REINSURANCE
AGREEMENT
(effective April 1, 1993)
Between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
National Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
and
FACULTATIVE
YEARLY RENEWABLE TERM REINSURANCE AGREEMENT
(self-administered bordereau reporting)
TABLE OF CONTENTS
Page
Table of Contents i-iii
1. Parties to Agreement .................................... 1
2. YRT Reinsurance ......................................... 1
3. Retention ............................................... 1
4. Facultative Reinsurance ................................ 1
5. Commencement of Facultative Resurance Coverage .......... 2
6. Basis of Reinsurance Amount and Reinsurance Premium Rates 2
a. Life Reinsurance .................................... 2
b. Preliminary Term Insurance .......................... 3
c. Term Insurance Renewals ............................. 3
d. Flat Extra Premium .................................. 4
e. Rates Not Guaranteed ................................ 4
7. Cash Values or Loans .................................... 4
8. Payment of Reinsurance Premiums ......................... 4
a. Premium Due ......................................... 4
b. Failure to Pay Premiums ............................. 4
c. Premium Adjustment .................................. 4
9. Premium Tax Reimbursement and DAC Tax Agreement ......... 4
10.Reports ................................................. 4
11.YRT Reserves for Reinsurance ............................ 5
00.Xxxxxx .................................................. 5
a. Notice ............................................. 5
b. Proofs
5
c. Amount and Payment of Benefits ..................... 5
d. Contested Claims ................................... 5
e. Claim Expenses ..................................... 5
f. Extracontractual Damages ........................... 5
13.Misrepresentation, Suicide, and Misstatement ............ 6
i
14.Policy Changes .......................................... 6
a.Notice .............................................. 6
b.Increases ........................................... 6
c. Reduction or Termination ........................... 6
d. Other Policy Changes, Conversions, Exchanges, Etc .. 6
e. Extended Term and Reduced Paid-Up Insurance ....... 6
15.Reinstatements .......................................... 6
a. Facultative Reinstatement .......................... 7
b. Premium Adjustment ................................. 7
c. Nonforfeiture Reinsuarnce Termination .............. 7
16.Increase in Retention ................................... 7
a. New Business ....................................... 7
b. Recapture .......................................... 7
17.Errors & Omissions ...................................... 8
18.Insolvency .............................................. 8
19.Arbitration ............................................. 8
a. General ............................................ 8
b. Notice ............................................. 8
c. Procedure .......................................... 9
d. Costs .............................................. 9
20.Good Faith; Financial Solvency ......................... 9
21.Term of This Agreement .................................. 9
22.Medical Information Bureau .............................. 10
23.Amendments .............................................. 10
24.Effective Date .......................................... 10
ii
Listing of Schedules:
Schedule A
1. Facultative Business Reinsured 2. Facultative Retention Limits 3. Age Basis
4. Reporting Period 5. Recapture Period 6. Premium Taxes 7. DAC Tax Agreement
Schedule B - Reinsurance Premiums - Yearly Renewable Term Basis
1. Life Insurance
2. Facultative Rate Limit
Schedule C - Information on Risks Reinsured
Accounting Summary
Policy Exhibit Summary
Reserve Credit Summary
Schedule D - Facultative Forms
Application for Reinsurance Form
Notification of Reinsurance Form
iii
FACULTATIVE
YRT REINSURANCE AGREEMENT
This Agreement is between
NATIONAL LIFE INSURANCE COMPANY (CEDING COMPANY), Montpelier, Vermont 05604
and
Agrees to reinsurance certain portions of CEDING COMPANY's contract
risks on the following terms and conditions:
1. PARTIES TO AGREEMENT. This Agreement is solely between and CEDING COMPANY.
There is no third party beneficiary to this Agreement. Reinsurance under this
Agreement will not create any right or legal relationship between and any other
person, for example, any insured, policyowner, agent, beneficiary, or assignee.
CEDING COMPANY agrees that it will not make a party to any litigation between
any such third party and CEDING COMPANY. CEDING COMPANY shall not use name with
regard to CEDING COMPANY's agreements or transactions with these third parties
unless gives prior written approval for the use of its name.
2. YRT REINSURANCE. This Agreement including the attached Schedules states the
terms and conditions of facultative reinsurance which shall be on a yearly
renewable term basis. This Agreement is applicable only to reinsurance of
policies directly written by CEDING COMPANY. Any policies acquired through
merger of another company, reinsurance, or purchase of another company's
policies are not included under the terms of this Agreement.
3. RETENTION. See Schedule A for facultative Retention Limits.
4. FACULTATIVE REINSURANCE. When CEDING COMPANY submits a policy application to
for a facultative offer, the following items must be submitted:
a. A form substantially similar to "Application for Reinsurance"
form show in Schedule D.
1
b. Copies of the original insurance application, medical examiner's reports,
financial information, and all other papers and information obtained by
CEDING COMPANY regarding the insurability of the risk.
After receipt of CEDING COMPANY's application, will promptly examine the
materials and notify CEDING COMPANY either of the terms and conditions of offer
for facultative reinsurance or that no offer will be made. Offer expires 120
days after the offer is made, unless the written offer specifically states
otherwise.
If CEDING COMPANY accepts offer, then CEDING COMPANY shall note it's
acceptance in it's underwriting file.
5. COMMENCEMENT OF FACULTATAIVE REINSURANCE COVERAGE. Reinsurance coverage
for any policy that is ceded facultatively under this Agreement shall being
when CEDING COMPANY accepts offer.
6. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM RATES.
a. LIFE REINSURANCE. The amount reinsured on a policy is the policy's net amount
at risk less CEDING COMPANY's retention available on the policy less any
amount of reinsurance with other reinsurers. The retention on each life or
lives (for joint policies) is shown in Schedule A.
UNIVERSAL LIFE PLANS:
For universal life policies the amount of reinsurance for any policy year is
to be determined at the beginning of such year as the excess, if any, of the
amount at risk over the retained risk. Once determined for a particular
policy year, the amount of reinsurance shall be altered only if there is a
policy change effected during that year.
The net amount at risk for a particular policy is the death benefit less the
accumulated value of the policy.
The retained risk for a policy is determined at the original issue date of
the policy as agreed in the reinsurance cession.
ALL PLANS OTHER THAN UNIVERSAL LIFE:
The portion of the policy reinsured (p) will be determined at issue as the
reinsured face amount divided by the total face amount. The net amount at
risk reinsured will be determined at issue for the first ten years as
follows:
1. Calculate the net amount at risk reinsured for the first policy year as (p) x
((a) + (b) - (c)):
2
(a) The first year death benefit of the policy;
(b) The first year death benefit of any insurance provided by the adds rider;
(c) The total projected cash value at the end of the first year, excluding
any dividend payable only at the completion of the first year.
2. Calculate the projected net amount at risk reinsured for the tenth policy
year as (p) x ((a) + (b) + (c) - (d)):
(a) The tenth-year death benefit from the base policy;
(b) The projected tenth-year death benefit from any insurance purchased by
dividends (based on the continuation of CEDING COMPANY's current dividend
scale);
(c) The projected tenth-year death benefit from any life insurance rider
(term, cost of living, or adds rider); (d) The total projected tenth-year
cash value, excluding any dividend payable only at the completion of the
tenth year.
3. The net amount at risk reinsured for the intervening years will be
calculated using straight-line interpolation between the first year and the
tenth-year net amount at risk reinsured values.
The net amount at risk reinsured will be recalculated at the end of each
ten-year period (or at the time of any policy change) and projected for another
ten-year period using the then-current dividend scale. Again straight-line
interpolation will be used to calculate the net amount at risk reinsured for the
intervening years.
The reinsurance premiums per $1000 reinsured are shown in Schedule B.
Whenever the amount of reinsurance on a policy under this Agreement reduces to $
5,000 or less, the reinsurance will be wholly recaptured.
b. PRELIMINARY TERM INSURANCE. Premiums for reinsurance of preliminary
term insurance are at the second year rate for the insured's attained
age, as shown in Schedule B, for the fraction of a year covered.
c. TERM INSURANCE RENEWALS. Reinsurance premium rates for term renewals
are calculated using the original issue age, duration since insurance
of the original policy and the original underwriting classification.
3
d. FLAT EXTRA PREMIUMS. If CEDING COMPANY's policy is issued with a flat
extra premium, the reinsurance premiums shown in Schedule B will apply.
e. RATES NOT GUARANTEED. The reinsurance premium rates are not guaranteed.
Reserves the right to change the rates at any time. If of the change. Any
change applies only to reinsurance premiums due after the expiration of
the notice period.
7. CASH VALUES OR LOANS. This Agreement does not provide reinsurance for
cash surrender values. Ind addition, will not participate in policy loans
or other forms of indebtedness on reinsured business.
8. PAYMENT OF REINSURANCE PREMIUMS.
a. PREMIUM DUE. Reinsurance premiums for each reinsurance cession are due
annually, in advance. These premiums are due on the issue date, monies
payable between and CEDING COMPANY may be netted to determine the payment
due.
b. FAILURE TO PAY PREMIUMS. If reinsurance premiums are 60 days past due,
for reasons other than those due to error or omission as defined below in
Section 17, the premiums will be considered in default and may terminate
the reinsurance upon 30 days prior written notice. Will have no further
liability as of the terminate date. CEDING COMPANY will be liable for the
prorated reinsurance premiums to the termination date.
CEDING COMPANY agrees that it will not force termination under the
provisions of this paragraph solely to avoid the recapture requirements
or to transfer the block of business reinsured to another reinsurer.
c. PREMIUM ADJUSTMENT. If CEDING COMPANY overpays a reinsurance premium and
accepts the overpayment, acceptance will not constitute or create a
reinsurance liability or result in any additional reinsurance. Instead,
will be liable to CEDING COMPANY for a credit in the amount of the
overpayment. If a reinsured policy terminates, will refund the
reinsurance premium. This refund will be on a prorated basis without
interest from the date of termination of the policy to the date to which
a reinsurance premium has been paid.
9. PREMIUM TAX REIMBURSEMENT AND DAC TAX AGREEMENT. See Schedule A.
10. REPORTS. The reporting period is shown in Schedule A. For each reporting
period, CEDING COMPANY will submit a statement to with information that
is substantially similar to the information displayed in Schedule C. The
statement will include information on the risks reinsured with premiums
owed, policy exhibit activity, and an accounting summary. Annually,
CEDING COMPANY will submit a reserve credit summary similar to that shown
in Schedule C.
4
11. YRT RESERVES FOR REINSURANCE. The statutory reserve basis for yearly
renewable term reinsurance will be shown on the reserve credit summary
provided annually.
