EXHIBIT 10.2
EXECUTION
AMENDMENT NO. 1
REINSURANCE AGREEMENT #
(MODIFIED COINSURANCE TREATY)
(hereinafter referred to as the "Agreement")
between
LIFE REASSURANCE CORPORATION OF AMERICA
(STAMFORD, CONNECTICUT)
(hereinafter referred to as "Life Re")
and
SAGE LIFE ASSURANCE OF AMERICA, INC.
(STAMFORD, CONNECTICUT)
(hereinafter referred to as the "Company")
EFFECTIVE: FEBRUARY 1, 1999
AMENDMENT EFFECTIVE: OCTOBER 1, 2001
AMENDMENT NO. 1
This Amendment No. 1, effective as of October 1, 2001 (the
"Amendment"), amends the Reinsurance Agreement, dated effective as of February
1, 1999 (the "Agreement"), made and entered into by and between Sage Life
Assurance of America, Inc., a Delaware stock life insurance corporation, as
ceding insurer (the "Company") and Life Reassurance Corporation of America, a
Connecticut stock life insurance corporation, as reinsurer ("Life Re"). All
defined terms used herein that are not otherwise defined herein shall have the
meaning assigned to such terms in the Agreement. All references to the
Agreement, whether in this Amendment or in the Agreement, shall mean the
Agreement, as amended by this Amendment.
WITNESSETH:
WHEREAS, pursuant to the terms of the Agreement, the Company has agreed
to cede, and Life Re has agreed to assume and accept, a combination of
coinsurance and modified coinsurance coverage of certain variable annuity and
variable life insurance risks (the "Risks") with respect to the specified
original policy forms issued by the Company (each, a "Reinsured Contract" and,
taken together, the "Reinsured Contracts"); and
WHEREAS, pursuant to the terms of the Agreement, the Company has
requested that the scope of the reinsurance provided thereby be expanded to
include certain new products to be issued by the Company effective October 1,
2001; and
WHEREAS, Life Re is amenable to such expansion of the terms of
reinsurance provided by the Agreement;
WHEREAS, accordingly, the Company and Life Re have agreed to amend the
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties to this Amendment No. 1 do hereby agree as
follows:
1. New Products. Schedules A and B of the Agreement are deleted in
their entirety and replaced with the attached amended and restated Schedules A
and B.
2. Enhancements. Article 1, Section 6 of the Agreement is amended and
modified by adding the following words to the end of such provision:
"In no event shall Life Re participate in punitive, compensatory or bad
faith damages as may be awarded against the Company or any agent or
affiliate thereof as a result of any act, omission or course of conduct
committed by or on behalf of the Company in connection with the marketing,
placement, performance or administration of the policies reinsured
hereunder."
3. Compliance with Law. Article XI of the Agreement is amended and
modified by adding thereto a new Section 13 as set forth below:
"13. Compliance with Law
The Company represents and warrants that it understands the requirements of
the
insurance, securities/investment and taxation laws or regulations of the
jurisdictions in which it will operate with respect to the Reinsured Contracts
and further, acknowledges that it is responsible for compliance with all
applicable laws, rules and regulations, including but not limited to, any such
federal, state or local laws rules, rules or regulations of any jurisdiction
pertaining to (i) the design, marketing, issuance, management or administration
of the Reinsured Contracts, (ii) taxation (including, without limitation,
withholding obligations with respect thereto) by any jurisdiction of amounts
earned with respect to the Reinsured Contracts, (iii) currency restrictions or
limitations applicable with respect to the source of funds for, or the
disposition of proceeds from, the Reinsured Contracts, including, without
limitation, the U.S. Money Laundering Abatement and Financial Anti-Terrorism Act
of 2001; and further, that it now has and shall maintain during the term of this
Agreement the licenses, permits and authorizations necessary or appropriate to
the conduct of its business. The Company shall be solely responsible for any
damages, fines, penalties, loss, liability, cost or expense incurred thereby,
and shall fully indemnify and hold Swiss Re and its Affiliates harmless in
respect of, all damages, fines, penalties, loss, liability, cost or expense
incurred by Swiss Re or any affiliate thereof which Swiss Re or any such
affiliate may incur, arising out of or relating to the Company's failure to
comply with any applicable law, rule or regulation or failure to properly
maintain required licensure."
