Edgar Filing: LINCOLN NATIONAL CORP

lincoln11k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIOIN

Washington, D.C. 20549

FORM 11- K

FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS

AND SIMILARY PLANS PURSUANT TO SECTION 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ________

Commission File Number 1-6028

A.	Full title of the plan and the address of the plan, if different from that of the issuer named below:

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AGENTS’

SAVINGS AND PROFIT-SHARING PLAN

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Lincoln National Corporation

150 N. Radnor Chester Road

Radnor, PA 19087

REQUIRED INFORMATION

Financial statements and schedule for The Lincoln National Life Insurance Company Agents’ Savings and Profit-Sharing Plan, prepared in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974, are contained in this Annual Report on Form 11-k.

• Financial Statements and Supplemental Schedule

The Lincoln National Life Insurance Company Agents’

Savings and Profit-Sharing Plan

December 31, 2008 and 2007 and for the Three Years

Ended December 31, 2008, 2007, and 2006

with Report of Independent Registered Public Accounting

Firm

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Financial Statements

and Supplemental Schedule

Years Ended December 31, 2008 and 2007 and for the

Three Years Ended December 31, 2008, 2007, and 2006

Contents

Report of Independent Registered Public Accounting Firm	1

Financial Statements

Statements of Net Assets Available for Benefits	2
Statements of Changes in Net Assets Available for Benefits	3
Notes to Financial Statements	4

Supplemental Schedule

Schedule H, Line 4 i – Schedule of Assets (Held at End of Year)	43

Report of Independent Registered Public Accounting Firm

Lincoln National Corporation Plan Administrator

Lincoln National Corporation

We have audited the accompanying statements of net assets available for benefits of The Lincoln National Life Insurance Company Agents’ Savings and Profit-Sharing Plan as of December 31, 2008 and 2007, and the related statements of changes in net assets available for benefits for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2008 and 2007, and the changes in its net assets available for benefits for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2008, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

March 25, 2009

The Lincoln National Life Insurance Company
Agents’ Savings and Profit-Sharing Plan

Statements of Net Assets Available for Benefits


	December 31
	2008		2007
Assets
Investments:
Mutual funds (cost – $62,557,165)	$	48,171,602	$	–
Other collective investment trusts (cost – $26,174,352)		23,063,386		–
Common stock – Lincoln National Corporation
(cost: 2008 – $33,866,772; 2007 – $33,920,977)		21,964,369		47,511,770
Wilmington Trust money market fund		1,003,490		–
Wells Fargo Bank short-term investment account		–		1,564,190
Pooled separate accounts – The Lincoln National Life
Insurance Company Separate Accounts (cost: 2007 –
$91,414,277)		–		133,100,849
Investment contracts – The Lincoln National Life
Insurance Company		29,623,868		14,604,738
Participant loans		3,572,337		3,996,682
Total investments		127,399,052		200,778,229

Accrued interest receivable		118,613		54,904
Cash		14,689		(4,648	)
Contributions receivable from participant deferrals		40,306		–
Contributions receivable from Sponsor company		1,161,189		2,212,179
Total assets		128,733,849		203,040,664

Liabilities
Due to broker		12,670		214
Total liabilities		12,670		214
Net assets available for benefits	$	128,721,179	$	203,040,450

See accompanying notes to the financial statements.

The Lincoln National Life Insurance Company
Agents’ Savings and Profit-Sharing Plan

Statements of Changes in Net Assets Available for Benefits


	Year Ended December 31
	2008			2007			2006
Investment income:
Cash dividends	$	2,480,552		$	1,336,688		$	1,431,425
Interest		1,091,696			965,603			907,029
		3,572,248			2,302,291			2,338,454

Net realized gain (loss) on sale and distributions
of investments:
Mutual funds		(2,203,395	)		–			–
Other collective investment trusts		(760,263	)		–			–
Common Stock – Lincoln National Corporation		(3,553,903	)		3,844,371			5,504,007
Pooled separate accounts – The Lincoln National Life
Insurance Company separate accounts		16,379,942			8,568,425			5,920,004
		9,862,381			12,412,796			11,424,011

Net change in unrealized appreciation (depreciation)
of investments		(84,114,674	)		(8,070,015	)		14,925,196

Contributions:
Participants		7,988,435			8,793,200			7,889,483
Sponsor company		3,653,901			4,661,121			1,960,209
		11,642,336			13,454,321			9,849,692

Transfers to (from) affiliated plans		2,511,221			(36,541	)		(204,186	)
Deposit from Jefferson-Pilot 401(k) Plan		–			–			14,357,318
Distributions to participants		(17,704,133	)		(26,167,088	)		(26,009,979	)
Administrative expenses		(88,650	)		(152,742	)		(173,808	)

Net increase (decrease) in net assets available for benefits		(74,319,271	)		(6,256,978	)		26,506,698
Net assets available for benefits at beginning of the year		203,040,450			209,297,428			182,790,730
Net assets available for benefits at end of the year	$	128,721,179		$	203,040,450		$	209,297,428

See accompanying notes to the financial statements.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements

December 31, 2008

1. Description of the Plan

The following description of The Lincoln National Life Insurance Company Agents’ Savings and Profit-Sharing Plan (Plan) is a summary only and is qualified in its entirety by the terms and provisions of the Plan document.

The Plan is a contributory, defined contribution plan which covers eligible full-time agents of The Lincoln National Life Insurance Company (Lincoln Life), Lincoln Financial Advisors Corporation, and Lincoln Life & Annuity Company of New York. Lincoln Life is the Plan sponsor. Effective April 3, 2006, Lincoln National Corporation (LNC) acquired Jefferson-Pilot Corporation (Jefferson-Pilot). Jefferson-Pilot sponsored a 401(k) plan for their eligible agents. On May 31, 2006, formal approval was obtained for the transfer to this Plan of assets from the accounts of those agents in the legacy Jefferson-Pilot 401(k) plan. Effective June 1, 2006 the Plan was amended to make legacy Jefferson-Pilot agents eligible to participate in the Plan. This increased the net assets of the Plan by $14.4 million. Effective June 1, 2006, participants were permitted to make pre-tax contributions at a rate of at least 1% but not more than 50% (25% maximum for January 1, 2004 through May 31, 2006) of eligible earnings (9% for highly compensated agents, as defined in the Plan), up to a maximum annual amount as determined under applicable law. The maximum contribution rate for highly compensated agents was increased to 10% as of January 1, 2008. The Plan, although not subject to the Employee Retirement Income Security Act of 1974 (ERISA) is administered in accordance with the provisions of ERISA as a standard and in a manner of “best practices.”

In addition to each participant’s pre-tax contributions, Sponsor matching contributions are provided to the Plan. As of January 1, 2007, the Sponsor matching contribution for eligible participants is equal to 50% of each participant’s pre-tax contributions, not to exceed 6% of eligible earnings per pay period. Prior to January 1, 2007, the Sponsor matching contribution for eligible former Jefferson-Pilot agents was equal to 10% of each participant’s pre-tax contribution, not to exceed 6% of eligible compensation. The investment of these Sponsor matching contributions is directed by the participant. In addition, the Sponsor may contribute an additional discretionary match to eligible participants. The Sponsor discretionary match is an amount determined by the sole discretion of the LNC Board of Directors. One requirement for eligibility is that the participant must be employed on the last day of the year or have died or become disabled during the year. The amount of the Sponsor discretionary matching contribution varies according to whether Lincoln Financial Advisors Corporation has met certain performance-based criteria, as determined by the Compensation Committee of LNC’s Board of Directors.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Participants’ pre-tax, other contributions and any earnings thereon are fully vested at all times. Sponsor contributions vest based upon years of service as defined in the Plan document as follows:

Years of Service		Percent Vested

1		0%
2		50%
3 or more		100%

Participants direct the Plan to invest their contributions, the basic Sponsor matching contributions, and the Sponsor discretionary matching contribution in any combination of the investment options offered under the Plan. For 2008 and 2007, Sponsor discretionary matching contributions are made in cash, and allocated to the investment funds in accordance with the participant’s elections. No discretionary matching contributions were made in 2006.

The Sponsor has the right to discontinue contributions at any time and terminate the Plan in accordance with the provisions of ERISA. In the event of Plan termination, all non-vested amounts allocated to participant accounts would become fully vested.

The Plan may make loans to participants in amounts up to 50% of the vested account value to a maximum of $50,000 reduced by the highest outstanding loan balance in the previous 12 month period. Interest charged on new loans to participants is established monthly based upon the prime rate plus 1%. Interest income credited was $284,652, $293,769, and $225,353 in 2008, 2007, and 2006, respectively. Loans may be repaid over any period selected by the participant up to a maximum repayment period of five years except that the maximum repayment period may be 20 years for the purchase of a principal residence.

Upon termination of service or disability, a participant may elect to receive either a lump-sum amount equal to the entire value of the participant’s account or an installment option if certain criteria are met; in cases of death, the participant’s beneficiary makes that election. Vested account balances less than $1,000 are immediately distributable under the terms of the Plan, without the participant’s consent, unless the participant has made a timely election of rollover to an Individual Retirement Account or other qualified arrangement.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Each participant’s account is credited with the participant’s contributions, Sponsor contributions, and applicable investment earnings thereon, and is charged with an allocation of administrative expenses and applicable investment losses. Forfeited non-vested amounts are used to reduce future Sponsor contributions.

