National Western Life Insurance Company is a stock life insurance company,
chartered in the State of Colorado in 1956, and doing business in forty-nine
states, the District of Columbia, and four U.S. territories or possessions.
National Western is also licensed in Haiti, and although not otherwise licensed,
accepts applications from and issues policies to residents of various international
countries. Such policies are underwritten, accepted, and issued in the United
States based upon applications submitted by independent contractors. National
Western provides life insurance products for the savings and protection needs
of approximately 123,000 policyholders and for the asset accumulation and retirement
needs of 137,900 annuity contract holders.
National Western offers a broad portfolio of individual whole life, universal
life and term insurance plans, and annuities, including supplementary riders.
In the following discussion, the Company reports sales and other statistical
information. These statistics are derived from various sales tracking and administrative
systems and are not derived from the Companys financial reporting systems or
financial statements.These statistics are used to measure the relative progress
of our marketing and acquisition efforts. Sales data for traditional life insurance
is based upon annualized premiums, while universal life sales are based on annualized
"target" premiums which are those premiums upon which full first year
commissions are paid. Sales of annuities are measured based on the amount of
deposits received. These statistics attempt to measure only some of the many
factors that may affect future profitability, and therefore, are not intended
to be predictive of future profitability.
Life Products. The companys life products provide protection for the life
of the insured and, in some cases, allow for cash value accumulation on a tax-deferred
basis. These product offerings include universal life insurance ("UL"),
interest-sensitive whole life, and traditional products such as term insurance
coverage. Interest sensitive products such as UL accept premiums that are applied
to an account value. Deducted from the account value are costs of insurance
charges which vary by age, gender, plan, and class of insurance, as well as
various expense charges. Interest is credited to account values at a fixed interest
rate generally determined in advance and guaranteed for a policy year at a time,
subject to minimum guaranteed rates specified in the policy contract. A slight
variation to this general interest crediting practice involves equity-index
universal life ("EIUL") policies whose credited interest may be linked
in part to an outside index such as the S&P 500® Composite Stock Price
Index ("S&P 500 Index®") at the election of the policyholder.
These products offer both flexible and fixed premium modes and provide policyholders
with flexibility in the available coverage, the timing and amount of premium
payments and the amount of the death benefit, provided there are sufficient
policy funds to cover all policy charges for the coming year. Traditional products
generally provide for a fixed death benefit payable in exchange for regular
premium payments.
Annuity Products. Annuity products sold include flexible premium and single
premium deferred annuities, equity-index (fixed-index) annuities, and single
premium immediate annuities. These products can be tax qualified or nonqualified
annuities. A fixed single premium deferred annuity ("SPDA") provides
for a single premium payment at the time of issue, an accumulation period, and
an annuity payout period commencing at some future date. A flexible premium
deferred annuity ("FPDA") provides the same features but allows, generally
with some conditions, additional payments into the contract. Interest is credited
to the account value of the annuity initially at a current rate of interest
which is guaranteed for a period of time, typically the first year. After this
period, the interest credited is subject to change based upon market rates and
product profitability subject to a minimum guaranteed rate specified in the
contract. Interest accrues during the accumulation period generally on a tax-deferred
basis to the contract holder. After a number of years specified in the annuity
contract, the owner may elect to have the proceeds paid as a single payment
or as a series of payments over a period of time. The owner is permitted at
any time during the accumulation period to withdraw all or part of the annuity
account balance subject to contract provisions such as surrender charges and
market value adjustments. A fixed-index deferred annuity performs essentially
in the same manner as SPDAs and FPDAs with the exception that, in addition to
a fixed interest crediting option, the contract holder has the ability to elect
an interest crediting mechanism that is linked, in part, to an outside index
such as the S&P 500 Index®. A single premium immediate annuity ("SPIA")
foregoes the accumulation period and immediately commences an annuity payout
period.
The company manages its business between Domestic Insurance Operations and International
Insurance Operations. For segment reporting purposes, the companys annuity
business, which is predominantly domestic, is separately identified. The Company
also has a Corporate segment, which consists of the assets and activities of
wholly-owned subsidiaries that have not been allocated to any other operating
segment.
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