REINSURANCE
AGREEMENT
(EFFECTIVE OCTOBER 1, 1994)
Between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
National ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and
AUTOMATIC 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. Automatic Reinsurance Terms ................................. 1
a. Conventional Underwriting .......................... 1
b. Retention .......................................... 2
c. Automatic Accaptance Limits ........................ 2
d. In Force and Applied for Limit for Automatic
Reinsurance ...................................... 2
e. Residence .......................................... 2
f. Mortality Rating Limit ............................. 2
g. Minimum Cession .................................... 2
4. Automatic Reinsurance Notice Procedure ...................... 2
5. Commencement of Reinsurance Coverage ........................ 2
a. Automatic Reinsurance .............................. 3
b. Pre-issue Coverage ................................. 3
6. Basis of Reinsurance Amount and Reinsurance Premium Rates ... 3
a. Life Reinsurance ................................... 3
b. Preliminary Term Insurance ......................... 5
c. Term Insurance Renewals ............................ 5
d. Flat Extra Premiums ................................ 5
e. Rates Not Guaranteed ............................... 5
7. Cash Values or Loans .................................. 5
8. Payment of Reinsurance Premiums ............................ 5
a. Premium Due ........................................ 5
b. Failure to Pay Premiums ............................ 5
c. Premium Adjustment ................................. 5
9. Premium Ttax Reimbursement ................................. 6
10. DAC Tax Agreement .......................................... 6
i
11. Reports ................................................... 7
12. YRT Reserves for Reinsurance .............................. 7
13. Claims .................................................... 7
a. Notice ............................................. 7
b. Proofs ............................................. 7
c. Amount and Payment of Benefits ..................... 7
d. Contested Claims ................................... 7
e. Claim Expenses ..................................... 8
f. Extracontractual Damages ........................... 8
14. Misrepresentation, Suicide, and Misstatement ............... 8
15. Policy Changes ............................................. 8
a. Notice ............................................. 8
b. Increases .......................................... 8
c. Reduction or Termination ........................... 9
d. Other Policy Changes, Conversions, Exchanges, Etc. . 9
e. Extended Term and Reduced Paid-Up Insurance ........ 9
16. Reinstatements ............................................. 9
a. Automatic Reinstatement ............................ 9
b. Premium Adjustment ................................. 9
c. Nonforfeiture Reinsurance Termination .............. 9
17. Increase in Retention ...................................... 9
a. New Business ....................................... 9
b. Recapture ..........................................10
18. Errors & Omissions .........................................10
19. Insolvency .................................................10
20. Arbitration ................................................11
a. General 11 b. Notice ...............................11
c. Procedure 11 d. Costs ..............................12
21. Good Faith; Financial Solvency .............................12
22. Term of This Agreement .....................................12
23. Medical Information Bureau .................................12
24. Entire Agreement ...........................................13
ii
25. Effective Date .............................................13
Listing of Schedules:
Schedule A
1. Plans Reinsured
2. Automatic Portion Reinsured
3. Retention Limits
4. Automatic Acceptance Limits
5. Automatic Inforce and Applied for Limits
6. Minimum Cession
7. Age Basis
8. Reporting Period
9. Recapture Period
10. Additional Underwriting Requirements
11. Premium Taxes
Schedule B - Automatic Reinsurance Premiums - Yearly Renewable
Term Basis
1. Life Insurance
Schedule C - Information on Risks Reinsured
Accounting Summary
Policy Exhibit Summary
Reserve Credit Summary
iii
Automatic
YRT Reinsurance Agreement
This Agreement is between
NATIONAL LIFE INSURANCE COMPANY CEDING COMPANY), National Life Drive,
Montpelier, Vermont 05604
and
agrees to reinsure 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 automatic 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. AUTOMATIC REINSURANCE TERMS. ___ agrees to automatically accept
contractual risks on the life insurance plans and supplemental benefits
shown in Schedule A, subject to the following requirements:
a. CONVENTIONAL UNDERWRITING: Automatic reinsurance applies only to
insurance applications underwritten by CEDING COMPANY with
conventional underwriting and issue practices which are consistently
applied. Conventional underwriting and issue practices are those
customarily used and generally accepted by life insurance companies.
1
3.a (continued)
Some examples of non-customary underwriting practices which are not
accepted for automatic reinsurance under this Agreement are
guaranteed issue, any form of simplified underwriting, short-form
applications, any form of non-customary nonmedical underwriting
limits, or internal or external policy exchanges that do not require
conventional underwriting. An example of any unacceptable issue
practice is the issuance of a policy with contestability and suicide
clauses with a time limitation that is shorter than the maximum
allowed by state law.
Ceding Company must comply with additional underwriting requirements
at least as restrictive as those set forth in Schedule A. These
requirement may be changed by ___ will provide 120 days advance
written notice to CEDING COMPANY before the effective date of such
change.
b. RETENTION. CEDING COMPANY will retain, and not otherwise reinsure, an
amount of insurance on each life equal to it's retention shown in
Schedule A. If CEDING COMPANY'S scheduled retention is zero,
automatic reinsurance is not available.
c. AUTOMATIC ACCEPTANCE LIMITS. On any one life the amount automatically
reinsured under all Agreements with ___ shall not exceed the
Automatic Acceptance Limits shown in Schedule A.
d. IN FORCE AND APPLIED FOR LIMIT FOR AUTOMATIC REINSURANCE. The total
life insurance in force and applied for on any one life with all
companies which CEDING COMPANY KNOWS about cannot exceed the inforce
and applied for limits as shown in Schedule A.
e. RESIDENCE. Each insured must be a resident of the United States or
Canada at the time of issue.
f. MORTALITY RATING LIMIT. The total mortality rating on the insurable
life (lives) shall not be higher than 500% for permanent plans and
300% for terms plans and term riders or its equivalent on a flat
extra premium basis.
g. MINIMUM CESSION. The minimum amount of reinsurance per cession that
will accept is shown in Schedule A.
4. AUTOMATIC REINSURANCE NOTICE PROCEDURE. After the policy has been paid for
and delivered, CEDING COMPANY shall submit all relevant individual policy
information, as defined in Schedule C, in it's next statement to
5. COMMENCEMENT OF REINSURANCE COVERAGE. Commencement of reinsurance coverage
on any policy or pre-issue under this Agreement is described below.
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a. AUTOMATIC REINSURANCE. ____ reinsurance coverage for any policy that
is ceded automatically under this Agreement shall begin and end
simultaneously with CEDING COMPANY's contractual liability for the
policy resinsured.
b. PRE-ISSUE COVERAGE. ____ will not be liable for benefits paid under
CEDING COMPANY's conditional receipt or temporary insurance agreement
unless all the conditions for automatic reinsurance coverage under
Section 3 of this Agreement are met. ___ liability under CEDING
COMPANY's conditional receipt or temporary insurance agreement
(Exhibit I, attached to Schedule A of this Agreement) is limited to
the lesser of I or ii below:
i. The Automatic Acceptance Limits with ___) as shown in Schedule
A.
ii. The amount for which CEDING COMPANY is liable less its retention
shown in Schedule A, less any amount of reinsurance with other
reinsurers.
The pre-issue liability applies only once on any given life no matter
how many receipts were issued or initial premiums were accepted by
CEDING COMPANY.