2. Significant Accounting Policies

Investments Valuation and Income Recognition

As of October 1, 2008, Wilmington Trust (the Trustee) became the new trustee for the Plan. In addition, Lincoln Alliance also assumed responsibility as the recordkeeper for the Plan as of October 1, 2008. Prior to this date Wells Fargo Bank acted as the Plan’s trustee and recordkeeper. As a result of this change, the funds the participants may invest in were changed. At December 31, 2008, the assets of the Plan consisted primarily of mutual funds, collective investment trust funds, investment contracts issued by Lincoln Life, LNC common stock and participant loans. Marketable securities are stated at fair value based on quoted market prices in an active market at the Plan’s year end. The investment in LNC common stock is valued at the closing sales price reported on the New York Stock Exchange Composite Listing on the last business day of the year. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the plan year. The fair value of ownership interest of the collective investment trust funds is established by the trustee based on the quoted redemption values of the underlying investments on the last business day of the Plan year. A money market account is also utilized by the Trustee to hold money that has been removed from the participants’ funds and is waiting for distribution to the appropriate participants.

Prior to October 1, 2008, the Plan’s assets consisted of LNC common stock, pooled separate account investment contracts underwritten by Lincoln Life, investment contracts underwritten by Lincoln Life, Wells Fargo Bank short-term investment account and participant loans. The Wells Fargo Bank Short-term investment account, which is invested in the common stock fund, is valued at cost, which approximates fair value. The fair value of participation units in the pooled separate accounts estimated by Lincoln Life is based on quoted redemption value of the underlying investments on the last business day of the year. Total amount of assets transferred from Wells Fargo to Wilmington Trust was $162,671,965.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

The investment contracts are valued at contract value as estimated by Lincoln Life. As described in Financial Accounting Standards Board (FASB) Staff Position, (FSP), FSP AAG INV-1 and Statement of Position (SOP), SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP), investment contracts held by a defined-contribution plan are required to be reported at fair value. The Plan adopted FSP AAG INV-1 in 2006. The adoption did not have a material effect on the Plan’s financial statements as interest rates are adjusted to market quarterly. Accordingly, contract value, which represents net contributions plus interest at the contract rate, approximates fair value. The contracts are fully benefit-responsive.

Participant loans are valued at their outstanding balances, which approximate fair value.

The cost of investments sold, distributed, or forfeited is determined using the specific identification method. Investment purchases and sales are accounted for on a trade-date basis.

Interest and dividend income is recorded when earned.

Accounting Estimates and Assumptions

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States that require management to make estimates and assumptions affecting the amounts reported in the financial statements and accompanying notes. Those estimates are inherently subject to change and actual results could differ from those estimates.

Adoption of New Accounting Standard

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements (SFAS 157) which defines fair value, establishes a framework for measuring fair value under current accounting pronouncements that require or permit fair value measurement and enhances disclosures about fair value measurements. Effective January 1, 2008, the Plan adopted SFAS 157. SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction value hierarchy which requires an entity to maximize the use of observable inputs when measuring fair value. Adoption of SFAS 157 did not have a material impact on the Plan’s financial statements.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date;

Level 2 – Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value can be determined through the use of models or other valuation methodologies; and

Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Mutual Funds

These investments are public investment vehicles valued using the Net Asset Value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and classified within level 1 of the valuation hierarchy.

Collective Investment Trust

These investments are public investment vehicles valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is classified within level 2 of the valuation hierarchy because the NAV’s unit price is quoted on a private market that is not active; however, the unit price is based on underlying investments which are traded on an active market.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

Lincoln National Corporation common stock

Lincoln National Corporation common stock is valued at the closing price reported on the New York Stock Exchange Composite Listing and is classified within level 1 of the valuation hierarchy.

Investment Contracts

These investments are made by the Plan in an Unallocated Group Fixed Annuity Contract which are invested in the general assets of Lincoln Life who guarantees a fixed interest rate. The NAV for the investment contract is $1. The investment contracts are classified within level 3 of the valuation hierarchy.

Money Market Funds

These investments are public investment vehicles valued using $1 for the NAV. The money market funds are classified within level 2 of the valuation hierarchy.

Loans to Participants

Loans to plan participants are valued at cost plus accrued interest, which approximates fair value and are classified within level 3 of the valuation hierarchy.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

3. Investments

The following is a summary of assets held for investment:

	December 31, 2008							December 31, 2007
	Number of Shares, Units or Par Value		Net Asset Value Per Unit		Fair Value			Number of Shares, Units or Par Value		Net Asset Value Per Unit		Fair Value
Fair values
Mutual funds:
Columbia Acorn Z		459,043.245	$	17.710	$	8,129,656	*		–	$	–	$	–
Delaware Conservative Allocation I		113,085.607		7.770		878,675			–		–		–
Delaware Moderate Allocation I		302,589.806		8.010		2,423,744			–		–		–
Delaware Aggressive Allocation I		199,207.873		7.000		1,394,455			–		–		–
Delaware Mid Cap Value I		245,586.608		5.660		1,390,020			–		–		–
Dodge & Cox International Stock		274,568.330		21.900		6,013,046			–		–		–
American Fund Growth Fund of America R-5		422,607.570		20.440		8,638,099	*		–		–		–
Harbor International Growth Institutional		890,942.000		8.110		7,225,540	*		–		–		–
Vanguard Institutional Index		119,468.046		82.540		9,860,893	*		–		–		–
Vanguard Extended Market Index Institutional		92,317.823		24.020		2,217,474			–		–		–
Total mutual funds						48,171,602

Other collective investment trusts
Delaware Large Cap Value Trust		781,119.037		8.780		6,858,225	*		–		–		–
Delaware International Equity Trust		10,413.875		5.460		56,860			–		–		–
Delaware Small Cap Growth Trust		605,693.008		6.850		4,148,997			–		–		–
Delaware Diversified Income Trust		773,847.545		10.550		8,164,092	*		–		–		–
Delaware Large Cap Growth Trust		492,325.027		7.790		3,835,212			–		–		–
Total collective investment trust funds						23,063,386

Common Stock - LNC		1,165,837.000	$	18.840	$	21,964,369	*		816,073	$	58.220	$	47,511,770	*

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

3. Investments (continued)

	December 31, 2008							December 31, 2007
	Number of Shares, Units or Par Value		Net Asset Value Per Unit		Fair Value			Number of Shares, Units or Par Value		Net Asset Value Per Unit		Fair Value

Pooled separate accounts – The Lincoln Life Insurance Company Separate Accounts:
Core Equity Account		–	$	–	$	–			603,408.454	$	17.535	$	10,580,767	*
Medium Capitalization Equity Account		–		–		–			558,122.762		17.023		9,500,756
Short-Term Account		–		–		–			2,707,860.831		4.142		11,214,877	*
Government/Corporate Bond Account		–		–		–			502,647.363		9.843		4,947,357
Large Capitalization Equity Account		–		–		–			703,700.685		10.991		7,734,304
Balanced Account		–		–		–			399,671.268		9.426		3,767,261
High Yield Bond Account		–		–		–			842,282.306		4.488		3,780,163
Small Capitalization Equity Account		–		–		–			882,868.835		9.896		8,737,135
Value Equity Account		–		–		–			1,922,453.540		3.122		6,001,708
International Equity Account		–		–		–			941,916.059		12.562		11,832,632	*
Conservative Balanced Account		–		–		–			409,589.675		2.510		1,028,234
Aggressive Balanced Account		–		–		–			608,494.129		2.988		1,817,998
Delaware Growth and Income Account		–		–		–			2,079,971.566		2.138		4,446,147
Scudder VIT Equity 500 Index Account		–		–		–			4,049,051.948		1.268		5,133,793
Fidelity VIP Contrafund		–		–		–			6,414,875.498		1.906		12,229,960	*
Neuberger-Berman AMT Regency Account		–		–		–			1,506,244.982		1.827		2,751,458
Social Awareness Account		–		–		–			1,311,610.737		1.365		1,789,955
American Funds Insurance Series Global Growth		–		–		–			4,869,650.703		1.457		7,094,107
Neuberger-Berman Mid-Cap Growth Account		–		–		–			3,341,287.715		1.702		5,687,874
Scudder VIT Small Cap Index Account		–		–		–			1,781,845.843		1.859		3,313,342
Black Rock Legacy Account		–		–		–			407,813.986		1.899		774,601
American Funds International Account		–		–		–			395,626.878		22.588		8,936,420
Total pooled separate accounts													133,100,849

Contract value (approximates fair value – See footnote 3)
Investment contracts – The Lincoln National Life Insurance Company		29,623,868		1		29,623,868	*		14,604,738.000		–		14,604,738	*

Estimated value
Wilmington Trust Money market fund		1,003,490		1		1,003,490			–		–		–
Wells Fargo Bank short-term
investment account		–		–		–			1,564,190.000		–		1,564,190
Participants loans		3,572,337		–		3,572,337			3,996,682.000		–		3,996,682
Total investments			$	–	$	127,399,052				$	–	$	200,778,229

* Investments that represent 5% or more of the fair value of net assets available for benefits as of the end of the plan year.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

3. Investments (continued)

Net realized gain on sale (loss) and distribution of investments is summarized as follows:

	Year Ended December 31
	2008			2007		2006
Mutual fund accounts
Proceeds from disposition of units	$	6,146,376		$	–	$	–
Cost of units disposed		8,349,771			–		–
Net realized loss on sale and distribution of mutual fund accounts	$	(2,203,395	)	$	–	$	–

Collective investment trust funds
Proceeds from disposition of units	$	3,682,194		$	–	$	–
Cost of units disposed		4,442,457			–		–
Net realized loss on sale and distribution of collective investment trust funds	$	(760,263	)	$	–	$	–

