FOREIGN NATIONAL - Windsor Insurance

FOREIGN NATIONALField Underwriting Guidelines

INDEX

INTRODUCTION IMPORTANT CONTACT INFORMATION

WHY USE PAN-AMERICAN LIFE FOR YOUR FOREIGN NATIONAL BUSINESS? DISTRIBUTION REQUIREMENT GLOBAL CITIZEN PROFILE

MEDICAL UNDERWRITINGMEDICAL AND PARAMEDICAL EXAMINATIONS HOW TO PREPARE CLIENTS FOR THE EXAMINATIONTOBACCO USER DEFINITIONRISK CLASSIFICATION CRITERIAPREFERRED NON-TOBACCO GUIDELINES COMPLETION OF MEDICAL HISTORY QUESTIONS GUIDELINES FOR REQUESTING AN APSREIMBURSEMENT OF APS FEESRECONSIDERATION OF UNDERWRITING DECISION UNINSURABLEPERSONAL INSURANCE BENEFICIARY DESIGNATION AND INSURABLE INTERESTCONFIDENTIAL FINANCIAL QUESTIONNAIRE, FORM A-3067-EN INSPECTION REPORTS OCCUPATIONSINSURANCE ON JUVENILES - Q&AINSURANCE FOR HOUSEWIVES AND NON WORKING SPOUSESUNDERWRITING ELDERLY LIVES (AGES 76 TO 90)FUNCTIONAL ASSESSMENT

Basic Activities of Daily Living (ADL) Instrumental Activities of Daily Living (IADL) Advanced Activities of Daily Living (AADL)

BUSINESS INSURANCE PART 1 KEY PERSON INSURACNE

Underwriting guidelinesFinancial Evidence

BUSINESS CONTINUATION, STOCK REPURCHASE OR BUY-SELL INSURANCE Underwriting guidelinesFinancial Evidence

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BUSINESS INSURANCE PART 2 BENEFITS FOR EXECUTIVES OR EMPLOYEESCORPORATE OWNED LIFE INSURANCEINSURANCE TO COVER MORTGAGE LOANS

FINANCIAL UNDERWRITING FAMILY PROTECTIONINCOME PROTECTION TABLEBUSINESS VALUATION

Price earnings ratio (PER)Net present value (NPV) methodNet asset value

INTRODUCTORY LETTER FROM WRITING PRODUCER

INFORMAL INQUIRYREQUIREMENTSSUBMISSION

TRIAL APLICATIONREQUIREMENTS

SUBMISSION

COMPLIANCEBUSINESS RESTRICTIONSFATCA AND CRS COMPLIANCEANTI-MONEY LAUNDERING (AML) AND KNOW YOUR CUSTOMER (KYC) CHECK LIST POLITICALLY EXPOSED PERSON (PEP)

ADMINISTRATON & POLICY SERVICINGAMENDMENT GUIDELINESREINSTATEMENTSPREMIUM PAYMENT MODES

Credit Card Wire transfer instructions

APPENDIX FREQUENTLY ASKED QUESTIONS

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INDEX

UW GUIDELINES PAACII4

INTRODUCTION

We are pleased to provide you with Pan-American Private Client Life (PCL) Producers’ Field Underwriting Guide. This guideline applies to business written under our Foreign National / Pan-American Assurance Company International, Inc. (PAACII) business platform (see below). This guideline is designed to provide you with a comprehensive reference tool to life insurance underwriting at Pan-American PCL. We understand every insurance company is different, and policies

and procedures vary from one to another, which is why we felt it was important to provide you with a guide explaining PCL’s practices and standards. This manual can be used as a training base for new producers as well as a reference resource for experienced producers.

Take the time to review these guidelines for they will help facilitate marketing to new clients and improve servicing to existing clients.

IMPORTANT CONTACT INFORMATION:

All queries, case referrals, questions or case related correspondence needs to filter through our case managers in the New Business Department of PCL.

E-MAIL ADDRESS

[email protected]

COURIER ADDRESS

Pan-American Life Global Services Pan-American Plaza Piso 2Calle 50 y Aquilino de la GuardiaCiudad de PanamáRepública de Panamá

CONTACT NUMBER

Phone: (507) 208 8160

• If calling from the USA, dial 011 507 and then the phone number.

• If calling from elsewhere, dial 00 507 and then the phone number.


WHY USE PAN-AMERICAN LIFE FOR YOUR FOREIGN NATIONAL BUSINESS?• Established in 1911 for the purpose of

insuring individuals and business owners residing in Latin America. Over 100 years’ experience writing foreign national risk.

• Conservative investment philosophy that has minimized the company’s exposure to high risk volatile investments.

• Only U.S. Life company with capability to provide off-shore insurance solutions to Foreign Nationals that visit Florida, Texas,

Arizona, or Hawaii in a fully compliant manner.

• UL product portfolio is highly flexible with excellent long term cash value accumulation.

• Ample capacity to obtain large amounts of insurance coverage to Foreign Nationals.

• Concierge, White Glove Services (New Business, Underwriting and Customer Service)

DISTRIBUTION REQUIREMENT

Producer must be contracted with PAACII and have a valid life insurance license in the State where the company holds a Certificate of Authority.

GLOBAL CITIZEN PROFILE

All applicants must meet the following requirements:

• Must be able to complete a FATCA W8 BEN or BEN/E form

The applicant does not need to :

• Have financial or other ties to the U.S. as requirement for coverage

• Establish a trust for ownership of the policy

• Return to the U.S. for policy delivery

*Nationals of countries participating in the Visa Waiver program will not have a U.S. visa in their passports and therefore the entry stamp is important to prove the visa status that the individual has.

• Must be physically present in Florida, Texas, Arizona or Hawaii at the time of completing, signing and submitting the application

• Present a copy of a valid passport with signature and photo pages

• Present a valid B1/B2 tourist visa with copy of the entry stamp page *

• Medical exam performed in the U.S.

• Neither applicant nor policy owner can be a U.S. entity, U.S. citizen, U.S. permanent resident, U.S. temporay resident or individuals considered U.S. tax residents under the IRS rules


Global Citizens of the following countries meet our foreign residence guidelines:(highlighted countries : Preferred rates not available)

ARGENTINA

AUSTRALIA

AUSTRIA

BAHRAIN

BELGIUM

BELIZE

BERMUDA

BOLIVIA

BRAZIL

CANADA

CANARY ISLANDS

CHILE

CHINA *BEIJING, GUANGZHOU, SHANGHAI, SHENZHEN

COLOMBIA

COSTA RICA

DENMARK

DOMINICAN REP

ECUADOR

EL SALVADOR

FINLAND

FRANCE

GERMANY

GUATEMALA

HONDURAS *OUTSIDE OF MAJOR CITIES PLEASE CONSULT OUR PCL OFFICE IN PANAMA

HONG KONGISRAEL *TEL AVIV AND SURROUNDING PROVINCES ONLY – AREAS OF CONFLICT NOT ACCEPTABLE

ITALY

JAPAN

LUXEMBOURG

MEXICO

MONACO

NETHERLANDS

NICARAGUA

NORWAY

PANAMA

PARAGUAY

PERU * ONLY AVAILABLE FOR RESIDENTS OF LIMA, AREQUIPA, AND TRUJILLO

PORTUGAL

QATAR

SAN MARINO

SINGAPORE

SOUTH KOREA

SPAIN

SWEDEN

SWITZERLAND

TAIWAN

TURKS/CAICOS

UNITED KINGDOM

URUGUAY

VENEZUELA *PLEASE CONSULT OUR PCL OFFICE IN PANAMA FOR OUR LATEST POSITION AND REQUIREMENTS

CARIBBEAN COUNTRIES EXCLUDING ANGUILLA, BARBADOS, CUBA, DOMINICA, GUADELOUPE, AND HAITI


MEDICAL UNDERWRITING

Full Inspection Report (INS) may be requested at the discretion of UW | *EKG at age 40 and above

200,000 – 500,000

500,001 – 1,000,0001,000,001 and up

Non-Medical (APS from pediatrician upto age 10 at the discretion of UW)

PAR, UAPAR, UA, A-INS (Parents)