After a policy has been issued, no reinsurance benefits are payable
under this pre-issue coverage provision.
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 of 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.
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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)):
(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 divident 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 8.
Whenever the amount of reinsurance on a policy under this Agreement
reduces to $ 5,000 or less, the reinsurance will be wholly
recaptured.
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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 issuance of the original policy and the original
underwriting classification.
d. FLAT EXTRA PREMIUMS. If CEDING COMPANY's policy is issued with a
flat extra premium, the reinsurance premium 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 ____ changes the rates, it will give CEDING COMPANY 90
days prior written notice 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. In addition, ____ will not participate in policy
loans or other forms of indebtedness or 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
and each subsequent policy anniversary. On any payment 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 19, 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
termination 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 reiunsurance
premium and ____ accepts the overpayment, ____ acceptance will not
constitute or create a reinsurance liability or result in any
addition reinsurance. Instead, ____ will be liable to CEDING
COMPANY for a credit in the amount of the overpayment. If the
reinsurance policy terminates, ____ will refund the reinsurance
premium. This 5 8.c (continued)
5
8.c (continued)
refund will be on the 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. See Schedule A.
10. DAC TAX AGREEMENT.
CEDING COMPANY and ____ herein collectively called the "Parties", or
singularly the "Party", hereby enter into an election under Treasury
Regulations Section 1.848-2(g) (8) whereby:
a. For which each taxable year under this Agreement, the party with
the net positive consideration, as defined in the regulations
promulgated under Treasury Code Section 848, will capitalize
specified policy acquisition expenses with respect to this
Agreement without regard to general deductions limitation of
Section 848 (c) (1). ;
b. CEDING COMPANY and ____ agree to exchange information pertaining t
o the net consideration under this Agreement each year to insure
consistency or as otherwise required by the Internal Revenue
Service.
c. CEDING COMPANY will submit to ____ by May 1 of each year 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 that
CEDING COMPANY will report such net consideration in its tax
return for the preceding calendar year;
d. ____ may contest such calculation by providing an alternative
calculation to CEDING COMPANY in writing within 30 days of ____
receipt of CEDING COMPANY's calculation. If ____ does not so
notify CEDING COMPANY, ____ will report the net consideration as
determined by CEDIN COMPANY in ____ tax return for the previous
calendar year;
e. If ____ contests CEDING COMPANY's calculation of the net
consideration, the parties will act in good faith to reach an
agreement as to the correct amount within 30 days of the date ____
submits its alternative calculation. If CEDING COMPANY and ____
reach agreement on the net amount of consideration, each party
shall report such amount in their respective tax returns for the
previous calendar year.
Both parties represent and warrant that they are subject to U.S.
taxation under either Subchapter L of Chapter 1, or Subpart F of
Subchapter N of Chapter 1 of the Internal Revenue Code of 1986, as
amended.
6
11. REPORTS. The reporting period is shown in Schedule A. For each
reporting period, Ceding Company will submit to a statement to ____
with information that is substantially similar to the information on
the risks reinsured with ____ premiums owed, policy exhibit activity,
and an accounting summary. Each calendar quarter, CEDING COMPANY will
submit a reserve credit summary similar to that shown in Schedule C.
12. YRT RESERVES FOR REINSURANCE. The statutory reserve basis for yearly
renewable term reinsurance will be shown on the reserve credit summary
provided each quarter.
13. CLAIMS.
a. NOTICE. CEDING COMPANY will notify ____ as soon as reasonably
possible after in receives a claim request.
b. PROOFS. 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 insured 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 ill be shared among all the reinsurers 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.
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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. 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. If ____ agrees to participate in
an action that results in extracontractual damages, ____ will be
liable and will pay for its proportionate share of
extracontractual damages. If ____ does not agree to a course of
action that results in extracontractual damages, ____ shall not be
liable for and will not pay any amounts for CEDING COMPANY's
extracontractual damages and related expenses and fees.
14. 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.
15. 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 like 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.
8
c. REDUCTION OR TERMINATION. If life insurance on a reinsured policy
is reduced, then reinsurance will be reduced by the amount of the
reduction on the date of such change multiplied by the amount
reinsured prior to reduction, divided by the policy net amount at
risk prior to reduction. If more than one reinsured participates
in the reinsurance, the reinsurance with each reinsurer will be
reduced proportionately. If life reinsurance on a reinsured policy
is terminated, then reinsurance will cease on the fate of such
termination.
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 will be the
YRT conversion rates shown in Schedule B or may be mutually agreed
upon. Rates will be based on the original issue age and duration
since issuance of the original policy and will be based on the
original issue age, duration since issuance of the original policy
and the original underwriting classification.
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.
16. REINSTATEMENTS.
a. AUTOMATIC REINSTATEMENT . If CEDING COMPANY reinstates a policy
that was originally ceded to ____ as automatic reinsurance using
conventional underwriting practices, ____ reinsurance for that
policy shall be reinstated.
c. PREMIUM ADJUSTMENT. Reinsurance premiums for the interval during
which the policy was lapsed will be paid to ____ on the same basis
as CEDING COMPANY charged its policy owner for the reinstatement.
d. 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.
17. 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 retention increase.
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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.
18. 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.
19. INSOLVENCY. In the event of CEDING COMPANY"s insolvency, ____ liability
for death or premium waiver claims on reinsured policies will continue
to be setermined under this Agreement without any change because of
CEDING COMPANY's insolvency. ____ will pay reinsurance benefits
directly to CEDING COMPANY's liquidator, receiver, or statutory
successor (Successor). Sucessor shall give ____ written notice
10
19. (Continued)
directly to CEDING COMPANY's liquidator, receiver, or statutory successor
(Successor). Sucessor 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. While a death or premium waiver claim
is pending, ____ may investigate the claim and raise, at its own expense and in
CEDING COMPANY's name or that of the 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.
20. ARBITRATION.
a. GENERAL. All disputes and differences under this Agreement that
cannot be amicably agreed upon by the parties will be decided by
the 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
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 within 10 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.
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 reinsurers or affiliates. Each
party will appoint one arbitrator. Notice of the appointment of
these arbitrators will be given by each party to the other party
within 30 days of the fate of mailing of the notification
initiating the arbitration. These two arbitrators will, as soon as
possible, 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
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c. (Continued)
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 drawling 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
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, the
arbitrator appointed by that party, and all other expenses
connected with the presentation of its own case. The two parties
will share equally in the cost of the third arbitrator.
21. 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 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.
22. TERM OF THIS AGREEMENT. CEDIN COMPANY will maintin 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.
23. MEDICAL INFORMATION BUREAU. ____ is required to strictly adhere to the
Medical Information bureau rules, and CEDING COMPANY 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
12
23. (Continued)
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.
24. ENTIRE AGREEMENT. This reinsurance Agreement, including the attached
Schedules, constitutes the entire Agreement between the parties with
respect to the business being reinsured hereunder and there are no
understandings between the parties other than as expressed in this
Agreement. Any change or modification to this Agreement is null and
void unless made by amendment to this Agreement and signed by both
parties.
25. EFFECTIVE DATE. The Effective Date of this Agreement is October 1,
1994.
