AUTOMATIC YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
CEDING COMPANY: NATIONAL LIFE OF VERMONT LIFE INSURANCE COMPANY
(hereinafter referred to as the Ceding Company)
REINSURER: ___________ _________ COMPANY OF ________________
(hereinafter referred to as ___________)
EFFECTIVE DATE: May 1, 1999
Commencing on the effective date, the Ceding Company will submit and ___________
agrees to accept insurance risks on plans listed in the Accepted Coverage
Schedule subject to the provisions of this agreement.
This Agreement. consists of the following sections:
SECTION I REINSURANCE RISK BASIS
SECTION II BASIS OF REINSURANCE AND PREMIUMS
SECTION III STANDARD PROVISIONS
SECTION IV SPECIAL PROVISIONS
SECTION V SCHEDULES
These sections or parts of these sections may be changed or modified only upon
written agreement between the Ceding Company and ___________.
SECTION I
REINSURANCE RISK BASIS
A. AUTOMATIC REINSURANCE
___________ will automatically accept reinsurance on a risk subject to the
following conditions:
1.The Ceding Company has kept amounts equal to the retention limits
shown in the Retention Limits Schedule.
2. The risk has been classified in a mortality class according to the
normal underwriting rules of the Ceding Company.
3. The Ceding Company will not change its existing underwriting,
issuance or reinsurance practices in effect on the effective date
of this treaty, unless the Ceding Company notifies ___________ in
writing and ___________ approves in writing of such change(s).
4. The amount to be reinsured under this agreement does not exceed the
automatic acceptance limits shown in the Automatic Acceptance
Limits Schedule.
5. The total amount of life insurance applied for and in force in all
companies on the risk to be reinsured does not exceed $5,000,000.
6. The Issue age of the life insured does not exceed 75.
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7. For the Express Standard program the risk has not been submitted to
___________ or any other Reinsurer for facultative underwriting.
8. For the Express Standard program the substandard mortality rating
assessed to the risk does not exceed Table 4 (200%) or $5.00/$1000
for two years or less on an extra-premium basis.
9. The insurance is not the result of a group conversion, other
conversion, exchange or reissue where full evidence of insurability
has not been obtained.
10. For the Express Standard program, policies less than $100,000 will
not be reinsured.
11. The applicant is a permanent resident of the U.S. or Canada.
SECTION I
(continued)
B. FACULTATIVE REINSURANCE
The Ceding Company may submit any risks on products listed in the Accepted
Coverage Schedule to ___________ as part of its substandard facultative
shopping program for reinsurance on a facultative basis. ___________ may
decline to quote on specific facultative risks.
In order to apply for facultative reinsurance the Ceding Company will mail
to ___________ an application for reinsurance, copies of the original
application, all medical examination, microscopical reports, inspection
reports and all other information which the Ceding Company has pertaining
to the insurability of the risk. Any other information subsequently
available to the Ceding Company which is pertinent to the question of
assuming the risk will be transmitted promptly to ___________. ___________
will have the option of declining or making an offer on any application
for facultative reinsurance.
___________ will have no liability on a facultative submission of the
Ceding Company until an unconditional offer to reinsure has been made in
writing by ___________ and accepted by the Ceding Company as noted in
their file at the time the offer is accepted. ___________'s unconditional
offer will expire at the end of one hundred and twenty (120) days from the
date of the unconditional offer, unless an earlier date is specified in
the offer.
The Ceding Company will submit to ___________ any additional information
requested on all pending applications within ninety (90) days from
___________'s request or ___________ will close its file on the case.
When risks are submitted to more than one reinsurer, the Ceding Company
will clearly note in their file at the time the underwriting decision is
made the reinsurer whose offer has been selected for that risk. This
decision will be communicated to the reinsurer within a normally
acceptable time frame, but not to exceed 180 days.
C. TEMPORARY LIFE INSURANCE LIABILITY
Temporary Life Insurance coverage is provided under this agreement in
accordance with the provisions of this Section.
The Ceding Company must have provided ___________ with a copy of it's
Temporary Life Insurance Agreement and keep ___________ apprised of any
significant changes made subsequent to the date of the treaty.
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___________ will incur liability only if it would have automatically
accepted the risk in accordance with the provisions of this agreement.
___________ will not incur any liability under any Temporary insurance
Agreement issued by the Ceding Company for a risk submitted to ___________
on a facultative basis.
The limit of ___________'s liability will be the Ceding Company's limit of
temporary insurance liability reduced by the amount of insurance which the
Ceding Company would retain on the life according to its retention limits as
stipulated in the Retention Limits Schedule, and the amount of insurance that
the Ceding Company would reinsure with other companies, if any, on said risk. In
the event that there are multiple reinsurers, ___________'s position will be
determined on the same basis as in determining the portion of the automatic
reinsurance ___________ would receive under the treaty.
In no event will ___________'s liability exceed $1,000,000.00.