200,000 – 250,000250,001 – 750,000

750,001 – 2,500,0002,500,001 – 5,000,0005,000,001 – 10,000,000

10,000,001 and up

Non-MedicalPAR, UA, BCP

PAR, UA, BCP, E-INS, FINPAR, UA, BCP, EKG*, A-INS, FIN, APSPAR, UA, BCP, EKG*, A-INS, FIN, APS

MD, UA, BCP, TRD, INS, FIN, APS200,000 – 500,000500,001 – 750,000

750,001 – 2,000,0002,000,001 – 5,000,0005,000,001 – 10,000,000

10,000,001 and up

PAR, UA, BCP, APSPAR, UA, BCP, EKG, APS

PAR, UA, BCP, EKG, E-INS, FIN, APSPAR, UA, BCP, EKG, A-INS, FIN, APSPAR, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, TRD, INS, FIN, APS

200,000 – 500,000500,001 – 750,000

750,001 – 1,500,0001,500,001 – 2,500,000

2,500,001 – 10,000,00010,000,001 and up


PAR, UA, BCP, EKG, E-INS, FIN, APSPAR, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, TRD, INS, FIN, APS

200,000 – 500,000500,001 – 5,000,0005,000,001 and up

MD, UA, BCP, EKG, APS, FAQMD, UA, BCP, CBC, EKG, APS, A-INS, FIN, FAQMD, UA, BCP, CBC, EKG, APS, INS, FIN, FAQ

200,000 – 500,000500,001 – 750,000

750,001 – 1,500,0001,500,001 – 2,500,0002,500,001 – 5,000,000

5,000,001 and up


PAR, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, INS, FIN, APS

PAACII

0-19

20-50

51-60

61-70

71-75

76-90

AGES FACE AMOUNTS (USD) REQUIREMENTS

TERM PLANS NOT AVAILABLE FOR 0-19

Full Inspection Report (INS) may be requested at the discretion of UW - *EKG at age 40 and above

PAR Paramedical ExamMD Medical ExamBCP Blood Chemistry ProfileUA UrinalysisEKG Resting Electrocardiogram

TRD Treadmill or Stress TestFIN Confidential Financial QuestionnaireAPS Attending Physician StatementE-INS Electronic Inspection (no interview; background check only)

A-INS Abbreviated InspectionINS Full InspectionCBC Complete blood countFAQ Functional Assessment Questionnaire

EXPLANATION

200,000 – 500,000

500,001 – 1,000,0001,000,001 and up

Non-Medical (APS from pediatrician upto age 10 at the discretion of UW)

PAR, UAPAR, UA, A-INS (Parents)

200,000 – 250,000250,001 – 750,000

750,001 – 2,500,0002,500,001 – 5,000,0005,000,001 – 10,000,000

10,000,001 and up

Non-MedicalPAR, UA, BCP

PAR, UA, BCP, E-INS, FINPAR, UA, BCP, EKG*, A-INS, FIN, APSPAR, UA, BCP, EKG*, A-INS, FIN, APS

MD, UA, BCP, TRD, INS, FIN, APS200,000 – 500,000500,001 – 750,000

750,001 – 2,000,0002,000,001 – 5,000,0005,000,001 – 10,000,000

10,000,001 and up


PAR, UA, BCP, EKG, E-INS, FIN, APSPAR, UA, BCP, EKG, A-INS, FIN, APSPAR, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, TRD, INS, FIN, APS

200,000 – 500,000500,001 – 750,000

750,001 – 1,500,0001,500,001 – 2,500,000

2,500,001 – 10,000,00010,000,001 and up


PAR, UA, BCP, EKG, E-INS, FIN, APSPAR, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, TRD, INS, FIN, APS

200,000 – 500,000500,001 – 5,000,0005,000,001 and up

MD, UA, BCP, EKG, APS, FAQMD, UA, BCP, CBC, EKG, APS, A-INS, FIN, FAQMD, UA, BCP, CBC, EKG, APS, INS, FIN, FAQ

200,000 – 500,000500,001 – 750,000

750,001 – 1,500,0001,500,001 – 2,500,0002,500,001 – 5,000,000

5,000,001 and up


PAR, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, A-INS, FIN, APSMD, UA, BCP, EKG, INS, FIN, APS

PAACII

0-19

20-50

51-60

61-70

71-75

76-90

AGES FACE AMOUNTS (USD) REQUIREMENTS

TERM PLANS NOT AVAILABLE FOR 0-19

Full Inspection Report (INS) may be requested at the discretion of UW - *EKG at age 40 and above

PAR Paramedical ExamMD Medical ExamBCP Blood Chemistry ProfileUA UrinalysisEKG Resting Electrocardiogram

TRD Treadmill or Stress TestFIN Confidential Financial QuestionnaireAPS Attending Physician StatementE-INS Electronic Inspection (no interview; background check only)

A-INS Abbreviated InspectionINS Full InspectionCBC Complete blood countFAQ Functional Assessment Questionnaire

EXPLANATION


MEDICAL AND PARAMEDICAL EXAMINATIONS

For the Blood draw and Urine sample collection the proposed insured must have been fasting for at least eight hours to assure correct readings.

Preferred vendors must be used for the examinations. Paramedical and Medical exams are valid for 6 months. We will accept exams made by other companies under certain circumstances, as long as the “Non-Medical” questions on the Application form have been answered satisfactorily, and the other company’s medical exam form is compatible with ours.

The following Preferred Provider paramedical facilities should have the Exam One kits in their office and are willing to draw the blood for the BCP. If a medical doctor is used, a blood kit must be requested from the Supply Dept.

Please help us to manage our acquisition costs by using only the following Preferred Providers

when exams are performed in the United States, especially in Florida:

• EXAMINATION MANAGEMENT SERVICES, INC. (EMSI)

• AMERICAN PARA PROFESSIONAL SYSTEMS, INC. (APPS)

• EXAMONE

When a physician’s exam is required, any of the above paramedical facilities should be able to schedule the exam with one of their staff physicians. Always use company-approved paramedical facilities. Non-approved paramedical facilities are not acceptable.

Examinations by relatives or associates are not acceptable under any circumstances.

EXAM SHELF LIFE EXTENDED SHELF LIFE

Medical Exam Up to 6 months Up to 12 months (if applicant is healthy

with declaration of good health)

BCP & UA Up to 6 months N/A

EKG Up to 12 months (if the applicant doesn’t have cardiac risk factors/history) N/A

Inspection report

Up to 12 months but at the discretion of the underwriter (each case evaluated on its merits) N/A

EXAM

EXAM SHELF LIFE


HOW TO PREPARE CLIENTS FOR THE EXAMINATION

Important:

• Medical requirements are based on total amount currently applied for plus the amount in force with PAAC, PALIC, PAIIC, and/or any Branch or Affiliate of the Pan-American Life Insurance Group.

• APS’s must cover Medical Records for at least the two last years for ages up to 50 years old, and at least 3 years for 51 and older.

• The amounts of insurance in force with other companies is not taken into account for medical requirements, but is considered when determining the maximum insurable amount allowable.

• All blood and urine samples are to be sent to Exam One™, 10101 Renner Blvd, Lenexa, KS 66219-9752 for analysis. Kits Order forms are available for electronic submission on Producer Direct.

• A full BCP and UA are required for Preferred Classification (see below)

• No blood or urine specimens are to be sent to Pan-American Life offices. We do not have lab facilities for analysis nor safe handling capabilities.

Clients have certain apprehension about taking a medical examination for life insurance. The process provokes both anxiety and hesitation. In addition, it is possible that improper client preparation could lead to avoidable poor underwriting outcome. Here are few suggestions that will help to obtain a good result.

1. Rest and Good Health: Clients should have adequate rest and be in good health for their medical examination. If a client is sick (i.e. has a cold) or is exhausted, reschedule the examination.

2. Alcohol Consumption: Clients should avoid all alcohol consumption preferably 48 hours before the examination. Alcohol consumption can increase blood pressure and adversely affect certain elements of the blood study.

3. Tobacco Consumption: It is important that clients “disclose” any nicotine products they are using to the medical examiner at the time of test. Failure to do so combined with a discovery of nicotine in the urine may suggest “lack of full disclosure.” The information also should coincide with the Application.

4. Caffeine Consumption: Clients should limit caffeine consumption 48 hours before the examination. They should have no caffeine the morning of the examination. Caffeine increases blood pressure and pulse rate, and can even provoke an irregular heart rate (arrhythmia).