NATIONAL LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ von Wallmail
-------------------------
Title: SVP CHIEF ACTUARY
------------------
Date: 7/24/95
--------
SCHEDULE A
1. PLANS REINSURED:
The policy forms automatically reinsured are:
The following plans when issued under CEDING COMPANY's 4 Table Program:
Single Life plans
First To Die plans
Second To Die plans
2. AUTOMATIC PORTION REINSURED:
For these policy forms, ____ will automatically reinsure those on which
the insured's surname begins with the letters __A__ through __Z__,
inclusive.
For these policy forms, ____ will automatically reinsure 20 % of each
risk on a first dollar quota share basis.
In the event CDIN COMPANY's retention on the risk is full or partially
full, ____ will automatically reinsure up to 25% of the risk.
3. RETENTION LIMITS:
a. AUTOMATIC RETENTION LIMITS:
i. Life Insurance:
AGES LIMITS
---- ------
ALL 20% of policy face amount
4. AUTOMATIC ACCEPTANCE LIMITS:
On any one life or lives (for joint policies) the amount automatically
reinsured under this agreement with ____ shall not exceed the
following:
ISSUE AGE AUTOMATIC LIMITS
--------- ----------------
0-75 $1,000,000
over 75 Automatic reinsurance is not available
*For Joint Life policies Neither insured's actual age
may be greater than 80.
SCHEDULE A, CONTINUED
5. AUTOMATIC INFORCE AND APPLIED FOR LIMIT:
$5,000,000
6. MINIMUM CESSION:
There will be no minimum amount that can be reinsured with
7. AGE BASIS:
"Age" is the length of time the insured has lived to the insured's __nearest
birthday. __last birthday.
8. Reporting Period:
Reinsurane premiums, policy changes, and related statements must be submitted
to every: __month __quarter __year
9. 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.
10. ADDITIONAL UNDERWRITING REQUIREMENTS:
The following additional requirements apply to business reinsured under this
Agreement. These requirements are in addition to the conventional
underwriting and issue practices described in Section 3.a. of this Agreement.
BLOOD PROFILE LIMITS.
Where permitted by law, a blood profile including an AIDS test is required
according to the age and amount conditions described below. The AIDS test is
to be an HIV or, when the HIV is not permitted, a T-Cell ratio.
Ages Applied for Amount
------- ------------------
18 and over $100,000
SCHEDULE A, CONTINUED
11. PREMIUM TAXES:
Premium taxes are not reimbursable.
SCHEDULE B
REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. LIFE INSURANCE
a. Reinsurance Premiums
SINGLE LIFE POLICIES
Standard annual premiums per $1000 reinsured shall be following percentages
of the RPR rates attached to this Schedule B:
Nonsmoker Smoker
--------- ------
FIRST TO DIE POLICIES
The annual premiums per $100 0 reinsured shall be the above percentages times
... X (above RPR single life rate for the first life + above RPR single life
rate for the second life). The maximum 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
ina 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 100% of 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.
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 100% of the Last Survivor rates
attached to this Schedule B, using the joint equivalent age as shown
calculated n Exhbiit 3 attached to this
SECOND TO DIE POLICIES (Continued)
Schedule B. The maximum reinsurance premium per $1000 reinsured shall be no
more than ___.
Exhibit I
National Life Insurance Company
RECEIPT &
TEMPORARY LIFE INSURANCE AGREEMENT.
Please read with care.
Received from: ____ Applicant
A premium of $___ and an application having the same number as this Receipt and
Temporary Life Insurance Agreement (Receipt and which is made today to National
Life Insurance Company (the Company) for $___ of life insurance on the life of
________. Proposed Insured for the premium received and SUBJECT TO ALL OF THE
TERMS AND CONDITIONS OF THE HEALTH QUESTIONS AND TERMS AND CONDITIONS WHICH
FOLLOW AND CONTINUE ON THE BACK OF THIS RECEIPT, this Receipt provides a LIMITED
AMOUNT OF LIFE insurance for LIMITED PERIOD of time.
HEALTH QUESTIONS
If either of the questions below is answered ye or left blank, no representative
of the Company is authorized to accept money, and NO INSURANCE will take effect.
Has the Proposed Insured:
1. Been admitted to a hospital or medical facility in
the past 90 days or been advised in the past 90 days
by a member of the medical profession to be admitted
to a hospital or medical facility. __ Yes __ No
2. Been treated or advised by a member of the medical
profession to seek treatment for heart problems
(including angina), stroke, cancer or AIDS in the
past 2 years? __ Yes __ No
The Applicant has received a copy of this Receipt and has read it and
understands it. The answers to the Health Questions are to the best knowledge
and belief of the Proposed Insured complete and true, and the Applicant agrees
to be bound by them. No. 112712
Date: Proposed Insured:
Date: Applicant
If other than Proposed Insured:
Date: Agent
TERMS AND CONDITIONS
A. MAXIMUM AMOUNT OF TEMPORARY LIFE INSURANCE
The Maximum Amount of temporary life insurance on the Proposed Insured under
this Receipt shall not exceed the leat of:
1. The amount applied for; or
2. 2. $1,000,000 if the Proposed Insured is less than 70 years of age on the
date the temporary life insurance begins; or
3. $100,000 if the Proposed Insured is 70 years of age or older on the date
the temporary life insurance begins.
If death occurs while more than one Receipts is in effect with respect to
applications made to National Life Insurance Company, Vermont Life Insurance
Company, and Champlain Life Insurance Company: a. if the Proposed Insured is
less than 70 years of age, the maximum of $1,000,000 shall apply to total
death benefits under all Receipts; and b. if the Proposed Insured is 70 years
of age or older, the maximum of $100,000 shall apply to total death benefits
under all Receipts. The maximum shall be pro-rated in proportion to the
amounts which would have been paid in the absence of this section.
If a death benefit becomes payable under this Receipt, the premium received
will be applied as the first premium for the plan of insurance and premium
internal requested in the application. Any excess premium will be refunded.
Any unpaid premium will be deducted from the death benefit.
This Receipt is for only the "Plan" and "Amount of insurance applied for,
subject to the Maximum Amount, it does not cover any "Additional Benefits"
applied for such as Waiver of Premium, Accidental Death Benefit, term
insurance riders or any other supplemental benefits.
B. DATE COVERAGE BEGINS
Temporary life insurance will begin at the time when ALL of the following
requirements have been met.
1. This receipt is fully completed; and
2. Part A of the application for insurance is fully completed; and
3. Part B of the application for insurance is fully complete.
Terms and Conditions are continued on the back of this Receipt,
TEMPORARY LIFE INSURANCE AGREEMENT TERMS AND CONDITIONS (CONTINUED)
▇. ▇▇▇▇ COVERAGE TERMINATES.
Temporary life Insurance will terminate upon the EARLIEST of:
1. 90 days for the time the temporary life insurance begins; or
2. the third day af ter the date the Company mails notice of termination of
the temporary life insurance to the Applicant or the address given for
premium notices in Part A of the application; or
3. the time the Applicant first learns that the Company has terminated the
temporary life insurance; or
4. the time the Applicant withdraws the application for life insurance; or
5. the time the Company offers life insurance on any basis other than exactly
as applied for; or
6. the time the life insurance applied for begins
If the temporary life insurance terminates under 1,2,3 or 4 above the premium
received will be refunded to the Applicant at the address given for premium
notices in Part A of the application. It will be refunded if insurance offered
under 5 is refused or will be credited to the first year's premium If the
insurance is accepted, It will be credited to the first year's premium under 6.