12. CLAIMS.
a. NOTICE. CEDING COMPANY will notify as soon as reasonably possible
after it receives a claim request.
b. PROOF. CEDING COMPANY will promptly provide with proper claim proofs, all
relevant information respecting the claim, and an itemized statement of
the benefits paid by CEDING COMPANY.
c. AMOUNT AND PAYMENT OF BENEFITS. As soon as receives proper claim notice
and proof of the claim, will promptly pay the reinsurance benefits due
CEDING COMPANY, CEDING COMPANY's contractual liability for claims is
binding on The maximum benefit payable to CEDING COMPANY under each
reinsured policy is the amount specifically reinsured with The total
reinsurance in all companies on a policy shall not exceed CEDING
COMPANY's total contractual liability on the policy, less its retention
used on the policy. The excess, if any, of the total reinsurance in all
companies plus CEDING COMPANY's retention used on the policy over its
contractual liability under the reinsured policy will first be applied to
reduce all reinsurance on the policy. This reduction in reinsurance will
be shared among all the reinsurances in proportion to their respective
amounts of reinsurance prior to the reduction.
d. CONTESTED CLAIMS. CEDING COMPANY will notify of it's intention to
contest, compromise, or litigate a claim involving a reinsured policy. If
CEDING COMPANY's contest, compromise, or litigation results in a
reduction in its liability, will share in the reduction in the proportion
that net liability bears to the sum of the net liability of all
reinsurers on the insured's date of death. If should decline to
participate in the contest, compromise, or litigation, will then release
all of it's liability by paying CEDING COMPANY it's full share of
reinsurance and not sharing in any subsequent reduction in liability.
e. CLAIM EXPENSES. will pay its share of reasonable investigation and legal
expenses connected with the litigation or settlement of contractual
liability claims unless has released it's liability, in which case will
not participate in any expenses after the date of release. However, claim
expenses do not include routine claim and administration expenses,
including CEDING COMPANY's home office expenses. Also, expenses incurred
in connection with a dispute or contest arising out of conflicting claims
of entitlement to policy proceeds or benefits that CEDING COMPANY admits
are payable are not a claim expense under this Agreement.
f. EXTRACONTRACTUAL DAMAGES. shall not be liable for and will not pay any
amounts for CEDING COMPANY's extracontractual damages and related
expenses and fees. Extracontractual damages include, for example,
consequential, compensatory, exemplary, or punitive damages that CEDING
COMPANY has to pay. They also include amounts in excess of policy limits
CEDING COMPANY voluntarily pays in settlement of a dispute or claim.
5
13. MISREPRESENTATION, SUICIDE, AND MISSTATEMENT. If either a
misrepresentation on an application or a death of an insured by suicide
results in the return of policy premiums by CEDING COMPANY under the
policy rather than payment of policy benefits, will refund all of the
reinsurance premiums paid for that policy to CEDING COMPANY. This refund
will be in lieu of all other benefits under this Agreement. If there is
an adjustment for a misrepresentation or misstatement of age or sex, a
corresponding adjustment to the reinsurance benefit will be made.
14. POLICY CHANGES.
a. NOTICE. If a reinsured policy is changed, a corresponding change will be
made in the reinsurance for that policy. CEDING COMPANY will notify of
the change in CEDING COMPANY's next accounting statement.
b. INCREASES. If life insurance on a reinsured policy is increased and the
increase is subject to new underwriting evidence, then the increase of
life insurance on the reinsured policy will be handled the same as the
issuance of a new policy. If the increase is not subject to new
underwriting evidence, then the increase shall be automatically accepted
by but not to exceed the Automatic Acceptance Limits shown in Schedule A.
Reinsurance rates will be based on the original issue age, duration since
issuance of the original policy and the original underwriting
classification.
c. REDUCTION OR TERMINATION. If life insurance on a reinsured policy is
reduced or terminated, then reinsurance will be reduced proportionately
on the same date of this change.
d. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC. Exchanges, term
conversions or other changes in the insurance reinsured with where not
fully underwritten as a new issue, will continue to be ceded to
Reinsurance rates for these policies are shown in Schedule B. When these
changes are fully underwritten, the policy will be handled the same as
issuance of a new policy.
e. EXTENDED TERM AND REDUCED PAID-UP INSURANCE. When a reinsured policy
changes to extended term or reduced paid-up insurance, CEDING COMPANY
will notify of the new amount of reinsurance. Reinsurance rates will
remain the same as the rates used for the original policy and will be
based on the original issue age, duration since issuance of the original
policy and the original underwriting classification.
6
15. REINSTATEMENTS.
a. FACULTATIVE REINSTATEMENT. Any policy originally reinsured in accordance
with the terms and conditions of this Agreement by the CEDING COMPANY may
be automatically reinstated with as long as the policy is reinstated in
accordance with the terms and rules of the CEDING COMPANY.
b. PREMIUM ADJUSTMENT. Reinsurance premiums for the interval during which
the policy was lapsed will be paid to SECURITY on the same basis as
CEDING COMPANY charged its policyowner for the reinstatement.
c. NONFORFEITURE REINSURANCE TERMINATION. If CEDING COMPANY has been
requested to reinstate a policy that was reinsured while on extended term
or reduced paid-up then such reinsurance will terminate and either
automatic or facultative reinstatement procedures shall be followed.
16. INCREASE IN RETENTION.
a. NEW BUSINESS. If CEDING COMPANY increases its retention limits, then it
may, at its option and with written notice to increase its retention
shown in Schedule A for policies issued after the effective date of the
retention increase.
b. RECAPTURE. If CEDING COMPANY increases its retention limits, then it may,
with 90 days written notice to reduce or recapture the reinsurance in
force subject to the following requirements:
i. A cession is not eligible for recapture until it has been reinsured for
the minimum number of years shown in Schedule A. The effective date of
the reduction in reinsurance shall be the later of the first policy
anniversary following the expiration of the 90 day notice period to
recapture and the policy anniversary date when the required minimum of
years is attained.
ii. On all policies eligible for recapture, reinsurance will be reduced by
the amount necessary to increase the total insurance retained up to the
new retention limits.
iii.If more than one policy per life is eligible for recapture, then
starting with the earliest policy issue date, the recapture will be in
chronological order according to policy issue date.
iv. Recapture of reinsurance will not be allowed on any policy for which
CEDING COMPANY did not keep its maximum retention at issue.
v. If any policy eligible for recapture is also eligible for recapture from
other reinsurers, the reduction in reinsurance on that policy shall be in
proportion to the total amount of reinsurance on the life with all
reinsurers.
vi. Recapture will not be on a basis that may result in any anti-selection
against as it, in it's discretion, may determine.
7
17. ERRORS AND OMISSIONS. If either or CEDING COMPANY fails to comply with
any of the terms of this Agreement and it is shown that the failure was
unintentional or the result of a misunderstanding or an administrative
oversight on the part of either party, this Agreement will remain in
effect. If the failure to comply changes the operation or effect of this
Agreement, both parties will be put back to the positions they would have
occupied if the failure to comply had not occurred.
18. INSOLVENCY. In the event of CEDING COMPANY's INSOLVENCY, liability for
death or premium waiver claims on reinsured policies will continue to be
insolvency. Will pay reinsurance benefits directly to CEDING COMPANY's
liquidator, receiver, or statutory successor (Successor). Successor shall
give written notice of a pending death or premium waiver claim against
CEDING COMPANY on a reinsured policy within a reasonable time after the
claim is filed in the solvency proceeding.
While a death or premium waiver is pending, may investigate the claim and
raise, at its own expenses and in CEDING COMPANY's name or that of
Successor, any defenses which feels are available to CEDING COMPANY OR
Successor. Subject to court approval, expenses for raising the defenses
will be chargeable against CEDING COMPANY or Successor. This charge will
be part of the expense of liquidation to the extent of the proportionate
share of the benefit CEDING COMPANY or Successor receives solely as a
result of the defense undertaken by When two or more reinsurers are
involved in the same death or premium waiver claim and the majority
elects to bring defenses to the claim, the expenses will be apportioned
according to the terms of the reinsurance agreements the same as though
CEDING COMPANY or Successor had the expense.
19. ARBITRATION.
a. GENERAL. All disputes and differences under this Agreement that cannot be
amicably agreed upon by the parties will be decided by arbitration. The
arbitrators will have the authority to interpret this Agreement and, in
doing so, will consider the customs and practices of the life insurance
and life reinsurance industry. The arbitrators will consider this
Agreement as an honorable engagement rather than merely a legal
obligation, and they are relieved of all judicial formalities and may
abstain from the following the strict rules of law.
b. NOTICE. To initiate arbitration, one of the parties will notify the
other, in writing, of its desire to arbitrate. The notice will state the
nature of the dispute and the desired remedies. The party to which the
notice is sent will respond to the notification in writing within 30 days
of receipt of the notice. At that time, the responding party will state
any additional dispute it may have regarding the subject of arbitration.
8
c. PROCEDURE. Arbitration will be heard before a panel of three arbitrators.
The arbitrators will be executive officers of life insurance or
reinsurance companies; however, these companies will not be either party
or any of their reinsurances or affiliates. Each party will appoint on e
arbitrator. Notice of the appointment of these arbitrators will be given
by each party to the other party within 30 days of the date of mailing of
the notification initiating the arbitration. These two arbitrators will,
as soon as possible, but no longer than 45 days after the date of the
mailing of the notification initiating the arbitration, then select the
third arbitrator, who will be the umpire. Should either party fail to
appoint an arbitrator or should the two initial arbitrators be unable to
agree on the choice of a third arbitrator, each arbitrator will nominate
three candidates, two of whom the other will decline and the decision
will be made by drawing lots on the final selection. Once chosen, the
three arbitrators will have the authority to decide all substantive and
procedural issues by a majority vote. The arbitration hearing will be
held on the date fixed by the arbitrators at a location agreed upon by
the parties. The arbitrators will issue a written decision from which
there will be no appeal. Either party may reduce this decision to a
judgment before any court which has jurisdiction of the subject of the
arbitration.
d. COSTS. Each party will pay the fees of its own attorneys and all other
expenses connected with the presentation of its own case. The losing
party will pay the cost of arbitration, including the fees of the
arbitrators, unless the arbitrators decide otherwise.
20. GOOD FAITH; FINANCIAL SOLVENCY. CEDING COMPANY agrees that all matters
with respect to this Agreement require its utmost good faith. Or its
representatives have the right at any reasonable time to inspect CEDING
COMPANY's records relating to this Agreement.
Each party represents and warrants to the other party that it is solvent
on a statutory basis in all states in which it does business or is
licensed. Each party agrees to promptly notify the other if it is
subsequently financially impaired. has entered into this Agreement in
reliance upon CEDING COMPANY's representations and warranties. CEDING
COMPANY affirms that it has and will continue to disclose all matters
material to this Agreement and each cession. Examples of such matters are
a change in underwriting or issue practices or philosophy, a change in
underwriting management personnel, or a change in CEDING COMPANY's
ownership or control.
21. TERM OF THIS AGREEMENT. CEDING COMPANY will maintain and continue the
reinsurance provided in this Agreement as long as the policy to which it
relates is in force or has not been fully recaptured. This Agreement may
be terminated, without cause, for the acceptance of new reinsurance after
90 days written notice of termination by either party to the other. will
continue to accept reinsurance during this 90 day period. Acceptance will
be subject to both the terms of this Agreement and CEDING COMPANY's
payment of applicable reinsurance premiums. In addition, this Agreement
may be terminated immediately for the acceptance of new reinsurance by
either party if one of the parties materially breaches this Agreement,
becomes insolvent or financially impaired.
9
22. MEDICAL INFORMATION BUREAU. Is required to strictly adhere to the
Medical Information Bureau Rules, and CEDING COMPANAY agrees to abide by
these Rules, as amended from time to time. CEDING COMPANY will not submit
a preliminary notice, application for reinsurance, or reinsurance cession
to unless CEDING COMPANY has an authentic, signed preliminary or regular
application for insurance in it's home office and the current required
Medical Information Bureau authorization.
23. AMENDMENTS. This Agreement, including the attached Schedules, may be
amended only by a written agreement signed by both parties.
24. EFFECTIVE DATE. The Effective Date of this Agreement is April 1,
1993.
NATIONAL LIFE INSURANCE
COMPANY
By:
--------------------------
Title:
-------------------------
Date:
-------------------------
10
SCHEDULE A
1. FACULTATIVE BUSINESS REINSURED:
The policy and supplemental benefit forms facultatively reinsured are:
Single Life plans
First To Die plans
Second To Die plans
2. FACULTATIVE RETENTION LIMITS
There will be no minimum retention.
3. AGE BASIS:
"Age" is the length of time the insured has lived to the insured's
X nearest birthday. ____ last birthday.
