EXHIBIT 1.A.(3)(b)(i)
AMENDMENT TO THE
BROKER-DEALER SUPERVISORY AND SELLING AGREEMENT
FOR VARIABLE CONTRACTS
This Amendment is made by and among ING Security Life of Denver Insurance
Company ("ING Security Life"), ING America Equities, Inc. ("INGAE") and Selling
Broker-Dealer and Agency, collectively know as the Parties.
WHEREAS, the Parties have executed a Broker-Dealer Supervisory and Selling
Agreement for Variable Contracts (the "Agreement") which provides that Selling
Broker-Dealer and Agency will enable and supervise its registered
representatives to solicit and sell the Contracts issued by ING Security Life
and distributed by INGAE.
WHEREAS, the Agreement also provides for certain compensation to be paid to
Selling Broker-Dealer or Agency for the sales of such Contracts, the Agreement
is modified as follows:
1. The Schedule J, "Compensation Schedule to Selling Agreement for ING
Security Life Estate Designer Variable Universal Life" is hereby added.
This Amendment is effective March 1, 2000, and shall be deemed to be
accepted by Broker-Dealer and Agency by ING Security Life and INGAE by
submission of an application for the Estate Designer Variable Universal Life
product by Selling Broker-Dealer or Agency on or after that date.
SCHEDULE J
COMPENSATION SCHEDULE
TO SELLING AGREEMENT FOR SECURITY LIFE
ESTATE DESIGNER
JOINT SURVIVOR VARIABLE UNIVERSAL LIFE
This Schedule is an attachment to the ING America Equities, Inc. ("ING AMERICA
EQUITIES") Selling Agreement by and among the parties pursuant to paragraph 17
of that Selling Agreement, effective as of May 1, 2000, or the date that Selling
Broker-Dealer submits an application for this product, whichever is later. The
provisions of this Schedule shall apply only to Security Life ESTATE DESIGNER
policies solicited and issued while this Schedule is in effect. All compensation
payable under this Schedule shall be subject to the terms and conditions
contained herein at the time of issue of the policy by Security Life of Denver
Insurance Company ("SECURITY LIFE").
1. Commission Structure - Option L (Levelized):
-------------------------------------------
PCA SCA RCA Trail
----------- ----------- -------- ---------------------------------------
Years 1 - 7 Years 1 - 7 Years 8+ Years Years Years 21+
1 - 10 11 - 20
12% 4% 2% 0.20% net 0.15% net 0.10% net
account account account
value value value
PCA (PRIMARY COMMISSIONABLE AMOUNT) is equal to the first year's target premium
(shown on policy schedule pages and illustrations). Gross premiums paid up to
the PCA in any year are commissioned at the full PCA rate. If the gross premium
paid in one year is less than the PCA, that difference is carried over to the
next year. A new PCA is generated any time a new base coverage segment is
created. Note that a death benefit option change does not create a new PCA.
Premium dollars are allocated first to PCA, then to SCA, and then to RCA.
SCA (SECONDARY COMMISSIONABLE AMOUNT) is equal to the difference between the
gross premium received in each segment year in years one through seven and the
corresponding PCA for that year.
RCA (RENEWABLE COMMISSIONABLE AMOUNT) equals the gross premium received per
segment year in years 8 and thereafter.
Schedule J (02/22/00) Page 1 of 4
2. Commission Structure - Option M (Modified):
PCA SCA RCA Trail
-------------- ---------------- ----- -------------------------------
Year 1 Years Year 1 Years Years Years Years Years
2 - 7 2 - 7 8+ 1 - 10 11 - 20 21+
30% 7.5% 2% 4% 2% 0.20% 0.15% 0.10%
net net net
account account account
value value value
PCA (PRIMARY COMMISSIONABLE AMOUNT) is equal to the first year's target premium
(shown on policy schedule pages and illustrations). A new PCA is generated any
time a new base coverage segment is created. Note that a death benefit option
change does not create a new PCA. Premium dollars are allocated first to PCA,
then to SCA, and then to RCA.
SCA (SECONDARY COMMISSIONABLE AMOUNT) is equal to the difference between the
gross premium received in each segment year in years one through seven and the
corresponding PCA for that year.
RCA (RENEWABLE COMMISSIONABLE AMOUNT) equals the gross premium received per
segment year in years 8 and thereafter.
3. Premium Receipt: Premium received within 15 days prior to a policy
anniversary will result in the agent receiving commissions at the same
rate as if the premium was paid on the anniversary date.
4. Selection of Commission Structure: is made at the time of policy
application and cannot be changed once the application is received by
Security Life. If no commission structure is requested on the application,
Option L will apply.
5. Trail Commissions: are payable at each policy (not segment) anniversary
based on the policy's average net account value at the end of each of the
prior twelve months. The trail commission is payable annually at the end
of a policy year provided the policy is in force, and not subject to grace
period provisions, on that date.