A delay in making any refund will NOT change the date of termination.
D. SPECIAL LIMITATIONS
This Receipt will provide NO life insurance protection of any type and the
premium paid will be refunded to the Applicant:
1. If the answers provided in Part A or Part B of the application or in the
Health Question section of this receipt contain any material misstatements or
material misrepresentations;
2. If the Proposed Insured dies by suicide while sane or insane; or
3. if the premium paid is less than the monthly premium for the insurance
applied for: or
4. if any check or draft used to pay the required premium is not honored when
first presented for payment.
E. GENERAL LIMITATIONS
Except as specificially stated in the Receipt, temporary life insuance will
be subject to all of the terms of the policy applied for.
This Receipt is NOT valid unless signed by an agent of the Company, the
Proposed insured, and the Applicant if other than the Proposed Insured, NO
ONE is authorized to waive or change of the terms of this Receipt.
NOTICE TO APPLICANT
If you have any questions about this Receipt or if you do not hear about your
application within 80 days of this Receipt, write to the New Business
Department, National Life Insurance Company, Montpelier, Vermont 05604 or
call the New Business Department (collect0 (▇▇▇) ▇▇▇-▇▇▇▇.
Make all premium checks payable to "National Life Insurance Company. Do not
make checks payable to the agent or leave the payee blank.
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 ___ 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 suing 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
adjustments 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:
DIFFERENCE IN 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
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 $7.50 $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 .5 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
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 qx standard and table of qy standard, given
table of 1x standard and table of 1y standard. (Appendix 2)
2. Calculate standard survivorship whole life mortality table, qz
standard, given two single life mortality tables, qx standard and
qy standard, (Appendix 1)
3. Calculate rated single life mortality tables, qx actual and qy
actual, given table of qx standard, table of qy standard, and the
following underwriting information:
a. % rating x and % rating y (Appendix 3a)
or
b. flat rating x, flat term x, flat rating y, and flat term y.
(▇▇▇▇▇▇▇▇ ▇▇)
4. Calculate actual survivorship whole life mortality table, qz
actual, given tables of qx actual and qy actual, (Appendix 1)
EXHIBIT 3, CONTINUED
5. Calculate the survivorship expectation of life, ez actual, given
table of qz 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 $4
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 qz test, given table of qz standard and test
rating. (Appendix 3a or 3b)
c. Calculate e z test, given table of q z test, (Appendix 4)
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 > ez 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 1
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 of tpx, given table of q x.
o p x = 1
t p x = t-1px * (1-q x - t -1)
for 1 <= t <= 100-x
b. Calculate table of tpy, given table of qy, in same manner.
c. Calculate table of tpz, given tables of tpx and tpy.
tpz = tpx + tpy - (tpx * tpy)
for 0<= t <= 100 - min (x,y)
Note: For programming purposes tpz cannot be allowed to equal 0. IN such cases
set tpz equal to .00000001. This will avoid division by 0.
EXHIBIT 3, CONTINUED
d. Calculate table of q z, given table of t p z.
qz-t = 1- t+1pz
-------
tpz
for 0<= t <= 99 min(x,y)
2. However, if actual mortality (rather than standard) is being used and x is
uninsurable, then
qz+t = qy-t for 0<= t <= 99-min (x,y).
If the actual mortality is being used and y is uninsurable, then
qz+t = qx-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
EXHIBIT 3, CONTINUED
APPENDIX 2
Calculation of table of q, given table of 1
1. Calculate the ultimate q's
qw+t = 1w+t - 1w+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 = qw+t * selw, t+1 t=0, 1, 2,...., 9
i.e. q[w] = qw * sel w,1
q[w]+1 = qw+1 * sel w,2
q [w]+9 = qw+9 * sel w,10
The select factors (sel w) depend on sex and issue agge 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 u w = .3 sel m w + .2 sel f w, rounded to 2 decimals
EXHIBIT 3, CONTINUED
TABLE A
SELECTION FACTORS FOR ALTERNATE METHOD OF DETERMINING
LIFE INSURANCE RESERVES AND DEFICIENCY RESERVE REQUIREMENTS
================================================================================
ISSUE AGES POLICY YEAR
-----------------------------------------------------------------------------------
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.
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 o.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.
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.
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. qw +t temp and
ii. the greater of 0.5 and q w+t
for 0 <= t <= 99-w
EXHIBIT 3, CONTINUED
APPENDIX 4
Calculation of the expectation of life, e, given table of q
a. Calculate t p w
o p w = 1
t p w = t-1 p w * (1-q w+t-1)
for 1 <= t <= 100w
2. Calculate e w
100 w
e w = sum tpw/ 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.
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. ▇▇ ▇▇▇▇▇ (Yes or No)
24. Previous Policies (Yes or No)
25. Premiums
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 WO 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
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. Expiries __________ ____________
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)
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
A. Life Insurance
--------- ------------------ ----- ----- ------ ------
B. Accidental Death
Benefit
--------- ------------------ ----- ----- ------ ------
C. Disability
Active Lives
--------- ------------------ ----- ----- ------ ------
D. Disability
Disabled Lives
--------- ------------------ ----- ----- ------ ------
E. Other, Please
Explain
--------- ------------------ ----- ----- ------ ------
GRAND TOTAL:__________
--------------------------------------------------------------------------------
__Trial __Facultative: Please send approval __Facultative __ Automatic
Obligatory
--------------------------------------------------------------------------------
__Joint Life __YRT __Other __Self __ Age Last
Administered
--------------------------------------------------------------------------------
__Single Life __COINS __MRT __Individual Age Nearest
Cession
--------------------------------------------------------------------------------
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
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This _______________________day of _____________, 19___
Reinsurance Policy No. ________________________________
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__Trial __Facultative: Please send approval __Facultative __ Automatic
Obligatory
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__Joint Life __YRT __Other __Self __ Age Last
Administered
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__Single Life __COINS __MRT __Individual Age Nearest
Cession
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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
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#2
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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
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This _______________________day of _____________, 19___
Reinsurance Policy No. ________________________________
Amendment No. 1
To
Automatic Yearly Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
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 the following percentages of the RPR rates
attached to Schedule B of this Agreement:
Nonsmoker Smoker
--------------------------------------------------
--------------------------------------------------
2. The effective date of this Amendment is October 1, 1996.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------
Title: VP & Actuary
-------------
Date: 8/1/97
-------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------
Title: Reinsurance Administrator
-------------------------
Date: 8/19/97
-------
Amendment No. 2
To
Automatic Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
WHEREAS, CEDING COMPANY and ___ have entered into an Automatic and Facultative
Coinsurance Agreement effective October 1, 1996 (Agreement 01631639) under which
____ agrees to reinsure CEDING COMPANY's '96 Series Term Policies; and
WHEREAS, term policies reinsured under Agreement 01631639 may be converted to
permanent insurance policies which are eligible for reinsurance under this
Agreement 01631322'
WHEREAS, CEDING COMPANY and ___ wish to provide for reinsurance of such
converted policies under this Agreement 01631322.
A G R E E M E N T
In consideration of the foregoing CEDING COMPANY and SECURITY agree will
reinsure term policies which have been converted to permanent insurance policies
in accordance with the terms and conditions set forth in this Agreement
01631322, except as amended by the following:
1. SCHEDULE A, 1. PLANS REINSURED, shall be amended by adding the following:
All term policies which were reinsured under the Automatic and Facultative
Coinsurance Agreement between CEDING COMPANY and effective October 1, 1996 and
have been converted to permanent insurance policies. 2.