5. Medications: Clients taking prescription medications should be taking the medications as directed by their physician and provide details to the examiner: name of the drug, strength, dosage, etc.


6. Food and Drink: Clients should not eat or drink eight (8) hours before the medical examination. A small amount of water is permissible during this “fasting” period. They must tell the examiner when they had their last meal.

7. Exercise: Clients should not exercise before they have their medical examination. Exercise, especially cardiovascular workouts, can cause inaccurate elevations of test levels.

8. Blood Pressure: It is normal for clients to become anxious about having their blood pressure taken. It is helpful if clients are offered a few minutes to relax before their blood pressure is recorded.

9. Visit to any physician: Providing a list of client’s doctors, the correct date of last visit, reason, treatment and or prescriptions, if any, will prevent future surprises and provides important insight to the underwriter.

TOBACCO USER DEFINITION

We consider as a tobacco user anyone that uses tobacco in any form (cigars, cigarettes, pipe, chewing gum, nicotine patches, etc.) and in any frequency.

To qualify for regular Non-Tobacco risk classification, the person must not have used tobacco in any form in the 12 months prior to the application.

To qualify for Preferred Non-Tobacco risk classification, the person must not have used tobacco in any form in the 24 months prior to the application.

RISK CLASSIFICATION CRITERIA

Pan-American Life has the following base risk classifications:

• Preferred Plus (only available with Indexed UL)• Preferred Non Tobacco• Preferred Tobacco (only available with

Indexed UL)• Standard Non Tobacco • Standard Tobacco

(Non-tobacco means zero nicotine consumption from any source for a period of no less than 12 months).

Preferred Risk Classification is not available in certain countries – Please refer to our country list on page 6.

All applications will be subject to a paramedical or medical exam according to age and amount, a full blood chemistry profile (BCP) and a urinalysis (UA). Non-Medical applications are not acceptable for Preferred Risk Classification.


PREFERRED PLUS(ONLY AVAILABLE WITH INDEXED UL PRODUCTS- AGES 75 OR LESS)

1. No tobacco use in any form during the past 24 months (including Nicorette gum, nicotine patch and/or vaporized or electronic cigarettes).

2. Height and weight levels within the “Preferred Plus” guidelines in the chart that follows.

3. Cholesterol not exceeding:

Age 39 or less a. 210 if CHOL/HDL is less than 5.0, or b. 225 if CHOL/HDL is less than 4.0

Age 40 to 59 c. 220 if CHOL/HDL is less than 5.5, or d. 235 if CHOL/HDL is less than 4.5

Age 60 to 75 e. 230 if CHOL/HDL is less than 6.0, orf. 245 if CHOL/HDL is less than 5.0

4. Family history

a. No parental or sibling deaths due to cancer or cardiovascular disease prior to age 65.

b. No more than one parent with a history of diabetes.

5. Clean driving record

a. No known DUI (driving under the influence) convictions within the past 5 years.

b. No more than two known moving violations within the past 3 years or no driving convictions in the last 12 months.

6. No medical or non-medical related ratings or restrictions. (Policy must be issued without ratings or exclusion riders.)

7. No personal history of drug or alcohol abuse.

8. No aviation risks.

9. No hazardous sports, avocations, or occupations.

10. No personal history of cancer, diabetes, or cardiovascular disease

11. No blood pressure readings within the past year exceeding:

130/80 (Age 39 or less)

135/85 (Age 40 to 59)

140/90 (Age 60 to 75)

12. Not currently under treatment for Hypertension or Hyperlipidemia.

*No more than one moving violation within the past 3 years if the applicant engages in aviation activities


PREFERRED NON-TOBACCO(AGES 75 OR LESS)

To be considered for this class, an applicant must meet all of the following criteria:

1. No tobacco use on any form during the past 24 months (including Nicorette gum, nicotine patch and/or vaporized or electronic cigarettes)

2. Height and weight levels within the “Preferred” guidelines in the chart


a. Age 39 or lessi. 225 if CHOL/HDL is less than 6.0 ori. 240 of CHOL/HDL is less than 4.5

b. Age 40 to 59 i. 235 if CHOL/HDL is less than 6.5 ori. 250 if CHOL/HDL is less than 5.0

c. Age 60 to 75i. 245 if CHOL/ HDL is less than 7.0 or ii. 260 if CHOL/HDL is less than 5.5

4. Family History:

a. No parental or sibling deaths due to cancer or cardiovascular disease prior to age 65

b. No more than one parent with a history of diabetes


a. No known DUI (Driving Under the Influence) convictions within the past 5 years

b. No more than two known moving violations within the past 3 years or no driving convictions in the last 12 months.

6. No medial or non-medical related ratings or restrictions

7. No personal history of drug or alcohol abuse

8. Aviation activities are allowed, as long as the individual dis not rated for aviation nor issued with an aviation exclusion rider.

9. Hazardous sports, avocations, or occupations are allowed, unless the individual is rated for such activities.

10. No personal history of cancer, diabetes, or cardiovascular disease

11. No blood pressure readings with the past year exceeding

a. 135/85 (Age 39 or less)

b. 140/90 (Age 40 to 59)

c. 145/95 (Age 60 to 75)


PREFERRED TOBACCO(ONLY AVAILABLE WITH INDEXED UL PRODUCTS - AGES 75 OR LESS)

To be considered for this class, an applicant must meet all of the following criteria:

1. Tobacco use in any form is allowed, but the applicant cannot smoke more than one pack of cigarettes per day.

2. Height and weight must be within the “Preferred” guidelines in the chart


a. Age 39 or lessi. 225 if CHOL/HDL is less than 6.0 orii. 240 of CHOL/HDL is less than 4.5

b. Age 40 to 59 i. 235 if CHOL/HDL is less than 6.5 orii. 250 if CHOL/HDL is less than 5.0

c. Age 60 to 75 i. 245 if CHOL/HDL is less than 7.0 orii. 260 if CHOL/HDL is less than 5.5

4. Family history:

a. No parental or sibling deaths due to cancer or cardiovascular disease prior to age 65

b. No more than one parent with a history of diabetes


a. No known DIU ( Driving Under the Influence)convictions within the past 5 years

b. No more than two known moving violations within the past 3 years or no driving convictions in the last 12 months

6. No medical or non-medical related ratings or restrictions

7. No personal history of drug or alcohol abuse

8. Aviation activities are allowed, as long as the individual is not rated for aviation nor issued with aviation exclusion rider

9. Hazardous sports, avocations or occupations are allowed, unless the individual is rated for such activities.

10. No personal history of cancer, diabetes or cardiovascular disease

11. No blood pressure readings within the past year exceeding:

a. 135/85 (Age 39 or less

b. 140/90 (Age 40 to 59)

c. 145/95 (Age 60 to 75)


BUILD CHART FOR PREFERRED RISK CLASSES

COMPLETION OF MEDICAL HISTORY QUESTIONS

Completion of medical history questions on the PAACII application for every case is helpful during the underwriting process, since it enables the underwriter to order all medical requirements immediately, even if a medical / paramedical exam will follow.

Additionally, when we are underwriting using another carrier’s medical evidence, then the completion of the medical history questions on the PAACII application for is mandatory, this is why we suggest just making this the norm on all applications.

UW GUIDELINES PAIIC13

HEIGHT MAXIMUM WEIGHT PREFERRED PLUS

MAXIMUM WEIGHT PREFERRED

ENGLISH METRIC LBS. KGS. LBS. KGS.