4. REPORTING PERIOD:
Reinsurance premiums, policy changes, and related statements must be submitted
to every:
X month quarter year
5. RECAPTURE PERIOD:
For single life plans and first to die plans the minimum number of years for a
cession to be reinsured before it is eligible for recapture is 10 years. For
second to die plans the minimum number of years for a cession to be reinsured
before it is eligible for recapture is 20 years.
6. PREMIUM TAXES Premium taxes are not reimbursable.
7. DAC TAX AGREEMENT
CEDING COMPANY and SECURITY, herein collectively called the "Parties" or
singularly the "Party", agree to the following pursuant to Section 1.848-2(g)
(8) of the IRS Regulations issued December 1992:
a. The Party with the net positive consideration for this Reinsurance
Agreement will capitalize specified policy acquisition expenses without
regard to the general deductions limitations of Section 848(c) (1).
11
b. This election shall be effective for all taxable years for which this
Agreement remains in effect.
In addition, the Parties agree to exchange information pertaining to the amount
of net consideration as determined under Regulations 1.848-2(f) and 1.848-3 for
this Agreement each year to insure consistency or as is otherwise required by
the Internal Revenue Service. The exchange of information each year will follow
the procedures set forth below:
a. By May 1 of each year, CEDING COMPANY will submit a schedule to of its
calculation of the net consideration for the preceding calendar year.
This schedule of calculations will be accompanied by a statement signed
by an officer of CEDING COMPANY stating the amount of net consideration
CEDING COMPANY will report in it's tax return for the preceding calendar
year.
b. Within thirty (30) days of receipt of CEDING COMPANY's calculation,
may contest such calculation by providing an alternate calculation to
CEDING COMPANY in writing. If does not notify CEDING COMPANY, will report
the net consideration as determined by CEDING COMPANY in tax return for
the preceding year.
c. The Parties will act in good faith to reach an agreement as to the
correct amount within thirty (30) days of the date CEDING COMPANY
receives alternate calculation, if applicable. If CEDING COMPANY and
Reinsurer reach agreement on the amount of net consideration, each Party
shall report the applicable amount in their respective tax returns for
the preceding year.
represents and warrants that it is subject to U.S. taxation under
Subchapter L of Chapter 1 of the Internal Revenue Code.
12
SCHEDULE B
REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. LIFE INSURANCE
a. Reinsurance Premiums
Single Life Policies
The standard annual premiums per $1000 reinsured shall be as shown in the
RPR rates attached to this Schedule B:
However, for facultative excess issues the standard annual premiums per
$1000 reinsured shall be following percentages of the RPR rates attached
to this Schedule B:
NS Preferred NS Standard Smoker
------------ ----------- ------
Substandard reinsurance premiums shall be at the appropriate multiple of
100% of the RPR rates attached to this Schedule B.
First To Die Policies
The annual premiums per $1000 reinsured shall be X (above RPR single life
rate for the first life + above RPR single life rate for the second
life). The maxium reinsurance premium per $1000 reinsured shall be no
more than
Accelerated Benefits Rider (for Single Life and First to Die policies)
There will be no reinsurance premium for this rider. will
always pay benefits in a lump sum, even if insured elects to have
benefits paid out as an annuity.
Policy Continuation Rider (for First to Die policies)
The annual standard premiums per $1000 reinsured shall be the Survivor
Purchase Option/Designated Second Life Rider rates attached to this
Schedule B. After the option is elected the reinsurance premiums will be
based on the surviving insured's original issue age and underwriting
classification. If the second insured dies within 90 days of the death of
the first insured, an additional death benefit is payable.
Beneficiary Insurance Option Rider (for Single Life policies) The annual
standard premiums per $1000 reinsured shall be following percentages of
the Beneficiary Insurance Option rates attached to this Schedule B:
Year Percentage
------ -----------
1
2+
13
After the option is elected reinsurance premiums will be based on the RPR
rates attached to this Schedule B using point-in-scale rates based on the
original issue age and underwriting classification.
Flexible Term Rider (for Single Life, First to Die and Second to Die
policies)
Reinsurance premiums shall be the same as for the base plan.
Adds Rider and Dividend Additions (for Single Life, First to Die and
Second to Die policies)
Reinsurance premiums shall be the same as for the base plan.
Second To Die Policies
Annual premiums per $1000 reinsured shall be the Last Survivor rates
attached to this Schedule B, using the joint equivalent age and
substandard maximum reinsurance premium per $1000 reinsured shall be no
more than:
For facultative excess issues, preferred nonsmoker premiums are
determined by subtracting one year from the actual age used for the
nonsmoker life in the joint equal age calculation and standard nonsmoker
premiums are determined by adding one year to the actual age used for the
nonsmoker life in the joint equal age calculation.
b.Flat Extra reinsurance premiums shall be the following percentages of
such premiums charged the insured:
Permanent flat extra premiums (for more than 5 years duration)
First year
Renewal years
Temporary flat extra premiums (for 5 years or less duration)
First year
Renewal years
2. FACULTATIVE RATE LIMIT
The life reinsurance rates in this Agreement can be used for facultative
reinsurance up to the limits shown in the table below. If either limit
would be exceeded, then the reinsurance rates will be mutually agreed
upon.
a. The total individual inforce and applied for in all companies does not
exceed $25,000,000.
b. The total amount reinsured with for the subject life (or either life
for joint policies) does not exceed the following:
14
For Single Life Policies
------------------------
ISSUE STANDARD XXX. 0 XXX. 0 XXX. 00
AGES THRU TBL. 4 THRU TB. 8 THRU TBL. 12 THRU TBL. 16
------ ------------ ------------ ------------ ------------
0-65 $ 19,500,000 $ 15,600,000 $ 15,600,000 $ 11,700,000
66-70 $ 19,500,000 $ 15,600,000 $ 7,800,000 0
71-75 $ 19,500,000 $ 7,800,000 $ 7,800,000 0
76-80 $ 9,750,000 0 0 0
For joint policies, the maximum amount in the table above will be determined by
the life which produces the smallest amount.
Second To Die Policies
ISSUE STANDARD XXX. 0 XXX. 0 XXX. 00
AGES THRU XXX. 0 XXXX XXX. 0 XXXX XXX. 12 THRU TBL. 16
------ ------------ ------------ ------------ ------------
0-65 $ 11,400,000 $ 9,120,000 $ 9,120,000 $ 6,840,000
66-70 $ 11,400,000 $ 9,120,000 $ 6,840,000 0
71-75 $ 11,400,000 $ 6,840,000 $ 4,560,000 0
76-80 $ 5,700,000 0 0 0
The maximum amount in the table above will be determined by the life which
produces the smallest amount.
15
SCHEDULE C
INFORMATION ON RISKS REINSURED
1. Type of Transaction
2. Effective Date of Transaction
3. Automatic/Facultative Indicator
4. Policy Number
5. Full Name of Insured
6. Date of Birth
7. Sex
8. Smoker/Nonsmoker
9. Policy Plan Code
10. Insured's State of Residence
11. Issue Age
12. Issue Date
13. Duration from Original Policy Date
14. Face Amount Issued
15. Reinsured Amount (Initial Amount)
16. Reinsured Amount (Current Amount at Risk)
17. Change in amount at Risk Since Last Report
18. Death Benefit Option (For Universal Life Type Plans)
19. ADB Amount (If Applicable)
20. Substandard Rating
21. Flat Extra Amount Per Thousand
22. Duration of Flat Extra
23. XX Xxxxx (Yes or No)
24. Premiums
16
SCHEDULE C, CONTINUED
SAMPLE
ACCOUNTING SUMMARY
CEDING COMPANY: __________________________________________________
__________________________________________________
ACCOUNT NO: __________________________________________________
PREPARED BY: ___________________________ Phone: ( ) ________
DATE PREPARED: __________________________________________________
TYPE OF REINSURANCE:
Yearly Renewable Term _____
Coinsurance _____
Modified Coinsurance _____
Other _____
VALUATION DATE: __________________
LIFE WP AD TOTAL
Premiums
First Year ________ ________ ________ ________
Renewal ________ ________ ________ ________
Allowances
First Year ________ ________ ________ ________
Renewal ________ ________ ________ ________
Adjustments
First Year ________ ________ ________ ________
Renewal ________ ________ ________ ________
Net Due
First Year ________ ________ ________ ________
Renewal ________ ________ ________ ________
TOTAL DUE ________ ________ ________ ________
(The above information should be a summary of the
detail information provided to)
17
SCHEDULE C, CONTINUED
SAMPLE
POLICY EXHIBIT SUMMARY
(Life Reinsurance Only)
CEDING COMPANY: __________________________________________________
__________________________________________________
ACCOUNT NO: __________________________________________________
PREPARED BY: ___________________________ Phone: ( ) ___________
DATE PREPARED: __________________________________________________
TYPE OF REINSURANCE:
Yearly Renewable Term _____
Coinsurance _____
Modified Coinsurance _____
Other _____
VALUATION DATE: __________________
NUMBER OF AMOUNT
POLICIES OF REINSURANCE
A. Inforce Beginning
of Period __ / __ / __ _________________ _____________
B. New Paid Reinsurance Ceded _________________ _____________
C. Reinstatements _________________ _____________
D. Revivals _________________ _____________
E. Increases (Net) _________________ _____________
F. Conversion In _________________ _____________
G. Transfers In _________________ _____________
H. Total Increases (B - G) _________________ _____________
I. Deaths _________________ _____________
J. Maturities _________________ _____________
K Cancellations _________________ _____________
L. Expires _________________ _____________
M. Surrenders _________________ _____________
N. Lapses _________________ _____________
O. Recaptures _________________ _____________
P. Other Decreases (Net) _________________ _____________
Q. Reductions _________________ _____________
R. Conversions Out _________________ _____________
S. Transfers Out _________________ _____________
T. Total Decreases (I - S) _________________ _____________
U. Current Inforce / / _________________ _____________
(A + H - T)
18
SCHEDULE C, CONTINUED
SAMPLE
RESERVE CREDIT SUMMARY
CEDING COMPANY: __________________________________________________
__________________________________________________
ACCOUNT NO: __________________________________________________
PREPARED BY: ___________________________ Phone: ( ) _____
DATE PREPARED: __________________________________________________
TYPE OF REINSURANCE:
Yearly Renewable Term _____
Coinsurance _____
Modified Coinsurance _____
Other _____
VALUATION DATE: __________________
TYPE OF RESERVES:
Statutory ______
GAAP ______
Tax ______
ISSUE
VALUATION BASIS YEAR INFORCE INFORCE RESERVE
MORTALITY INTEREST VALUATION RANGE COUNT AMOUNT CREDIT
X.Xxxx Insurance ____ _____ _____ _____ _____ _____ _____
____ _____ _____ _____ _____ _____ _____
____ _____ _____ _____ _____ _____ _____
B. Accidental Death ____ _____ _____ _____ _____ _____ _____
Benefit ____ _____ _____ _____ _____ _____ _____
C. Disability ____ _____ _____ _____ _____ _____ _____
Active Lives ____ _____ _____ _____ _____ _____ _____
D. Disability ____ _____ _____ _____ _____ _____ _____
Disabled Lives ____ _____ _____ _____ _____ _____ _____
E. Other, Please ____ _____ _____ _____ _____ _____ _____
Explain: ____ _____ _____ _____ _____ _____ _____
GRAND TOTAL: _____
19
SCHEDULE D
FACULTATIVE FORMS
Application for Reinsurance
Notification of Reinsurance
[ ] Trial [ ] Facultative: Please send approval
[ ] Joint Life [ ] Yrt [ ] Other
[ ] Single Life [ ] Coins [ ] Mrt
[ ] Facultative Obligatory [ ] Automatic
[ ] Self Administered [ ] Age List
[ ] Individual Cession [ ] Age Nearest
Last Name First Name M.I. Date of Birth Sex Age
LIFE #1
LIFE #2
Smoker/Non State of Birth State of Res. Occupation SS #
#1
#2
Accidental Death
Life #1 Life #2 Premium Waiver Life #1 Life #2 Plan Name
Previous Ins. in force _____ _____ _____ _____ _____ _____ _____
of which we retain _____ _____ _____ _____ _____ _____ _____
Rating, if substandard _____ _____ _____ _____ _____ _____ _____
Insurance now applied for _____ _____ _____ _____ _____ _____ _____
or which we will retain _____ _____ _____ _____ _____ _____ _____
Rating, if substandard _____ _____ _____ _____ _____ _____ _____
Reinsurance requested _____ _____ _____ _____ _____ _____ _____
* If this is a new plan, make sure you
furnish us full plan details.