1
SCHEDULE A, 2. AUTOJMATIC PORTION REINSURED, shall be amended to include
the following:
will automatically reinsure 55.6% of the excess above CEDING COMPANY's
retention.
3. SCHEDULE A, 3. RETENTION LIMITS, shall be amended to include the following:
AGES LIMIT
---- -----
All $1,000,000 for Risks Engaged in
Aviation or Hazardous Sport.
$3,000,000 for All Other Risks
4. SCHEDULE A, 4. AUTOMATIC ACCEPTANCE LIMITS, shall be amended to include the
following:
On any one life the amount automatically reinsured with ___ including
CEDING COMPANY's retention limit as ▇▇▇▇▇ in NO. 2 above, shall not exceed
the following:
ISSUE AGE STANDARD RISKS ONLY
--------- -------------------
0-75 $5,560,000 for Risks Engaged in
Aviation or Hazardous Sports.
$8,340,000 for All Other Risks.
5. SCHEDULE B, REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM, shall be amended
to include the following:
Annual reinsurance premiums for conversions shall be as shown in the
Current Premiums per Thousand for Conversions of '96 Series Quota Share
Term policies attached to this Schedule B. Reinsurance rates shall be based
on the original issue age, duration since issuance of the original policy
and original underwriting classification.
6. The effective date of this Amendment is October 1, 1996.
2
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------
Title: VP & Actuary
-----------------
Date: 8/19/97
-----------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------
Title: Reinsurance Administrator
-------------------------
Date: 8/19/97
--------------------
Amendment No. 3
To
Automatic Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
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: VP & Actuary
-----------------
Date: 8/19/97
-----------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------
Title: Reinsurance Administrator
-------------------------
Date: 8/19/97
--------------------
EXHIBIT 3
The following will replace the Joint Equal Age Calculation Amendment 1 to the
_____YRT Agreement Addition of Last Survivor Plan.
The decrease YRT premium rates ____ _____ _____ to reinsurance of National
Life's list survivor policies reinsured under this agreement. The substandard
____ extra premium shall be the ___ ____ assessed the multiplied by 25% of
the standard rates described below. The total premium (standard premium + sub-
standard table extra premium but excluding any flat extra premium) in any year
___ ____ exceed $5,500 per thousand. Reinsurance premiums shall be based on
a joint equal age of the insurers under the policy. The Joint Equal Age shall
be calculated by using the following ____ 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
Femal Ages - 4
Table B
Female to Male Conversion
To convert the age of any female to a corresponding male age, the following
adjustments 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:
Difference in 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
RATINGS
-------
M 200 Std 200 500 Std Unins Std $5/5 yrsStd
Female F Std 200 200 Std 500 Std Unins Std $5/5 yrs
------ - --- --- --- --- --- --- ----- --- --------
85 175 175 300 225 250 250 300 1.25 1.25
80 150 200 300 175 350 200 500 1.00 1.50
75 150 225 300 150 500 175 900 2.00 3.00
80 175 175 350 225 250 250 350 .75 1.00
75 150 200 300 175 350 200 600 .75 1.25
70 150 225 3.00 150 500 175 Dec 1.00 1.75
75 175 175 300 225 300 250 400 .50 .75
70 150 200 300 175 350 200 700 .50 .75
65 150 225 350 175 500 175 Dec .75 1.25
70 150 175 300 225 300 300 500 .50 .50
65 150 200 300 175 400 25 800 .50 .50
60 STD 200 300 150 500 175 Dec .25 .50
65 175 175 350 225 300 300 600 .25 .50
60 150 200 300 200 400 225 800 .25 .50
55 STD 200 300 175 500 200 Dec. .25 .50
55 175 200 350 250 350 400 700 .25 .25
50 150 200 350 225 400 350 Dec. .25 .25
45 150 200 350 200 500 300 Dec .25 .25
The following procedure should be used for the calculation of the "joint percent
extra rating: and/or the "joint flat extra rating" for substandard Second-to-die
policies:
1. Calculate tables of standard qx's and standard qy's given a table
of standard ultimate q's and the select factors for individuals x
and y. Repeat, calculating tables of standard qz's for a male and
female, where z is equal equivalent issue age of individuals x and
y. (Appendix 2).
2. Calculate standard survivorship whole life mortality table, q[zz]
standard, where zz is the equal equivalent issue age for x and y,
using the standard mortality tables, q[z] male and q[z] female
calculated in step 1 above (Appendix 1).
3. Calculate actual single life mortality tables, q[x] actual and
q[y] actual, for x and y using the tables of standard q's
calculated in step 1 and the following underwriting information:
a. % rating, and % rating, (Appendix 3a)
or
b. flatrating x, flatterm x, flatrating y, and ▇▇▇▇▇▇▇▇ ▇,
(▇▇▇▇▇▇▇▇ ▇▇)
4. Calculate actual survivorship whole life mortality table, q{xy}
actual, given tables of q[x] actual and q[y] actual calculated in
step 3 above. (Appendix 1)
5. Calculate the annuity factor, a(xy) actual, given the table of q[xy]
actual calculated in step 4 above. (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%.
(ii) Flat extra rating on case as a whole.
Page 2
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[zz]test, given table of q[zz] standard and test
rating. (Appendix 3a or 3b)
c. Calculate a [zz]test, given table of q[zz]test. (Appendix 4)
d. If a [zz]test = a [xy] actual, then the test rating has been found.
(This will rarely happen.)
e. If a[zz] test > a [xy] actual, then the test rating is too low. Select
a higher test rating and repeat from 4.b.
f. If a [zz] test < a[xy] 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 know 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).
Page 3
APPENDIX 1
Calculation of survivorship whole life mortality table, q[xy] 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 of p[x] given a table of q[x]+t's
op[x] = 1
tp[x] = t-1 p [x] * )1-q[x]+t-1
for 1< t < 100-x
b. Calculate the table of tp[y], given a table of q[x]+t's, in same
manner.
c. Calculate the table of tp[xy], given tables of tp[x] and tp[y].
tp[xy] = tp[x] + tp[y]-(tp[x] * tp[y])
for 0 < t < 100-min(x,y)
NOTE: To avoid division by 0, tp[xy] cannot be allowed to equal 0.
In such cases set tp[xy] equal the smallest positive number
(10*) commonly allowed by all systems programming this
calculation. 10-8 = 0.00000001 was previously suggested.
d. Calculate table of q[xy], given table of tp[xy]
q[xy]+t = 1-t+1p[xy]/tp[xy], for 0 < t < 99-min (x,y)
Page 4
2. However, if actual mortality (rather than standard) is being used and
x is uninsurable, then
q[xy]+t = q[y]+t for 0 < t < 99 min {x,y}
If actual mortality is being used and y is uninsurable, then
q[xy]+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 win 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
w = y y insurable, x uninsurable
APPENDIX 2
Calculation of table of q's to be used in the calculation.
1. Look up the ultimate q's in the appropriate table (male, female or
unisex) of q's starting with issue age w.