4. Other Reinsurance. Article I, Section 4 of the Agreement is modified
and amended by adding the following words to the end of such provision:
It is understood and agreed that the coinsurance and modified
coinsurance provided hereby is net of such inuring other reinsurance
(i) whether or not collected or collectible by the Company and (ii)
whether or not maintained in force or continued by the Company. In
the event that the Company shall fail to maintain in force such
Other Reinsurance as currently in effect, or otherwise on terms
acceptable to Life Re, Life Re's liability and obligation hereunder
shall be modified to place Life Re fully in the same position as if
such Other Reinsurance had been so maintained and performed.
5. Exclusion of Certain Benefits.
(a) Article I, Section 3 of the Agreement is deleted in its entirety and
replaced with the following:
Life Re will reinsure a quota share of each Reinsured Contract as set
out in Schedule A provided, however, that for purposes of Article II and
Article IV, Sections 2, 4, 5 and 6 hereof, Life Re shall not reinsure,
and shall have no liability or obligation in respect of, and Life Re's
Share (as hereinafter defined) shall be zero in respect of (i) any and
every Other Reinsured Rider (as hereinafter defined) and (ii) except to
the extent that any such loss, liability or obligation has been fully
reinsured by virtue of the Other Reinsurance (as hereinafter defined),
any loss, liability or obligation under or in respect of any Reinsured
Contract arising out of any feature or element thereof providing a
guaranteed minimum benefit thereunder determined without reference to
the value of the investments supporting such Reinsured Contract (a
"Guaranteed Element"). For purposes of this Agreement, the term "Other
Reinsured Rider" shall mean any rider, endorsement or addition to any of
the Reinsured Contracts denoted as such on Schedule A hereto and
including, without limitation, any such rider or endorsement to any of
the Reinsured Contracts providing any guaranteed minimum benefits under
the Reinsured
3
Contracts in the event of any market decline, death, disability or other
event.
The share of each such Reinsured Contract so reinsured by Life Re is
herein referred to as "Life Re's Share."
6. Policyholder Charges for Other Reinsured Riders. Article IV, Section
4, Clause C of the Agreement is amended by adding to the end of the final
sentence thereof the words "and policyholder cost of the Other Reinsured
Riders."
7. Effectiveness of this Amendment. This Amendment is to be effective
as of October 1, 2001. It is acknowledged that Life Re has subsequently been
renamed Swiss Re Life & Health America Inc.
8. Counterparts. This Amendment may be executed simultaneously in any
number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Life Re have executed this Amendment No. 1
on the dates set forth below.
SAGE LIFE ASSURANCE OF AMERICA, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
----------------------------------
LIFE REASSURANCE CORPORATION
OF AMERICA
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
----------------------------------
4
SCHEDULE A
AMENDED AND RESTATED EFFECTIVE AS OF OCTOBER 1, 2001
Quota Share Percentages:
Deferred Variable Annuity - With Surrender Charges ("DVA") 73%
Deferred Variable Annuity - With No Surrender Charges ("DVA") 65%
Modified Single Premium Variable Life ("MSPVL") 80%
EFFECTIVE AS OF OCTOBER 1, 2001
SageChoice 79%
SageFreedom 69%
SagePlus 81%
SageSelect 79%
5
RETENTION LIMITS
Deferred Variable Annuity (with and without Surrender Charges)
Basic Death Benefit (BDB): 0% of the excess of the Guaranteed Minimum Death
Benefit (GMDB) over the account value.
