Table of Contents CITIZENS, INC. LIFE INSURANCE INTERNATIONAL SALES INTERNATIONAL PRODUCTS Our Life Insurance segment issues U.S. Dollar-denominated endowment contracts internationally, which are principally accumulation contracts that incorporate an element of life insurance protection, and ordinary whole life insurance in U.S. Dollar-denominated amounts sold to foreign residents. These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional coverage and annuity benefits to enhance accumulations. For the majority of our business, we retain the first $0.1 million of risk on any one life, reinsuring the remainder of the risk. Historically we have operated this segment through our CICA and CNLIC insurance subsidiaries. Since July 1, 2018, we operate the novated international business in this segment through CICA Ltd. We operate our domestic business in this segment through CICA and CNLIC. We focus our sales of U.S. Dollar-denominated ordinary whole life insurance and endowment policies to residents in Latin America and the Pacific Rim. We have participated in the foreign marketplace since 1975. We believe positive attributes of our international insurance business typically include: As of December 31, 2019, we had insurance policies in force in almost 20 countries, including Colombia, Venezuela, Taiwan, Ecuador and Argentina as our top producing countries. International direct premiums comprised approximately 96% of total direct premiums in the Life Insurance segment and 71% of our total direct premiums in 2019. Our independent marketing firms and consultants specialize in marketing life insurance products and generally have several years of insurance marketing experience. We maintain contracts with the independent marketing firms pursuant to which they provide recruitment, training and supervision of their managers and associates in the service and placement of our products. However, all associates of these firms also contract directly with us as independent contractors and receive their compensation directly from us. Accordingly, should an arrangement between any independent marketing firm and us be terminated for any reason, we expect we would seek to continue the existing marketing arrangements with the associates of these firms. Our agreements with independent marketing firms and consultants typically provide that they are independent contractors responsible for their own operational expenses and are the representative of the prospective insured. In addition, the marketing firms guarantee any debts of their associates to us. The marketing firms receive commissions on all new and renewal policies serviced or placed by them or their associates. All of these contracts provide that the independent marketing firms and consultants are aware of and responsible for compliance with local laws. We offer several ordinary whole life insurance and endowment products designed to meet the needs of our non-U.S. policyowners. These policies have been structured to provide: Our international products have living benefit features. Most policies contain guaranteed cash values and are participating (i.e., provide for cash dividends as apportioned by the Board). Once a policyowner pays the annual premium and the policy is issued, the owner becomes entitled to policy cash dividends as well as annual premium • larger face amount policies issued when compared to our U.S. operations, which results in lower underwriting and administrative costs per unit of coverage; • premiums paid annually rather than monthly or quarterly, which reduces our administrative expenses, accelerates cash flow and results in lower policy lapse rates than premiums with more frequently scheduled payments; and • persistency experience and mortality rates that are comparable to U.S. policies. • U.S. Dollar-denominated cash values that accumulate, beginning in the first policy year, to a policyholder during his or her lifetime; • premium rates that are competitive with most foreign local companies; • a hedge against local currency inflation; • protection against devaluation of foreign currency; • capital investment in a more secure economic environment (i.e., the U.S.); and • lifetime income guarantees for an insured or for surviving beneficiaries. December 31, 2019 | 10-K 3