5’0” 1.52 - 1.53 142 64.5 155 70.3

5’ 1” 1.54 - 1.56 146 66.4 160 72.6

5’ 2” 1.57 - 1.58 150 68.2 163 73.9

5’ 3” 1.59 - 1.61 157 71.4 172 78.0

5’ 4” 1.62 - 1.63 162 73.6 176 79.8

5’ 5” 1.64 - 1.66 166 75.5 181 82.1

5’ 6” 1.67 - 1.68 172 78.2 187 84.8

5’ 7” 1.69 - 1.71 176 80.0 192 87.1

5’ 8” 1.72 - 1.73 182 82.7 198 89.8

5’ 9’ 1.74 - 1.76 187 85.0 204 92.5

5’ 10” 1.77 - 1.79 191 86.8 209 94.8

5’ 11” 1.80 - 1.81 197 89.5 215 97.5

6’ 0” 1.82 - 1.84 202 91.8 221 100.2

6’ 1” 1.85 - 1.86 209 95.0 228 103.4

6’ 2” 1.87 - 1.89 215 97.7 234 106.1

6’ 3” 1.90 - 1.91 221 100.5 241 109.3

6’ 4” 1.92 - 1.94 227 103.2 247 112.0

6’ 5” 1.95 - 1.96 232 105.5 253 114.8

6’ 6” 1.97 - 1.99 239 108.6 260 117.9

6’ 7” 2.00 - 2.01 245 111.4 268 121.6

6’ 8” 2.02 - 2.04 251 114.1 274 124.6

6’ 9” 2.05 - 2.07 257 116.8 281 127.5

BUILD CHART FOR PREFERRED RISK CLASSES


GUIDELINES FOR REQUESTING AN APS

You may save valuable time in the underwriting and approval process if you request any necessary APS’s before you send the application and other forms to the Global Service Team in Panama.

If during the underwriting process the underwriter deems it necessary to request an APS and it has not been previously requested,

the request for the doctor’s report will be communicated to the agent.

When the doctor or medical facility is located within the United States, the Underwriting Department will secure the doctor’s records. If the doctor is located outside of the United States, it will be the agent’s responsibility to obtain the medical records.

WHEN IS AN APS REPORT NEEDED?

Refer to requirements table on page 6 however there are numerous medical conditions where an APS report will be ordered even if not listed on the requirements table – examples are:

ABNORMAL EKG

ANEURYSM

ANGINA PECTORIS (CHEST PAIN)

BLOOD DISORDERS

BLOOD IN THE URINE

BRONCHIECTASIS

BRONCHITIS, MULTIPLE ATTACKS

CANCER*

CEREBRAL

CHECK-UP WITH HOSPITAL CONFINEMENT

CORONARY ARTERY DISEASE

DEPRESSED SKULL FRACTURE

DIABETES

DIZZY SPELLS

DRUG USE

ELEVATED BLOOD SUGAR

EMBOLISM

EMPHYSEMA

ENDOCARDITIS

ENTERITIS OR ILEITIS

EPILEPSY (SEIZURES, CONVULSIONS)

FATIGUE

HEART

HEART DISORDERS

HEART MURMUR

HEART VALVE DISORDERS

HEMOPHILIA

HEMORRHAGE

HIGH BLOOD PRESSURE

HYPERTENSION

INTESTINAL BLEEDING

KIDNEY OR LIVER DISORDERS

MALIGNANT TUMORS*

MENTAL DISORDERS


MOLE EXTRACTION*

MURMURS

NERVOUS CONDITIONS

PANCREATIC DISORDERS

PARALYSIS

PATHOLOGY

PERICARDITIS

PROSTATE DISORDERS

PYELONEPHRITIS

SARCOMA*

SCHIZOPHRENIA

SEPTAL DEFECTS,

SPLEEN DISORDER

STROKE

SUGAR IN THE URINE

RECENT SURGERY*

SYNCOPE

THROMBOSIS

TUBERCULOSIS (WITHIN 5 YEARS)

TUMOR, GROWTH & LESION*

ULCER (STOMACH, DUODENAL)

ULCERATIVE COLITIS-PROCTITIS

VERTIGO

*In these cases, obtain a copy of the operative and pathology reports (biopsy).

NOTE: This list does not attempt to cover all the diseases or impairments that could possibly require an APS. Unusual diseases and impairments seldom seen are deliberately omitted from this list.


AN APS WILL NOT BE REQUESTED IF THE ONLY

REASON FOR MEDICAL CONSULTATIONS WAS:

Routine Operation such as:

• Appendectomy • Cataract • Gall Bladder (Laparoscopic Cholecystectomy) • Hernia • Normal Childbirth • Pilonidal Cyst • Sterilization Procedure (Tubes or Vasectomy) • Tonsillectomy • Minor Illnesses such as: • Allergies • Cold or Flu

• Hay Fever • Hemorrhoidectomy • Lumbar Disc • Migraine • Minor Injuries • Normal Pregnancy • Simple Fractures

Routine examination such as:• Pre-Marital • Employment• Pre-School • Insurance

REIMBURSEMENT OF APS FEES

If the attending physician requires payment in advance to complete an APS form or provide copies of the medical records, a maximum of $75.00 is allowed by the Underwriting Dept. For amounts exceeding the maximum, an approval should be obtained from the PCL Panama Team, [email protected].

For reimbursement, a copy of the original receipt with the date and signature (and stamp or seal)

of the doctor should be submitted. Payments are processed within 30 days of receipt.

Please keep in mind that if the information contained on the APS form is insufficient or has no underwriting value, the reimbursed amount may be reduced or denied.

Form A-3094 (APS) is available in PDF Format, as well as other Underwriting documents, on Producer Direct.

RECONSIDERATION OF UNDERWRITING DECISION

If a case is postponed for a period of time by the Underwriting Dept., the proposed insured may request in writing the reconsideration of his case at the end of such period. The request should be submitted along with proof that the cause for the adverse action has been resolved or controlled.

It is unlikely that we will reconsider a case that has been declined within two years following the decision. Otherwise we would have postponed it for a given amount of time.

Laboratory tests are not to be repeated, unless an exception is approved by the Underwriter.


UNINSURABLE INDIVIDUALS

Applications should not be written on persons with:

• Abdominal Aortic Aneurysm surgically corrected in the last 6 months

• Alcohol treatment in the last 3 years• Angioplasty/Bypass in the last 3 months• MI/heart attack in the last 6 months• Alzheimer’s disease or Dementia• Cancer treatment (current)• Cirrhosis of Liver• Congestive heart failure• Severe COPD/ Emphysema• CVA (stroke) within 6 months• Diabetes if complications present (i.e.

amputation, end stage kidney or vascular disease, etc.)

• Drug use (other than marijuana) in the last 3 years

• DUIs, two or more in last 5 years

• Gastric/Intestinal Bypass within 6 months• HIV Positive• Kidney Dialysis• Mental Disorder requiring hospitalization or

disability in last year• Medical testing advised but not yet completed• Organ Transplant (awaiting)• Parole or probation (currently on)• Performance enhancing drugs, current or

recent use (steroids)• Pregnant (current) with Gestational Diabetes,

toxemia, eclampsia, pre-eclampsia• Suicide attempt in the last year• Suicide attempts (more than one) if the last

one was within the last 2 years• Surgery (major) advised but not yet completed• Valve replacement within 6 months

This list is not intended to be all-inclusive. If your applicant has a serious condition not listed here, please contact the PCL UW Dept.

PERSONAL INSURANCE BENEFICIARY DESIGNATION AND INSURABLE INTEREST

Insurable Interest can be defined as the genuine interest of the beneficiary in the continuation of the life of the insured. The purpose of insurance is to cover the financial loss resulting from the premature death of the insured, without the expectation of profiting from it.

The face amount on the life of any of the persons proposed for insurance must be related to the material or financial loss, in case of an untimely death. In order to determine it, is frequent that the underwriter will request additional information regarding the proposed insured’s or the owner’s finances. This will especially apply to high face amounts in

personal or business insurance; however it may happen on just any case.

These large cases may be processed faster if the agent attaches the financial information, such as financial questionnaires, balance sheets, preferably audited and signed by a third party, such as an Accountant (CPA), or external auditors.


Also copies of tax returns may be accepted. A bankers reference letter (letter of good standing) is also recommended and a helpful additional for the Underwriter to reach a decision.

It is very important to the underwriter, to know the need and purpose of the insurance. The more information on the proposed insured financial situation and how the sale was made, the easier it will be for the underwriter to reach a decision. All applications should come accompanied with an introduction letter from the writing producer. The name, age, relationship, and percentage of proceeds for each person named as a beneficiary should be included. The percentage of each classification should total 100%. If no percentage is indicated, it is understood that the proceeds should be distributed in equal shares.

There should always be a relationship between the proposed insured and the beneficiary. The beneficiary should suffer a financial loss at the death of the insured.

When the beneficiaries are minors, they can be named directly, without the need of a tutor or guardian.

IMPORTANT: Pan-American Life will not accept any beneficiary designation such as “tutor”, “guardian” or “administrator” of minors without legal proof and confirmation of such a designation. A bank can also be named beneficiary as long as there is a loan /mortgage contract in place (we need a copy of the contract or a letter from the bank for our files).