D. BASIS OF REINSURANCE AND PREMIUMS
Life insurance will be reinsured on the Yearly. Renewable Term Plan (YRT)
for the net amount at risk. The net amount at risk each year will be the
reinsured net amount at risk as calculated by the Ceding Company using
their normal calculations and the reinsurance amount adjusted annually.
This reinsured amount will be in proportion to the Ceding Company's net
amount at risk, less retention, if applicable.
NET AMOUNT AT RISK CALCULATIONS
UNIVERSAL LIFE:
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 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 upon by the underwriting offer made by the
reinsurer and the acceptance of that offer by the ceding company
PLANS OTHER THAN UNIVERSAL LIFE AND ANNUAL RENEWABLE TERM:
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)) where: a = the first year Death
Benefit of the policy.
b = the first year Death Benefit of any insurance provided by the
adds rider.
c = the total projected cash value at the end of the first year,
excluding any dividend payable only at the completion of the
first year.
2) Calculate the projected net amount at risk reinsured for the tenth
policy year as (P) x ((a) + (b)
+(c) - (d)) where:
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 our current dividend scale)
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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 tenth year net amount at risk reinsured values.
Reinsurance premiums are to be paid annually in advance and will be
determined as follows:
1) For Life insurance issued as part of the Express Standard program
the appropriate premium rates factors in the Premium Rates Schedule
will apply.
2) For Life insurance issued as part of the Substandard Shopping
program the appropriate premium rate factors from the Premium Rates
Schedules will apply.
3) For Life Insurance risks classified with a substandard table rating
by ___________ under the Substandard Shopping program, the rate
table identified in the Premium Rate Schedule will
be increased by 25% for each substandard table rating assigned to
the risk. The appropriate factor will be applied to this resultant
rate.
4) The reinsurance premium for insurance benefits issued as a result of
a continuation, as defined in Section III. D, are to be calculated
using the rate based on the age at issue and duration since issue of
the original insurance. For continuations occurring mid policy year
an additional duration will be added if the continuation occurs
closer to the next policy anniversary.
E. RATE GUARANTEE
The reinsurance premium rates in the Premium Rate Schedule are not
guaranteed for a period of more than one year. ___________ anticipates
that such premiums will be continued indefinitely for all reinsurance
provided. ___________ retains the exclusive right to raise the premium to
be paid to ___________ by the Ceding Company to the current valuation
basis net premium level required by the insurance regulators of the
various states at any time.
F. PAYMENT OF REINSURANCE PREMIUMS
Within 45 days from the close of the calendar month, the Ceding Company
will forward to ___________ a statement or electronic media reflecting
the premiums due and cession changes made. The Ceding Company will also
remit a check for the balance due or will submit a request for payment
for any net amount due
___________.
If any reinsurance premium is not paid within the allotted time,
___________ may terminate the reinsurance on unpaid policies by giving the
Ceding Company written notice. The Ceding Company will be liable for the
payment of reinsurance premiums to the effective date of termination.
Failure by ___________ to exercise its right under this paragraph in any
specific situation will not be a waiver of ___________'s right to do so at
a later date. ___________ may at its option reinstate the reinsurance at
any time within sixty (60) days following such termination if the Ceding
Company makes payment, with interest, of all reinsurance premiums due and
payable up to the date of reinstatement and provides full disclosure of
all claims incurred between dates of termination and reinstatement.
___________ will be liable for reinsurance on only those claims incurred
by the Ceding Company between the dates of termination and reinstatement
that the Ceding Company disclosed at the time it requested reinstatement
of such policies. All such claims will be subject to the claims provisions
specified in Section III.
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Balances remaining unpaid by either party for more than 45 days from the
date due will incur interest retroactive from the due date of the balance
to the date of actual payment.
Interest amounts will be calculated using the 7 year Constant Maturity
Treasury rate reported for the last working day of that calendar month in
the Federal Reserve H15 Report.
___________ and the Ceding Company may exercise at any time, the right to
offset any undisputed debits or credits, liquidated or unliquidated,
whether on account of premiums or on account of losses or otherwise, due
from either party to the other under this agreement.
G. QUARTERLY RESERVE AND VALUATION INFORMATION
The Ceding Company will submit information for valuation and reserve
calculation by the 20th of the month following the close of each calendar
quarter.
H. BULK REPORTING REQUIREMENTS
The Ceding Company will not change its existing self administered
reporting practices in effect on or after the effective date, unless the
Ceding Company notifies ___________ in writing and ___________ approves of
such changes.
STANDARD PROVISIONS
A. ERRORS AND OMISSIONS
This Agreement will not be abrogated by the failure of either the Ceding
Company or ___________ to comply with any of the terms of this Agreement
if it is shown that said failure was unintentional and the result of a
misunderstanding, oversight or clerical error on the part of either the
Ceding Company or ___________. Both parties will be returned to the
position they would have occupied had no such oversight, misunderstanding
or clerical error occurred. This provision will cease five years after the
termination of the last policy known to be reinsured under this agreement.