This cession represents: [ ] New Business [ ] Term Conversion
[ ] Guaranteed Insurability Option [ ] Amended
Cession
If Amendment: Reason ___________________________ Effective Date ______________
Original Policy No. ___________________ Date of Original Policy ______________
Valuation Basis ___________________
PREMIUM WAIVER REINSURANCE ACCIDENTAL DEATH REINSURANCE
Rider Form No. ....________
Age Expiry....________ Rider Form No.....________
Premium to be Waived....________ Age Expiry....________
Premium for Waiver Benefit ....________
----------- ---------------- ------------- ------------------
DATED AT CEDING COMPANY DATE BY
Other Comments:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
The above application is accepted and reinsurance granted, subject to all terms
and conditions of such application and the Reinsurance Company and
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
This ______________ Date of ____________________ , 19 ____
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
20
President
Reinsurance Policy No.
--------------------
[ ] Trial [ ] Facultative: Please send approval
[ ] Joint Life [ ] YRT [ ] Other
[ ] Single Life [ ] COINS [ ] MRT
[ ] Facultative Obligatory [ ] Automatic
[ ] Self Administered [ ] Age List
[ ] Individual Cession [ ] Age Nearest
Last Name First Name M.I. Date of Birth Sex Age
LIFE #1
LIFE #2
Smoker/Non State of Birth State of Res.Occupation SS #
#1
#2
ACCIDENTAL DEATH
LIFE #1 LIFE #2 Premium Waiver LIFE #1 LIFE #2 Plan Name
Previous Ins. in force _____ _____ _____ _____ _____ _____ _____
of which we retain _____ _____ _____ _____ _____ _____ _____
Rating, if substandard _____ _____ _____ _____ _____ _____ _____
Insurance now applied for _____ _____ _____ _____ _____ _____ _____
or which we will retain _____ _____ _____ _____ _____ _____ _____
Rating, if substandard _____ _____ _____ _____ _____ _____ _____
Reinsurance requested _____ _____ _____ _____ _____ _____ _____
*If this is a new plan, make sure you furnish us full plan details.
This cession
represents: [ ] New Business [ ] Term Conversion
[ ] Guaranteed Insurability Option [ ] Amended
Cession
If Amendment: Reason ___________________________
Original Policy No. ____________________________
Valuation Basis ________________________________
Effective Date ______________
Date of Original Policy ______________
PREMIUM WAIVER REINSURANCE ACCIDENTAL DEATH REINSURANCE
Rider Form No. ....________
Age Expiry....________ Rider Form No.....________
Premium to be Waived....________ Age Expiry....________
Premium for Waiver Benefit ....________
DATED AT CEDING COMPANY DATE BY
Other Comments: ____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
The above application is accepted and reinsurance granted, subject to all terms
and conditions of such application and the Reinsurance Company and
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This ______________ Date of ____________________ , 19 ____
--------------------------------------------------------------------------------
President
Reinsurance Policy No. __________________________________
21
Amendment No. 1
to
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1.SCHEDULE B, shall be amended to include the 81-85 attached to this Amendment.
2.The effective date of this Amendment is April 1, 1996.
NATIONAL LIFE INSURANCE COMPANY
By: ____________________________________
Title: ____________________________________
Date: ____________________________________
22
Amendment No. 2
to
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1.SCHEDULE B, REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM, Single Life
Policies, shall be amended to the following:
For the '96 Series Term Plans, Standard annual premiums per $1000
reinsured shall be of the PRP rates attached to Schedule B of this
Agreement.
2.The effective date of this Amendment is October 1, 1996.
NATIONAL LIFE INSURANCE COMPANY
By: ______________________________________
Title: ___________________________________
Date: ____________________________________
By: ______________________________________
Title: ____________________________________
Date: ____________________________________
23
Amendment No. 3
to
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1.Exhibit 3 to Schedule B of the Agreement is hereby deleted in its entirety
and replaced by the new Exhibit 3 attached to this Amendment No. 3.
2.The effective date of this Amendment is march 24, 1997.
NATIONAL LIFE INSURANCE COMPANY
By: ____________________________________
Title: _________________________________
Date: __________________________________
By: ____________________________________
Title: _________________________________
Date: __________________________________
24
EXHIBIT 3
The following will replace the Joint Equal Age Calculation in Amendment I to the
Facultative YRT Agreement, Addition of Last Survivor Plan:
The attached YRT premium rates shall apply to reinsurance of National Life's
Last Survivor policies reinsured under this Agreement. The substandard
table-extra premium shall be the number of tables assessed the risk multiplied
by 25% of the standard rates described below. The total premium (standard
premium plus substandard table-extra premium but excluding any flat extra
premium) in any year shall not exceed $500.00 per thousand.
Reinsurance premiums shall be based on a joint equal age of the insureds under
the policy. The Joint Equal Age shall be calculated by using the following
tables in the order indicated.
Table A
Smoker to Nonsmoker Conversion
If one insured is a nonsmoker and one a smoker, the following adjustments shall
be made to convert the smoker's age to a nonsmoker's age:
Male Ages: / 6
Female Ages: / 4
Table B
Female to Male Conversion
To convert the age of any female to a corresponding male age, the following
adjustment should be made:
All ages: -5
Table C
Joint Equal Age Calculation
Once two male ages have been converted to the same smoking class, the following
table shall be used to determine a Joint Equal Age:
Differencein Age Age to Younger Age
0 0
1-2 1
3-4 2
5-6 3
7-9 4
10-12 5
13-15 6
16-18 7
19-23 8
24-28 9
29-34 10
35-39 11
40-44 12
45-47 13
48-50 14
25
EXHIBIT 3, CONTINUED
Ratings
MF 200 Std 200 500 Std X Std $5/5yrs. Std
M F Fm Std 200 200 Std 500 Std X Std $5/5yrs.
85 85 175 175 300 225 250 250 300 $1.50 $1.75
80 150 200 300 175 350 200 500 $1.00 $2.00
75 STD 200 300 150 400 150 700 .50 2.50
80 80 175 175 350 225 250 250 350 1.25 1.50
75 150 200 300 175 350 200 600 .75 2.00
70 STD 200 300 150 400 175 900 .50 2.25
75 75 175 175 300 225 300 250 400 1.00 1.50
70 150 200 300 175 350 200 700 .50 1.75
65 STD 200 300 150 400 175 1000 .50 2.00
70 70 150 175 300 225 300 300 500 .75 1.25
65 150 200 300 175 400 225 800 .50 1.50
60 150 200 300 175 500 200 DEC .50 1.50
65 65 175 175 350 225 300 300 600 .75 1.00
60 150 200 300 200 400 250 800 .50 1.25
55 150 200 300 175 500 225 DEC .50 1.25
55 55 175 200 350 250 350 400 700 .50 .75
50 150 200 350 225 400 350 DEC .50 .75
45 150 200 300 200 500 300 DEC .25 1.00
26
EXHIBIT 3, CONTINUED
CONFIDENTIAL
Date: October 2, 1980
To: Xxxx Xxxxxxxx - M417
Xxxxx Xxxxx - M425
From: Xxxx Xxxxxxxx - M565
Re: Calculation of Ratings for Substandard Vermont Legacy
The attached specifications outline the determination of the joint rating for
substandard Vermont Legacy policies. These specifications address only the
"black box" aspect of the project. These specifications are revised to reflect
the revised product specifications of July 17, 1990 and subsequent revisions to
the expectation of life calculation.
The following are considered as input for the black box: the actual sexes, ages,
percent extra ratings, flat extra ratings, and terms of flat extra ratings.
In the specifications, (x) and (y) refer to single lives aged x and y,
respectively. (z) refers to the second-to-die status based on (x) and (y). (w)
is used in formulas where either a single life table or a survivorship life
table may be used.
In 1980 CSO male and female 1x tables should be used as the standard single life
tables. The 1980 CSO table B should be used in unisex cases.
Cc: Xxxxx Xxxxx - M565
27
EXHIBIT 3, CONTINUED
The following procedure should be used for the calculation of the "joint percent
extra rating" and/or the "joint flat extra rating" for substandard Vermont
Legacy policies:
1. Calculate table of q x standard and table of q y standard, given table of 1 x
standard and table of 1 y standard. (Appendix 2)
2. Calculate standard survivorship whole life mortality table, q z standard,
given two single life mortality tables, q x standard and q y standard. (Appendix
1)
3. Calculate rated single life mortality tables, q x actual and q y actual,
given table of q x standard, table of q y standard, and the following
underwriting information:
a. %rating x and %rating y. (Appendix 3a) or
b. flatrating x, flatterm x, flatrating y, and flatterm y. (Xxxxxxxx 0x)
4. Calculate actual survivorship whole life mortality table, q z actual, given
tables of q x actual and q y actual.
(Appendix 1)
28
EXHIBIT 3, CONTINUED
5. Calculate the survivorship expectation of life, e z actual, given table of q
z actual. (Appendix 4)
6. Solve for rating(s) on case as a whole:
a. Select test rating.
(i) Percent extra rating on case as a whole
The set of permissible ratings will most likely include the following ratings:
100%, 125%, 150%, 175%, 200%, 225%, 250%, 300%, 350%, 400%, 500%, 600%, 700%,
800%, 900%, 1000%.
or
(ii) Flat extra rating on case as a whole
The set of permissible ratings will include flat ratings between $0 and $25 (or
some other high number) per $1000 at increments of $0.25 per $1000. The term for
this flat extra will be the largest of all the terms of the individual flat
extra ratings.
b. Calculate table of q z test, given table of q z standard and test rating.
(Appendix 3a or 3b)
c. Calculate e z test, given table of q z test. (Appendix 4)
29
EXHIBIT 3, CONTINUED
d. If e z test = e z actual, then the test rating has been found. (This
will rarely happen).
e. If e z test > e z actual, then the test rating is too low. Select a
higher test rating and repeat from 4.b.
f. If e z test < e z actual, then the test rating is too high. Select a
lower test rating and repeat from 4.b.
g. When two adjacent permissible test ratings are converged upon such that
one of the test ratings is too low and the other, too high, select the
higher of the two test ratings as the survivorship whole life rating.
However, if 125% is arrived at as the survivorship whole life rating,
then return a rating of 100%, i.e. standard.
Note: At any given time, three ratings must be stored:
i. the highest rating known to be too low,
ii. the lowest rating known to be too high, and
iii. the current test rating (which will always lie between i and ii above.)
EXHIBIT 3, CONTINUED
APPENDIX I
Calculation of survivorship whole life mortality table, q z, given q x and q y
1. If actual ages x and y are not equal, then the tables q x and q y will not
be of equal length. The shorter of the two tables should be padded with 1's
at the end to make the two tables of equal length.
a. Calculate table t p x, given table of q x.