The total amount of life insurance on any life must have a relationship to the amount of loss sustained should that person die. It is often necessary for our underwriting department to request additional information regarding finances in order to justify the amount being requested.

It is essential for the Underwriter to know the need and purpose for the new coverage. The more information regarding the finances of the applicant and the circumstances of the sale that are provided, the easier it is for the underwriter to expedite issue. (please refer to page 29 regarding the importance of an introductory letter from the writing producer).

CONFIDENTIAL FINANCIAL QUESTIONNAIRE, FORM A-3067-EN

The Confidential Financial Information Questionnaire must be completed when the amount of life insurance requested exceeds $750,000. The large amount applications may be expedited if they are accompanied by copies of personal financial statements of the Proposed Insured, and statements of his business

or company (if applicable). It is preferable that these statements are prepared and signed by an accountant.

It is desirable to include a copy of the last Balance Sheet, in case of Business Insurance audited by third party auditors.

INSPECTION REPORTS

The company will request an Inspection Report when required by the Table of Underwriting Requirements. It will be beneficial to inform the Proposed Insured, when applicable, that he will receive a telephone call from a person who will interview him either in person or by phone, and ask questions about his finances and other personal information. By informing the Proposed Insured of the call, we can avoid problems and delays in the evaluation process.


The company assures the confidentiality of the information received. The companies and persons who complete the interview are specialized professionals who render independent services for verification of data to insurance companies.

The Underwriting Department reserves the right to request inspection reports at any time it considers necessary, while evaluating the risk.

OCCUPATIONS

5. Elected or appointed public and government officials and their immediate family members.

6. Journalists or members of the media that are considered controversial

7. Guards and Security Personnel

8. Individuals with prior criminal and penal offense records

This is a limited list, and some other occupations can be also not considered. If you have questions, please consult our PCL Panama office.

Professional athletes and entertainers will be reviewed on an individual consideration basis (we ALWAYS require an inspection report assuming that we are prepared to participate).

Juvenile coverage available for U.S. Citizens/U.S. Residents? No

Juvenile coverage available for Non-Resident Aliens Yes

Age 0 – 18(Typically a child needs to be at least 1 month old)

Product Available Universal Life

Is Term Insurance Available? No

Best Rate Available Standard Tobacco(Pan-American is unable to give credits for non-tobacco use to Juveniles)

OwnershipParent of Juvenile

(Only one parent can own the policy as Pan- American’s admin system does not allow for two people to own the policy)

INSURANCE ON JUVENILES - Q&A

In general the majority of the occupations are acceptable. Some of them carry an extra risk and will require a rating. A few may be uninsurable.

Most of the time, we will not consider the following occupations:

1. Judges, criminal prosecutors and certain members of the judicial system.

2. Ambassadors and both career and appointed diplomats

3. Members of the military, police, and any armed forces personnel and their immediate family members.

4. Politicians, officers, directors and activists of political parties and their immediate family members.


Parents required to have life insurance in-force? Yes (double what is being requested on the child)

If the parents are insured with U.S. life insurance carriers this is

acceptable to Pan-American?

Yes(Proof of Coverage – Copy of Policy Summary Page – is required)

Does the same amount of coverage need to be taken out on the lives of

each child in the family?

Yes(Unless one of the children are uninsurable for medical or other reasons. Or there is a large age difference between children. Usually college students

qualify for higher amounts)

Maximum Amount of Coverage $500,000(Death benefit cannot exceed 50% of parents face amount)

Will Pan-American offer policies over $500,000+ for Juveniles?

Case by case basis… Need to contact PCL office in Panama for details. Also medical exam is required for amounts above

$500,000.

Medical Exam Required No

Pan-American application with medical questions completed

required ?

Yes Up to $500,000 - No(Needed for all ages and application must be completed and

signed by the parent as policy owner)

APS’s Required from Pediatrician Age 0 to 10

Yes(Required for proposed insureds between the ages of 0 – 10)

APS’s Required from Pediatrician Age 11 to 18

No(However, if there is a known medical history, APS’s from the Pediatrician

will be required and APS’ must be translated into English)

Does the Juvenile/Proposed Insured need to travel to the USA to sign

paperwork, etc.?No

Does the Policy Owner need to travel to the USA or Hong Kong/Singapore to sign

paperwork, etc.?

Yes(USA – Florida, Texas, Arizona)

Copy of Policy Owner’s Passport

Yes(Need copy of passport, entry stamp into the USA and B1/B2 Visa if

applicable. Also an electronic I-94 will be run on the Policy Owner to confirm entry into the USA.)

Can Policy Ownership be transferred to the proposed insured?

Yes(2 months before the Juvenile’s 18th birthday, the owner of the policy will

be notified that the policy owner can change the ownership to the proposed insured when the proposed insured turns 18)

Can the proposed insured apply for non-tobacco rates?

Yes(When the proposed insured turns 18, they can request the requirements

needed to change from “tobacco” rates to “non-tobacco” rates)


INSURANCE FOR NON WORKING SPOUSES

The spouses who are not employed may be considered for insurance, generally for half the basic amount of the coverage for the spouse who generates the family income. The income should justify the total insurance amount, of both proposed insureds. The spouse may be insured by another company, but the 50% ratio must be maintained unless the need for a higher amount is duly justified. The maximum amount that may be considered shall be equal to, or less than the amount for the principal proposed insured.

UNDERWRITING ELDERLY LIVES (AGES 70 TO 90)

Since life expectancy drops precipitously as age increases, a maximum issue age of 85 is a general industry norm for Permanent Life Insurance and 65-70 for Term Life Insurance. Similarly since risk uncertainty increases with age most life carriers have maximum substandard table limits that get lower as the age increases. Pan-American Life generally will not consider insurance on a 70+ year old above Table D (200%).

The financial needs of the elderly may differ from those usually seen in younger individuals. Understanding the financial objective to be protected by insurance, whether this objective is attainable during the proposed insured’s lifetime, the cost of

the insurance, how the product was sold, and the product pricing are some of the aspects underwriters should know when evaluating each risk.

Many of the same medical conditions found in the younger population are prevalent in the elderly. However, there are many special problems in older people that need to be considered during the appraisal. This requires an understanding of those problems and necessitates an underwriting workup that is unique for older proposed insureds.

Once again a detailed letter of introduction from the agent is required to explain the justification and need for insurance.

There are some situations when the spouse is not insurable due to occupation or illness; or it might be that the spouse has died. In those cases, the income, investments, and net worth of the proposed insured will be considered to determine the maximum amount insurable.

Once again a letter of introduction from the agent is required to explain the justification and need for insurance.


FUNCTIONAL ASSESSMENT

These activities are characterized as Basic Activities of Daily Living (ADL), Instrumental Activities of Daily Living (IADL), and Advanced Activities of Daily Living (AADL).

Basic Activities of Daily Living (ADL) ADLs are the necessary, basic self-care activities. ADLs usually include:

• Bathing• Dressing• Toileting• Transferring• Continence• Eating

A limitation in the ability to perform any of the basic ADLs will generally require attendant care, provided by a family member or third party or necessitate the use of medical appliances such as a wheelchair, walker, oxygen, etc. A proposed insured with a limitation of any ADL would usually not be insurable.

Instrumental Activities of Daily Living (IADL) IADLs are activities that require higher levels of functional ability. Such activities include:

• Ability to use the telephone• Shopping• Food preparation• Housekeeping• Laundry• Mode of transportation (no special services

required)• Responsibility for own medications• Ability to handle finances

Advanced Activities of Daily Living (AADL)

AADLs are those activities that are voluntary, reflect personal choice, and add meaning and richness to life. These activities are primarily vocational, social, or recreational, including, but not limited to:

• Working in an occupation, full or part-time• Attending church• Going out to dinner• Going to a movie, theater, or to a concert• Playing cards• Participating in physical recreational

activities: travel, driving, etc.

The risk selection process of elderly individuals requires special underwriting care. Medical problems are more prevalent in this age group and functional and cognitive problems, infrequently seen at younger ages, may be present. Underwriting the older, retired proposed insured brings with it several financial challenges and cost considerations, especially in conjunction with medical and functional problems.