Common stock
Proceeds from disposition of stock	$	4,366,742		$	7,729,845	$	12,038,077
Cost of stock disposed		7,920,645			3,885,474		6,534,070
Net realized gain (loss) on sale and distribution of common stock	$	(3,553,903	)	$	3,844,371	$	5,504,007

Pooled separate accounts
Proceeds from disposition of units	$	135,008,487		$	49,126,170	$	43,764,916
Cost of units disposed		118,628,545			40,557,745		37,844,912
Net realized gain on sale and distribution of pooled separate accounts	$	16,379,942		$	8,568,425	$	5,920,004

Total net realized gain on sale and distribution of investments	$	9,862,381		$	12,412,796	$	11,424,011

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

3. Investments (continued)

The net change in unrealized appreciation (depreciation) of investments in total and by investment classification as determined by fair value is summarized as follows:

	Year Ended December 31
	2008			2007			2006
Fair value in excess of (less than) cost:
At beginning of the year	$	55,277,366		$	63,347,381		$	48,422,185
At end of the year		(28,837,308	)		55,277,366			63,347,381
Change in net unrealized appreciation (depreciation) of investments	$	(84,114,674	)	$	(8,070,015	)	$	14,925,196

Mutual funds	$	(14,385,805	)	$	–		$	–
Other collective investment trusts		(3,110,966	)		–			–
Common stock – LNC		(24,931,330	)		(10,211,687	)		7,023,661
Pooled separate accounts – LNL		(41,686,573	)		2,141,672			7,901,535
Change in net unrealized appreciation (depreciation) of investments	$	(84,114,674	)	$	(8,070,015	)	$	14,925,196

The Plan holds investments in investment contracts. From October 1 to December 31, 2008, the Plan invested in Lincoln Stable Value Fund (Stable Value Fund) which earned an average interest rate of approximately 4.95% (annualized) in the fourth quarter of 2008. Interest is credited at the same rate for the entire contract value. The credited interest rate is based upon a three-year average of the Lehman rate plus 20 basis points (“bp”) and can be changed quarterly. Prior to October 1, 2008, the Plan invested in the Lincoln Life Guaranteed Account (Guaranteed Account) which earned an average interest rate of approximately 4.0% (annualized) in the first three quarter of 2008 and for all of 2007 and 2006. The credited interest rates for new contributions, which approximated the current market rate, were 4.0% (annualized) through September 30, 2008, and all of 2007 and 2006. The rate on new contributions was guaranteed through the three succeeding calendar year quarters. The credited interest rates for the remaining contract value balance, which approximated the current market rate, were 4.0% (annualized) at September 30, 2008 and December 31, 2007 and 2006, and were determined based upon the performance of Lincoln Life’s general account. The credited interest rates could be changed quarterly for both the Stable Value Fund and the Guaranteed Account. The minimum rate was 3.5% through September 30, 2008 and is currently 3.0%. The guarantee is based on Lincoln Life’s ability to meet its financial obligations from the general assets of Lincoln Life.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

3. Investments (continued)

For both the Stable Value Fund and the Guaranteed Account restrictions apply to the aggregate movement of funds to other investment options. The fair value of the investment contracts approximate contract value. Participants are allocated interest on the investment contracts based on the average rate earned on all Plan investments in the investment contracts.

4. Investment Options

The detail of the net assets available for benefits by investment option as of December 31, 2008 is as follows:

	Investment Options
	Total		1.A.		2.A.		3.A.		4.A.		5.A.		6.A.

Assets
Investments:
Mutual funds	$	48,171,602	$	8,129,656	$	878,675	$	2,423,744	$	1,394,455	$	1,390,020	$	6,013,046
Other collective investment trusts		23,063,386		–		–		–		–		–		–
Common stock – LNC		21,964,369		–		–		–		–		–		–
Wilmington Trust money market fund		1,003,490		–		–		–		–		–		–
Investment contracts		29,623,868		–		–		–		–		–		–
Participant loans		3,572,337		–		–		–		–		–		–
Total investments		127,399,052		8,129,656		878,675		2,423,744		1,394,455		1,390,020		6,013,046

Accrued interest receivable		118,613		–		–		–		–		–		–
Cash		14,689		–		–		–		–		–		–
Contributions receivable from participant deferrals		40,306		2,734		–		582		286		303		899
Contributions receivable from Sponsor company		1,161,189		98,660		2,741		29,147		21,559		20,209		89,172
Total assets		128,733,849		8,231,050		881,416		2,453,473		1,416,300		1,410,532		6,103,117

Liabilities
Due to (from) broker		12,670		208		–		–		–		–		337
Total liabilities		12,670		208		–		–		–		–		337
Net assets available for benefits	$	128,721,179	$	8,230,842	$	881,416	$	2,453,473	$	1,416,300	$	1,410,532	$	6,102,780

Number of participants selecting investment options				835		56		260		157		248		629

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

	Investment Options
		7.A.			8.A.			9.A.			10.A.		11.A.			12.A.		13.A.

Assets
Investments:
Mutual funds	$	8,638,099		$	7,225,540		$	9,860,893		$	2,217,474	$	–		$	–	$	–
Other collective investment trusts		–			–			–			–		6,858,225			56,860		4,148,997
Common stock – LNC		–			–			–			–		–			–		–
Wilmington Trust money market fund		–			–			–			–		–			–		–
Investment contracts		–			–			–			–		–			–		–
Participant loans		–			–			–			–		–			–		–
Total investments		8,638,099			7,225,540			9,860,893			2,217,474		6,858,225			56,860		4,148,997

Accrued interest receivable		–			–			–			–		–			–		–
Cash		–			–			–			–		–			–		–
Contributions receivable from participant deferrals		5,988			6,001			2,336			1,998		2,042			–		642
Contributions receivable from Sponsor company		130,639			150,527			92,285			35,847		84,594			1,084		50,441
Total assets		8,774,726			7,382,068			9,955,514			2,255,319		6,944,861			57,944		4,200,080

Liabilities
Due to (from) broker		(2,068	)		(3,447	)		(1,089	)		–		(1,883	)		208		–
Total liabilities		(2,068	)		(3,447	)		(1,089	)		–		(1,883	)		208		–
Net assets available for benefits	$	8,776,794		$	7,385,515		$	9,956,603		$	2,255,319	$	6,946,744		$	57,736	$	4,200,080

Number of participants selecting investment options		724			793			725			374		654			17		532

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
		14.A.			15.A.			16.A.		17.A.		Loans		Short-term

Assets
Investments:
Mutual funds	$	–		$	–		$	–	$	–	$	–	$	–
Other collective investment trusts		8,164,092			3,835,212			–		–		–		–
Common stock – LNC		–			–			21,964,369		–		–		–
Wilmington Trust money market fund		–			–			561,866		–		–		441,624
Investment contracts		–			–			–		29,623,868		–		–
Participant loans		–			–			–		–		3,572,337		–
Total investments		8,164,092			3,835,212			22,526,235		29,623,868		3,572,337		441,624

Accrued interest receivable		–			–			–		118,613		–		–
Cash		–			–			–		–		–		14,689
Contributions receivable from participant deferrals		837			629			10,975		4,054		–		–
Contributions receivable from Sponsor company		51,238			55,144			180,943		66,959		–		–
Total assets		8,216,167			3,890,985			22,718,153		29,813,494		3,572,337		456,313

Liabilities
Due to (from) broker		(15,751	)		(1,033	)		–		37,188		–		–
Total liabilities		(15,751	)		(1,033	)		–		37,188		–		–
Net assets available for benefits	$	8,231,918		$	3,892,018		$	22,718,153	$	29,776,306	$	3,572,337	$	456,313

Number of participants selecting investment options		498			402			1267		710		272

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

The detail of the net assets available for benefits by investment option as of December 31, 2007 is as follows:

		Investment Options
		Total			1		2			3			4		5		6

Assets
Investments:
Common stock	$	47,511,770		$	47,511,770	$	–		$	–		$	–	$	–	$	–
Wells Fargo Bank short-term investment account		1,564,190			1,564,190		–			–			–		–		–
Pooled separate accounts – LNL		133,100,849			–		–			10,580,767			9,500,756		11,214,877		4,947,357
Investment contracts		14,604,738			–		14,604,738			–			–		–		–
Participant loans		3,996,682			–		–			–			–		–		–
Total investments		200,778,229			49,075,960		14,604,738			10,580,767			9,500,756		11,214,877		4,947,357

Accrued interest receivable		54,904			5,966		48,938			–			–		–		–
Cash		(4,648	)		–		(4,648	)		–			–		–		–
Contributions receivable from participant deferrals		–			–		–			–			–		–		–
Contributions receivable from Sponsor company		2,212,179			2,212,179		–			–			–		–		–
Total assets		203,040,664			51,294,105		14,649,028			10,580,767			9,500,756		11,214,877		4,947,357

Liabilities
Due to (from) broker		214			–		–			(28,320	)		–		94,323		(14,387	)
Total liabilities		214			–		–			–			–		94,323		(14,387	)
Net assets available for benefits	$	203,040,450		$	51,294,105	$	14,649,028		$	10,609,087		$	9,500,756	$	11,120,554	$	4,961,744

Number of participants selecting investment options		1354			366		541			467			480		338

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
		7			8		9			10			11			12			13

Assets
Investments:
Common stock – LNC	$	–		$	–	$	–		$	–		$	–		$	–		$	–
Wells Fargo Bank short-term investment account		–			–		–			–			–			–			–
Pooled separate accounts – LNL		7,734,304			3,767,261		3,780,163			8,737,135			6,001,708			11,832,632			1,028,234
Investment contracts		–			–		–			–			–			–			–
Participant loans		–			–		–			–			–			–			–
Total investments		7,734,304			3,767,261		3,780,163			8,737,135			6,001,708			11,832,632			1,028,234