2. Apply the 1980 CSO select factors (selw,t) to determine select q's for
the first 10 durations.
q[w]+t = qw+t * sel w,t+1 t = 0,1,2,...,9
i.e. q[w] = qw *sel w,1
q [w]+1 = qw+1 * sel w,2
.
.
.
q[w]+9 = qw+9 * sel w,10
The select factors (selw,t) depend on sex and issue age and can be found on the
next page. If unisex mortality were being used, the unisex select factors would
depend on the 1980 CSO unisex table being used. In this case, unisex table D
would be used, so:
sel, unisex = .5* (selw male + sel w female) rounded up to 2 decimals.
Page 6
Appendix 3a
Calculation of rated table of q's, given standard table of q's and percent extra
ratig 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 nad 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
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.
APPENDIX 3b
Calculation of rated table of q's given standard table of q's, flat extra
rating, and term of flat extra rating
q[w]+t term = q[w]+t + flatratingw/1000 for 0< t < flatterm w
q[w]+t rated = lesser of
i. q[w]+t temp and ii. the greater of 0.5 nad q[w]+t for
0 < t < flatterm w.
= q[w]+t for t>flattermw.
Page 7
APPENDIX 4
Calculation of the annuity value, a, given a table of q's
a. Calculate t p [w]
o p [w] = 1
t p [w] = t-1 p [[w] * (1-q[w]+t-1)
for 1 < t < n, where
n = 100-w for percent extra ratings
the largest of all flatterms for flat extra
ratings
2. Calculate a(w)
a(w) = sum t p [w] (1 '/.i), where i = .12
t = 1
The annuity factor, a[w], is the present value of a string of payments of 1 each
year for the indicated number of years and discounted for interest and mortality
for a life status wiht issue age w. It was found to better differentiate between
substandard cases than a simple expectation of life.
Page 8
Amendment No. 4
to
Automatic Yearly Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
WHEREAS, CEDING COMPANY wishes to cede to _____ 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 agrees to the following:
1. Paragraph 1, PARTIES TO AGREEMENT, is hereby amended in its entirety to read:
PARTIES TO AGREEMENT. This Agreement is soley 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, 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. ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇ REINSURANCE, is hereby amended in its entirety to read:
YRT REINSURANCE. This Agreement including the attached Schedules states the
terms and conditions of automatic 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, or purchase of another company's policies are
not included under the terms of this Agreement.
3. Paragraph 13d., CONTESTED CLAIMS, is hereby amended by adding the
following new paragraph:
CEDING COMPANY will notify ____ if Life of the Southwest intends to
contest, compromise, or litigate a claim involving a reinsured policy.
If the 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 reinsurance and not sharing in any subsequent
reduction in its liability.
4. Paragraph 18, 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
5. The effective date of this Amendment is September 1, 1997.
NATIONAL LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: VP & Actuary
-------------------
Date: 4/2/98
-------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title: Reinsurance Administrator
-------------------------
Date: 4/2/98
-------------------
Amendment No. 5
To
Automatic Yearly Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1. Schedule A, Paragraph 1, is amended by adding 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. Schedule A. Paragraph 2, AUTOMATIC PORTION REINSURED, is hereby amended
in its entirety to read:
For these policy forms, ___ will automatically reinsure those on which
the insured's surname begins with letters A through Z, inclusive.
For these policy forms, ____ will automatically reinsure 25% of each
risk on a first dollar quota share basis.
3. 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 $1000 reinsured shall be
95% of the RPR Rates attached to Schedule B of the Agreement.
1
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
The 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 shown 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
5. The effective date of this Amendment is September 1, 1997.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: VP & Actuary
-------------------
Date: 4/2/98
-------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title: Reinsurance Administrator
-------------------------
Date: 4/2/98
-------------------
Amendment No. 6
To
Automatic Yearly Renewable Term Reinsurance Agreement
(Effective October 1, 19954)
between
NATIONAL LFIE 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 INSURANCE:
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 13., 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 total face amount 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.
1
CEDING COMPANY's contractual liability for claims is binding on ____.
The total reinsurance in all company's 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 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 ___have by their respective officers
executed and delivered this Amendment NO. 6 to duplicate, on the dates indicated
below, with an effective date of December 1, 1997.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: VP & Actuary
-------------------
Date: 4/2/98
-------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title: Reinsurance Administrator
-------------------------
Date: 4/2/98
-------------------
2
Amendment No. 7
To
Reinsurance Agreement
(Effective October 1, 1994)
Between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
And
R E C I T A L S
---------------
WHEREAS, ____ currently reinsures 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;
A G R E E M E N T
-----------------
The parties hereby agree as follows:
1. The Survivorship Universal Life plans are hereby added to the Agreement
and the Agreement is amended by adding Schedule A1 and Schedule B1,
which are attached to this Amendment No. 7 and hereby incorporated into
the Agreement; and
2. The terms and conditions set forth in Schedules 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.
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: VP & Actuary
-------------------
Date: 2/3/00
--------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title: Reinsurance Administrator
-------------------------
Date: 2/2/2000
----------
2
SCHEDULE A.1
1. PLANS REINSURED:
The policy plans and supplemental benefits automatically 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. AUTOMATIC PORTION REINSURED:
For these policy forms, ___ will automatically reinsure those on which the
insured's surname begins with letters A through Z, inclusive.
For these policy forms, ___ will automatically reinsure 25% of each risk on
a first dollar quota share basis.
3. AUTOMATIC 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
1
SCHEDULE A.1, CONTINUED
CEDING COMPANY's Proportionate retention is 60% ($6,000,000/$10,000,000).
Therefore, CEDING COMPANY will retain 60% of the net amount at risk
remaining after the expiration of the Estate Preservation Rider.
4. AUTOMATIC ACCEPTANCE LIMITS:
On any one life, the amount automatically reinsured under all
agreements with all reinsurers, including CEDING COMPANY's retention,
shall not exceed the following:
AGES STD - TABLE 4
---- -------------
0-75 $20,000,000
76-80 $15,000,000
81+ $0
5. AUTOMATIC IN FORCE AND APPLIED FOR LIMITS:
LIFE INSURANCE IN FORCE LIMIT:
$35,000,000
6. MINIMUM CESSION:
The minimum amount of reinsurance per cession that ___ will accept is
$10,000.
7. PREMIUM DUE:
Annual reinsurance premiums are due each month in advance. These premiums
are due on the issue date and each subsequent policy anniversary.
8. RECAPTURE PERIOD:
The minimum number of years for a cession to be reinsured before it is
eligible for recapture is 20 years.
2
SCHEDULE B.1
AUTOMATIC REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM
BASIS
1. LIFE INSURANCE:
a. Standard annual reinsurance premiums per $1,000 reinsured
under the base policy shall be calculated in the following
manner: 1) determining for reach individual insured, the
single life rate from the 75-80 Select Mortality Table
(attached as Exhibit B.1.1 to this Amendment) for the
applicable age and duration; 2) multiplying the single
life rate by the appropriate YRT Percentage from the
tables below; 3) Frasierizing the single life rates as
shown in the method set forth in Exhibit B.I.II.
YRT PERCENTAGES
---------------
The following YRT percentages will be applied if the life is insured under
the Ceding Company's 4 Table Program:
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
The following YRT percentages will be applied if the life is standard and
not insured under the Ceding Company's Table Program:
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
There shall be a minimum annual reinsurance premium of ___ per $1000
reinsured in renewal years. The maximum reinsurance premium will be ___ per
$1000 reinsured.
b. ADDITIONAL PROTECTION BENEFIT RIDER: Standard annual reinsurance premiums,
per $1000 reinsured under the Additional Protection 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.I.II.