For these reasons, we will require a TRIAL APPLICATION (without premium) regardless of the face amount. In the selection process in order to screen potentially acceptable risks from unacceptable ones, it requires a thorough field underwriting assessment from the agent. All the medical questions on the Declarations must be completed and any “yes” answer, duly explained.

The presence of an attending physician who is practicing regular preventative medicine is an extremely important underwriting consideration. The elderly with their higher incidence of disease are much more likely to benefit from routine coronary, cancer, and blood checks. Such procedures are likely to identify disease in the earlier stages when treatment is most efficacious.

Also, the attending physician is an extremely important corroborative source of information regarding the proposed insured’s medical history. The elderly may have memory loss, depression, reduced hearing, a general distrust of strangers, or numerous other reasons for being a poor historian on an insurance examination.


Underwriting requirements for elderly lives :

• Medical exam performed by a MD (not paramed or nurse)

• Functional Assessment Questionnaire, to be completed by the Examiner (not paramed or nurse)

• Attending Physician Statement (APS) on all cases, with copies and details of medical records that will cover at least five years before the application.

• Complete Blood Count (CBC)• Blood Chemistry Profile (BCP) that will

include PSA in men• Resting EKG (we also require a NT Pro BNP

cardiac marker)• Chest XR and Pulmonary Function Test

(Spirometry) for all smokers or individuals with a respiratory ailment history

• Inspection Report

BUSINESS INSURANCE PART 1In business insurance, the beneficiary is an entity (company, business or corporation) that has an insurable interest on an individual, for the financial value that he or she represents.

The reason for insurance may vary according to the circumstances, and could be to cover the percentage of participation in the business (insurance between partners or buy-sell agreement), the experience and importance an individual may bring to the value of the business or company (key person), who’s untimely death would impair a profitable operation, or as a benefit for the executives or employees of a company, or as a collateral to cover loans.

Unlike personal insurance, business insurance deals with insured amounts that can be better defined, and can be calculated by analyzing the company’s financial statements. The annual statements must be attached, along with the details of at least the last two years.

Again, a letter of introduction from the agent

indicating how the face amount was calculated will help the underwriter to follow the process and arrive to the same conclusion. It is important to indicate the calculations, values, and factors used.

The principal factors used by the Underwriting Dept. to evaluate the life insurance to cover business needs are: gross sales, operational costs, value and number of shares, (if any), type of business (services, sales, etc.), and profits. According to the face amount, information of two years or more years will be requested.

For business insurance, Accidental Death or Accidental Death and Dismemberment Benefit will not apply.


UNDERWRITING CONSIDERATION

OF INTEREST TO THE U/W (FOR CONSIDERATION IN THE INTRODUCTORY LETTER FROM THE AGENT) :

Key person insurance aims to compensate a business for financial losses that may arise as a result of the death or incapacity of a key employee. Losses may be in the form of reduced profitability, an interruption to business activities or the inability of the business to service its commitments. There may also be added costs associated with recruiting a replacement - however recruitment costs alone rarely justify the purchase of a very large life insurance policy.

• Generally, the larger the management structure in a company the less vulnerable it is to business interruption as a result of losing an employee. As a consequence, key-person coverage is more suited to small to medium sized enterprises that are more reliant on the business contacts or revenue generating capabilities of one individual or a small number of employees.

• We look at what loss or business interruption is likely to arise as a result of the death or incapacity of the key employee and how long it will take for the business to recover.

• We factor in how much other in-force coverage there is on the applicant and purpose of that coverage.

• The employer must be a viable, profitable, ongoing business concern. Loss making companies or marginally profitable companies with significant accumulated losses would generally be declined.

• For Keyman coverage we are skeptical of:

» Companies in newly established industries or start up companies without a documented track record of success

• The key person’s position and status in that company

• Reason and justification as to why are they considered a “key” employee

• If there are any other key-people in the organization and if so, are they all being covered? If not, why not?

• Income and remuneration over the last few years

KEY PERSON INSURANCE


MULTIPLE OF EMPLOYEE INCOME

AGE SMALL COMPANY MEDIUM COMPANY

<60 10 1-5

>60 I.C. - 3 1-5

U/W GUIDELINES

FINANCIAL EVIDENCE

Employees:

Employees:

• Consider using the following methodology where there is a single key-employee who is also a substantial equity holder in the business:

2 x Gross Profit OR 5 x Net Profit

• Financial questionnaire including details and purpose of all other cover in-force, why the applicant is “key” to the company, their gross remuneration, how cover was calculated, are there other key people and are they being covered, percentage of ownership in company (if any).

• Introductory letter from agent – outlining the background to the insurance sale, the reason for coverage and how it was calculated, employment history of the applicant, and why they should be considered “key”, a description of the financial impact on the company as a result of the loss of the key-person as well as any special circumstances that the underwriter should take into consideration.

• Financial Statements – profit and loss and balance sheets for the last 2 or more years.

• Gross Remuneration – this should include all non-cash benefits and indirect benefits that the person may receive such as share allocations, options, pensions, cars, schooling allowances, health schemes etc.

• Independent Verification – for larger sums assured independent verification of the financial information should be obtained from a source that is at “arms length” to the sales process. Acceptable sources include the company’s lawyers, accountants and bankers


BUSINESS CONTINUATION, STOCK REPURCHASE OR BUY-SELL INSURANCE

Buy-Sell / Partnership insurance provide a lump sum on the death of a business owner to enable the surviving shareholders to purchase the business owner’s share of the business. The obligation to acquire the insured’s share of the business is created in a Buy-Sell Agreement which often forms part of a business succession plan.

OF INTEREST TO THE U/W (FOR CONSIDERATION IN THE INTRODUCTORY LETTER FROM THE AGENT):

• All the business partners names and % shareholding (articles of association / incorporation)

• Are all business shareholders being covered for their share of the business? If not, why not?

• If there is other buy-sell cover in place

• The business succession plan or details of the buy-sell agreement in place

• An independent market valuation of the company

• Is the life insured actively involved in the business?

UNDERWRITING GUIDELINES

• We only insure each owner for the percentage of the business that the person owns.

• We require an independent market valuation for the whole company (see below)

• The sum insured can be grossed up to negate the effect of any tax that may be payable at claim time. Where this has been included in the sum insured, the agent should include detailed calculations / justification

FINANCIAL EVIDENCE

• Financial questionnaire including details of all other cover in-force, gross remuneration, percentage of ownership and role in the company.

• Introductory letter from agent outlining the background to the insurance sale, the reason for coverage and how it was calculated, employment history, any special circumstances that the underwriter should take into consideration.

• Financial Statements – profit and loss and balance sheets for the last 2 or more years

• Buy-Sell Agreement – a copy of the buy-sell agreement including details of all parties to the agreement (if available and if not the articles of association / incorporation)


BENEFITS FOR EXECUTIVES OR EMPLOYEES

BUSINESS INSURANCE PART 2

Business insurance may also be used as an additional benefit for the executives or employees of a company. In this case, they are not to be considered as key persons. Generally, the

company is to be the insurance owner (applicant or subscriber), and the beneficiaries are the family of the proposed insured. The company may also be the party that pays the premiums.

CORPORATE OWNED LIFE INSURANCE

This is also called COLI. This is a type of coverage that can be written for a number of purposes. In most cases, the policy is a permanent type of coverage. The owner/payor beneficiary is a corporation. In many cases, the cash value of the policy is used to accumulate funds, which will be used to fund a future benefit promised to the employee (i.e., deferred compensation or

supplemental retirement benefit). In order to evaluate this type of transaction, the purpose and structure of the plan needs to be provided. The documentation should include (1) a copy of the plan as adopted by the company, (2) the formula by which the face amounts are calculated, and (3) a census of the employees to be covered.

INSURANCE TO COVER MORTGAGE LOANS

An insurance policy may be used as collateral of a mortgage loan. In this case, the beneficiaries listed on the application may be, for example, the family of the proposed insured, and Collateral Assignment (A-3391) shall be attached, thereby assigning to the financial entity that grants the loan, that portion of the benefit equal to the balance of the debt, at the moment of death. In this manner, the financial entity does not have to decide to whom it should deliver the benefit difference.

In these cases, it will always be necessary to state the reason, need, and purpose of the loan,

and the terms of the same. It is preferable, but not mandatory, to attach a copy of the loan documents.