Accrued interest receivable		–			–		–			–			–			–			–
Cash		–			–		–			–			–			–			–
Contributions receivable from participant deferrals		–			–		–			–			–			–			–
Contributions receivable from Sponsor company		–			–		–			–			–			–			–
Total assets		7,734,304			3,767,261		3,780,163			8,737,135			6,001,708			11,832,632			1,028,234

Liabilities
Due to (from) broker		(20,915	)		–		(10,164	)		(9,880	)		(28,411	)		(18,761	)		–
Total liabilities		(20,915	)		–		(10,164	)		(9,880	)		(28,411	)		(18,761	)		–
Net assets available for benefits	$	7,755,219		$	3,767,261	$	3,790,327		$	8,747,015		$	6,030,119		$	11,851,393		$	1,028,234

Number of participants selecting investment options		471			188		338			579			378			655			52

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
		14		15			16		17		18		19		20

Assets
Investments:
Common stock – LNC	$	–	$	–		$	–	$	–	$	–	$	–	$	–
Wells Fargo Bank short-term investment account		–		–			–		–		–		–		–
Pooled separate accounts – LNL		1,817,998		4,446,147			5,133,793		12,229,960		2,751,458		1,789,955		7,094,107
Investment contracts		–		–			–		–		–		–		–
Participant loans		–		–			–		–		–		–		–
Total investments		1,817,998		4,446,147			5,133,793		12,229,960		2,751,458		1,789,955		7,094,107

Accrued interest receivable		–		–			–		–		–		–		–
Cash		–		–			–		–		–		–		–
Contributions receivable from participant deferrals		–		–			–		–		–		–		–
Contributions receivable from Sponsor company		–		–			–		–		–		–		–
Total assets		1,817,998		4,446,147			5,133,793		12,229,960		2,751,458		1,789,955		7,094,107

Liabilities
Due to (from) broker		–		(6,031	)		–		47,210		4,918		–		(17,740	)
Total liabilities		–		(6,031	)		–		47,210		4,918		–		(17,740	)
Net assets available for benefits	$	1,817,998	$	4,452,178		$	5,133,793	$	12,182,750	$	2,746,540	$	1,789,955	$	7,111,847

Number of participants selecting investment options		153		448			293		673		265		128		438

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
		21			22			25		26		Loans

Assets
Investments:
Common stock	$	–		$	–		$	–	$	–	$	–
Wells Fargo Bank short-term investment account		–			–			–		–		–
Pooled separate accounts		5,687,874			3,313,342			774,601		8,936,420		–
Investment contracts		–			–			–		–		–
Participant loans		–			–			–		–		3,996,682
Total investments		5,687,874			3,313,342			774,601		8,936,420		3,996,682

Accrued interest receivable		–			–			–		–		–
Cash		–			–			–		–		–
Contributions receivable from participant deferrals		–			–			–		–		–
Contributions receivable from Sponsor company		–			–			–		–		–
Total assets		5,687,874			3,313,342			774,601		8,936,420		3,996,682

Liabilities
Due to (from) broker		(19,496	)		(8,988	)		28,799		8,057		–
Total liabilities		(19,496	)		(8,988	)		28,799		8,057		–
Net assets available for benefits	$	5,707,370		$	3,322,330		$	745,802	$	8,928,363	$	3,996,682

Number of participants selecting investment options		535			383			79		654		220

Investment options 23 and 24 had a zero balance as of December 31, 2007 and are not shown.

4. Investment Options (continued)

The detail of the changes in net assets available for benefits by investment option for the year ended December 31, 2008 is as follows:

		Investment Options
		Total			1			2			3			4			5			6

Investment income:
Cash dividends	$	2,480,552		$	992,652		$	–		$	–		$	–		$	–		$	–
Interest		1,091,696			27,789			430,879			–			–			–			–
Total investment income		3,572,248			1,020,441			430,879			–			–			–			–
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		(2,203,395	)		–			–			–			–			–			–
Other collective investment trusts		(760,263	)		–			–			–			–			–			–
Common Stock – Lincoln National Corporation		(3,553,903	)		(2,038,638	)		–			–			–			–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		16,379,942			–			–			7,113,263			4,053,768			744,210			418,130
		9,862,381			(2,038,638	)		–			7,113,263			4,053,768			744,210			418,130
Net change in unrealized appreciation (depreciation) of investments		(84,114,674	)		(10,333,659	)		–			(8,978,006	)		(5,961,467	)		(525,325	)		(611,969	)
Contributions:
Participant		7,988,435			769,366			157,742			370,605			258,035			170,287			171,628
Sponsor company		3,653,901			236,797			60,617			102,816			74,379			43,389			61,374
Total contributions		11,642,336			1,006,163			218,359			473,421			332,414			213,676			233,002
Transfers to (from) affiliated plans		2,511,221			1,131,002			6,987			39,703			121,657			305,370			40,626
Transfer from Wells Fargo to Wilmington Trust		–			(35,061,561	)		(15,463,946	)		(8,194,643	)		(6,640,307	)		(13,015,959	)		(4,881,347	)
Distributions to participants		(17,704,133	)		(3,277,477			(1,675,195	)		(377,312	)		(576,982	)		(2,468,824	)		(733,699	)
Administrative expenses		(88,650	)		(20,967	)		(7,071	)		(4,695	)		(4,092	)		(5,809	)		(2,485	)
Net transfers		–			(3,719,409	)		1,840,959			(680,818	)		(825,747	)		3,632,107			575,998
Net increase (decrease) in net assets available for benefits		(74,319,271	)		(51,294,105	)		(14,649,028	)		(10,609,087	)		(9,500,756	)		(11,120,554	)		(4,961,744	)
Net assets available for benefits at beginning of year		203,040,450			51,294,105			14,649,028			10,609,087			9,500,756			11,120,554			4,961,744
Net assets available for benefits at end of year	$	128,721,179		$	–		$	–		$	–		$	–		$	–		$	–

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
		7			8			9			10			11			12			13

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			–
Total investment income		–			–			–			–			–			–			–
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		–			–			–			–			–			–			–
Other collective investment trusts		–			–			–			–			–			–			–
Common Stock – Lincoln National Corporation		–			–			–			–			–			–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		2,283,053			107,728			214,579			864,849			725,242			1,589,539			(6,597	)
		2,283,053			107,728			214,579			864,849			725,242			1,589,539			(6,597	)
Net change in unrealized appreciation (depreciation) of investments		(4,332,528	)		(664,197	)		(523,738	)		(2,733,998	)		(1,810,140	)		(4,753,882	)		(114,086	)
Contributions:
Participant		350,072			190,840			138,493			314,623			277,280			466,763			23,460
Sponsor company		111,167			169,658			39,382			88,078			75,704			127,511			5,207
Total contributions		461,239			360,498			177,875			402,701			352,984			594,274			28,667
Transfers to (from) affiliated plans		90,242			(6,334	)		2,305			135,018			16,608			144,734			3,263
Transfer from Wells Fargo to Wilmington Trust		(5,550,836	)		(3,162,482	)		(3,311,855	)		(6,481,657	)		(4,935,869	)		(8,132,281	)		(1,083,294	)
Distributions to participants		(476,163	)		(134,855	)		(179,449	)		(497,293	)		(273,905	)		(688,884	)		(12,840	)
Administrative expenses		(3,370	)		(1,720	)		(1,754	)		(3,748	)		(2,705	)		(4,945	)		(572	)
Net transfers		(226,856	)		(265,899	)		(168,290	)		(432,887	)		(102,334	)		(599,948	)		157,225
Net increase (decrease) in net assets available for benefits		(7,755,219	)		(3,767,261	)		(3,790,327	)		(8,747,015	)		(6,030,119	)		(11,851,393	)		(1,028,234	)
Net assets available for benefits at beginning of year		7,755,219			3,767,261			3,790,327			8,747,015			6,030,119			11,851,393			1,028,234
Net assets available for benefits at end of year	$	–		$	–		$	–		$	–		$	–		$	–		$	–

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
		14			15			16			17			18			19			20

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			–
Total investment income		–			–			–			–			–			–			–
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		–			–			–			–			–			–			–
Other collective investment trusts		–			–			–			–			–			–			–
Common Stock – Lincoln National Corporation		–			–			–			–			–			–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		(131,835	)		(608,123	)		(44,433	)		(16,452	)		118,793			6,846			(136,428	)
		(131,835	)		(608,123	)		(44,433	)		(16,452	)		118,793			6,846			(136,428	)
Net change in unrealized appreciation (depreciation) of investments		(255,465	)		(378,654	)		(967,450	)		(3,186,406	)		(561,468	)		(275,292	)		(1,497,242	)
Contributions:
Participant		153,926			255,751			215,050			643,901			117,216			57,866			368,324
Sponsor company		45,488			79,116			63,036			229,654			35,026			15,949			103,100
Total contributions		199,414			334,867			278,086			873,555			152,242			73,815			471,424
Transfers to (from) affiliated plans		(11,252	)		32,118			27,961			152,108			5,567			11,893			79,171
Transfer from Wells Fargo to Wilmington Trust		(1,849,835	)		(3,309,397	)		(4,234,028	)		(9,684,047	)		(1,905,571	)		(1,527,681	)		(5,058,443	)
Distributions to participants		(64,232	)		(227,887	)		(482,087	)		(760,650	)		(338,714	)		(125,226	)		(579,689	)
Administrative expenses		(891	)		(1,992	)		(2,291	)		(5,562	)		(1,135	)		(797	)		(3,274	)
Net transfers		296,098			(293,110	)		290,449			444,704			(216,254	)		46,487			(387,366	)
Net increase (decrease) in net assets available for benefits		(1,817,998	)		(4,452,178	)		(5,133,793	)		(12,182,750	)		(2,746,540	)		(1,789,955	)		(7,111,847	)
Net assets available for benefits at beginning of year		1,817,998			4,452,178			5,133,793			12,182,750			2,746,540			1,789,955			7,111,847
Net assets available for benefits at end of year	$	–		$	–		$	–		$	–		$	–		$	–		$	–