B. TERMINATIONS OF AND CHANGES TO INSURANCE RISKS
1) The Ceding Company will notify ___________ of all policy
terminations, deaths and changes that affect the reinsurance as
they occur. Unearned reinsurance premiums will be refunded except
that cession fees as defined in the Premium Rates Schedule are not
refundable on any off anniversary termination.
2) If the Ceding Company retains a portion of the risk on the
policy(ies) reinsured under this agreement and any portion of the
Ceding Company's insurance risk on the life of the insured
terminates or reduces, whether or not covered by this agreement,
the reinsurance will be reduced in proportion to the original
policy.
3) If the reinsured net amount at risk on any policy falls below
$1,000 the cession will be terminated.
C. REINSTATEMENTS
1) If a policy or policies that comprise the risk under which
reinsurance has been retroceded automatically to ___________ lapses
for nonpayment of premiums and is later reinstated in accordance
with its terms, the reinsurance under such risk will be reinstated
automatically by ___________ and the reinsured amount at risk
reestablished at the amount reinsured prior to such lapse.
2) If an insurance policy on a life on which reinsurance has been
accepted facultatively by ___________ lapses for nonpayment of
premium, copies of the application for reinstatement and any other
relevant papers will be referred to ___________ for its
underwriting evaluation prior to actual reinstatement by the Ceding
Company. ___________ will notify the Ceding Company in writing of
its underwriting decision on all such reinstatement requests.
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3) In connection with all reinstatements, the Ceding Company will
pay to ___________ all reinsurance premiums in arrears.
D. CONTINUATIONS
Continuation of a policy reinsured under this agreement will remain
reinsured with ___________ under this agreement or another agreement
between the Ceding Company and ___________.
For the purpose of this agreement, continuations will be defined as
exchanges, conversions or reissues of any other policy that was
originally reinsured with ___________.
E. FORMS
The Ceding Company will furnish ___________ with any specimen copies of
its applications, policy forms, rider forms and any tables of rates and
values which may be required for the proper administration of the business
reinsured under this agreement, and will keep ___________ informed with
documentation as to any modifications or new forms under which reinsurance
may be desired.
F. CLAIMS
1) The Ceding Company will notify ___________ of each claim promptly
after first receipt of such information. ___________ will be
consulted before admission or acknowledgment of claim liability is
made by the Ceding Company if the claim is in the contestable
period.
2) Copies of the proofs of claim obtained by the Ceding Company,
together with the amount payable or paid on such claim, will be
furnished to ___________ as soon as possible.
3) ___________ will be liable to the Ceding Company for the benefits
reinsured hereunder to the same extent as the Ceding Company is
liable to the Insured for such benefits, and all reinsurance will
be subject to the terms and conditions of the policy under which
the Ceding Company will be liable.
4) For life and accidental death claims, ___________ will pay its
share in a lump sum to the Ceding Company without regard to the
form of claim settlement of the Ceding Company. For a waiver of
premium disability claim, ___________ will pay its share of each
gross premium as the premiums are waived by the Ceding Company.
5) ___________ agrees to pay to the Ceding Company a proportionate
share of any interest paid out to the claimant by the Ceding
Company. ___________s liability to pay interest will be discharged
on the date that ___________ issues payment to the Ceding Company.
6) ___________ reserves the right to withhold any claim payments in
accordance to Section II, F.
7) In the event the amount of insurance provided by a policy or policies
reinsured hereunder is increased or reduced because of a misstatement of
age or sex established after the death of the insured, ___________ will
share in the increase, up to ___________'s maximum limit, or reduction in
the proportion that the net liability of ___________ bore to the sum of
the retained net liability of the Ceding Company and the net liability of
other reinsurers immediately prior to such increase or reduction. The
reinsurance with ___________ will be rewritten from commencement on the
basis of the adjusted amounts using premiums and reserves at the correct
age, and sex. The adjustment for the difference in premiums will be made
without interest.
8) Claims remaining unpaid for more then 30 days after the receipt of
final papers will incur interest calculated from that date using the 7
year Constant Maturity Treasury Rate reported for the last working date
of that-month in the Federal Reserve H15 Report.
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9) The Ceding Company will promptly notify ___________ of its intention to
contest insurance reinsured under this agreement or to assert defenses to
a claim for such insurance. If ___________ agrees to participate in the
contest or assertion of defenses and the Ceding Company's contest of such
insurance results in the reduction of its liability, ___________ will
share in such reduction in proportion to ___________'s liability. If
___________ declines to participate in the contest or assertion of
defenses, ___________ will discharge all of its liability by payment of
the full amount of the reinsurance to the Ceding Company.
___________ will pay its share of the unusual expenses of the contest in
addition to its share of the claim itself. Routine expenses incurred in
the normal settlement of uncontested claims, including interpleader
cases, and the salary of an officer or employee of the Ceding Company are
excluded from this provision.