Accidental Death Benefit (ADB): 0% of the ADB
Earnings Enhancement Death Benefit (EEDB): 0% of the EEDB
Guaranteed Minimum Income Benefit (GMIB): 0% of the Commuted Benefit at
Annuitization
The items above are subject to the following limitations imposed by other
reinsurance referenced in Article III section 3:
1. The maximum BDB reinsured on any one life is $1,000,000.
2. The maximum annual aggregate BDB paid by the reinsurer during
any calendar year is capped at 2.00% of the average aggregate
account value.
3. The maximum ADB reinsured on any one life is $250,000.
4. The maximum EEDB reinsured on any one life is $2,000,000.
5. The GMIB is reinsured for premiums of $5,000,000 or less on
any one life.
6. The maximum GMIB annual election rate paid by the reinsurer is
20%.
7. The maximum GMIB paid by the reinsurer over 25 years is capped
at the lesser of 7.5% of premium or 0.60% of average benefit
base per year during the waiting period.
Deferred Variable Annuities introduced October 4, 2001 - SageChoice,
SageFreedom, SagePlus, and SageSelect
Basic Death Benefit (BDB): 0% of the excess of the Guaranteed Minimum Death
Benefit (GMDB) over the account value.
Accidental Death Benefit (ADB): 0% of the ADB
Earnings Enhancement Death Benefit (EEDB): 0% of the EEDB
Earnings Enhancement Life Rider (EELR): 0% of the EELR
Guaranteed Minimum Income Benefit (GMIB): 0% of the Commuted Benefit at
Annuitization
Enhanced Guaranteed Minimum Income Benefit (EGMIB): 0% of the Commuted Benefit
at Annuitization
Guaranteed Minimum Account Balance (GMAB): 0% of the GMAB Benefit
The items above are subject to the following limitations imposed by other
reinsurance referenced in Article III section 3:
6
1. The maximum BDB reinsured on any one life is $5,000,000.
2. Excluding contracts with 5 or 7 year GMAB benefits, BDB claims
paid by the reinsurer are limited to 4.5%, 5.0%, 5.5% of
aggregate premium for return of premium, ratchet deferred 7
years, and ratchet respectively.
3. For contracts with 5 or 7-year GMAB benefits, BDB claims paid
by the reinsurer are limited to 4.0% of aggregate premium for
all types combined.
4. ADB claims paid by the reinsurer are limited to 1% of
aggregate premium.
5. The maximum ADB reinsured on any one life is $250,000.
6. The maximum EEDB and EELR reinsured on any one life is
$5,000,000.
7. EEDB and EELR claims paid by the reinsurer are limited to
13.5% of aggregate premium.
8. The GMIB is reinsured for premiums of $5,000,000 or less on
any one life.
9. The maximum GMIB annual election rate paid by the reinsurer is
20%.
10. The GMIB is reinsured for ratios of current to guaranteed
annuity price of up to 80%.
11. The maximum GMIB paid by the reinsurer over 25 years is capped
at the lesser of 7.5% of premium or 0.60% of average benefit
base per year during the waiting period.
12. The maximum enhanced GMIB paid by the reinsurer over 25 years
is capped at the lesser of 20.00% of premium or 1.55% of
average benefit base per year during the waiting period.
13. The GMAB benefit is reinsured for premiums not to exceed
$5,000,000 on any one life.
14. Five year, 7 year, and 10 year GMAB claims paid by the
reinsurer are limited to 5.5%, 8.5%, and 12.5% of aggregate
premium respectively.
Modified Single Premium Variable Life
The retained basic death benefit and accidental death benefit is 20% of the
combined risk up to a maximum retention of $50,000 per life.
The items above are subject to the following limitations imposed by other
reinsurance referred in Article III section 3:
1. The maximum basic death benefit reinsured on any one life is
$5,000,000.