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

	Investment Options
		21			22			25			26		Loans

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			284,652
Total investment income		–			–			–			–			284,652
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		–			–			–			–			–
Other collective investment trusts		–			–			–			–			–
Common Stock – Lincoln National Corporation		–			–			–			–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		(3,509	)		76,068			(111,706	)		(877,043	)		–
		(3,509	)		76,068			(111,706	)		(877,043	)		–
Net change in unrealized appreciation (depreciation) of investments		(1,407,719	)		(424,814	)		(75,562	)		(1,647,165	)		–
Contributions:
Participant		290,319			196,013			40,047			472,982			–
Sponsor company		93,514			60,356			10,960			153,014			–
Total contributions		383,833			256,369			51,007			625,996			–
Transfers to (from) affiliated plans		26,729			6,911			4,133			144,701			–
Transfer from Wells Fargo to Wilmington Trust		(4,577,803	)		(2,923,155	)		(915,695	)		(6,685,857	)		–
Distributions to participants		(352,713	)		(222,741	)		(78,689	)		(601,557	)		(708,997	)
Administrative expenses		(2,582	)		(1,533	)		(466	)		(4,194	)		–
Net transfers		226,394			(89,435	)		381,176			116,756			–
Net increase (decrease) in net assets available for benefits		(5,707,370	)		(3,322,330	)		(745,802	)		(8,928,363	)		(424,345	)
Net assets available for benefits at beginning of year		5,707,370			3,322,330			745,802			8,928,363			3,996,682
Net assets available for benefits at end of year	$	–		$	–		$	–		$	–		$	3,572,337

Investment options 23 and 24 had a zero balance as of December 31, 2008 and are not shown.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

Investment Options

1.A.

2.A.

3.A.

4.A.

5.A.

6.A.

7.A.

Investment income:
Cash dividends	$	55,268		$	25,018		$	62,766		$	47,588		$	9,312		$	618,418		$	136,789
Interest		–			–			–			–			–			–			–
Total investment income		55,268			25,018			62,766			47,588			9,312			618,418			136,789
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		(268,126	)		(18,231	)		(82,740	)		(82,213	)		(96,790	)		(162,497	)		(212,853	)
Other collective investment trusts		–			–
Common Stock – Lincoln National Corporation		–			–			–			–			–			–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		–			–			–			–			–			–			–
		(268,126	)		(18,231	)		(82,740	)		(82,213	)		(96,790	)		(162,497	)		(212,853	)
Net change in unrealized appreciation (depreciation) of investments		(2,600,638	)		(60,279	)		(265,308	)		(228,061	)		(333,958	)		(2,582,426	)		(2,361,832	)
Contributions:
Participant		122,571			6,625			37,608			29,244			23,886			114,896			173,185
Sponsor company		132,340			3,735			39,628			28,919			27,180			120,056			175,264
Total contributions		254,911			10,360			77,236			58,163			51,066			234,952			348,449
Transfers to (from) affiliated plans		–			–			–			–			–			–			–
Transfer from Wells Fargo to Wilmington Trust		11,218,110			1,083,294			3,162,482			1,849,835			1,905,571			8,132,281			10,599,742
Distributions to participants		(122,380	)		(2,812	)		(5,087	)		(12,618	)		(9,561	)		(95,233	)		(65,589	)
Administrative expenses		–			–			–			–			–			–			–
Net transfers		(306,303	)		(155,934	)		(495,876	)		(216,394	)		(115,108	)		(42,715	)		332,088
Net increase (decrease) in net assets available for benefits		8,230,842			881,416			2,453,473			1,416,300			1,410,532			6,102,780			8,776,794
Net assets available for benefits at beginning of year		–			–			–			–			–			–			–
Net assets available for benefits at end of year	$	8,230,842		$	881,416		$	2,453,473		$	1,416,300		$	1,410,532		$	6,102,780		$	8,776,794

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

Investment Options

8.A.

9.A.

10.A.

11.A.

12.A.

13.A.

14.A.

Investment income:
Cash dividends	$	82,227		$	79,056		$	41,175		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			–
Total investment income		82,227			79,056			41,175			–			–			–			–
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		(632,974	)		(561,201	)		(85,770	)		–			–			–			–
Other collective investment trusts		–			–			–			(246,395	)		–			(194,948	)		10,638
Common Stock – Lincoln National Corporation		–			–			–			–			–			–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		–			–			–			–			–			–			–
		(632,974	)		(561,201	)		(85,770	)		(246,395	)		–			(194,948	)		10,638
Net change in unrealized appreciation (depreciation) of investments		(2,515,904	)		(2,716,893	)		(720,506	)		(769,543	)		(1,193	)		(1,861,251	)		424,173
Contributions:
Participant		203,532			119,234			53,570			113,548			2,437			62,044			71,893
Sponsor company		203,270			125,212			48,074			115,996			1,495			68,413			69,857
Total contributions		406,802			244,446			101,644			229,544			3,932			130,457			141,750
Transfers to (from) affiliated plans		–			–			–			–			–			–			–
Transfer from Wells Fargo to Wilmington Trust		11,744,300			13,956,353			2,923,155			8,245,267			–			6,481,658			8,193,200
Distributions to participants		(55,246	)		(71,142	)		(8,280	)		(24,105	)		(208	)		(21,182	)		1,354
Administrative expenses		–			–			–			–			–			–			–
Net transfers		(1,643,690	)		(974,016	)		3,901			(488,024	)		55,205			(334,654	)		(539,197	)
Net increase (decrease) in net assets available for benefits		7,385,515			9,956,603			2,255,319			6,946,744			57,736			4,200,080			8,231,918
Net assets available for benefits at beginning of year		–			–			–			–			–			–			–
Net assets available for benefits at end of year	$	7,385,515		$	9,956,603		$	2,255,319		$	6,946,744		$	57,736		$	4,200,080		$	8,231,918

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

	Investment Options
		15.A.			16.A.			16.A.		Short-term
Investment income:
Cash dividends	$	–		$	330,283		$	–		$	–
Interest		–			–			348,376			–
Total investment income		–			330,283			348,376			–
Net realized gain (loss) on sale and distribution of investments:
Mutual funds		–			–			–			–
Other collective investment trusts		(329,558	)		–			–			–
Common Stock – Lincoln National Corporation		–			(1,515,265	)		–			–
Pooled separate accounts – The Lincoln National Life Insurance Company		–			–			–			–
		(329,558	)		(1,515,265	)		–			–
Net change in unrealized appreciation (depreciation) of investments		(903,152	)		(14,597,671	)		–			–
Contributions:
Participant		64,096			224,744			94,733			–
Sponsor company		75,044			243,949			90,177			–
Total contributions		139,140			468,693			184,910			–
Transfers to (from) affiliated plans		–			–			–			–
Transfer from Wells Fargo to Wilmington Trust		5,550,835			35,061,562			28,479,904			–
Distributions to participants		7,505			(92,569	)		(1,667,233	)		456,313
Administrative expenses		–			–			–			–
Net transfers		(572,752	)		3,063,120			2,430,349			–
Net increase (decrease) in net assets available for benefits		3,892,018			22,718,153			29,776,306			456,313
Net assets available for benefits at beginning of year		–			–			–			–
Net assets available for benefits at end of year	$	3,892,018		$	22,718,153		$	29,776,306		$	456,313

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

The detail of the changes in net assets available for benefits by investment option for the year ended December 31, 2007 is as follows:

		Investment Options
			Total				1				2				3				4				5				6

Investment income:
Cash dividends	$	1,336,688		$	1,336,688		$	–		$	–		$	–		$	–		$	–
Interest		965,603			76,858			594,976			–			–			–			–
Total investment income		2,302,291			1,413,546			594,976			–			–			–			–
Net realized gain on sale and distribution of investments:
Common Stock – LNC		3,844,371			3,844,371			–			–			–			–			–
Pooled separate accounts – LNL		8,568,425			–			–			664,484			561,776			457,917			126,139
Total net realized gains		12,412,796			3,844,371			–			664,484			561,776			457,917			126,139

Net change in unrealized appreciation (depreciation) of investments		(8,070,015	)		(10,211,687	)		–			(23,248	)		630,889			72,885			70,687
Contributions:
Participant		8,793,200			1,253,272			205,334			488,649			378,949			185,822			222,521
Sponsor company		4,661,121			2,472,984			68,051			149,632			110,506			52,493			62,216
Total contributions		13,454,321			3,726,256			273,385			638,281			489,455			238,315			284,737
Transfers to (from) affiliated plans		(36,541	)		(26,046	)		123,769			(91,474	)		(36,589	)		1,148			(55,814	)
Deposit from Jefferson-Pilot 401(k) Plan		–			–			–			–			–			–			–
Distributions to participants		(26,167,088	)		(5,292,358	)		(2,994,094	)		(928,069	)		(548,062	)		(5,901,943	)		(241,702	)
Administrative expenses		(152,742	)		(38,138	)		(9,642	)		(7,265	)		(6,359	)		(23,600	)		(3,031	)
Net transfers		–			(3,431,147	)		(455,387	)		(861,230	)		(1,176,110	)		6,503,894			272,608
Net increase (decrease) in net assets available for benefits		(6,256,978	)		(10,015,203	)		(2,466,993	)		(608,521	)		(85,000	)		1,348,616			453,624
Net assets available for benefits at beginning of year		209,297,428			61,309,308			17,116,021			11,217,608			9,585,756			9,771,938			4,508,120
Net assets available for benefits at end of year	$	203,040,450		$	51,294,105		$	14,649,028		$	10,609,087		$	9,500,756		$	11,120,554		$	4,961,744