If ___________ participates in the contest, in no event will ___________
participate in punitive or compensatory damages which are awarded against
the Ceding Company as a result of an act, omission or course of conduct
committed solely by the Ceding Company in connection with the insurance
reinsured under this Agreement. ___________ will, however, pay its share
of statutory penalties awarded against the Ceding Company in connection
with insurance reinsured under this Agreement if ___________ elected to
join in the contest of the coverage in question. The parties recognize
that circumstances may arise in which equity would require ___________,
to the extent permitted by law, to share proportionately in certain
assessed damages. Such circumstances are difficult to define in advance,
but generally would be those situations in which ___________ was an
active party and directed, consented to, or ratified the act, omission,
or course of conduct of the Ceding Company which ultimately results in
the assessment of punitive and/or compensatory damages. In such
situations, the Ceding Company and ___________ would share such damages
so assessed in equitable proportions. Routine expenses incurred in the
normal settlement of uncontested claims, in the submission of
interpleaders and the salary of an officer or employee of the Ceding
Company are excluded from this provision.
For purposes of this provision, the following definitions will
apply:
"Punitive Damages" are those damages awarded as a penalty, the
amount of which is not governed nor fixed by statute;
"Statutory Penalties" are those amounts which are awarded as a
penalty, but fixed in amount by statute;
"Compensatory Damages' are those amounts awarded to compensate for
the actual damages sustained, and are not awarded as penalty, nor
fixed in amount of statute.
G. RECAPTURE PRIVILEGE
If the Ceding Company increases its retention limits, the Ceding Company
may reduce the reinsurance in accordance with the following provisions:
1) The Ceding Company kept its full retention in accordance with the
retention limits in effect when the original insurance was issued.
(Refer to the Retention Limits Schedule).
2) The Life and Waiver of Premium Benefits in the policy must have
been reinsured with ___________ for a period of ten (10) years.
3) The reduction in the reinsurance of Accidental Death Benefits will
be effective on the first policy anniversary following the notice of
election to recapture.
4) The amounts recaptured from all reinsurers will be sufficient to
increase the Ceding Company's retention on the risk to the new
limits.
5) If there are other reinsurers, the reduction on ___________'s risk
will be determined according to ___________'s portion of the total
reinsurance on the risk.
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6) If the reinsurance is reduced on any risk, similar reductions will
be made on all risks eligible for recapture. This includes policies
currently on waiver of premium claim.
H. INSPECTION OF RECORDS
___________ will have the right, at any reasonable time, to inspect, at
the office of the Ceding Company, all books, records and documents
relating to the reinsurance under this Agreement.
I. INSOLVENCY
1) In the event of insolvency of the Ceding Company, ___________'s
liability for claims will continue to be in accordance with the
terms of the agreement. Payment of reinsurance claims less any
reinsurance premiums due ___________ will be made directly to the
liquidator, receiver or statutory successor of the Ceding Company
without diminution of the insolvency of the Ceding Company.
2) In the event of insolvency of the Ceding Company, the liquidator,
receiver or statutory successor will give ___________ written
notice of any pending claim and ___________ may, at its own
expense, investigate the claim and interpose any defense which it
deems appropriate to the Ceding Company or its liquidator, receiver
or statutory successor. If the Ceding Company benefits from the
defense undertaken by ___________, an equitable share of the
expenses incurred by ___________ will be chargeable to the Ceding
Company as part of the expense of liquidation.
3) In the event of insolvency of either the Ceding Company or
___________, any debts or credits due the other party, whether
matured or unmatured, under this Agreement or any other agreement,
which exist on the date of the entry of a receivership or
liquidation order, will be deemed mutual debts or credits as the
case may be and will be set off and only the balance will be
allowed or paid.
4) ___________'s liability will not increase as a result of the
insolvency of the Ceding Company.
J. PARTIES TO THE AGREEMENT
This is an Agreement for indemnity reinsurance solely between the Ceding
Company and ___________. The acceptance of reinsurance hereunder will not
create any right or legal relation whatever between ___________ and any
insured or any beneficiary under any policies of the Ceding Company which
may be reinsured hereunder.
K. TERMINATION CHARGE
If ___________ exercises its rights to terminate all new and existing
inforce reinsurance as stipulated under Section II F, an appropriate
charge will be determined by, and paid to, ___________. Such termination
charge will be determined so as to approximate the excess of deferred
acquisition expenses plus equity in unearned premium reserve over the
benefit reserve plus unearned premium reserve for the business being
terminated hereunder. The calculation of the components of the charge
will be ___________'s usual calculation methods and will be in accordance
with the GAAP principals as outlined in FAS60 or FAS97, as appropriate.
L. DURATION OF AGREEMENT
This Agreement will be effective on and after the Effective Date stated on
the cover page. Other than for nonpayment of reinsurance premiums and/or
failure to comply with reporting requirements, as provided in the
Reporting Requirements Schedule, the Agreement is unlimited in duration
but may be amended by mutual consent of the Ceding Company and
___________.
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This Agreement may be terminated as to new reinsurance by either party's
giving ninety (90) days written notice to the other. However, if the
Ceding Company changes its underwriting rules and ___________ does not
approve of such changes in writing, this Agreement may be terminated for
new business immediately by ___________. Termination as to new reinsurance
does not affect existing reinsurance.
