Common use of RISK RETENTION LIMITS Clause in Contracts

RISK RETENTION LIMITS. The total amount of insurance retained on both lives for THE COMPANY and its affiliates will not exceed the risk retention limits in the following table. No Smokers ============================================================================ Highest Rating Class ================== ============================================================================ ================== ================ =================== ================== ==================== Oldest Issue Age No Substandard Class A - D Class E - H Greater than Class of Insured Rating H ------------------ ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- Ages: 18 - 65 $50,000,000 $35,000,000 $25,000,000 $20,000,000 -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 66 - 70 $35,000,000 $22,000,000 $16,000,000 $13,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 71 - 75 $20,000,000 $13,000,000 $10,000,000 $ 8,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 76 - 80 $15,000,000 $10,000,000 $ 7,000,000 $ 5,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 81 - 85 $10,000,000 $ 8,000,000 $ 5,000,000 $ 3,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 86 - 90 $ 5,000,000 $ 4,000,000 $ 3,000,000 $ 2,000,000 ========= ======== ================ =================== ================== ==================== One Smoker ============================================================================ Highest Rating Class ================== ============================================================================ ================== ================ =================== ================== ==================== Oldest Issue Age No Substandard Class A - D Class E - H Greater than Class of Insured Rating H ------------------ ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- Ages: 18 - 65 $35,000,000 $25,000,000 $17,000,000 $14,000,000 -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 66 - 70 $25,000,000 $20,000,000 $13,000,000 $10,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 71 - 75 $15,000,000 $12,000,000 $10,000,000 $ 6,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 76 - 80 $13,000,000 $10,000,000 $ 7,000,000 $ 4,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 81 - 85 $ 9,000,000 $ 7,000,000 $ 5,000,000 $ 3,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 86 - 90 $ 4,000,000 $ 3,000,000 $ 2,000,000 $ 2,000,000 ========= ======== ================ =================== ================== ==================== Two Smokers ============================================================================ Highest Rating Class ================== ============================================================================ ================== ================ =================== ================== ==================== Oldest Issue Age No Substandard Class A - D Class E - H Greater than Class of Insured Rating H ------------------ ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- Ages: 18 - 65 $25,000,000 $20,000,000 $15,000,000 $10,000,000 -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 66 - 70 $20,000,000 $15,000,000 $12,000,000 $ 8,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 71 - 75 $11,000,000 $10,000,000 $10,000,000 $ 5,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 76 - 80 $10,000,000 $10,000,000 $ 6,000,000 $ 4,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 81 - 85 $ 7,000,000 $ 6,000,000 $ 4,000,000 $ 3,000,000 --------- -------- ---------------- ------------------- ------------------ -------------------- --------- -------- ---------------- ------------------- ------------------ -------------------- 86 - 90 $ 3,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000 ========= ======== ================ =================== ================== ==================== SCHEDULE B AUTOMATIC REINSURANCE PREMIUMS --------------------------------------------------------------------------------------------------------------------------- 1. STANDARD ANNUAL REINSURANCE PREMIUMS The standard annual reinsurance premiums per $1,000 of net amount at risk for (1) all cessions of automatic reinsurance will be the frasierized values of the product of the single life rates in the table attached to this Schedule B and the following factors: 6 1. 290 ==================== ============================================= --------------------------------------------------------------------------------------------------------------------------- The frasierized method is described as follows: Definition of Terms: (a) Qx,n = single life rate per thousand in duration n for an insured whose policy was issued at issue age x (b) Qx,y,n = joint last survivor rate per thousand in duration n for two insureds whose policy was issued at issue ages x and y Step 1 Calculate qx,n for each insured for durations 1 to n. qx,n = Qx,n divided by 1000. Step 2 Calculate px,n for each insured for durations (n-1) and n. px,n = (1-qx,1) x (1-qx,2) x (1-qx,n). Step 3 Calculate px,y,n for durations (n-1) and n. px,y,n = px,n + py,n - ((px,n) x (py,n)) Step 4 Calculate qx,y,n for duration n. Let px,y,0 = 1. qx,y,n = 1 - px,y,n px,y,n-1