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
			7				8				9				10				11				12				13

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			–
Total investment income		–			–			–			–			–			–			–
Net realized gain on sale and distribution of investments:
Common Stock – LNC		–			–			–			–			–			–			–
Pooled separate accounts – LNL		328,624			160,650			223,727			627,301			510,207			1,402,736			6,931
Total net realized gains		328,624			160,650			223,727			627,301			510,207			1,402,736			6,931

Net change in unrealized appreciation (depreciation) of investments		567,002			16,677			(131,196	)		277,677			(323,142	)		(771,756	)		31,719
Contributions:
Participant		495,873			232,621			227,386			461,880			385,416			673,139			31,372
Sponsor company		153,408			65,594			63,133			128,953			110,044			186,021			8,513
Total contributions		649,281			298,215			290,519			590,833			495,460			859,160			39,885
Transfers to (from) affiliated plans		(58,621	)		(47,208	)		9,755			(48,121	)		(61,018	)		(31,786	)		2,869
Deposit from Jefferson-Pilot 401(k) Plan		–			–			–			–			–			–			–
Distributions to participants		(643,603	)		(230,133	)		(426,186	)		(824,414	)		(535,077	)		(1,532,873	)		(39,414	)
Administrative expenses		(5,356	)		(2,150	)		(2,737	)		(5,918	)		(4,329	)		(8,767	)		(593	)
Net transfers		(1,349,981	)		636,431			47,503			(836,027	)		(470,127	)		(1,022,172	)		203,810
Net increase (decrease) in net assets available for benefits		(512,654	)		832,482			11,385			(218,669	)		(388,026	)		(1,105,458	)		245,207
Net assets available for benefits at beginning of year		8,267,873			2,934,779			3,778,942			8,965,684			6,418,145			12,956,851			783,027
Net assets available for benefits at end of year	$	7,755,219		$	3,767,261		$	3,790,327		$	8,747,015		$	6,030,119		$	11,851,393		$	1,028,234

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
			14				15				16				17				18				19				20

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			–
Total investment income		–			–			–			–			–			–			–
Net realized gain on sale and distribution of investments:
Common Stock – LNC		–			–			–			–			–			–			–
Pooled separate accounts – LNL		84,856			388,328			375,161			633,888			304,958			166,495			368,289
Total net realized gains		84,856			388,328			375,161			633,888			304,958			166,495			368,289

Net change in unrealized appreciation (depreciation) of investments		(7,272	)		(491,433	)		(96,526	)		1,059,176			(209,939	)		(108,043	)		478,622
Contributions:
Participant		167,729			397,221			327,593			773,153			192,216			94,470			436,375
Sponsor company		47,380			123,171			94,406			229,182			56,811			23,608			115,367
Total contributions		215,109			520,392			421,999			1,002,335			249,027			118,078			551,742
Transfers to (from) affiliated plans		19,560			19,808			126,166			54,298			13,290			4,671			26,797
Deposit from Jefferson-Pilot 401(k) Plan		–			–			–			–			–			–			–
Distributions to participants		(257,743	)		(517,097	)		(577,682	)		(1,141,743	)		(339,021	)		(341,781	)		(675,586	)
Administrative expenses		(1,075	)		(3,661	)		(3,428	)		(7,445	)		(2,128	)		(1,323	)		(4,290	)
Net transfers		372,461			(569,895	)		(182,952	)		432,054			(417,767	)		(62,109	)		675,543
Net increase (decrease) in net assets available for benefits		425,896			(653,558	)		62,738			2,032,563			(401,580	)		(224,012	)		1,421,117
Net assets available for benefits at beginning of year		1,392,102			5,105,736			5,071,055			10,150,187			3,148,120			2,013,967			5,690,730
Net assets available for benefits at end of year	$	1,817,998		$	4,452,178		$	5,133,793		$	12,182,750		$	2,746,540		$	1,789,955		$	7,111,847

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

Investment Options
	21	22	25	26	Loans

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			293,769
Total investment income		–			–			–			–			293,769
Net realized gain on sale and distribution of investments:
Common Stock – LNC		–			–			–			–			–
Pooled separate accounts – LNL		400,202			236,248			27,248			512,260			–
Total net realized gains		400,202			236,248			27,248			512,260			–

Net change in unrealized appreciation (depreciation) of investments		569,104			(302,865	)		45,981			786,673			–
Contributions:
Participant		333,069			321,154			29,914			478,072			–
Sponsor company		98,406			89,843			7,488			143,911			–
Total contributions		431,475			410,997			37,402			621,983			–
Transfers to (from) affiliated plans		10,159			19,857			4,795			(16,806	)		–
Deposit from Jefferson-Pilot 401(k) Plan		–			–			–			–			–
Distributions to participants		(712,486	)		(326,627	)		(34,679	)		(796,203	)		(308,512	)
Administrative expenses		(3,443	)		(2,668	)		(343	)		(5,053	)		–
Net transfers		700,568			(458,028	)		200,835			1,247,225			–
Net increase (decrease) in net assets available for benefits		1,395,579			(423,086	)		281,239			2,350,079			(14,743	)
Net assets available for benefits at beginning of year		4,311,791			3,745,416			464,563			6,578,284			4,011,425
Net assets available for benefits at end of year	$	5,707,370		$	3,322,330		$	745,802		$	8,928,363		$	3,996,682

Investment options 23 and 24 had a zero balance as of December 31, 2007, and are not shown.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

The detail of the changes in net assets available for benefits by investment option for the year ended December 31, 2006 is as follows:

		Investment Options
			Total				1				2				3				4				5				6

Investment income:
Cash dividends	$	1,431,425		$	1,431,425		$	–		$	–		$	–		$	–		$	–
Interest		907,029			75,944			605,734			–			–			–			–
Total investment income		2,338,454			1,507,369			605,734			–			–			–			–
Net realized gain on sale and distribution of investments:
Common Stock – LNC		5,504,007			5,504,007			–			–			–			–			–
Pooled separate accounts – LNL		5,920,004			–			–			842,833			416,271			293,803			45,228
Total net realized gains		11,424,011			5,504,007			–			842,833			416,271			293,803			45,228

Net change in unrealized appreciation (depreciation) of investments		14,925,196			7,023,661			–			562,705			431,374			144,500			215,027
Contributions:
Participant		7,889,483			892,220			219,516			534,884			444,349			156,018			190,879
Sponsor company		1,960,209			167,578			62,897			147,672			127,649			45,235			39,260
Total contributions		9,849,692			1,059,798			282,413			682,556			571,998			201,253			230,139
Transfers to (from) affiliated plans		(204,186	)		40,455			(80,699	)		(67,104	)		(15,423	)		19,074			(34,410	)
Deposit from Jefferson-Pilot 401(k) Plan		14,357,318			4,303,193			1,069,761			813,773			30,436			1,810,678			492,367
Distributions to participants		(26,009,979	)		(7,847,021	)		(964,315	)		(1,479,911	)		(910,747	)		(2,990,725	)		(329,267	)
Administrative expenses		(173,808	)		(35,074	)		(9,740	)		(7,555	)		(6,643	)		(59,632	)		(2,117	)
Net transfers		–			(5,940,883	)		1,236,927			(2,362,923	)		(1,044,483	)		2,232,329			721,015
Net increase (decrease) in net assets available for benefits		26,506,698			5,615,505			2,140,081			(1,015,626	)		(527,217	)		1,651,280			1,337,982
Net assets available for benefits at beginning of year		182,790,730			55,693,803			14,975,940			12,233,234			10,112,973			8,120,658			3,170,138
Net assets available for benefits at end of year	$	209,297,428		$	61,309,308		$	17,116,021		$	11,217,608		$	9,585,756		$	9,771,938		$	4,508,120

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
			7				8				9				10				11				12				13

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		(1	)		–			–			(1	)		–			–			–
Total investment income		(1	)		–			–			(1	)		–			–			–
Net realized gain on sale and distribution of investments:
Common Stock – LNC		–			–			–			–			–			–			–
Pooled separate accounts – LNL		256,005			81,440			181,716			609,894			193,896			893,187			26,701
Total net realized gains		256,005			81,440			181,716			609,894			193,896			893,187			26,701

Net change in unrealized appreciation (depreciation) of investments		(71,963	)		172,802			191,493			13,347			782,905			1,563,299			34,529
Contributions:
Participant		538,206			193,039			229,529			536,012			380,805			715,945			33,347
Sponsor company		171,749			50,772			56,584			143,170			107,499			182,614			9,907
Total contributions		709,955			243,811			286,113			679,182			488,304			898,559			43,254
Transfers to (from) affiliated plans		(52,313	)		(4,143	)		3,480			7,320			(10,103	)		35,229			1,020
Deposit from Jefferson-Pilot 401(k) Plan		5,932			24,752			15,909			32,510			34,191			51,862			14,266
Distributions to participants		(1,295,769	)		(252,933	)		(432,917	)		(1,022,299	)		(489,132	)		(1,279,486	)		(11,458	)
Administrative expenses		(6,458	)		(1,926	)		(2,201	)		(6,555	)		(3,642	)		(7,628	)		(601	)
Net transfers		(1,922,722	)		(92,507	)		341,048			(1,170,005	)		(4,430	)		29,615			(92,800	)
Net increase (decrease) in net assets available for benefits		(2,377,334	)		171,296			584,641			(856,607	)		991,989			2,184,637			14,911
Net assets available for benefits at beginning of year		10,645,207			2,763,483			3,194,301			9,822,291			5,426,156			10,772,214			768,116
Net assets available for benefits at end of year	$	8,267,873		$	2,934,779		$	3,778,942		$	8,965,684		$	6,418,145		$	12,956,851		$	783,027