M. ARBITRATION
1) It is the intention of ___________ and the Ceding Company that the
customs and practices of the insurance and reinsurance industry
will be given full effect in the operation and interpretation of
this Agreement. The parties agree to act in all things with the
highest good faith. If ___________ or the Ceding Company cannot
mutually resolve a dispute which arises out of or relates to this
Agreement, however, the dispute will be decided through
arbitration.
2) Disagreements between ___________ and the Ceding Company will be
submitted to three arbitrators who must be officers of other life
insurance companies. Within sixty (60) days of the date of notice
of the intent to submit the dispute to arbitration, ___________ and
the Ceding Company will each appoint one arbitrator and the third
will be selected by these two arbitrators. If agreement cannot be
reached on the selection of the third arbitrator, each arbitrator
will nominate three (3) candidates within ten (10) days thereafter,
two of whom the other will decline, and the decision will be made
by drawing lots.
3) The arbitrators will base their decision on the terms and
conditions of this Agreement plus, as necessary, on the customs and
practices of the insurance and reinsurance industry rather than
solely on a strict interpretation of the applicable law. There will
be no appeal from their decision, and any court having jurisdiction
of the subject matter and the parties may reduce that decision to
judgment.
4) The arbitration hearing will be held on the date fixed by the
arbitrators. In no event will this date be later than six (6)
months after the appointment of the third arbitrator. As soon as
possible, the arbitrators will establish prearbitration procedures
as warranted by the facts and issues of the particular case. At
least ten (10) days prior to the arbitration hearings, each party
will provide the other party and the arbitrators with a detailed
statement of the facts and arguments it will present at the
arbitration hearing. The arbitrators may consider any relevant
evidence; they will give the evidence such weight as they deem it
entitled to after consideration of any objections raised concerning
it. The party initiating the arbitration will have the burden of
proving its case by a preponderance of the evidence. Each party may
examine any witnesses who testify at the arbitration hearing.
Within twenty (20) days after the end of the arbitration hearing,
the arbitrators will issue a written decision. In their decision,
the arbitrators will apportion the costs of arbitration, which will
include but not be limited to their own fees and expenses, as they
deem appropriate.
N. CURRENCY
All currency will be payable in United States dollars.
O. CHOICE OF LAW AND FORUM
Illinois law will govern the terms and conditions of the Agreement. In
the case of an arbitration, the arbitration hearing will take place in
___________, and the Uniform Arbitration Act will control except as
provided in Section III, M, of this Agreement.
P. DAC TAX ELECTION STATEMENT
The Ceding Company and ___________ hereby agree to the following pursuant
to Section 1.848-2(g)(8) of the Income Tax Regulations issued December
29,1992, under Section 848 of the Internal Revenue Code of 1986, as
amended. This election shall be effective for 1991 taxable year for all
amounts of consideration arising after November 14, 1991 and for all
subsequent taxable years for which this agreement remains in effect.
1) The term "party" will refer to either the Ceding Company or
___________ as appropriate.
2) The terms used in this article are defined by reference to Treasury
Regulation Section 1.848-2 in effect as of December 29, 1992. The
term "net consideration" will refer to either net consideration as
defined in Treasury Reg. Section 1.848-2(f) or "gross premium and
other consideration" as defined in Treasury Reg. Section 1.848-3(b)
as appropriate.
3) The party with net positive consideration for this agreement for
each taxable year will capitalize specified policy acquisition
expenses with respect to this agreement without regard to the
general deductions limitation of IRC Section 848(c)(1).
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P. DAC TAX ELECTION STATEMENT
4) The Ceding Company and ___________ agree to exchange information
pertaining to the amount of net consideration under this Agreement
each year to ensure consistency. The Ceding Company and ___________
also agree to exchange information which may be otherwise required
by the IRS.
5) The Ceding Company will submit a schedule to ___________ by June 1
of each year of its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding
Company stating that the Ceding Company will report such net
consideration in its tax return for the preceding calendar year.
6) ___________ may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within 30 days of
___________'s receipt of the Ceding Company's calculation. If
___________ does not so notify the Ceding Company, ___________ will
report the net consideration as determined by the Ceding Company in
___________'s tax return for the previous calendar year.
7) If ___________ contests the 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 thirty (30) days of the
date ___________ submits its alternative calculation. If the Ceding
Company and ___________ reach agreement on an amount of the net
consideration, each party shall report such amount in their
respective tax returns for the previous calendar year.
Q. ENTIRE CONTRACT
This agreement will constitute the entire agreement between the
parties with respect to the business being reinsured thereunder and
that there are no understandings between the parties other than in
the agreement.
Any changes or modifications to the agreement will be null and void
unless made by amendment to the agreement and signed by both
parties.