2. The ADB cannot exceed $250,000 and expires at attained age 81.
DVA Group Policy Forms
NOTE: * DENOTES AN OTHER REINSURED RIDER
7
1a. Generic Group Certificates:
DVA-C-9712 (Basic Certificate)
DVA-C-2001C (Core Basic Certificate)
DVA-C-2001SS (Short Surrender Charge Basic Certificate)
DVA-C-2001B (Bonus Basic Certificate)
DVA-C-2001Z (No Surrender Charge Basic Certificate)
1b. Generic Optional Riders:
DVA-C-ADB-9712 (Accidental Death Benefit Rider)*
DVA-C-ADB-2001 (Accidental Death Benefit Rider)*
DVA-C-WSC-9712 (Waiver Surrender Charge Rider)*
DVA-C-XXX-9901 (XXX Xxxxx)*
DVA-C-XXX-2002 (XXX Xxxxx)*
DVA-C-(S)XXX-9712 (XXX Xxxxx)*
DVA-C-(R)XXX-9712 (XXX Xxxxx)*
DVA-C-(S)XXX-9907 (XXX Xxxxx)*
DVA-C-(R)XXX-9907 (XXX Xxxxx)*
DVA-C-GMIB-9712 (Guaranteed Minimum Income Benefit Rider)*
DVA-C-EDB-9712 (Earnings Enhancement Death Benefit Rider)*
DVA-C-EGMDB-2001 (Enhanced Guaranteed Minimum Death Benefit Rider)*
DVA-C-EGMIB-2001 (Enhanced Guaranteed Minimum Income Benefit Rider)*
DVA-C-GMIB-2001 (Guaranteed Minimum Income Benefit Rider)*
DVA-C-EEDB-2001 (Earnings Enhancement Death Benefit Rider)*
DVA-C-EGMDB-2002 (Enhanced Guaranteed Minimum Death Benefit Rider)*
DVA-C-EGMIB-2002 (Enhanced Guaranteed Minimum Income Benefit Rider)*
DVA-C-GMIB-2002 (Guaranteed Minimum Income Benefit Rider)*
DVA-C-EEDB-2002 (Earnings Enhancement Death Benefit Rider)*
DVA-C-EELR-2002 (Earnings Enhancement Life Insurance Rider)*
DVA-C-GMAV-2001 (Guaranteed Minimum Account Value Benefit Rider)*
1c. Generic Applications:
AP-DVA-C-9805 (Application)
AP-DVA-C-2001 (Application)
AP-DVA-C-2001C (Core Application)
AP-DVA-C-2001SS (Short Surrender Charge Application)
AP-DVA-C-2001B (Bonus Application)
AP-DVA-C-2001Z (No Surrender Charge Application)
1d. Generic Master Group Contracts:
MGC-C-9712 (Master Group Contract)
DVA-(MGC)-2001C (Core Master Group Contract)
DVA-(MGC)-2001SS (Short Surrender Master Group Contract)
DVA-(MGC)-2001B (Bonus Master Group Contract)
DVA-(MGC)-2001Z (No Surrender Charge Master Group Contract)
2. State Variations as applicable by State
8
DVA Individual Policy Forms
NOTE: * DENOTES AN OTHER REINSURED RIDER
1a. Generic Group Certificates:
DVA-9712 (Basic Contract)
DVA1-9712 (Basic Contract)
DVAZ-9712 (Basic Contract)
DVA-2001C (Core Basic Contract)
DVA-2001SS (Short Surrender Charge Basic Contract)
DVA-2001B (Bonus Basic Contract)
DVA-2001Z (No Surrender Charge Basic Contract)
1b. Generic Optional Riders:
DVA-ADB-9712 (Accidental Death Benefit Rider)*
DVA-WSC-9712 (Waiver Surrender Charge Rider)*
DVA-XXX-9901 (XXX Xxxxx)*
DVA-(S)XXX-9712 (Simple XXX Xxxxx)*
DVA-(R)XXX-9712 (Xxxx XXX Rider)*
DVA-(S)XXX-9907 (Simple XXX Xxxxx)*
DVA-(R)XXX-9907 (Xxxx XXX Rider)*
DVA-GMIB-9712 (Guaranteed Minimum Income Benefit Rider)*
DVA-EDB-9712 (Earnings Enhancement Death Benefit Rider)*
DVA-EGMDB-2001 (Enhanced Guaranteed Minimum Death Benefit Rider)*
DVA-EGMIB-2001 (Enhanced Guaranteed Minimum Income Benefit Rider)*
DVA-GMIB-2001 (Guaranteed Minimum Income Benefit Rider)*