Only available if the loan / mortgage is through a recognized banking or financial institution (not between individuals).

The insurance does not correspond to short-term loans (less than two years), and the insurance may not be larger than the amount of the loan that is to be covered, unless it is done by a Collateral Assignment and there exists an insurable interest that justifies such amount.


FINANCIAL UNDERWRITING FAMILY PROTECTION

Typical financial, personal or family objectives, such as maintaining an income flow adequate for supporting the family, payment of mortgage or rent, and money for expenses of inheritance and succession, are derived from the family provider’s capability to generate income. The portion of potential income that is used to cover the financial needs of the family is what represents the insurable value. The insurance functions as indemnity and covers the financial loss caused by a premature death.

The value of the income that can disappear on the premature death may be estimated as a multiple of the annual income of the family provider. The following table presents factors that, multiplied by the annual income of the proposed insured, produce a top limiting amount for family insurance. A column has been added to help the agent determine an insurance amount, when it is assumed that the future income of the person will increase due to growth opportunities greater than normal or an important inflation. This table may be used only for reference.

INCOME PROTECTION TABLE

AGE FAMILY NEED FAST GROWTH*

(MULTIPLY BY ANNUAL INCOME**)

Up to 30 18 22

31 - 40 15 20

41 - 50 12 15

51 - 60 10 12

61 - 65 8 10

66 - 70 5 8

71 - 75 2 4

• * Use for individuals in professions or careers with increased growth potential.• ** Income, wages, commissions. Do not include unearned income or interests.


BUSINESS VALUATION

This is a subjective area, as the value of any business is really the price which someone is willing to pay for it. A valuation certificate by a chartered accountant or registered business valuer is very good evidence. A business owner is usually aware of the value of their business, and for smaller sums insured their valuation is often a competent guide. The valuation method used by an owner may not be too scientific, but will usually reflect industry rules of thumb and ‘custom and practice’.

Although there are many ways of arriving at a valuation the most suitable methods for underwriting purposes are:

Price earnings ratio (PER)

The price earnings ratio method of valuation focuses on a company’s anticipated future profitability and the perceived present-day value of those profits. The higher the ratio, the greater future profits are expected relative to current profits.

The valuation is calculated by multiplying after tax profits by a factor, the price earnings ratio (PER), which reflects the prospects for the business and the industry in which it operates.

A list of industry specific PERs can be found with a simple internet search.

PRICE EARNINGS RATIO (PER) ANTICIPATED PROFIT GROWTH

5 – 10 lower than inflation

10 - 12 in line with inflation

12 - 15 modestly ahead of inflation

15 – 20 well ahead of inflation

The table below can be used as a general guide:

Company valuation = net profit after tax x PER Value of shareholding (partnership coverage) = percentage of issued share capital owned x company valuation


OTHER WAYS OF DETERMINING A BUSINESS’S VALUE

Net present value (NPV) method

This is the method favoured by chartered accountants and licensed business valuers. Firstly it must be determined whether current profit levels can be sustained in the future. Next a cost of capital is allocated, based on the financial risk which the partnership undertakes in earning that income. Finally a calculation is performed, which gives the present value of the future income stream of the partnership. This value is then multiplied by each partner’s share of the partnership to determine the insured amount. An accountant’s certificate should always be obtained if available. Even if up to three years old, it still provides useful information, which

may include details of internal decision-making processes and the sensitivity of future net profit projections.

Net asset value

By valuing a company in accordance with its net assets, the prospects of future earnings are not considered. The valuation is merely an estimate of the value of the buildings, stock etc. owned by the company, less liabilities such as loans. The net asset value can be found on the balance sheet.

Taking a simplified view, this is the cash receivable for a business if it were broken up and sold. However, no account is taken of intangible assets (such as the value of brand name, skilled or specialised work force, goodwill etc).

INTRODUCTORY LETTER FROM WRITING PRODUCER We cannot stress enough the benefit of you including in the application documentation an introductory letter presenting your client to us. Let us know how you met, what your client does, his financial well-being, how the insurance need was determined, how the face amount was justified etc. This information is gold to the underwriter and very often helps reduce additional information requests by the underwriter in the risk evaluation process. Your letter could save valuable time in getting your case issued and paid.

Points of interest to an underwriter :

• How was the proposed assured referred to you, is he/she known to you ?

• Explain the need for the life insurance policy

• Explain how the face amount was determined

• Does your client have life insurance in force (either national and/or international)?

• Basic occupation details

• Remuneration (Salary, bonuses and approximate net worth)

• General profile of client and basic family details

• Basic health status and profile

• Residential area profile


INFORMAL INQUIRYAn informal inquiry under many circumstances can be very beneficial to both clients and producers as it provides a preliminary review of an individual to determine insurability. There are many reasons to using this approach including the following:

• History of medical concerns• Elderly individuals• Politically exposed persons (PEPs)• Desire to obtain large amounts of insurance

above capacity

• Permanent residence in a country not approved by Pan-American Life

Upon completion of the informal process, the agency will be notified of a tentative offer which will be subject to the formal application and necessary requirements needed for age and face amount.

All quotes are tentative and potentially subject to change after a full underwriting evaluation is completed.

REQUIREMENTS

SUBMISSION

• Form – PALIG Preliminary Underwriting Questions OR,

• Cover letter including all information referred to on Page 29 of this guide

• HIPPA Authorization

• E-mail PALIG forms to: [email protected]


REQUIREMENTS

TRIAL APPLICATIONA trial application may be submitted prior to the formal application process for:

• Initial review of insured’s health status

• Financial eligibility

• Review of other important history

When submitting the application we recommend accompanying the trial application with any

medical records, APS, third party financials (face amounts in excess of $3M), and detailed agent cover letter to expedite the initial review process and provide the best evaluation.

Upon completion of the initial review process, the agency will be notified of a tentative offer which will be subject to any additional requirements to complete the formal underwriting process.

• Completed primary insured application (Form varies depending on product; contact us for specific form)

• Detailed agent cover letter

• HIPPA Authorization

SUBMISSION

• E-mail PALIG to: [email protected]


COMPLIANCE BUSINESS RESTRICTIONS

• Companies located in Cuba;

• Companies, wherever located, organized in or controlled from Cuba;

• Individuals, regardless of citizenship, currently residing in Cuba;

• Cuban citizens, wherever located (except those who have become “unblocked individuals” by establishing permanent residence outside of Cuba*).

FATCA AND CRS COMPLIANCE

It is important to note the following:

• No cash values life insurance policy and/or annuities can be issued unless the FATCA and CRS required documentation is obtained, i.e. a FATCA and CRS Self-Certification Form (B-2006) and/or the appropriate IRS Withholding Certificate (for PAACII business this means a W-8BEN (personal ownership) or W-8BEN-E (entity ownership).

• FATCA and CRS do not apply to term life insurance products.

• FATCA and CRS require us to identify the taxpayer status of Policy Owners and not the Insured.

• FATCA requires us to report the identity of Policy Owners -individuals and entities -that are considered U.S. Taxpayers.

• CRS requires us to report the identity of Policy Owners – individuals and entities – that are considered tax residents in other CRS countries.

As per our PAACII business model, restrictions apply to not only U.S. citizens and U.S. companies and overseas branches of U.S. companies, but also to overseas subsidiaries of U.S. companies.

We will not offer to insure:

• Individuals, entities appearing on OFAC’s Specially Designated Nationals and Blocked Persons list;

• Governmental entities and officials of Libya, Sudan, and Cuba;

The “Foreign Account Tax Compliance Act” (FATCA) was created by the U.S. Internal Revenue Service (IRS) in order to identify persons subject to U.S. Income Tax Laws (U.S. Taxpayers) who invest directly in offshore financial accounts or indirectly through ownership of foreign entities. FATCA requires foreign (non U.S.) insurance companies including PAACII, to report the identities of owners of cash value life insurance policies or annuities considered to be U.S. Taxpayers per the IRS.

Similar to FATCA, the Common Reporting Standard (CRS) was developed by the Organisation for Economic Co-operation and Development (OECD) as a common, international framework for participating countries to combat offshore tax evasion. As the Cayman Islands is a participating CRS country, we are required to determine where our policy owners are “tax residents” – which generally means where the policy owner is liable to pay taxes – and report the identities of owners of cash value life insurance policies or annuities considered to be tax residents of CRS countries.