SECTION IV
SPECIAL PROVISIONS
NONE
By:
Signed for by:
Attest:
Date of Signatures: 12/10/99
Signed for the Ceding Company:
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By:
Title:
Attest:
Date of Signatures: 12/22/99
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SECTION V
SCHEDULES
RETENTION LIMITS
AUTOMATIC ACCEPTANCE
LIMITS ACCEPTED COVERAGE
PREMIUM RATES
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RETENTION LIMITS SCHEDULE
LIFE BENEFITS
EXPRESS STANDARD PROGRAM
The Ceding Company will retain 20% of each risk, but not to exceed its published
retention as indicated below:
Ceding company's maximum retention on any one life is $3,000,000.
Ceding companies retention is reduced to $1,000,000 for the following risks:
(a) Aviation -- All pilots, standard or rateable.
(b) Hazardous Sports -- Standard or rateable. Examples are Hang Gliding;
automobile racing; hot air ballooning, etc.
(c) Foreign Residents -- Standard or rateable.
In addition to the basic retention, the Ceding Company will separately retain
$3,000,000 off Beneficiary Insurance Option (BIO) rider.
In addition to the basic retention, the Ceding Company will retain the full
amounts of additional insurance provided in the following situations:
(a) Accidental Death Benefit rider.
(b) The Ceding Company's employee term insurance.
(c) Additional Insurance Option (AIO) rider.
(d) Guaranteed Issue underwriting.
(e) Waiver of Premium (WP) rider.
On all plans other than universal life, the Ceding Company will retain, in
addition to its basic retention of the additional insurance provided in the
following situations:
(a) Purchased by dividends.
(b) Issued under the terms of a Cost of Living (COL) or other increasing
term insurance rider. (c) Issued under the terms of its Adds (paid up
additions) rider.
SUBSTANDARD SHOPPING PROGRAM
The Ceding Company is not required to retain any portion of these risks.
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AUTOMATIC ACCEPTANCE LIMITS SCHEDULE
EXPRESS STANDARD PROGRAM
___________ will automatically accept 25% of the excess of the Ceding Companies
retention on plans and riders listed in the Accepted Coverage Schedule to a
maximum of $1,000,000.
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ACCEPTED COVERAGE SCHEDULE
Accepted coverages shall include Individual and Joint Life Insurance risks
written by the Ceding Company on their active life insurance portfolio as of the
effective date of this agreement.
The following riders to the base coverage will be included:
Survivorship UL/VUL Plans:
Additional Protection Benefit (APB)
Policy Split Option (PSO)
Estate Preservation Rider (EPR)
Individual Term Riders
Continuing Coverage Rider (CCR)
Enhanced Death Benefit Rider (EDBR)
Automatic Increase Rider (AIR)
Survivorship VUL Plan:
Guaranteed Death Benefit (GDB)
Single Life Plans:
Flex Term Rider
Annual Premium Additions Rider (APAR)
Single Premium Additions Rider (SPAR)
Additional Protection Benefit Rider (APB)
Accelerated Benefits Rider (ABR)
Accepted coverages also include Universal Life business assumed from the Ceding
Companies wholly owned subsidiary, Life Insurance Company of the Southwest.
15
PREMIUM RATE SCHEDULE
Premiums shall be determined using the following applicable percentages of the
rate tables A -- C, attached to this treaty. Rates are age nearest.
EXPRESS STANDARD PROGRAM
SINGLE LIFE PRODUCTS
Rate Table A
Underwriting Class All Years
Standard Non Tobacco
Standard Tobacco
EXPRESS STANDARD PROGRAM
UL and VUL JOINT LIFE PRODUCTS
Rate Table B
Underwriting Class All Years
All
EXPRESS STANDARD PROGRAM
TRADITIONAL JOINT LIFE PRODUCTS
Rate Table C
Underwriting Class All Years
All
SUBSTANDARD SHOPPING PROGRAM
SINGLE LIFE PRODUCTS
Rate Table A
Underwriting Class All Years
Standard Non Tobacco
Standard Tobacco
16
SUBSTANDARD SHOPPING PROGRAM
UL and VUL JOINT LIFE PRODUCTS
Rate Table B
Underwriting Class All Years
All
SUBSTANDARD SHOPPING PROGRAM
TRADITIONAL JOINT LIFE PRODUCTS
Rate Table C
Underwriting Class All Years
NonSmoker/NonSmoker
NonSmoker/Smoker
Smoker/Smoker
Joint life premiums for UL and VUL products are based on a frazierized "75-80"
SOA Select & Ultimate Basis Mortality Table. The minimum premium rate at all
ages and durations is $.15 per thousand. Joint Life premiums for traditional
products are based on a Joint Equal Age (JEA). For the JEA calculation refer to
Exhibit I.
Under the Substandard Shopping Program for Joint Life business, when one life is
uninsurable the rates in table A, based on the age and table rating of the
insurable life, will apply.