0 p x = 1
t p x = t -1 p x * (1-qx+ t -1)
for 1 <= t <= 100-x
b. Calculate table of t p y, given table of q y, in same manner.
c. Calculate table of t p z, given tables of t p x and t p y.
t p z = t p x + t p y - (t p x * t p y)
for 0 <= t <= 100 - min (x,y)
NOTE: For programming purposes t p z cannot be allowed to equal 0. In such
cases set t p z equal to .00000001. This will avoid division by 0.
30
EXHIBIT 3, CONTINUED
d. Calculate table q z, given table of t p z.
t + 1 pz
q z + t = ------------
t p z
for 0 <= t <= 99 - min (x,y)
2. However, if actual mortality (rather than standard) is being used and x is
uninsurable, then
q z + t = q y + t for 0 <= t <= 99 - min (x,y).
If actual mortality is being used and y is uninsurable, then
q z + t = q x + t for 0 <= t <= 99 - min (x,y).
NOTE: If the age of the insurable life is greater than the age of the
uninsurable life, the table of q's for the insurable life must be extended with
ones (as described in step 1). The w in Appendix 4 may then be defined as min
(x,y).
Without this extension, w must be defined as:
Min (x,y) both insurable
w = x x insurable, y uninsurable
y y insurable, x uninsurable
31
EXHIBIT 3, CONTINUED
APPENDIX 2
Calculation of table of q, given table of 1
1. Calculate the ultimate q's
q w + t = 1 w + t - 1 w + t + 1
--------------------- for 0 <= t <= 99-w
1 w + t
2. Apply the 1980 CSO select factors (sel w) to determine select q's for the
first 10 durations.
q [w] + t = q w + t * selw, t + 1 t = 0, 1, 2, . . . , 9
i.e. q[w] = qw * sel w,1 q[w] + 1 = qw + 1 * sel w2
q[w] + 9 = qw + 9 * sel w,10
The select factors (sel w) depend on sex and issue age and can be found on the
next page. Unisex select factors will depend on the 1980 CSO unisex table being
used. In this case, table b is being used, so:
Sel uw = .3 sel mw + .2 sel fw, rounded to 2 decimals.
32
EXHIBIT 3, CONTINUED
TABLE A
SELECTION FACTORS FOR ALTERNATE METHOD OF DETERMINING
LIFE INSURANCE RESERVES AND DEFICIENCY RESERVE REQUIREMENTS
Policy Year
Issue Ages 1 2 3 4 5 6 7 8 9 10
Males
Under 20.... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
20-39....... 75 80 85 90 90 95 95 95 95 95
40-44....... 70 75 80 85 85 90 95 95 95 95
45-49....... 65 70 75 80 80 85 90 90 90 90
50-54....... 61 65 70 75 75 80 85 85 85 85
55-59....... 56 60 65 70 70 75 80 80 80 80
60-64....... 52 56 60 65 65 70 75 75 75 75
65 and over. 48 52 55 60 60 65 70 70 70 70
Females
Under 20.... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
20-29....... 96 96 96 100 100 100 100 100 100 100
30-34....... 92 92 96 96 96 100 100 100 100 100
35-39....... 88 88 92 96 96 96 96 100 100 100
40-44....... 84 84 88 92 92 92 92 95 95 95
45-49....... 80 80 84 88 88 88 88 90 90 90
50-54....... 76 76 80 84 84 84 84 85 85 85
55-59....... 72 72 76 80 80 80 80 80 80 80
60-64....... 68 68 72 76 76 76 80 80 80 80
65-69....... 64 64 68 72 72 72 75 75 80 80
70 and over. 60 60 64 68 68 72 75 75 80 80
NOTE. - Selection factor equals 100 percent for policy years 11 and over.
33
EXHIBIT 3, CONTINUED
APPENDIX 3a
Calculation of rated table of q, given standard table of q and percent extra
rating or "uninsurable" status
1. If the life or case in question is not uninsurable, then the following
process should be used:
q w + t temp = (% rating w / 100) * q w + t
for 0 <= t <= 99 - w
q w + t rated = lesser of
i. q w + t temp and
ii. the greater of 0.5 and q w + t
for 0 <= t <= 99 - w
2. If the life in question is uninsurable, then the following process should be
used:
q w + t rated = 1 for 0 <= t <= 99 - w.
34
EXHIBIT 3, CONTINUED
Alternatively, in this case, q w + t rated can be set equal to q w + t. This
table will not actually be used because the survivorship mortality will be based
entirely upon the mortality of the person who is not uninsurable.
35
EXHIBIT 3, CONTINUED
APPENDIX 3b
Calculation of rated table of q, given standard table of q, flat extra rating,
and term of flat extra rating
q w + t temp = q w + t + flatrating w / 1000
for 0 <= t < flatterm w
q w + t rated = lesser of
i. q w + t temp and
ii. the greater of 0.5 and q w + t
for 0 <= t <= 99 - w
36
EXHIBIT 3, CONTINUED
APPENDIX 4
Calculation of the expectation of life, e, given table of q
1. Calculate t p w
0 p w = 1
t p w = t-1 pw * (1 - q w + t - 1)
for 1 <= t <= 100 - w
2. Calculate e w
100 - w
e w = t p w / (1/ i) t - 1 , where I = .12
t = 1
The expectation of life, e w, may be interpreted as representing the average
future lifetime in years of a life aged w.
37
Amendment No. 4
To
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
WHEREAS, CEDING COMPANY wishes to cede to SECURITY LIFE under the terms of the
Agreement, SECURE PLUS EQUITY INDEXED LIFE policies issued by Life of the
Southwest and 100% reinsured by CEDING COMPANY,
The parties agree to the following:
1.Paragraph 1, PARTIES TO AGREEMENT, is hereby amended in its entirety to read:
PARTIES TO AGREEMENT. This Agreement is solely between and CEDING COMPANY.
There is no third party beneficiary to this Agreement. Reinsurance under
this Agreement will not create any right or legal relationship between and
any other person, for example, an insured, policyowner, agent, beneficiary,
assignee or any company whose policies are reinsured by CEDING COMPANY.
CEDING COMPANY agrees that it will not make a party to any litigation
between any such third party and CEDING COMPANY. CEDING COMPANY shall not
use name with regard to CEDING COMPANY's agreements or transactions with
these third parties unless gives prior written approval for the use of its
name.
2.Paragraph 2, YRT REINSURANCE, is hereby amended in its entirety to read:
YRT REINSURANCE. This Agreement including the attached Schedules states the
terms and conditions of facultative reinsurance which shall be on a yearly
renewable term basis. This Agreement is applicable only to reinsurance of
policies directly written by CEDING COMPANY, or directly written by Life of
the Southwest and reinsured by CEDING COMPANY. Any policies acquired
through merger of another company, reinsurance, purchase of another
company's policies are not included under the terms of this Agreement.
38
3. Paragraph 5, COMMENCEMENT OF FACULATIVE REINSURANCE COVERAGE, is hereby
amended by the following sentence: For policies issued by Life of the
Southwest and reinsured by CEDING COMPANY, the effective date of
reinsurance coverage shall be the date that CEDING COMPANY's reinsurance
liability for the policy issued became effective.
4. Paragraph 12.d., CONTESTED CLAIMS, is hereby amended by adding the
following new paragraph:
CEDING COMPANY will notify if Life of the Southwest's intends to contest,
compromise, or litigation results in a reduction of CEDING COMPANY's liability
on the reinsured risk, will share in the reduction in the proportion that net
liability bears to net liability of all reinsurers immediately prior to such
reduction. If should decline to participate in the contest, compromise or
litigation, will then release all of it's liability by paying CEDING COMPANY
it's full share of reinsuranceand not sharing in any subsequent reduction in its
liability.
5. Paragraph 17, ERRORS AND OMISSIONS, is hereby amended by adding the
following sentence:
If CEDING COMPANY makes an adjustment to Life of the Southwest due to a
misunderstanding, oversight or error with regard to a reinsured policy, such
adjustment shall be passed through to
6. The effective date of this Amendment is September 1, 1997.
NATIONAL LIFE INSURANCE COMPANY
By: ____________________________
Title: ____________________________
Date: ____________________________
By: ____________________________
Title: ____________________________
Date: ____________________________
39
Amendment No. 5
To
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1.Schedule A, Paragraph 1, is amended by adding the following to clarify that
the following supplemental benefit forms are reinsured under this Agreement.
Accelerated Benefits Rider
Policy Continuation Rider (for First to Die Policies)
Flexible Term Rider (for Single Life, First to Die and Second to Die Policies)
Adds Rider and Dividend Additions (for Single Life, First to Die and Second to
Die Policies)
2.The section entitled SINGLE LIFE POLICIES, which is set forth in Schedule B,
Paragraph 1.a., is hereby amended in its entirety to read:
SINGLE LIFE POLICIES
The standard annual reinsurance premiums per $1,000 reinsured shall be of the
RPR Rates attached to Schedule B of the Agreement, and subsequently amended by
Amendment No. 1.
However, for facultative excess issues the standard annual reinsurance premiums
per $1,000 reinsured shall be the following percentages of the RPR rates
attached to Schedule B of the Agreement:
40
NS PREFERRED NS STANDARD SMOKER
Substandard reinsurance premiums shall be the number of tables assessed the risk
times 25% of the standard premium. 3. The section entitled BENEFICIARY INSURANCE
OPTION RIDER (for Single Life Policies), which is set forth in Schedule B,
Paragraph 1.a. is hereby amended in its entirety to read:
The annual standard premiums per $1,000 reinsured shall be the following
percentages of the Beneficiary Insurance Option Rates attached to Schedule B of
the Agreement:
YEAR PERCENTAGE
1
2+
4. The section entitled Second to Die Policies, which is set forth in Schedule
B, Paragraph 1.a., is hereby amended in its entirety to read:
SECOND TO DIE POLICIES
Annual premiums per $1,000 reinsured shall be % of the Last Survivor rates
attached to Schedule B of the Agreement, using the joint and equivalent age and
substandard ratings calculated as show in the Exhibit 3 set forth in Amendment
No. 3 to the Agreement. The maximum reinsurance premium per $1,000 reinsured
shall be no more than:
For facultative excess issues, the annual premiums per $1,000 shall be of the
Last Survivor rates attached to Schedule B of this Agreement, using the joint
and equivalent age and substandard ratings calculated as shown in Exhibit 3 set
forth in Amendment No. 3 and adjusted as follows:
CLASS ADJUSTMENT
Preferred Non Smoker Subtract on
eyear from the actual age
used For the nonsmoker
life.
Standard Non-Smoker Add one year to
the actual age used for the
Nonsmoker life in the joint
and equivalent age.
41
5.Schedule B, Paragraph 1.b., is hereby amended in its entirety to read:
Flat extra reinsurance premiums shall be the following percentages of such
premiums charged the insured:
FLAT EXTRA PREMIUMS (FOR MORE THAN 5 YEARS DURATION)
First Year
Renewal Years
TEMPORARY FLAT EXTRA PREMIUMS (FOR 5 YEARS OR LESS DURATION)
First Year
Renewal Years
6.The effective date of this Amendment is September 1, 1997.
NATIONAL LIFE INSURANCE COMPANY
By: ____________________________
Title: _________________________
Date: __________________________
By: ____________________________
Title: _________________________
Date: __________________________
42
Amendment No. 6
To
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1. The following is added to the end of Paragraph 6. BASIS OF REINSURANCE AMOUNT
AND REINSURANCE PREMIUM RATES, a., LIFE REINSURANCE:
In the event payment is made under any policy prior to the death of the insured
due to the exercise of an accelerated benefit option, the amount of reinsurance
will be reduced in proportion to the reduction in the reinsured policy's net
amount at risk.