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
			14				15				16				17				18				19				20

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			–
Total investment income		–			–			–			–			–			–			–
Net realized gain on sale and distribution of investments:
Common Stock – LNC		–			–			–			–			–			–			–
Pooled separate accounts – LNL		42,775			129,297			157,697			513,922			287,530			118,389			208,894
Total net realized gains		42,775			129,297			157,697			513,922			287,530			118,389			208,894

Net change in unrealized appreciation (depreciation) of investments		94,353			643,058			544,507			589,751			53,486			96,001			655,306
Contributions:
Participant		137,628			267,527			270,109			661,729			201,773			110,703			364,104
Sponsor company		39,834			60,562			51,132			161,104			57,863			22,939			78,005
Total contributions		177,462			328,089			321,241			822,833			259,636			133,642			442,109
Transfers to (from) affiliated plans		3,894			(5,365	)		1,588			36,396			(36,824	)		(8,716	)		(24,011	)
Deposit from Jefferson-Pilot 401(k) Plan		48,126			1,132,174			637,563			962,462			44,622			4,590			90,693
Distributions to participants		(178,780	)		(541,825	)		(282,709	)		(1,597,150	)		(653,613	)		(310,567	)		(681,560	)
Administrative expenses		(757	)		(1,872	)		(2,718	)		(5,732	)		(2,096	)		(1,220	)		(2,911	)
Net transfers		216,013			1,356,640			(99,373	)		1,124,208			(87,474	)		124,902			1,370,075
Net increase (decrease) in net assets available for benefits		403,086			3,040,196			1,277,796			2,446,690			(134,733	)		157,021			2,058,595
Net assets available for benefits at beginning of year		989,016			2,065,540			3,793,259			7,703,497			3,282,853			1,856,946			3,632,135
Net assets available for benefits at end of year	$	1,392,102		$	5,105,736		$	5,071,055		$	10,150,187		$	3,148,120		$	2,013,967		$	5,690,730

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

		Investment Options
			21				22				23				24				25				26				Loans

Investment income:
Cash dividends	$	–		$	–		$	–		$	–		$	–		$	–		$	–
Interest		–			–			–			–			–			–			225,353
Total investment income		–			–			–			–			–			–			225,353
Net realized gain on sale and distribution of investments:
Common Stock – LNC		–			–			–			–			–			–			–
Pooled separate accounts – LNL		234,335			209,810			10,799			47,687			4,854			113,041			–
Total net realized gains		234,335			209,810			10,799			47,687			4,854			113,041			–

Net change in unrealized appreciation (depreciation) of investments		312,430			322,834			(28,056	)		(312,226	)		29,581			860,492			–
Contributions:
Participant		253,827			275,516			3,465			30,702			11,262			236,389			–
Sponsor company		59,929			56,075			938			8,124			2,443			48,675			–
Total contributions		313,756			331,591			4,403			38,826			13,705			285,064			–
Transfers to (from) affiliated plans		(4,642	)		(55,583	)		59			112			937			45,586			–
Deposit from Jefferson-Pilot 401(k) Plan		883,394			515,760			–			–			20,185			865,891			452,228
Distributions to participants		(628,815	)		(386,056	)		(604	)		(222,058	)		(69,635	)		(518,743	)		(631,884	)
Administrative expenses		(2,324	)		(1,872	)		(71	)		(747	)		(149	)		(1,567	)		–
Net transfers		200,973			181,659			(255,858	)		(1,455,551	)		465,085			4,928,520			–
Net increase (decrease) in net assets available for benefits		1,309,107			1,118,143			(269,328	)		(1,903,957	)		464,563			6,578,284			45,697
Net assets available for benefits at beginning of year		3,002,684			2,627,273			269,328			1,903,957			–			–			3,965,728
Net assets available for benefits at end of year	$	4,311,791		$	3,745,416		$	–		$	–		$	464,563		$	6,578,284		$	4,011,425

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

Information with respect to investment options through September 30, 2008 is as follows:

Option	Description of Investment Option
1	LNC Common Stock Account, which invests exclusively in the stock of LNC. However, some funds may be invested in the Wells Fargo Bank Short-Term Investment Account until the LNC stock can be purchased.
2	Guaranteed Account, which invests in investment contracts underwritten by Lincoln Life. The account’s balances are backed by the general assets of Lincoln Life.
3	Core Equity Account (SA#11), which seeks to buy large capitalization stocks of well-established companies with the objective of long-term capital appreciation.
4	Medium Capitalization Equity Account (SA#17), which invests in stocks of medium-sized companies with the objective of maximum long-term total return.
5	Short-Term Account (SA#14), which invests in high-quality money market securities with the objective of maximizing interest earnings while maintaining principal.
6	Government/Corporate Bond Account (SA#12), which invests primarily in U.S. government and high-quality corporate bonds and securities.
7	Large Capitalization Equity Account (SA#23), which invests primarily in stocks of large companies that have the potential to grow 50% within 18 months from the date of purchase.
8	Balanced Account (SA#21), which invests in stocks, bonds and money market instruments with the objective to maximize long-term total return with a moderate level of risk.
9	High Yield Bond Account (SA#20), which invests primarily in below-investment-grade bonds, providing higher rates of return to compensate for higher risk.
10	Small Capitalization Equity Account (SA#24), which invests primarily in the stock of new, rapid growth companies.
11	Value Equity Account (SA#28), which invests in large capitalization stocks of conservative companies that are industry leaders.
12	International Equity Account (SA#22), which invests primarily in stocks of non-United States companies.
13	Conservative Balanced Account (SA#30), which invests in stocks, bonds and money market instruments to maximize long-term total earnings with a conservative level of risk.
14	Aggressive Balanced Account (SA#32), which invests in stocks, bonds and money market instruments to maximize long-term total return with an aggressive level of risk.
15	Delaware Value Account (SA#61), which invests in large capitalization companies that have long-term capital appreciation potential.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

Option	Description of Investment Option
16	Scudder VIT Equity 500 Index Account (SA#27), which seeks to replicate the total return of the S&P 500.
17	Fidelity VIP Contrafund (SA#35), which seeks capital appreciation by investing primarily in securities of companies whose value is not fully recognized by the market.
18	Neuberger-Berman AMT Regency Account (SA#38), which seeks capital growth by investing mainly in common stocks of mid-capitalization companies.
19	Social Awareness Account (SA#33), which seeks capital growth and social responsibility by investing in the Lincoln National Social Awareness Portfolio.
20	American Funds New Perspective Account (formerly Global Growth) (SA#34), which invests primarily in common stocks, convertibles, preferred stocks, bonds and cash to provide long-term growth through investments all over the world.
21	Neuberger-Berman AMT Mid-Cap Growth Account (SA#37), which seeks capital appreciation using a growth-oriented investment approach.
22	Scudder VIT Small Cap Index Account, which seeks to reflect Russell 2000 performance by investing in the Small Cap Index Portfolio.
23	Janus Aspen Growth Account (SA#70), which seeks long-term growth of capital in a manner consistent with the preservation of capital.
24	Fidelity VIP Overseas Account (SA#59), which seeks long-term growth of capital by investing mainly in foreign securities.
25	Blackrock Legacy Account (SA #81), which seeks to provide long-term growth of capital.
26	American Funds Insurance Series International Fund Account (SA #54), which seeks capital appreciation by investing primarily in common stocks of companies outside the United States.

Investment options 3 through 26 are invested in pooled separate accounts of Lincoln Life through a group annuity contract issued by Lincoln Life.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

The following investment options are available beginning October 1, 2008:

Option	Description of Investment Option
1.A.	Columbia Acorn Z is a mutual fund that invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. The fund seeks long-term capital appreciation.
2.A.	Delaware Conservative Allocation I is a mutual fund that invests primarily in shares of other Delaware Investments Funds, including fixed income and equity funds. The portfolio seeks a combination of current income and preservation of capital with capital appreciation.
3.A.	Delaware Moderate Allocation I is a mutual fund that invests at least 25% of its net assets in equity funds and securities and at least 25% of its net assets in fixed income funds with the flexibility to invest more in equity funds and securities or more in fixed income funds and securities. It will also typically invest between 5% and 20% of its assets in international funds and securities. The portfolio seeks capital appreciation with current income as a secondary objective.
4.A.	Delaware Aggressive Allocation I which invests primarily in shares of international mutual funds, including equity funds and to a lesser extent, fixed income funds. The fund seeks long-term capital growth.
5.A.	Delaware Mid Cap Value I is a mutual fund that invests primarily in investments of medium-sized companies whose stock prices appear low relative to their underlying value or future potential. The fund seeks capital appreciation.
6.A.	Dodge & Cox International Stock is a mutual fund that invests at least 80% of its total assets in common stocks, preferred stocks, securities convertible into common stocks and securities that carry the right to buy common stocks of non-United States companies excluding non-United States companies included in the Standard & Poor’s 500. The fund also invests in American, European and Global Depositary Receipts. The fund seeks long-term growth of principal and income.
7.A.	American Fund Growth Fund R5 is a mutual fund that seeks long-term growth by investing primarily in common stocks of companies that appear to offer superior opportunities for growth of capital.
8.A.	Harbor International Growth Institutional is a mutual fund that invests primarily in common stocks of foreign companies of any size throughout the world. The fund seeks long-term growth of capital.
9.A.	Vanguard Institutional Index is a mutual fund that employs a “passive management” or indexing investment approach designed to track the performance of the Standard & Poor’s 500 Index, a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. The fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