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
Standard annual reinsurance premiums, per $1000 reinsured under the Additional
Protection Benefit Rider, shall be the following if the life is standard and not
insured under the Ceding Company's 4 Table Program:
3
SCHEDULE B.1, CONTINUED
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
There shall be a minimum annual reinsurance premium of $ 5 per $1000 reinsured
in renewal years.
c. POLICY SPLIT OPTION RIDER: Reinsurance premiums for this option shall be
___ of the reinsurance premiums for the base policy.
d. EXERCISE OF THE POLICY SPLIT OPTION RIDER: After a split, the reinsurance
premiums per $1,000 reinsured shall be the CEDING COMPANY'S RPR Rates in
effect at the time the split occurs. The premium for each policy will be
determined based on attained ages at the time of the split. The policy
shall be split on a 50/50 basis and each life must be rated Table 6 or
better.
e. ESTATE 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 in effect at the
time the Rider is issued. The single life rates are the Frasierized, as
determined in Exhibit B.1.11.
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
Standard annual reinsurance premiums, per $1000 reinsured under the Estate
Preservation Rider, shall be the following if the life is standard and not
insured under the Ceding Company's 4 Table Program:
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
There shall be a minimum annual reinsurance premium of: ___ 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 premiums for this rider shall be
____% of the rider premiums.
4
SCHEDULE B.1, CONTINUED
h. ENHANCED DEATH BENEFIT RIDER: Standard annual reinsurance premiums, per
$1000 reinsured under the Enhanced Death benefit Rider, s hall be the following
precentages of the 75 - 80 Select Mortality Table rates attached to this
Schedule B.1 as Exhibit B.I.I. Single life rates are then Frassierized, as
determined in Exhibit B.I.II.
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
Standard annual reinsurance premiums, per $1000 reinsured under the Enhanced
Death Benefit Rider, shall be the following if the life is standard and not
insured under the Ceding Company 4 Table Program:
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
There shall be a minimum annual reinsurance premium of $ __ per $000 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.
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.I. Single life rates are then Frasierized, as
determined in Exhibit B.1.II.
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
Standard annual reinsurance premiums, per $1000 reinsured under the Automatic
Increase Rider, shall be the following if the life is standard and not insured
under the Ceding Company's 4 Table Program.''
PREFERRED STANDARD PREFERRED
NONSMOKER NONSMOKER SMOKER SMOKER
There shall be a minimum annual reinsurance premium of ___ per $1000 reinsured
in renewal years. The maximum reinsurance premium will be ___ per $1000
reinsured.
5
SCHEDULE B.1, CONTINUED
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 are added to each single life rate
before Frasierization.
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
2. SUPPLEMENTAL BENEFITS:
Not Reinsured
3. AGE BASIS:
Age Nearest Birthday
4. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC.:
Annual reinsurance premiums for conversations shall be CEDING COMPANY's then
current rates for permanent insurance. Reinsurance rates shall be based on the
original issue agge, duration since issuance of the original policy and the
original underwriting.
6
EXHIBIT B.1.II
CALCULATION OF "FRASIERIZED SECOND TO DIE MORTALITY RATES
---------------------------------------------------------
The following steps convert the single life mortality rates, attached as EXHIBIT
B.1.I. 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[y] q[y]=t-1
----------------------------------------------------------------
t-1p[x] t-1p[y] + t-1p[x] (1-t-1p[y] + (1-t-1p[x]) t-1 p[y]
The Frazierized second to die mortality rate per $1,000 in policy year
t= 1000q[x]+t-1:[y]+t-1.
Amendment No. 8
to
Automatic Yearly Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
The parties agree to the following:
1. Schedule A. Paragraph 2, AUTOMATIC PORTION REINSURED, is hereby amended in
its entirety to read:
For these policy forms, REINSURER will automatically reinsure those on
which the insured's surname begins with letters A through Z, inclusive.
For these policy forms, REINSURER, will automatically reinsure 20% of each
risk on a first dollar quota share basis.
In the event CEDING COMPANY's retention on the risk is full or partially
full, REINSURER will automatically reinsure up to 25% of the risk.
2. The effective date of this Amendment is May 1, 1999.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------
Title: VP & Actuary
---------------
Date: 1/18/00
---------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------
Title Reinsurance Administrator
-------------------------
Date: 1/18/00
---------------
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 ▇.▇, ▇▇▇▇▇▇▇▇▇ 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
tbales, using the column titled "Lifetime", attached hereto as Exhibit
B.3.3.
3. Except for those additional terms, conditions and modification contained in
this Amendment 12, all other terms and conditions of Amendment 11 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 12 in duplicate on the dates
indicated below, with an effective date of June 1, 2001.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇▇▇ ▇. Day
---------------
Title: Associate Actuary
---------------
Date: 8/2/01
---------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title Reinsurance Administrator
-------------------------
Date: 7/31/01
---------------
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 ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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: ▇▇▇▇▇▇▇ ▇. Day
-------------
Title: Associate Actuary
-------------
Date: 9/10/01
-------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------
Title: Reinsurance Administrator
-------------------------
Date: 9/7/01
-------------
The following reinsurance agreement(s) have been identified as requiring
modification to comply with recently adopted privacy/confidentiality
legislation.
ING RE
ING RE TREATY CLIENT EFFECTIVE TREATY BASIS OF
CEDED BY ▇▇.▇▇. NO. TREAT ID DATE TYPE REINSURANCE PLANS COVERED
-------- ------ --- -------- ---- ---- ----------- -------------
National Life Year
Insurance Renewable
Company 163 1126 1631126 4/1/1993 Facultative Term Single Life products
-----------------------------------------------------------------------------------------------------------------------
National Life Year
Insurance Automatic/ Renewable Single Life -
Company 163 1322 1631322 10/1/1994 Facultative Term Table 4 products
National Life
Insurance Automatic/ -
Company 163 1639 1631639 10/1/1996 Facultative Coinsurance ART products
National Life Year
Insurance Automatic/ Renewable
Company 163 1859 1631859 9/1/1997 Facultative Term Single Life Products
National Life Year
Insurance Automatic/ Renewable
Company 163 2004 016-2004 12/1/1996 Facultative Term COLI - VUL products
National Life Year
Insurance Automatic/ Renewable
Company 163 2768 N/A 6/1/2001 Facultative Term COLI - VUL products
AMENDMENT NO. 14
Effective July 1, 2001
to the
Automatic Yearly Renewable Term Reinsurance Agreement
Effective Octobe 1, 1994
between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
--------
WHEREAS, Reinsurer currently resinsures 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 14, all other terms and conditions of
Amendment 6 and the Agreement, including amendments
1
thereto, shall remain unchanged.
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 July 1, 2001.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇▇▇ ▇. Day
-------------------
Title: Associate Actuary
-------------------
Date: 1/10/02
-------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title Reinsurance Administrator
-------------------------
Date: 1/10/2002
---------------
AMENDMENT NO. 15
EFFECTIVE JANUARY 1, 2002
to the
Automatic Yearly Renewable Term Reinsurance Agreement
Effective October 1, 1994
between
NATIONAL LIFE INSURANCE COMPANY
("Ceding Company")
And
RECITALS
--------
WHEREAS, Reinsurer currentlly reinsures Ceding Company's plans or policies under
the Agreement; and
WHEREAS, Ceding Company wishes to reduce the retention limits, and the Reinsurer
agrees to accept these new retention lmits, as hereinafter reflected.