2.Paragraph 12., CLAIMS, c. AMOUNT AND PAYMENT OF BENEFITS is deleted in its
entirety and replaced by the following:
AMOUNT AND PAYMENT OF BENEFITS. As soon as receives proper claim notice
and proof of the claim, will promptly pay the life reinsurance benefits due
CEDING COMPANY. If all or a portion of a claim on a reinsured policy is paid
prior to death under the terms of an accelerated benefit rider or provision,
shall participate in payment of such benefits in the proportion that the amount
reinsured bears to the face amount at risk of the policy.
The maximum benefit payable to CEDING COMPANY under each reinsured policy for
claims paid after the death of the insured shall be the amount specifically
reinsured with ___________________. In the case of accelerated benefits, the
maximum benefit payable by is the lesser of the amount specifically reinsured by
or $500,000. This will be a cumulative limit in the case of repeated partial
accelerations.
43
CEDING COMPANY's contractual liability for claims is binding on . The total
reinsurance in all companies on a policy shall not exceed CEDING COMPANY's total
contractual liability on the policy, less reinsurance in all companies plus
CEDING COMPANY's retention used on the policy over its contractual liability
under the reinsured policy will first be applied to reduce all reinsurance on
the policy. This reduction in reinsurance will be shared among all the
reinsurers in proportion to their respective amounts of reinsurance prior to the
reduction.
3.Schedule B, Paragraph a., Reinsurance Premiums, subparagraph ACCELERATED
BENEFITS RIDER, is amended to read as follows:
ACCELERATED BENEFITS RIDER
There will be no reinsurance premium for this rider.
Except as herein amended, all other terms and conditions of the Agreement shall
remain unchanged.
In witness of the above, CEDING COMPANY and SECURITY have by their respective
officers executed and delivered this Amendment No. 5 in duplicate on the dates
indicated below, with an effective date of December 1, 1997.
NATIONA LIFE INSURANCE COMPANY
By: ____________________________
Title: _________________________
Date: __________________________
By: ____________________________
Title: _________________________
Date: __________________________
44
Amendment No. 7
To
Reinsurance Agreement
(Effective April 1, 1993)
Between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
RECITALS
WHEREAS, currently reinsurers CEDING COMPANY's plans under the Agreement;
And
WHEREAS, CEDING COMPANY wishes to cede policies issued under the Survivorship
Universal Life plans to under the Agreement;
AGREEMENT
The parties hereby agree as follows:
1.The Survivorship Universal Life plans are hereby added to the Agreement and
the Agreement is amended by Schedule A1 and Schedle B1, which are attached to
this Amendment No. 7 and hereby incorporated into the Agreement; and
2.The terms and conditions set forth in Schedule A1 and B1 are additional and
shall apply only to policies issued under the Survivorship Universal Life plans;
and
3.Except for the additional terms, conditions and modifications contained in
Schedules A1 and B1, all other terms of the Agreement, including any amendments
thereto, remain unchanged.
Except as herein amended, all other terms and conditions of this Agreement shall
remain unchanged.
45
In witness of the above, CEDING COMPANY and have by their respective officers
executed and delivered this Amendment in duplicate on the dates indicated below,
with an effective date of May 1, 1998.
NATIONAL LIFE INSURANCE COMPANY
By: ____________________________
Title: _________________________
Date: __________________________
By: ____________________________
Title: _________________________
Date: __________________________
46
SCHEDULE A.1
1.PLANS REINSURED:
The policy plans and supplemental benefits facultatively reinsured are:
Plans Form No.
Survivorship UL Products
Additional Protection Benefit Rider
Policy Split Option Rider
Estate Preservation Rider
Individual Term Riders
Continuing Coverage Rider
Enhanced Death Benefit Rider
Automatic Increase Rider
2.FACULTATIVE RETENTION LIMITS:
LIFE INSURANCE:
For second-to-die policies CEDING COMPANY shall retain up to $3,000,000 per life
for an aggregate $6,000,000 retention on both lives.
If an Estate Preservation Rider is issued on the life, CEDING COMPANY's
retention will be adjusted when the Estate Preservation Rider expires. If the
total net amount at risk under the Estate Preservation Rider plus the net amount
at risk under the base plan and other riders exceeds National Life's retention
of $6 million at the time of issue, then CEDING COMPANY will retain the same
proportionate share of the total net amount at risk before and after the
expiration of the Estate Preservation Rider. For example:
Base Plan $ 4,000,000
Estate Preservation Rider $ 4,000,000
Other Riders $ 2,000,000
--------------
Total Net Amount At Risk $10,000,000
47
SCHEDULE A.1, CONTINUED
CEDING COMPANY's Proportionate retention is 60% of the net amount at risk
remaining after the expiration of the Estate Preservation Rider.
3.PREMIUM TAXES:
Premium taxes are not reimbursed.
4.MINIMUM CESSION:
The minimum amount of reinsurance per cession that will
accept is $10,000.
5.PREMIUM DUE:
Annual reinsurance premiums are due each month in advance. These premiums are
due on the issue date and each subsequent policy anniversary.
6.REDCAPTURE PERIOD:
The minimum number of years for a cession to be reinsured before it is eligible
for recapture is 20 years.
48
SCHEDULE B, CONTINUED
x.XXXXXX PRESERVATION RIDER: Standard annual reinsurance premiums, per $1000
reinsured under the Estate Preservation Rider, shall be the following
percentages of the 75 - 80 Select Mortality Table rates attached to this
Schedule B.1 as Exhibit B.1.1. Single life rates are then Frasierized, as
determined in Exhibit B.1.11.
Preferred Standard Preferred Standard
Nonsmoker Nonsmoker Smoker Smoker
There shall be a minimum annual reinsurance premium of (cent) per $1000
reinsured in renewal years.
f.INDIVIDUAL TERM RIDERS: Reinsurance premiums, per $1,000 reinsured under the
Individual Term Riders, shall be the Single Life rates attached to Schedule B of
the Agreement.
g.CONTINUING COVERAGE RIDER: Reinsurance rates for this rider shall be % of
the rider premium.
h.ENHANCED DEATH BENEFIT RIDER: Standard annual reinsurance premiums, per $1,000
reinsured under the Enhanced Death Benefit Rider, shall be the following
percentages of the 75 - 80 Select Mortality Table rates attached to this
Schedule B.1 as Exhibit B.1.1. Single life rates are then Frasierized, as
determined in Exhibit B.1.11.
Preferred Standard Preferred Standard
Nonsmoker Nonsmoker Smoker Smoker
There shall be a minimum annual reinsurance premium of per $1000 reinsured in
renewal years.
Reinsurance rates for this rider shall be based on the original issue age,
duration since issuance of the rider and the original underwriting
classification.
49
SCHEDULE B, CONTINUED
i.AUTOMATIC INCREASE RIDER: Standard annual reinsurance premiums, per $1000
reinsured under the Automatic Increase Rider, shall be the following percentages
of the 75 - 80 Select Mortality Table rates attached to this Schedule B.1 as
Exhibit B.1.1. Single life rates are then Frasierized, as determined in Exhibit
B.1.11.
Preferred Standard Preferred Standard
Nonsmoker Nonsmoker Smoker Smoker
There shall be a minimum annual reinsurance premium of per $1000
reinsured in renewal years.
Reinsurance rates for this rider shall be based on the original issue age,
duration since issuance of the rider and the original underwriting
classification.
j.Table rated substandard reinsurance premiums shall be the appropriate multiple
of the standard reinsurance premiums (25% per table).
k.Flat Extra reinsurance premiums shall be the following percentages of such
premiums charged the insured:
Permanent flat extra premiums (for more than 5 years duration) First Year
Renewal Years
Temporary flat extra premiums (for 5 years or less duration)
All Years
*Flat Extra premiums shall be added to each single life rate before
Frasierization.
2.SUPPLEMENTAL BENEFITS:
Not Reinsured
3.AGE BASIS:
Age Nearest Birthday
50
SCHEDULE B, CONTINUED
4. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC.:
Annual reinsurance premiums for conversions shall be CEDING COMPANY'S then
current rates for permanent insurance. Reinsurance rates shall be based on the
original issue age, duration since issuance of the original policy and the
original underwriting classification.
5. FACULTATIVE RATE LIMIT:
The automatic reinsurance rates in this Agreement can be used for facultative
reinsurance up to the limits shown below. If either limit would be exceeded,
then the reinsurance rates shall be mutually agreed upon.
a. The total individual in force and applied for in all companies does not
exceed $35,000,000.
b. The total amount reinsured with for either life does not exceed the
following:
AGES STD-TABLE 4 TABLES 5-8 TABLES 9-12 TABLES 13-16
0-75 $20,000,000 $15,000,000 $10,000,000 $10,000,000
76-80 $15,000,000 $10,000,000 $5,000,000 $5,000,000
81-85 $5,000,000 $0 $0 $0
The maximum amount in the table above shall be determined by the life that
produces the smallest amount.
For policies where one life is uninsurable, if the healthier life is rated about
Table 8, SECURITY can offer only its retention of $1,500,000, if available.
c. The rate limit for facultative cases in excess of the $35,000,000 in force
and applied for limit is $10,000,000.
51
EXHIBIT B.1.11
CALCULATION OF "FRASIERIZED" SECOND TO DIE MORTALITY RATES
The following steps convert the single life mortality rates, attached as EXHIBIT
B.1.1, into "Frasierized" second to die mortality rates.
1. q[x] + t - 1 are the single life mortality rates for lives x and y, in
policy year t,
q[y] + t - 1 obtained by taking the rates shown in Exhibit B.1.I,
attached to this Schedule B.1, and dividing by 1000. (For
substandard lives, add an extra 25% per table plus any
flat extra).
2. p[x] + t - 1 = 1 - q[x] + t - 1
p[y] + t - 1 = 1 - q[y] + t - 1
3. t-1p[x] = p[x].p[x] + 1.p[x] + 2 . . . p[x] + t-2 t-1p[y] = p[y].p[y] +
1.p[y] + 2 . . . p[y] + t-2
4. q[x] + t-1:[y] + t-1 = t-1p[x] t-1p[y] q[x]+t-1 q[y]+t-1 + t-1p[x] (1 - t-1p[y]) q[x]+t-1 + (1 - t-1p[x]) t-1p[v] q[v] = t-1
----------------------------------------------------------------------------------------------------------------------------
t-1p[x] t-1p[y] + t-1p[x] )1 - t-1p[y]) + (1 - t-1p[x]) t-1p[y]
The Frasierized second to die mortality rate per $1,000 in policy year t =
1000q[x]+t-1:[y]+t-1.
52
Amendment No. 8
To
Reinsurance Agreement
(Effective April 1, 1993)
Between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
And
RECITALS
WHEREAS, currently reinsures CEDING COMPANY's plans under the
Agreement; and
WHEREAS, CEDING COMPANY wishes to cede policies issued under the COLI VUL plans
to under the Agreement;
AGREEMENT
The parties hereby agree as follows:
1. The COLI VUL plans are hereby added to the Agreement and the Agreement is
amended by adding Schedule A2, which is attached to this Amendment No. 8 and
hereby incorporated into the Agreement; and
2. The terms and conditions set forth in Schedule A2 are additional and shall
apply only to policies issued under the COLI VUL plans; and
3. Except for the additional terms, conditions and modifications contained in
Schedule A2, all other terms of the Agreement, including any amendments thereto,
remain unchanged.
Except as herein amended, all other terms and conditions of this Agreement shall
remain unchanged.
53
In witness of the above, CEDING COMPANY and have by their respective officers
executed and delivered this Amendment in duplicate on the dates indicated below,
with an effective date of December 1, 1998.