DVA-EEDB-2001 (Earnings Enhancement Death Benefit Rider)*
DVA-EGMDB-2002 (Enhanced Guaranteed Minimum Death Benefit Rider)*
DVA-EGMIB-2002 (Enhanced Guaranteed Minimum Income Benefit Rider)*
DVA-GMIB-2002 (Guaranteed Minimum Income Benefit Rider)*
DVA-EEDB-2002 (Earnings Enhancement Death Benefit Rider)*
DVA-ADB-2002 (Accidental Death Benefit Rider)*
DVA-ADB-2001 (Accidental Death Benefit Rider)*
DVA-EELR-2002 (Earnings Enhancement Life Insurance Rider)*
DVA-GMAV-2001 (Guaranteed Minimum Account Value Benefit Rider)*
1c. Generic Applications:
AP-DVA-9805 (Application)
AP-DVA-2001 (Application)
AP-DVA-2001C (Core Application)
AP-DVA-2001SS (Short Surrender Charge Application)
AP-DVA-2001B (Bonus Application)
AP-DVA-2001Z (No Surrender Charge Application)
2. State Variations as applicable by State
9
MSPVL Group Policy Forms
NOTE: * DENOTES AN OTHER REINSURED RIDER
1. Generic forms that apply:
MSPVL-C-9801 (Basic Certificate)
MSPVL-C-9906 (Basic Certificate)
MSPVL-C-ACCDB-9801 (Accidental Death Benefit Rider)*
MSPVL-C-ADB-9801 (Accidental Death Benefit Rider)*
MSPVL-C-COI-9801 (Change of Insured Rider)
MSPVL-C-WSC-9801 (Waiver of Surrender Charge Rider)*
AP-MSPVL-C-9806 (Application)
TIA-MSPVL-C-9806 (Temporary Insuring Agreement)
APII-MSPVL-C-9806 (Part II of Application)
MSPVL-C-NLE-9906 (No Lapse Endorsement)
MSPVL-C-VSO-2001 (Variable Settlement Options Endorsement)
2. State Variations as applicable by State
MSPVL Individual Policy Forms
NOTE: * DENOTES AN OTHER REINSURED RIDER
1. Generic forms that apply:
MSPVL-9801 (Basic Contract)
MSPVL1-9801 (Basic Contract)
MSPVL-ACCDB-9801 (Accidental Death Benefit Rider)*
MSPVL-ADB-9801 (Accidental Death Benefit Rider)*
MSPVL-COI-9801 (Change of Insured Rider)
MSPVL-WSC-9801 (Waiver of Surrender Charge Rider)*
AP-MSPVL-9806 (Application)
TIA-MSPVL-9806 (Temporary Insuring Agreement)
APII-MSPVL-9806 (Part II of Application)
MSPVL-NLE-9906 (No Lapse Endorsement)
MSPVL-VSO-2001 (Variable Settlement Options Endorsement)
2. State Variations as applicable by State
10
SCHEDULE B
AMENDED AND RESTATED EFFECTIVE AS OF OCTOBER 1, 2001
DEFERRED VARIABLE ANNUITY
WITH SURRENDER CHARGES
EXPENSE ALLOWANCE
------- ---------------------------------------------------------
ISSUE AGES ISSUE AGES ISSUE AGES
COMMISSIONS 0-80 81- 85 86 - 90
----------- ------------- ---------- ------------
Year 1 8.22% of 4.45% of 3.08% of
Reinsurance Premium Reinsurance Premium Reinsurance
less charge backs less charge backs Premium less
charge backs
Year 2 8.22% of 4.45% of 3.08% of
Reinsurance Premium Reinsurance Premium Reinsurance
less charge backs less charge backs Premium less
charge backs
Year 3 6.84% of 3.42% of 1.71% of
Reinsurance Premium Reinsurance Premium Reinsurance
less charge backs less charge backs Premium less
charge backs
Year 4 5.48% of 2.74% of 1.37% of
Reinsurance Premium Reinsurance Premium Reinsurance
less charge backs less charge backs Premium less
charge backs
Year 5 4.11% of 2.05% of 1.03% of
