencies with few restrictions, to better align with your unique business model.