Exhibit 1.A(3)(b)(ii)
SCHEDULE B
COMPENSATION SCHEDULE
TO SELLING AGREEMENT FOR
SECURITY LIFE FIRSTLINE and FIRSTLINE II
This Schedule is an attachment to the ING AMERICA EQUITIES, INC. ("ING AMERICA
EQUITIES") Selling Agreement by and among the parties pursuant to paragraph 17
of that Selling Agreement, effective as of May 1, 2000, or the date the Selling
Agreement is made effective by Security Life, whichever is later. The provisions
of this Schedule shall apply only to Security Life FirstLine and FirstLine II
Flexible Premium Variable Universal Life policies solicited and issued while
this Schedule is in effect. All compensation payable under this Schedule shall
be subject to the terms and conditions contained herein at the time of issue of
the policy by SECURITY LIFE OF DENVER INSURANCE COMPANY ("SECURITY LIFE").
1. Commission Structure:
PCA SCA RCA, 2-10 RCA, 11+ Trail, 11+
--- --- --------- -------- ----------
FirstLine 95% 4% 4% 2% 10 basis points
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FirstLine II 95% 4% 4% 2% 15 basis points
PCA (PRIMARY COMMISSIONABLE AMOUNT) is equal to the first year
target premium. Gross premiums paid up to the PCA in any year
are commissioned at the full PCA rate. If the gross premium
paid in year one is less than the PCA, then the difference is
carried over to the second year. Premiums received in year two
or later up to this difference, if any, are commissioned at
the full PCA commission rate. A new PCA is generated any time
a new coverage segment is created (whether on the base policy
or on a commissionable rider). Note that a death benefit
option change does not create any new PCA as no new coverage
segment is added. Premium dollars are allocated first to PCA,
then to SCA, and finally to RCA.
SCA (SECONDARY COMMISSIONABLE AMOUNT) is equal to the
difference, if any, between the gross premiums paid in year
one and the PCA. In the year that a new coverage segment is
created, all premium paid in excess of the PCA total for that
year is commissioned at the RCA rate.
RCA (RENEWABLE COMMISSIONABLE AMOUNT) equals zero in the first
policy year. In renewal years, the RCA equals the gross
premium paid less the PCA for that year, but in no event less
than zero.
Premiums received within 15 days prior to policy anniversary will result in the
agent receiving commissions at the same rate as if the premium was paid on the
anniversary date.
Schedule B Page 1 of 4
2. Trail Commissions: A trail commission of 0.10% for FirstLine and 0.15% for
FirstLine II on an annualized basis is calculated at the end of each month
based on the policy's Account Value less policy debt at the end of the
prior month. For XxxxxXxxx XX, trail commissions begin at the eleventh
policy anniversary. For FirstLine, the trail commission begins at the
earlier of:
a. the eleventh policy anniversary, or
b. the end of the policy year in which the cumulative premium
payments less partial withdrawals equals or exceeds the guideline
single premium as defined by the Internal Revenue Code. If prior
to the eleventh policy anniversary, the first trail commission
will be calculated for the entire year.
The trail commission is payable annually at the end of a policy year
provided the policy is in force (and not subject to the Grace Period
provision) on such date.
3. Riders: Waiver of Cost of Insurance Rider, Additional Insured Rider and
Waiver of Specified Premium Rider are commissionable and will have a
separate target premium which is set at issue and is level thereafter. The
Adjustable Term Insurance Rider and Right to Exchange Rider have no target
premium associated with them. Flat extra ratings with a duration of six
years or more are commissionable and substandard table ratings are
commissionable based upon the first year additional cost of insurance
charge.
4. Commission Calculation: Commissions shall be calculated only on premium
actually received and accepted by SECURITY LIFE. Commissions shall be paid
only on an earned basis. Outstanding loan amounts carried over are not
considered commissionable premium.
5. Premium Allocation: If the Stated Death Benefit has been increased since
the policy date, premiums received are allocated to the coverage segments
in the same proportion that the guideline annual premium for each segment
bears to the total guideline annual premium of the policy.
6. Death Benefit Increases: If a premium payment accompanies a request for a
Stated Death Benefit increase or is received while a request is pending,
the payment will be applied to the policy but commissions shall not be
payable until the increase is effective. The commission shall then be
payable based on the premium being allocated among all segments as it would
normally and the new target premium after the increase.
Schedule B Page 2 of 4
7. Guaranteed Issue: XxxxxXxxx XX guaranteed issue rates are the same as for
fully underwritten business. FirstLine has two Guaranteed Issue programs,
Regular and Select. The commission levels for FirstLine for first target
are shown in the tables below. The commission levels for renewals, ultimate
and trail, are the same as the fully underwritten version.
FirstLine First Year Commission Rate
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Issue Age Non-Smokers Smokers
Regular Guaranteed Issue: 0-40 77% 48%
41-45 77% 43%
46-50 61% 27%
51-55 35% 11%
56-60 17% 4%
61-65 8% 4%
66+ 4% 4%
Select Guaranteed Issue: 0-40 82% 65%
41-45 82% 57%
46-50 70% 38%
51-55 52% 15%
56-60 34% 4%
61-65 14% 4%
66+ 4% 4%
Guaranteed Issue generally is not available for ages 71 and above.
8. Compensation Payments: Compensation on initial premium shall be due to the
Selling Broker-Dealer at the time of the issuance of the policy and for all
other premium payments at the time of the receipt and acceptance of premium
by Security Life, except that the amount, if any, and the time of payment
of compensation on stated death benefit increases, replacements, reissues,
changes, conversions, exchanges, term renewals, term conversions, premiums
paid in advance, policies issued on a "guaranteed issue" basis, policies
requiring facultative reinsurance arrangements, and other special cases and
programs shall be governed by Security Life's underwriting and
administrative rules then in effect. The Compensation shall be payable to
the Selling Broker-Dealer in accordance with the Schedule B in effect at
the time of issue of the policy.
9. Commission Chargeback: In the event that a policy for which a commission
has been paid is lapsed or surrendered by the Policy Owner during the first
six months, or is returned to SECURITY LIFE for refund of premium during
the Free Look Period as described in the policy, SECURITY LIFE and ING
AMERICA EQUITIES shall require reimbursement from SELLING BROKER-DEALER
equal to 100% of the commission paid. If a premium payment for which a
commission has been paid is refunded by SECURITY LIFE, a reimbursement of
the commission paid on the amount refunded will be due from the SELLING
BROKER-DEALER.
Schedule B Page 3 of 4
The reimbursement may be deducted by ING AMERICA EQUITIES from the next, or any
subsequent, commission payment to SELLING BROKER-DEALER.
If the amount to be reimbursed exceeds compensation otherwise due, SELLING
BROKER-DEALER shall promptly reimburse ING AMERICA EQUITIES before the next
commission cycle.
10. Internal Exchanges: Commissions on the exchange of any policy issued by
SECURITY LIFE or any other ING affiliate for FirstLine, if any, will be
paid in accordance with the internal exchange procedures in effect at
SECURITY LIFE on the date the exchange is completed. The commission rates
and/or target premiums may be adjusted in accordance with the rules in
effect at the time of the exchange. If the Representative responsible for
the exchange is not the producer of the original policy, and the original
producer is still active with SECURITY LIFE, no commission will be payable
to the Representative or the SELLING BROKER-DEALER.
Schedule B Page 4 of 4