The maximum reinsurance premium rate per $1,000 of coverage for a Joint Life
policy is $____. Flat extra premiums will be increased in all policy years as
follows:
For Life insurance issued with flat extra premiums, of five years or less,
the premiums will be increased in all policy years or until premiums cease
or rating removed by 90% of the extra premiums applicable to the initial
amount reinsured.
For Life insurance issued with flat extra premiums of more than five
years, the premiums will be increased in the initial policy years by 10%
of the extra premiums and in all subsequent years by 90% of the extra
premiums.
For Joint Life business the flat extra premiums are added to the base
premium rate before frazierization.
State premium tax will not be reimbursed. Recapture period is 10 years.
17
EXHIBIT I
JOINT EQUAL AGE CALCUATION
Reinsurance premiums shall be based on a joint equal age of the insureds under
the policy. The joint equal age shall be calculated by using the following
tables in the order indicated.
TABLE A
Convert all lives to Standard Non-smokers as follows, if both lives are not non
smokers.
Male Female
Preferred Non-smoker -1 -1
Standard Non-smoker +1 +1
Smoker +6 +4
The above Table A is for automatic policies and facultative excess policies.
For policies issued under the Competitive Underwriting Program or the Table 4
program, only the smoker conversion is used.
TABLE B
For Substandard Joint-Last to Die policies, a joint equal age will be calculated
based on a standard rated policy; then, the Company's ratings are applied,
either as a multiple of (percentage extra), or addition to (flat extra), the
basic premium.
Flat and multiple extras will receive the same allowances as flat and multiple
extras on individual life policies. Rating values for specific ages and ratings
are shown further on in this Exhibit. It is understood that the maximum premium
is $__ per thousand.
TABLE C
An adjustment should be made in the ages of any females to bring them to a
corresponding male age.
Female to Male Adjustment
All Ages: -5
18
EXHIBIT I
JOINT EQUAL AGE CALCUATION
(continued)
TABLE D
Once you have two male ages with the same underwriting and smoking class, the
following table is used to determine a joint equal age.
Difference in Age Add 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
-------------------------------------------------------
19
Addendum
to the
Automatic Yearly Renewable Term Reinsurance Agreement
between
National Life Insurance Company
Montpelier, Vermont
(hereinafter called the Ceding Company)
and
___________ _________ Company
_________________
(hereinafter called Reinsurer)
Treaty ID 2277
Effective May 1, 2000, the rates for the Accelerated Care Rider (ACR) will be
corrected in Premium Rate Schedule (revised May 1, 2000). The rates attached to
this addendum will be applicable; therefore, this Addendum supercedes the
previous addendum.
The terms for the reinsurance of the ACR are as follows:
Reinsurance premiums are based on the appropriate premium rate in the Premium
Rate Schedule.
Premiums paid to the Reinsurer will be based on the face amount of the
ACR ceded to the Reinsurer.
Benefits paid by the Reinsurer to The Ceding Company will be its
participating pool share percentage times the ratio of the Current Net
Amount at Risk to the Face Amount of the Policy times the benefit paid
by the Ceding Company to the Insured.
The Reinsurer will not participate in benefits derived as a result of
the inclusion of the Non Forfeiture Benefits of the policy.
This Amendment is part of the Reinsurance Agreement. All provisions in the
Reinsurance Agreement will apply, except those specifically modified by this
Amendment.
This addendum will be attached to and form a part of the Automatic Yearly
Renewable Term Reinsurance Agreement effective May 1, 1999, between the Ceding
Company and the Reinsurer.
In witness whereof, the said National Life Insurance Company, Montpelier,
Vermont and the said ___________ _________ Company, ___________, have by their
respective officers executed and delivered this addendum in duplicate.
20
ACCEPTED COVERAGE SCHEDULE
(REVISED MAY 1, 2000)
Accepted coverages shall include Individual and Joint Life Insurance risks
written by the Ceding
Company on their active life insurance portfolio as of the effective date of
this agreement.
The following riders to the base coverage will be included:
SURVIVORSHIP UL/VUL PLANS:
Additional Protection Benefit (APB)
Policy Split Option (PS0)
Estate Preservation Rider (EPR)
Individual Term Riders
Continuing Coverage Rider (CCR)
Enhanced Death Benefit Rider (EDBR)
Automatic Increase Rider (AIR)
SURVIVORSHIP VUL PLAN:
Guaranteed Death Benefit (GDB)
SINGLE LIFE PLANS
Flex Term Rider
Annual Premium Additions Rider (APAR)
Single Premium Additions Rider (SPAR)
Additional Protection Benefit Rider (APB)
Accelerated Benefits Rider (ABR)
Accelerated Care Rider (ACR)
Accepted coverages also include Universal Life business assumed from the Ceding
Companies wholly-owned subsidiary. Life Insurance Company of the Southwest.
21
PREMIUM RATE SCHEDULE
(REVISED MAY 1, 2000)
Premiums shall be determined using the following applicable
percentages of the rate tables A- D, attached to this treaty. Rates are age
nearest.