AMENDMENT
---------
The parties hereby agree to amend or modify the Agreement and Amendment 7, as
follows:
1. Schedule A. Section 3 and Schedule A.1, Section 3, are deleted in their
entirety and replaced by the following:
RETENTION LIMITS:
a. With the exception of second-to-die policies, the Ceding Company will
retain $1,000,000 on any one life. For second-to-die policies, the Ceding
Company will retain an equal amount on each life such that the maximum retention
on either life is $1,000,000.
1
b. On all plans other than universal life, the Ceding Company will retain, in
addition to its retention stated in Section 3.a above, a share
proportional to its retention stated in Section 3.a above of the
additional insurance provided in the following situations:
i. Purchased by dividends.
ii. Issued under the terms of a Cost of Living (COL) or other
term insurance rider.
iii. Issued under the terms of its annual premium additions
rider (APAR).
The net amount at risk on an Estate Preservation Rider issued on a
second-to-die policy will be included with the net amount at risk under
the base plan and other riders in determining National Life's $1,000,000
retention. At expiration of the Estate Preservation Rider, National Life
will retain the same proportional share of the total net amount at risk as
before expiration.
2. Except for those additional terms, conditions and modifications contained
in this Amendment 15, 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 January 1, 2002.
0
By: ▇▇▇▇▇▇▇ ▇. Day
----------------
Title: Associate Actuary
----------------
Date: 11/26/02
----------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------
Title Reinsurance Administrator
--------------------------
Date: 11/26/2002
----------------
AMENDMENT NO. 16
Effective May 1, 2000
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective October 1, 1994
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
11 and Amendment 12 to specify that ACR are not issued in connection with
Universal Life and Variable Universal Life policies.
1. Schedule A3, 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 16, all other terms and conditions of
Amendment 11, Amendment 12 and the Agreement, including amendments
thereto, shall remain unchanged.
1
In witness of the foregoing, Ceding COmpany and Reinsurer have, by their
respective officers, hereby executed this Amendment 16 in duplicate on the
dates indicated below, with an effective date of May 1, 2000.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇▇▇ ▇. Day
----------------
Title: Associate Actuary
----------------
Date: 11/6/02
----------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------
Title Reinsurance Administrator
-------------------------
Date: 11/7/2002
----------------
AMENDMENT NO. 17
Effective June 1, 2002
to the
Facultative Yearly Renewable Term Reinsurance Agreement
Effective October 1, 1994
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 Accelerated Care Rider ("ACR") on Universal Life and Variable 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 net 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 am ount or a percentage of the total
Accelerated Care Rider. There are no reinsurance premiums for this
benefit.
1
Amendment No. 9
to
Automatic Yearly renewable Term Reinsurance Agreement
(Effective October 1, 1994)
between
NATIONAL LIFE INSURANCE COMPANY
("CEDING COMPANY")
And
R E C I T A L S
---------------
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;
A G R E E M E N T
-----------------
The parties hereby agree as follows:
1. The new traditional whole life series of policies are hereby added to
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 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 August 1, 1999.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------
Title: VP & Actuary
---------------
Date: 8/8/00
---------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------
Title Reinsurance Administrator
-------------------------
Date: 8/8/00
---------------
SCHEDULE A.2
1. PLANS REINSURED:
The policy plans and supplemental benefits automatically 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
--------------------------------------------------------------------------------
▇▇▇▇ 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 $1,0000 reinsured shall ___
percent of the RPR rates attached to Schedule B of the Agreement.
Substandard reinsurance premiums shall be the number of tables assessed
the risk times 25% of the standard premium.
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 321 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.
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
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
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
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
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 335 8 049 00 335 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
Amendment No. 10
to
Automatic Yearly Renewable Term Reinsurance Agreement
(Effective October 1, 1994)
between
NATIONAL LIFE INSURANCE COMPANY
(CEDING COMPANY)
and
To clarify any possible inconsistencies resulting from Amendments 7 and 8 to
the Agreement, the parties agree to amend the Agreement as follows:
1. AUTOMATIC PORTION REINSURED (Schedule A, Paragraph 2 and
Schedule A.1, Paragraph 2) is hereby amended to read:
"For these policy forms, REINSURER will automatically reinsure
those on which the insured's surname begins with letters A
through Z, inclusive.
FOr these policy forms, REINSURER will automatically reinsure
20% of each risk on a first dollar quota share basis.
In the event CEDING COMPANY's retention on the risk is full or
partially full, REINSURER will automatically reinsure up to 25%
of the risk."
2. The effective date of this Amendment is May 1, 1999.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
Title: VP & Actuary
-----------------
Date: 5/23/2000
-----------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------
Title Reinsurance Administrator
-------------------------
Date: 5/23/2000
-----------------
AMENDMENT NO. 11
EFFECTIVE MAY 1, 2000
to the
Automatic Yearly Renewable Term Reinsurance Agreement\
Effective October 1, 1994
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 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. 11 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.
1
4. Except for those additional terms, conditions and modifications
contained in this Amendment 11 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 11 in duplicate on the dates
indicated below, with an effective date of May 1, 2000.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇▇▇ ▇. Day
---------------
Title: Associate Actuary
---------------
Date: 5/4/01
---------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title Reinsurance Administrator
-------------------------
Date: 5/3/2001
---------------
2
SCHEDULE A.3
ACCELERATED CARE RIDER COVERAGE AND LIMITS
1. PLANS REINSURED:
a. RIDERS AND BENEFITS REINSURED: The following plan codes and form numbers
issued in connection with any policy automatically 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
1
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.
9. CLAIMS 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.
2
1999 LifeCare Series - Accelerated Care Rider
Final Specifications
April 13, 1999 (Revised August 9, 1999)
APPENDIX C
Claims Processing
Claims on the ACR Rider will be administered by:_______ with National Life as
the intermediary between the insured/policyholder and _______ will charge NL a
set up fee plus $ per month to administer claims. The initial amount due will be
$____plus for the first month.
SCHEDULE B.3
ACCELERATED CARE RIDER PREMIUMS
1. LIFE 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 hereto 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 intentions with regard
to the reinsurance premiums as described in the March 8, 2000 letter to
from ▇▇▇▇▇ ▇. ▇▇▇▇▇, 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
AMENDMENT NO. 12
Effective June 1, 2001
to the
Automatic Yearly Renewable Term Reinsurance Agreement
Effective October 1, 1994
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
11 to include the Ceding Company's Non-Qualified Accelerated Care Rider, which
will be sold in California, as follows:
1. Schedule A.3, Paragraph 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
1
2. Except for those additional terms, conditions and modifications
contained in this Amendment 17, all other terms and conditions of this
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 17 in duplicate on the dates
indicated below, with an effective date of June 1, 2002.
NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇▇▇ ▇. Day
---------------
Title: Associate Actuary
---------------
Date: 11/6/02
---------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
Title Reinsurance Administrator
-------------------------
Date: 11/7/2002
-----------