• The following are considered to be U.S. Taxpayers and therefore not eligible for the PAACII business model:

• U.S. citizens

• U.S. residents (including green card holders)

• Nonimmigrant Visa holders who spent a specified number of days in the U.S.

• Domestic U.S. partnerships or corporations

• Estates and trusts controlled by U.S. persons, who are subject to U.S. Income Tax Laws

ANTI-MONEY LAUNDERING (AML) AND KNOW YOUR CUSTOMER (KYC) CHECK LIST

Politically Exposed

Person (PEP)

. Verification of all the parties to the application, including the nominal and beneficial owners

. Complete Political Activity Questionnaire (UW)

. Source of Funds [Politically Exposed Person Questionnaire -

Form #COMP2

. Senior Management approval required

Corporation/Limited

Liability Company

. Certificate of Incorporation, constitutional document, i.e. memorandum and articles of association, by-laws of the applicant/customer or equivalent, details of registered office, and, if different, a principal place of business

. Satisfactory evidence of the identity of each of the legal owners, beneficial owners and a Register of members/shareholders. Certification of Beneficial Owner - Form #COMP6

. Copies of the most recent list/register of directors or the equivalent

. ID for at least two directors, one of whom should, if applicable, be an executive director; if different from policy signatories

. Certificate of good standing or similar document confirming that the entity is listed in the company registry of its place of formation and has not been dissolved

Private Client Life, Pan-American Assurance International Inc. (PAACII) has established a comprehensive International Anti-Money Laundering (AML) Compliance Program committed to ensuring all organizational areas of international jurisdictions are, and remain, compliant with applicable compliance program obligations and regulatory requirements. The International AML

Compliance Program for PAACII has been designed and implemented to prevent, detect, and correct in a timely manner any suspected incidences of noncompliance or potential suspicious activity of money laundering. The International Compliance Department works collaboratively with regulatory agencies to achieve mutual goals of evidencing compliant performance.


Trust

. Trust Deed (including any amendments) or Trust Verification Form - Form#COMP5

. Copy of ID from the Trustee(s)

. Copy of ID from settlor

. Structure chart or organizational chart – if available

. Source of Funds and forms - Form#COMP7

POLITICALLY EXPOSED PERSON (PEP)

DEFINITION

a. Persons that are or have been entrusted with prominent public functions by a foreign country, for example Head of State or of government, senior politician, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials;

b. Persons who are or have been entrusted domestically with prominent public functions; and

c. Persons who are or have been entrusted with a prominent function by an international organization refers to members of senior management, i.e. directors, deputy directors and members of the board or equivalent functions;

d. Also includes their immediate family and their close associates

“close associates”- any natural person who is known to hold the ownership or control of a legal instrument or person jointly with apolitically exposed person, or who maintain s some other kind of close business or personal relationship with a politically exposed person, or who hold the ownership or control of a legal instrument or person, or who holds the ownership or control of a legal instrument or person which is known to have been established to the benefit of a politically exposed persons.

“family member”- includes the spouse, parent, sibling or child of a politically exposed person


ADMINISTRATON & POLICY SERVICING

AMENDMENT GUIDELINES

Amendments are documents that must be signed by the Owner and the Proposed Insured with the purpose of modifying the information on the Application, that have an impact on the premium, the face amount, or the accumulated values of the policy. They are also used to modify a life insurance contract, if during the underwriting process; it has been issued other than applied for (i.e. with a rating).

Commissions will not be paid while there is a pending amendment (or any other delivery requirement), since it is a document that, once signed by the Owner and the Proposed Insured, indicates acceptance of the modified conditions to the contract.

Amendments will be prepared when the following information is omitted from the application or changed during the underwriting process:

• Age discrepancies • Rate class information (STD, NT, Pref. NT,

etc.) • Owner’s name when other than insured • Beneficiary designation • A specific date is requested on the

application and, as a result, the age changes • Planned premium payment for Universal

Life • Plan of Insurance, Amount of Insurance,

Death Benefit Option • Addition/removal of riders and/or benefits • Ratings to the policy • Exclusions to the policy • Other circumstances as deemed necessary

by home office staff • For specific questions regarding amendments

contact the Underwriting Dept.

REINSTATEMENTS

• When a policy lapses due to non-payment of the premium or no longer has positive cash-values, and if the insured wishes to keep the protection of his or her policy, in addition to the payments to put the policy up-to-date, he or she will have to complete the form

• Within 120 days from the lapse date, Form B-1561 will have to be completed.

• After 120 days from the lapse date, Form A-3098-EN Part A, B and C will have to be completed.

Reinstatements can only be made within the time frame indicated on the contract, after the lapse date. The Underwriting Dept. will indicate what are the requirements needed and Client Services will indicate the premium due.

PREMIUM PAYMENT MODES

Preferred payment methods, Credit Card and Bank to Bank Wire Transfer

Credit Card - A Credit Card Voucher that can be obtained from New Business or Producer Direct needs to be completed, signed and attached to the Application. Once the Underwriting Dept. approves the case the credit card will be charged immediately.

Wire transfer instructions – Once the Underwriting Dept. has confirmed case approval, the planned premium can be wire, not before.


NAME OF BANK CITIBANK, N.A. PANAMA BRANCH

ADDRESS OF BANK PANAMA, REP. OF PANAMA

ACCOUNT NAMEPAN AMERICAN ASSURANCE COMPANY

INTERNATIONAL INC

ACCOUNT NUMBER 0150689015

SWIFT CITIPAPAXXX

ORIGINATOR

ORIGINATOR

ADDRESS

PHONE NUMBER

REFERENCE POLICY NUMBER

APPENDIX UNDERWRITING FORMS (PAACII)

PAACII WIRE INSTRUCTIONS

The underwriting forms are available to download from Producer Direct. You need to sign on as a Producer. They are under the New Business section. Do not print large quantities and check frequently as we will update regularly.


FREQUENTLY ASKED QUESTIONS

US Citizens or residents?US Citizens or residents do not qualify for PAACII policies as per our business model (would have to consider a PALIC or PAAC domestic policy) – the ONLY business model that is approved for this line of business is when the Proposed Insured and the Owner (if different to the Proposed Insured) are Foreign Nationals and possess a US B1/B2 Tourist Visa (or equivalent Visa Waiver). Additionally they must be present in the US State on the same date where the application is signed (approved States : FL, TX, AZ and HA)

US Company Ownership?US Company Ownership is not allowed for PAACII policy as per our business model (would have to consider a PALIC or PAAC domestic policy)

US Trust Ownership?US Trust Ownership is not allowed for PAACII policy as per our business model (would have to consider a PALIC or PAAC domestic policy)

US Person / Company as payer or beneficiary?Provided the US person or entity is not the Proposed Insured or the Owner of the policy we can consider a US person or entity as payer or beneficiary ONLY.

Pregnant ladies?Pregnant ladies can apply for life insurance with PAACII up to the end of the 8th month of pregnancy and we recommend obtaining an APS from the attending Obstetrician.

Occasional cigar / Non Smoker status?Pan – American Life policies are priced as tobacco / non-tobacco users and not as smoker / non smoker meaning that any type

of tobacco consumption (cigars, cigarettes and all “vape” products), would constitute being charged the tobacco base rate. Any kind of tobacco consumption in the last 12 months even with a current negative cotinine test would be considered a tobacco user. Alternatively a positive cotinine test even with a no tobacco use declaration would be classified as a tobacco user. We can only consider Preferred Rates after 24 months after cession of tobacco products. Option 3 (return of premium)?Option 3 is only available for certain products and face amounts – please consult your Pan-American Sales VP before offering this option to your clients.

Financial underwriting requirements needed for large face amounts?Standard financial requirements include :Financial Questionnaire signed by the Proposed Insured and/or Policy Owner

Inspection Report performed by one of our approved vendors

Introductory Letter from the writing producer (please refer to page 29 of this guide)

Generally Pan-American Life Underwriters require additional financial evidence for face amounts in excess of 3,000,000 US$. This could be in the form of a third party validation of income and net worth or even fully audited financial information. Important to prep your clients that additional financial information will very likely be necessary for large face amounts in order to manage their expectations and avoid frustration when such information is requested.

Pan-American Life Insurance Group@PanAmericanLife

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