EXPRESS STANDARD PROGRAM
SINGLE LIFE PRODUCTS
RATE TABLE A
UNDERWRITING CLASS ALL YEARS
Standard Non Tobacco
Standard Tobacco
EXPRESS STANDARD PROGRAM
ULANDVUL JOINT LIFE PRODUCTS
RATE TABLE B
UNDERWRITING CLASS ALL YEARS
All
EXPRESS STANDARD PROGRAM
TRADITIONAL JOIN LIFE PRODUCTS
RATE TABLE C
UNDERWRITING CLASS ALL YEARS
All
SUBSTANDARD SHOPPING PROGRAM
SINGLE LIFE PRODUCTS
RATE TABLE A
UNDERWRITING CLASS ALL YEARS
Standard Non Tobacco
Standard Tobacco
22
PREMIUM RATE SCHEDULE
(Revised May 1, 2000)
(continued)
SUBSTANDARD SHOPPING PROGRAM
UL ARID VUL JOINT LIFE PRODUCTS
RATE TABLE B
UNDERWRITING CLASS ALL YEARS
All
SUBSTANDARD SHOPPING PROGRAM
TRADITIONAL JOINT LIFE PRODUCTS
RATE TABLE C
UNDERWRITING CLASS ALL YEARS
NonsmokerlNonsmoker
Nonsmoker/Smoker
Smoker/Smoker
ACCELERATED CARE RIDER (ACR)
RATE TABLE D
Form 7801(0199) Tax Qualified
Accelerated Death Benefit Rider 1 --2%
(California Non-Qualified)
First year
Renewal Years
Reinsurance premiums for the ACR benefit will be based on the face amount of the
ACR ceded to the Reinsurer. The reinsurance premium rates are the Lifetime
Benefit premium rate, without NFO Benefit, for the appropriate ACR benefit, 1%
or 2%.
Joint Life premiums for UL and VUL products are based on a frazierized 75-80"
SOA Select & Ultimate Basis Mortality Table. The minimum premium rate at all
ages and durations is ____ per thousand. Joint Life premiums for traditional
products are based on a Joint Equal Age (JEA) For the JEA calculation refer to
Exhibit I.
Under the Substandard Shopping Program for Joint Life business, when one life is
uninsurable the rates in Table A, based on the age and table rating of the
insurable life, will apply.
The maximum reinsurance premium rate per $1000 of coverage for a Joint Life
policy is ______.
Flat extra premiums will be increased in all policy years as follows;
For Life insurance issued with flat extra premiums, of five years or less, the
premiums will be increased in all policy years or until premiums cease or rating
removed by ___ of the extra premiums applicable to the initial amount reinsured.
23
PREMIUM RATE SCHEDULE
(Revised May 1, 2000)
(continued)
For Life insurance issued with flat extra premiums of more than five years, the
premiums will be increased in the initial policy years by ___ of the extra
premiums and in all subsequent years by ___ of the extra premiums.
For Joint Life business the flat extra premiums are added to the base premiums
rate before frazierization.
State premium tax will not be reimbursed.
Recapture period is 10 years.
24
ADDENDUM
to the
Automatic Yearly Renewable Term Reinsurance Agreement
between
National Life Insurance Company
Montpelier, Vermont
(hereinafter called the Ceding Company)
and
___________ _________ Company
______________
(hereinafter called Reinsurer)
Treaty ID: 2277
Effective May 1, 1999, the attached rate extension for ages 85 through 90
will be added to
Schedule A for Single Life Plans.
This Amendment is part of the Reinsurance Agreement. All
provisions in the Reinsurance Agreement will apply, except those specifically
modified by this Amendment.
This addendum will be attached to and form a part of the Automatic Yearly
Renewable Term Reinsurance Agreement effective May 1, 1999, between the Ceding
Company and the
Reinsurer.
In witness whereof, the said National Life Insurance Company, Montpelier,
Vermont, and the said ___________ _________ Company, ____________ have by
their respective officers executed and delivered this addendum in
duplicate.
25
June 7, 2002
Xx. Xxxxxxx Xxxxxxxxxx
Supervisor of Reinsurance
National Life Insurance
Thank you for prodding us regarding the addition of your new Accelerated
Benefits Rider to the various agreements that we have business reinsured under.
The changes from your previous rider are as follows:
1. The maximum benefit has been increased from $500,000 to $1,000,000.
2. The chronically ill insured may accelerate benefits after the first two
policy years rather than the first five policy years.
We are agreeable to these changes and will continue paying our porportionate
share of the elected benefit. The attached Accelerated Benefits Riders, Form No.
7490(0200) and Form No. 7493(0200), will be added to our various agreements
effective May 1, 2001. I believe that we have three Reinsurance Agreements to
add this to.
Facultative YRT effective July 1, 1984
Guaranteed Facultative Coinsurance effective January 1, 1980 Automatic
YRT effective May 1, 1999
If this meets with your approval, please sign two copies of this letter and
return one for our records
26
