TORCHMARK CORP | 2013 | FY | 3


Advertising Costs: Costs related to advertising are generally charged to expense as incurred. However, certain direct response advertising costs are capitalized when there is a reliable and demonstrated relationship between total costs and future benefits that is a direct result of incurring these costs. Torchmark’s Direct Response advertising costs consist primarily of the production and distribution costs of direct mail advertising materials, and when capitalized are included as a component of deferred acquisition costs. They are amortized in the same manner as other deferred acquisition costs. Direct response advertising costs charged to earnings and included in other operating expense were $6 million, $16 million, and $16 million in 2013, 2012, and 2011, respectively. Capitalized advertising costs included within deferred acquisition costs were $1.09 billion at December 31, 2013 and $1.04 billion at December 31, 2012.