NATIONAL LIFE
INSURANCE COMPANY
By: ____________________________
Title: ___________________________
Date: ___________________________
By: ____________________________
Title: ___________________________
Date: ___________________________
54
SCHEDULE A.2
1. PLANS REINSURED:
The policy plans and supplemental benefits facultatively reinsured are:
Plans Plan Codes
COLI VUL
2. FACULTATIVE RETENTION LIMITS:
There will be no minimum retention.
3. PREMIUM TAXES:
Premium taxes are not reimbursed.
4. PREMIUM DUE:
Reinsurance premiums are due on the issue date and each subsequent monthly
policy due date, regardless of the policy's payment mode.
5. RECAPTURE PERIOD:
The minimum number of years for a cession to be reinsured before it is eligible
for recapture is 10 years.
0000-0000-0 COLI A-1
55
Amendment No.9
To
Facultative Yearly Renewable Term Reinsurance Agreement
(Effective April 1, 1993)
Between
NATIONAL LIFE INSURANCE COMPANY
("CEDING COMPANY")
And
RECITALS
WHEREAS, REINSURER currently reinsures CEDING COMPANY's plans under the
Agreement; and
WHEREAS, CEDING COMPANY wishes to cede its new traditional whole life series of
policies to REINSURER under the Agreement, effective August 1, 1999;
AGREEMENT
The parties hereby agree as follows:
1. The new traditional whole life series of policies are hereby included in the
Agreement and the Agreement is amended by adding Schedule A-2 and Schedule B-2,
which are attached to this Amendment No. 9 and hereby incorporated into the
Agreement; and
2. The terms and conditions set forth in Schedules A-2 and B-2 are additional
and shall apply only to the new traditional whole life series of policies as set
forth in Schedule A-2; and
3. Except for the additional terms, conditions and modifications contained in
Schedules A-2 and B-2, all other terms of the Agreement, including any
amendments thereto, remain unchanged.
Except as herein amended, all other terms and conditions of the Agreement shall
remain unchanged.
56
In witness of the above, CEDING COMPANY and REINSURER have by their respective
officers executed and delivered this Amendment in duplicate on the dates
indicated below, with an effective date of August 1, 1999.
NATIONAL LIFE
INSURANCE COMPANY
By: ____________________________
Title: _________________________
Date: __________________________
By: ____________________________
Title: _________________________
Date: __________________________
57
SCHEDULE A.2
1. PLANS REINSURED:
The policy plans and supplemental benefits facultatively reinsured are:
Plans Plan Codes
Single Premium Life See attached Exhibit I.
5 Pay Life See attached Exhibit II.
10 Pay Life See attached Exhibit III.
15 Pay Life See attached Exhibit IV.
20 Pay Life See attached Exhibit V.
Full Pay Life See attached Exhibit VI.
Decreasing (Flex I) Rider
Level (Flex II) Rider
Waiver of Premium Rider
Rider for Accelerated Benefits (ABR)
Aircraft Limitation Rider
War Hazard Limitation Rider
ADB (Full Pay Life only)
AIO (Full Pay Life only)
L and GL Series, ART (Full Pay Life only)
BIO (Full Pay Life only)
Dividend Term Rider (Full Pay Life only)
SCHEDULE B.2
REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. LIFE INSURANCE PREMIUMS:
For the traditional whole life series added by Schedule A-2, the standard annual
reinsurance premiums per $1,000 reinsured shall be % of the RPR Rates attached
to Schedule B of this Agreement (as amended by Amendment 1 for ages 81-85 and as
amended by the attachment to this Schedule B-2 for ages 86-90).
However, for facultative excess issues, the standard annual reinsurance premiums
per $1,000 reinsured shall be the following percentages of the RPR rates
attached to Schedule B of this Agreement (as amended by Amendment 1 for ages
81-85 and as amended by the attachment to this Schedule B-2 for ages 86-90):
Elite Preferred Preferred Standard Preferred Smoker
Nonsmoker Nonsmoker Nonsmoker Smoker
Substandard reinsurance premiums shall be the number of tables assessed the risk
times 25% of the standard premium.
2. FACULTATIVE RATE LIMIT:
The automatic reinsurance rates in this Agreement can be used for facultative
reinsurance up to the limits shown below. If either limit would be exceeded,
then the reinsurance rates shall be mutually agreed upon.
a. The total individual in force and applied for in all companies does not
exceed $35,000,000.
b. The total amount reinsured with Reinsurer for either life does not exceed the
following:
AGES STD-TABLE 4 TABLES 5-8 TABLES 9-12 TABLES 13-16
0-75 $20,000,000 $15,000,000 $10,000,000 $10,000,000
76-90 $15,000,000 $10,000,000 $5,000,000 $5,000,000
90+ $0 $0 $0 $0
58
EXHIBIT I
Male Elite Preferred Nonsmoker 324 6 050 01
Male Preferred Nonsmoker 321 6 050 01
Male Standard Nonsmoker 318 6 050 01
Male Preferred Smoker 321 3 050 01
Male Smoker 318 3 050 01
Female Elite Preferred Nonsmoker 325 6 050 01
Female Preferred Nonsmoker 322 6 050 01
Female Standard Nonsmoker 319 6 050 01
Female Preferred Smoker 322 3 050 01
Female Smoker 319 3 050 01
Unisex Elite Preferred Nonsmoker 326 8 050 01
Unisex Preferred Nonsmoker 323 8 050 01
Unisex Standard Nonsmoker 320 8 050 01
Unisex Preferred Smoker 323 7 050 01
Unisex Smoker 320 7 050 01
The plan code will change to a paid up plan code on the first policy
anniversary. This structure is required because there is not a uniform
mathematical relationship between gross and net premiums.
59
EXHIBIT II
Male Elite Preferred Nonsmoker 315 6 050 05
Male Preferred Nonsmoker 312 6 050 05
Male Standard Nonsmoker 309 6 050 05
Male Preferred Smoker 312 3 050 05
Male Smoker 309 3 050 05
Female Elite Preferred Nonsmoker 316 6 050 05
Female Preferred Nonsmoker 313 6 050 05
Female Standard Nonsmoker 310 6 050 05
Female Preferred Smoker 313 3 050 05
Female Smoker 310 3 050 05
Unisex Elite Preferred Nonsmoker 317 8 050 05
Unisex Preferred Nonsmoker 314 8 050 05
Unisex Standard Nonsmoker 311 8 050 05
Unisex Preferred Smoker 314 7 050 05
Unisex Smoker 311 7 050 05
60
EXHIBIT III
Male Elite Preferred Nonsmoker 306 6 050 10
Male Preferred Nonsmoker 303 6 050 10
Male Standard Nonsmoker 300 6 050 10
Male Preferred Smoker 303 3 050 10
Male Smoker 300 3 050 10
Female Elite Preferred Nonsmoker 307 6 050 10
Female Preferred Nonsmoker 304 6 050 10
Female Standard Nonsmoker 301 6 050 10
Female Preferred Smoker 304 3 050 10
Female Smoker 301 3 050 10
Unisex Elite Preferred Nonsmoker 308 8 050 10
Unisex Preferred Nonsmoker 305 8 050 10
Unisex Standard Nonsmoker 302 8 050 10
Unisex Preferred Smoker 305 7 050 10
Unisex Smoker 302 7 050 10
61
EXHIBIT IV
Male Elite Preferred Nonsmoker 306 6 050 15
Male Preferred Nonsmoker 303 6 050 15
Male Standard Nonsmoker 300 6 050 15
Male Preferred Smoker 303 3 050 15
Male Smoker 300 3 050 15
Female Elite Preferred Nonsmoker 307 6 050 15
Female Preferred Nonsmoker 304 6 050 15
Female Standard Nonsmoker 301 6 050 15
Female Preferred Smoker 304 3 050 15
Female Smoker 301 3 050 15
Unisex Elite Preferred Nonsmoker 308 8 050 15
Unisex Preferred Nonsmoker 305 8 050 15
Unisex Standard Nonsmoker 302 8 050 15
Unisex Preferred Smoker 305 7 050 15
Unisex Smoker 302 7 050 15
62
EXHIBIT V
Male Elite Preferred Nonsmoker 306 6 050 20
Male Preferred Nonsmoker 303 6 050 20
Male Standard Nonsmoker 300 6 050 20
Male Preferred Smoker 303 3 050 20
Male Smoker 300 3 050 20
Female Elite Preferred Nonsmoker 307 6 050 20
Female Preferred Nonsmoker 304 6 050 20
Female Standard Nonsmoker 301 6 050 20
Female Preferred Smoker 304 3 050 20
Female Smoker 301 3 050 20
Unisex Elite Preferred Nonsmoker 308 8 050 20
Unisex Preferred Nonsmoker 305 8 050 20
Unisex Standard Nonsmoker 302 8 050 20
Unisex Preferred Smoker 305 7 050 20
Unisex Smoker 302 7 050 20
63
EXHIBIT VI
Basic Version Level Smoker (NJ)
Male Elite Preferred Nonsmoker 333 6 049 00 333 6 039 00
Male Preferred Nonsmoker 330 6 049 00 330 6 039 00
Male Standard Nonsmoker 327 6 049 00 327 6 039 00
Male Preferred Smoker 330 3 049 00 330 3 039 00
Male Smoker 327 3 049 00 327 3 039 00
Female Elite Preferred Nonsmoker 334 6 049 00 334 6 039 00
Female Preferred Nonsmoker 331 6 049 00 331 6 039 00
Female Standard Nonsmoker 328 6 049 00 328 6 039 00
Female Preferred Smoker 331 3 049 00 331 3 039 00
Female Smoker 328 3 049 00 328 3 039 00
Unisex Elite Preferred Nonsmoker 325 8 049 00 325 8 039 00
Unisex Preferred Nonsmoker 332 8 049 00 332 8 039 00
Unisex Standard Nonsmoker 329 8 049 00 329 8 039 00
Unisex Preferred Smoker 332 7 049 00 332 7 039 00
Unisex Smoker 329 7 049 00 329 7 039 00
64
AMENDMENT NO. 10
Effective May 1, 2000
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective April 1, 1993
Between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
WHEREAS, Reinsurer currently reinsurers Ceding Company's plans or policies under
the Agreement; and
WHEREAS, Ceding Company wishes to cede and Reinsurer wishes to reinsure Ceding
Company's Accelerated Care Rider (`ACR") on plans or policies ceded to Reinsurer
under the Agreement.
AMENDMENT
The parties hereby agree to amend or modify the Agreement as follows:
1.Ceding Company's Accelerated Care Rider ("ACR") is hereby added as a rider
insured under the Agreement and the Agreement is further amended by adding
Schedules A.3 and B.3, attached to this Amendment No. 10 and hereby incorporated
by this reference into the Agreement; and
2.The terms and conditions set forth in Schedules A.3 and B.3 are additional to
the Agreement, and shall apply only to the reinsurance of Ceding Company's
Accelerated Care Rider ("ACR"); and
3.Immediately following any claim pursuant to this rider, the Reinsurer's Net
Amount at Risk shall be reduced proportionately with the reduction in face
amount.
65
4.Except for those additional terms, conditions and modifications contained in
this Amendment 10 and the attached Schedules A.3 and B.3, all other terms and
conditions of the Agreement including amendments thereto, shall remain
unchanged.
In witness of the foregoing, Ceding Company and Reinsurer have, by their
respective officers, hereby executed this Amendment 10 in duplicate on the dates
indicated below, with an effective date of May 1, 2000.
NATIONAL LIFE OF VERMONT
INSURANCE COMPANY
By:
Title:
Date:
By:
Title:
Date:
66
SCHEDULE A.3
ACCELERATED CARE RIDER COVERAGE AND LIMITS
1.FACULTATIVE BUSINESS REINSURED:
a.Riders and Benefits reinsured: The following plan codes and form numbers
issued in connection with any policy facultatively accepted by the Reinsurer
under the Agreement shall be automatically reinsured under this Agreement.