6. Riders: Commissionable riders will have a separate target premium which is
set at issue and is level thereafter. The Adjustable Term Insurance Rider
has no target premium associated with it.
7. Commission Calculation: Commissions shall be calculated only on premium
actually received an accepted by SECURITY LIFE. Commissions shall be paid
only on an earned basis. Outstanding loan amounts carried over as part of
a 1035 exchange are not considered commissionable premium.
Schedule J (02/22/00) Page 2 of 4
8. Premium Allocation: If the Stated Death Benefit has been increased since
the policy date, premiums received are allocated to the coverage segments
in the same proportion that the commission target premium for each segment
bears to the total commission target premium of the policy.
9. Death Benefit Increases: If a premium payment accompanies a request for a
Stated Death Benefit increase or is received while a request is pending,
the payment will be applied to the policy but commissions shall not be
payable until the increase is effective. The commission shall then be
payable based on the premium being allocated among all segments as it
would normally and the new target premium after the increase.
10. Compensation Payments: Compensation on initial premiums shall be due to
the SELLING BROKER-DEALER at the time of the issuance of the policy.
Thereafter, it shall be payable at the time of the receipt and acceptance
of premium by SECURITY LIFE, except that the amount, and the time of
payment of compensation on stated death benefit increases, replacements,
reissues, changes, conversions, exchanges, term renewals, term
conversions, premiums paid in advance, policies issued on a "guaranteed
issue" basis, policies requiring facultative reinsurance arrangements, and
other special cases and programs shall be governed by SECURITY LIFE'S
underwriting and administrative rules then in effect. The Compensation
shall be payable to the SELLING BROKER-DEALER in accordance with the
Schedule J in effect at the time of issue of the policy.
11. Commission Chargeback: In the event that a policy (for which a commission
has been paid) is lapsed or surrendered by the Policy Owner during the
first six months, or is returned to SECURITY LIFE for refund of premium
during the Free Look Period as described in the policy, SECURITY LIFE and
ING AMERICA EQUITIES shall require reimbursement from SELLING
BROKER-DEALER equal to 100% of the commissions paid. If a premium payment
for which a commission has been paid is refunded by SECURITY LIFE, a
reimbursement of the commission paid on the amount refunded will be due
from the SELLING BROKER-DEALER.
Chargebacks are based on premiums received in the applicable segment year and
are as follows:
OPTION L OPTION M
Premiums
Received in PCA RCA & SCA PCA RCA & SCA
----------- --- --------- --- ---------
Months
1 - 6 12% 4% 30% 2%
Months
7 - 12 N/A N/A 30% 2%
Years
2 & 3 N/A N/A 7.5% 4%
Schedule J (02/22/00) Page 3 of 4
The reimbursement may be deducted by ING AMERICA EQUITIES from the next, or any
subsequent, commission payment to SELLING BROKER-DEALER. If the amount to be
reimbursed exceeds compensation otherwise due, SELLING BROKER-DEALER shall
promptly reimburse ING AMERICA EQUITIES before the next commission cycle.
12. Internal Exchanges: Commissions on the exchange of any policy issued by
SECURITY LIFE or any other ING affiliate for an ESTATE DESIGNER policy, if
any, will be paid in accordance with the internal exchange procedures in
effect at SECURITY LIFE on the date the exchange is completed. The
commission rates and/or target premiums may be adjusted in accordance with
the rules in effect at the time of the exchange. If the Representative
responsible for the exchange is not the producer of the original policy,
and the original producer is still active with SECURITY LIFE, no
commission will be payable to the Representative or the SELLING
BROKER-DEALER.
13. Commission Payment for Early Second Death: In the event that the death of
both insured persons under a policy occurs in the first seven policy
years, SELLING BROKER/DEALER shall be entitled to compensation on the
policy subject to the following rules:
o The policy when sold was a commissionable policy (i.e., not an
internal exchange as defined in section 12 above)
o The policy must be in active status with SECURITY LIFE and some
premium must have been paid into the policy during the 12 months
prior to the death of the second insured person
o The payment due if these conditions are met is the present value
of the remaining premium-based commissions from the policy month
in which the second death occurred through the end of policy year
seven, as calculated by SECURITY LIFE at 10.5%.
o The calculation shall use the premium stream, payment mode and
commission structure as reflected on the "as sold" illustration
on file at SECURITY LIFE
o This payment is due to SELLING BROKER/DEALER only after payment
of the death benefit under the policy has been determined and
made by SECURITY LIFE to policy beneficiaries
o Trail commissions are excluded from the calculation for this
payment and are not payable after termination of the policy
whether terminated by death or otherwise.
Schedule J (02/22/00) Page 4 of 4