4. Investment Options (continued)

Option	Description of Investment Option
10.A.	Vanguard Extended Market Index Institutional is a mutual fund that employs a “passive management” or indexing investment approach designed to track the performance of the Standard & Poor’s Completion Index. The fund seeks to track the performance of a benchmark index that measures the investment return of small- and mid-capitalization stocks.
11.A.	Delaware Large Cap Value Trust is a collective investment trust fund that invests mainly in securities of large-capitalization companies. The fund seeks long term capital appreciation.
12.A.	Delaware International Equity Trust is a collective investment trust fund that invests mainly in non-U.S. equity securities. The fund seeks long-term capital appreciation without undue risk to principal.
13.A.	Delaware Small Cap Growth Trust is a collective investment trust fund that invests primarily in small companies. The fund seeks capital appreciation by investing primarily in securities of emerging or other growth-oriented companies.
14.A.	Delaware Diversified Income Trust is a collective investment trust fund that allocates its investments principally among the U.S. Investment Grade, U.S. High Yield, International Developed Markets and Emerging Market Sectors. The fund seeks maximum long-term total return, consistent with reasonable risk.
15.A.	Delaware Large Cap Growth Trust is a collective investment trust fund that invests mainly in individual large-cap companies. The fund seeks long-term capital appreciation by investing in equity securities of large capitalization companies that the advisors believe to have the potential for sustainable free cash flow growth.
16.A.	LNC Stock Fund investment is a collective investment trust fund that invests exclusively in shares of LNC Common Stock. However, some funds may be invested in the Wilmington Trust Short-Term Investment Account until the LNC stock can be purchased. This option is designed to provide participants with the opportunity to invest in the Sponsor securities.
17.A	Lincoln Stable Value Account is a fixed annuity issued by Lincoln Life. The Lincoln Stable Value option is managed to earn a competitive interest rate without risk of loss of principal.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

5. Fair Value of Financial Investments, Carried at Fair Value

See “Adoption of New Accounting Standard” in Note 2 above for discussions of the methodologies and assumptions used to determine the fair value of the Plan’s investments.

Below are the Plan’s financial instruments carried at fair value on a recurring basis by the FAS 157 fair value hierarchy levels described in Note 2.

	As of December 31, 2008
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets:
Mutual funds	$	48,171,602	$	–	$	–	$	48,171,602
Collective investment trusts		–		23,063,386		–		23,063,386
Common stock – LNC		21,964,369		–		–		21,964,369
Investment contracts		–		–		29,623,868		29,623,868
Money market fund		–		1,003,490		–		1,003,490
Participant loans		–		–		3,572,337		3,572,337
Total assets	$	70,135,971	$	24,066,876	$	33,196,205	$	127,399,052

The table below sets forth a summary of changes in the fair value of the Plan’s level 3 investment assets and liabilities for the year ended December 31, 2008:

	As of December 31, 2008
	Beginning Fair Value		Items Included in Net Income		Gains (Losses) in OCI		Sales, Issuances, Maturities, Settlements, Calls, Net			Transfers In or Out of Level 3, Net		Ending Fair Value

Investment contracts	$	14,604,738	$	–	$	–	$	15,019,130		$	–	$	29,623,868
Participant loans		3,996,682		–		–		(424,345	)		–		3,572,337
Total	$	18,601,420	$	–	$	–	$	14,594,785		$	–	$	33,196,205

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

6. Income Tax Status

The Plan has received a determination letter from the Internal Revenue Service dated April 30, 2004, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended and restated. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended and restated, is qualified and the related trust is tax exempt.

7. Tax Implications to Participants

Federal (and most states) income tax is deferred on participants contributions, the Sponsor’s contributions, and income earned in the Plan until actual distribution or withdrawal from the Plan.

8. Transactions with Parties-in-Interest

The Plan has investments in common stock of LNC and investment contracts with Lincoln Life. Starting October 1, 2008, the Plan also invests in mutual funds and collective investment trust funds managed by Delaware Management Holdings, Inc., an affiliate of Lincoln Life. For the first nine months of 2008 and in 2007 and 2006 the Plan was invested in pooled separate accounts with Lincoln Life. Lincoln Life charged the Plan for certain administrative expenses including trustee and audit fees. Total administrative expenses charged were $88,650, $152,742, and $173,808 in 2008, 2007, and 2006, respectively. Lincoln Alliance, an affiliate of Lincoln Life is the recordkeeper for the Plan. As of October 1, 2008, all administrative expenses are being paid for by LNC.

9. Concentrations of Credit Risks

The Plan has investments in common stock of LNC and investment contracts with Lincoln Life of $21,964,369 and $29,623,686, respectively, at December 31, 2008 (17.5% and 23.0% of net assets, respectively). LNC and Lincoln Life operate predominately in the insurance and investment management industries.

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Notes to Financial Statements (continued)

9. Concentrations of Credit Risks (continued)

The Plan invests in various investment securities. Investment securities are exposed to various risks including, but not limited to, interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for plan benefits.

10. Reconciliation to Form 5500

The following is a reconciliation of net assets available for benefits per the 2008 statement of net assets available for benefits to the Form 5500:

	December 31,
	2008

Net assets available for benefits per the financial statements	$	128,721,179
Less: Amounts allocated to benefits payable to participants		506,313
Net assets available for benefits per the Form 5500	$	128,214,866

The following is a reconciliation of distributions to participants per the 2008 statement of changes in net assets available for plan to the Form 5500:

	December 31,
	2008

Distributions to participants per the financial statements	$	17,704,133
Plus: Amounts allocated to benefits payable to participants at year-end		506,313
Distributions to participants per the Form 5500	$	18,210,446

Amounts allocated to benefits payable to participants are recorded on the Form 5500 for benefit payments that have been processed and approved for payment prior to year-end but not yet paid; however, the financial statements do not reduce assets until paid.

Supplemental Schedule

The Lincoln National Life Insurance Company

Agents’ Savings and Profit-Sharing Plan

Schedule H, Line 4i – Schedule of Assets (Held At End of Year)

Plan Number: 006

EIN: 35-0472300

December 31, 2008

		(c)
		Description of Investment
	(b)	Including Maturity Date			(e)
	Identity of Issue, Borrower,	Rate of Interest,		(d)	Current
(a)	Lessor or Similar Party	Par or Maturity Value		Cost	Value

	Mutual fund accounts:
	Columbia Acorn Z	459,043.245	participation units	**	$ 8,129,656
*	Delaware Conservative Allocation I	113,085.607	participation units	**	878,675
*	Delaware Moderate Allocation I	302,589.806	participation units	**	2,423,744
*	Delaware Aggressive Allocation I	199,207.873	participation units	**	1,394,455
*	Delaware Mid Cap Value I	245,586.608	participation units	**	1,390,020
	Dodge & Cox International Stock	274,568.330	participation units	**	6,013,046
	American Fund Growth Fund of America R-5	422,607.570	participation units	**	8,638,099
	Harbor International Growth Institiutional	890,942.000	participation units	**	7,225,540
	Vanguard Institutional Index	119,468.046	participation units	**	9,860,893
	Vanguard Extended Market Index Institiutional	92,317.823	participation units	**	2,217,474
	Total mutual funds				48,171,602

	Other collective investment trust funds:
*	Delaware Large Cap Value Trust	781,119.037	participation units	**	6,858,225
*	Delaware International Equity Trust	10,413.875	participation units	**	56,860
*	Delaware Small Cap Growth Trust	605,693.008	participation units	**	4,148,997
*	Delaware Diversified Income Trust	773,847.545	participation units	**	8,164,092
*	Delaware Large Cap Growth Trust	492,325.027	participation units	**	3,835,212
	Total collective investment trust fund accounts				23,063,386

	Common stock:
*	Lincoln National Corporation	1,165,837.000	shares	**	21,964,369
	Lincoln Stable Value Account
	Investment contracts:
*	Lincoln Stable Value Account	4.95%	interest rate (annualized)	**	29,623,868

	Wilmington Trust Money Market Fund W Class	1,003,490.000	par value	**	1,003,490

	Participant loans	Various loans at interest rates
		varying from 4.25% to 10.25%
		Maturity through May 2027		–	3,572,337
					$ 127,399,052

* **	Indicates party-in-interest to the Plan. Indicates a participant-directed account. The cost disclosure is not required.

SIGNATURE

THE PLAN: Pursuant to the requirements of the Securities and Exchange Act of 1934, the Administrator of The Lincoln National Life Insurance Company Agents’ Savings and Profit-Sharing Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

	The Lincoln National Life Insurance Company Agents’
	Savings and Profit Sharing Plan

	By: /s/ William David
Date: March 31, 2009	William David on behalf of The Lincoln National
	Corporation Benefits Committee

EXHIBIT I

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-3 No. 333-131943; Form S-1 No. 333-131947) pertaining to The Lincoln National Life Insurance Company Agents’ Savings and Profit-Sharing Plan of our report dated March 25, 2009, with respect to the financial statements and schedule of The Lincoln National Life Insurance Company Agents’ Savings and Profit-Sharing Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2008.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

March 25, 2009