BASIC VERSION PLAN CODE FORM NUMBER
ACR1 (100 month payout) 123020 7801 (0199)
ACR2 (50 month payout) 123010 7801 (0199)
ACR1 w/NFO 123120 7802 (0199)
ACR2 w/NFO 123110 7802 (0199)
Waiver of Premium
For administrative clarity, the Accelerated Care Rider Final Specifications
that describe the above riders is attached hereto as Exhibit A.3.1.
2.AUTOMATIC RETENTION LIMITS:
Ceding Company shall retain an amount equal to its proportional share as
determined by the percentage retained on the Base Policy.
3.AUTOMATIC ACCEPTANCE LIMITS;
Reinsurer shall reinsure an amount equal to its proportional share as
determined by the percentage retained on the Base Policy.
4.MINIMUM CESSION:
$0
5.RESERVES:
The reinsurance reserve is the reserve on the portion of each rider reinsured
hereunder.
6.MONTHLY BENEFIT AMOUNT:
Minimum: .5% of death benefit
Maximum: 2% of death benefit
7.MAXIMUM BENEFIT:
$1,000,000
67
SCHEDULE A.3
ACCELERATED CARE RIDER COVERAGE AND LIMITS
CONTINUED
8.BENEFIT PERIODS:
50 or 100 months as specified in paragraph 1.a. of this Schedule A.3
0.XXXXXX PAYMENTS:
The frequency of computations and of claim payments is monthly.
If the Insured dies during payout period, the Reinsurer will pay its
proportional share of the reduced Net Amount at Risk of the face amount of the
policy.
If the Insured dies and under the contract the Benefit Recipient would be
entitled to a premium refund, the Reinsurer will pay its proportional share of
this refund.
68
SCHEDULE B.3
ACCELERATED CARE RIDER PREMIUMS
0.XXXX INSURANCE:
a.Reinsurance Premiums:
i.Accelerated Care Riders: The standard annual premiums per $1,000 reinsured
shall be the following percentages of the National Life Insurance Company of
Vermont's Accelerated Death Benefit Rider rate tables, using the column titled
"Life", attached herto as Exhibit B.3.1.:
YEAR Premium
Percentage
Year 1
Renewal Years
Reinsurance premium is based upon the rider amount in force, and not the net
amount at risk. Reinsurance premium can only be waived while a claim under the
rider is active.
The Reinsurer has agreed to the Ceding Company's intention with regard to the
reinsurance premiums as described in the March 8, 2000 letter to from Xxxxx X.
Xxxxx, which is attached hereto as Exhibit B.3.2.
ii.Waiver of Premium Benefit: The reinsurance premium for the Accelerated Care
Rider only will be waived while a claim to the rider is active.
2.AGE BASIS:
Age Nearest Birthday
69
AMENDMENT NO. 11
Effective June 1, 2001
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective April 1, 1993
Between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
WHEREAS, Reinsurer currently reinsures Ceding Company's plans or policies under
the Agreement; and
WHEREAS, Ceding Company wishes to cede and Reinsurer wishes to reinsure Ceding
Company's Non-Qualified Accelerated Care Rider ("ACR") on plans or policies
ceded to Reinsurer under the Agreement.
AMENDMENT
The parties hereby agree to amend or modify the Agreement by amending Amendment
10 to include the Ceding Company's Non-Qualified Accelerated Care Rider, which
will be sold in California, as follows:
1.Schedule X.0, Xxxxxxxxx 1.a is hereby amended to include additional policy
plans as follows:
NON-QUALIFIED PLAN CODE FORM NUMBER
VERSION
ACR1 (100 month payout) 124020 7986 (0199)
ACR2 (50 month payout) 124010 7986 (0199)
ACR1 w/NFO 124120 7987 (0199)
ACR2 w/NFO 124110 7987 (0199)
Waiver of Premium
70
Also attached as Exhibit A.3.2, is an Actuarial Memorandum Addendum, which
describes the differences between the Qualified and Non-qualified Riders.
2.For clarity, Schedule X.0, Xxxxxxxxx 1.a.i. shall be amended as follows:
a."Accelerated Care Riders" shall be replaced with "Qualified Accelerated Care
Riders".
b.The following language will be inserted after the first paragraph
"Non-qualified Accelerated Care Riders: The standard annual premiums per $1,000
reinsured shall be the following percentages of the National Life Insurance
Company of Vermont's Accelerated Death Benefit Rider rate tables, using the
column titled "Lifetime", attached hereto as Exhibit B.3.3.
3.Except for those additional terms, conditions and modifications contained in
this Amendment 11, all other terms and conditions of Amendment 10 and the
Agreement, including amendments thereto, shall remain unchanged.
In witness of the foregoing, Ceding Company and Reinsurer have, by their
respective officers, hereby executed this Amendment 11 in duplicate on the dates
indicated below, with an effective date of June 1, 2001.
NATIONAL LIFE OF VERMONT
INSURANCE COMPANY
By:
Title:
Date:
By:
Title:
Date:
71
AMENDMENT NO. 12
Effective July 1, 2001
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective April 1, 1993
between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
WHEREAS, Reinsurer currently reinsures Ceding Company's plans or policies under
the Agreement; and
WHEREAS, Ceding Company wishes to increase the maximum benefit payable for the
Accelerated Benefits Rider;
AMENDMENT
The parties hereby agree to amend or modify the Agreement by amending Amendment
6 to increase the maximum benefit payable for the Accelerated Benefits Rider by
the Reinsurer to the Ceding Company from $500,000 to $1,000,000:
1.The second paragraph in Item 2 of Amendment 6 is deleted in its entirety and
replaced by the following:
The maximum benefit payable to the Ceding Company under each reinsured policy
for claims paid after death of the insured shall be the amount specifically
reinsured with the Reinsurer. In the case of accelerated benefits, the maximum
benefit payable by the Reinsurer is the lesser of the amount specifically
reinsured by the Reinsurer, or $1,000,000. This will be a cumulative limit in
the case of repeated partial accelerations.
2.Except for those additional terms, conditions and modifications contained in
this Amendment 12, all other terms and conditions of Amendment 6 and the
Agreement, including amendments thereto, shall remain unchanged.
72
In witness of the foregoing, Ceding Company and Reinsurer have, by their
respective officers, hereby executed this Amendment 12 in duplicate on the dates
indicated below, with an effective date of July 1, 2001.
NATIONAL LIFE OF VERMONT
INSURANCE COMPANY
By:
Title:
Date:
By:
Title:
Date:
73
AMENDMENT
To
REINSURANCE AGREEMENT(S)
Between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
The parties agree to the following:
1.Except for the purposes of carrying out this Agreement and as required by law,
Reinsurer shall not disclose or use any non-public personally identifiable
customer or claimant information ("Customer/Claimant Information") provided by
Ceding Company to Reinsurer, as such Customer/Claimant Information is defined by
the Xxxxxx-Xxxxx-Xxxxxx Act and related regulations. Such Customer/Claimant
Information shall be shared only with those entities with which Reinsurer may,
from time to time, contract in accordance with the fulfillment of the terms of
this Agreement, including but not limited to Reinsurer's retrocessionaires and
Reinsurer's affiliates.
Except as herein amended, all other terms and conditions of this Agreement shall
remain unchanged.
In witness of the above, Ceding Company and Reinsurer have by their respective
officers executed and delivered this Amendment in duplicate on the dates
indicated below, with an effective date of June 30, 2001.
NATIONAL LIFE INSURANCE
COMPANY
By:
Title:
Date:
By:
Title:
Date:
74
The following reinsurance agreement(s) have been identified as requiring
modification to comply with recently adopted privacy/confidentiality
legislation.
Ceded By ING Re ING Re Client Effective Treaty Basis of Plans
Co. No. Treaty No. Treaty ID Date Type Reinsurance Covered
-----------------------------------------------------------------------------------------------------------------------------------
National Life Insurance Company 163 1126 1631126 4/1/1993 Facultative Yearly Renewable Term Single Life
products
National Life Insurance Company 163 1322 1631322 10/1/1994 Automatic/ Yearly Renewable Term Single Life
Facultative - Table 4 products
National Life Insurance Company 163 1639 1631639 10/1/1996 Automatic/ Coinsurance ART products
Facultative
National Life Insurance Company 163 11859 1631859 9/1/1997 Automatic/ Yearly Renewable Term Single
Facultative Life products
National Life Insurance Company 163 2004 016-2004 12/1/1998 Automatic/ Yearly Renewable Term COLI -
Facultative VUL products
National Life Insurance Company 163 2768 N/A 6/1/2001 Automatic/ Yearly Renewable Term COLI -
Facultative VUL products
75
AMENDMENT NO. 14
Effective May 1, 2000
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective April 1, 1993
between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
WHEREAS, Reinsurer currently reinsures Ceding Company's plans or policies under
the Agreement; and
WHEREAS, Ceding Company and Reinsurer wish to amend or modify, the rates for the
Ceding Company's Accelerated Care Rider ("ACR") and Non-Qualified Accelerated
Care Rider ("ACR") policies under the Agreement.
AMENDMENT
The parties hereby agree to amend or modify the Agreement, by amending Amendment
10 and Amendment 11 to specify that ACR are not issued in connection with
Universal Life and Variable Universal Life policies.
1.Schedule A.3, paragraph 1.a. is amended to include the following:
The above plan codes are not issued in connection with the Ceding Company's
Universal Life or Variable Universal Life policies.
2.Except for those additional terms, conditions and modifications contained in
this Amendment 14, all other terms and conditions of Amendment 10, Amendment 11
and the Agreement, including amendments thereto, shall remain unchanged.
76
In witness of the foregoing, Ceding Company and Reinsurer have, by their
respective officers, hereby executed this Amendment 14 in duplicate on the dates
indicated below, with an effective date of May 1, 2000.
NATIONAL LIFE OF VERMONT
INSURANCE COMPANY
By:
Title:
Date:
By:
Title:
Date:
77
AMENDMENT NO. 15
Effective June 1, 2002
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective April 1, 1993
between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
WHEREAS, Reinsurer currently reinsures Ceding Company's plans or policies under
the Agreement; and
WHEREAS, Ceding Company wishes to code and Reinsurer wishes to reinsure Ceding
Company's Accelerated Care Rider ("ACR") on Universal Life and Variable
Universal Life plans or policies ceded to Reinsurer under the Agreement.
AMENDMENT
The parties hereby agree to amend or modify the Agreement by adding the Ceding
Company's Accelerated Care Rider, as follows:
1.An Accelerated Care Rider may be added to the Universal Life or Variable
Universal Life products covered under this Agreement.
The reinsurance benefit is the Reinsurer's proportionate share of the
accelerated death benefit payable under this Agreement. The Accelerated Care
Rider payable under this Agreement is the Reinsurer's proportionate share of the
ent amount at risk as shown in Article 6 of the Agreement, reduced by the Ceding
Company's discount percentage and subject to Ceding Company's cap on the total
death benefit payable to the insured. The cap is either a dollar amount or a
percentage of the total Accelerated Care Rider. There are no reinsurance
premiums for this benefit.
78
2.Execpt for xxxx additional terms, conditions and modifications contained in
this Amendment 15, all other terms and conditions of the Agreement, including
amendments thereto, shall remain unchanged.
In witness of the foregoing, Ceding Company and Reinsurer have, by their
respective officers, hereby executed this Amendment 15 in duplicate on the dates
indicated below, with an effective date of June 1, 2002.
NATIONAL LIFE OF VERMONT
INSURANCE COMPANY
By:
Title:
Date:
By:
Title:
Date:
79