Reinsurance Premium Reinsurance Premium Reinsurance
less charge backs less charge backs Premium less
charge backs
Year 6+ 2.74% of 1.37% of N/A
Reinsurance Premium Reinsurance premium
less charge backs less charge backs
DISTRIBUTION ALLOWANCE
Year 1 1.03% of Reinsurance Premium
Year 2+ 1.03% of Reinsurance Premium
PREMIUM TAXES 0.0% of Reinsurance Premium
FEES TO TPAS
Issue $28.00 per policy issued x Life Re's Share
Maintenance $48.00 annually per policy, payable quarterly x Life Re's Share
DAC TAX REIMBURSEMENT ("DTR") ON (Capitalization Rate x Statutory Tax Rate x NQ
NON-QUALIFIED PREMIUM ONLY Reinsurance Premium) / (1-Statutory Tax Rate); less
Life Re's Share of DAC Tax Amortization
11
DEFERRED VARIABLE ANNUITY
WITH NO SURRENDER CHARGES
EXPENSE ALLOWANCE
------- ---------------------------------------------------------
ISSUE AGES ISSUE AGES ISSUE AGES
COMMISSIONS 0-80 81- 85 86 - 90
----------- ------------- ---------- ------------
Year 1 5.77% of 3.08% of 0.77% of
Reinsurance Premium Reinsurance Reinsurance
less charge backs Premium less Premium less
charge backs charge backs
Year 2 - 5 5.38% of additional 2.69% of 0.38% of
Reinsurance additional additional
Premiums less Reinsurance Reinsurance
charge backs, plus Premiums less Premiums less
0.25% of Account charge backs, plus charge backs, plus
Value annually x 0.25% of Account 0.25% of Account
Life Re's Share, Value annually x Value annually x
payable quarterly Life Re's Share, Life Re's Share,
payable quarterly payable quarterly
Year 6+ 2.31% of additional 0.38% of N/A
Reinsurance additional
Premiums less Reinsurance
charge backs, plus Premiums less
0.25% of Account charge backs, plus
Value annually x 0.25% of Account
Life Re's Share, Value annually x
payable quarterly Life Re's Share,
payable quarterly
DISTRIBUTION ALLOWANCE
Year 1 1.15% of Reinsurance Premium
Year 2+ 1.15% of Reinsurance Premium
PREMIUM TAXES 0.0% of Reinsurance Premium
FEES TO TPAS
Issue $28.00 per policy issued x Life Re's Share
Maintenance $48.00 annually per policy, payable quarterly x Life Re's
Share
DAC TAX REIMBURSEMENT ("DTR") ON (Capitalization Rate x Statutory Tax Rate x NQ
NON-QUALIFIED PREMIUM ONLY Reinsurance Premium) / (1-Statutory Tax Rate) less
Life Re's Share of DAC Tax Amortization
12
MODIFIED SINGLE PREMIUM VARIABLE LIFE
EXPENSE ALLOWANCE
---------
COMMISSIONS ISSUE AGES 0 - 80 ISSUE AGES 81+
----------- ----------------- --------------
Year 1 9.38% of Reinsurance Premium 5.00% of Reinsurance Premium
less charge backs less charge backs
Year 2 9.38% of additional 5.00% of additional
Reinsurance Premium less Reinsurance Premium less
charge backs charge backs
Year 3 7.50% of additional 3.75% of additional
Reinsurance Premium less Reinsurance Premium less
charge backs charge backs
Year 4 6.25% of additional 2.50% of additional
Reinsurance Premium less Reinsurance Premium less
charge backs charge backs
Year 5 5.00% of additional 1.25% of additional
Reinsurance Premium less Reinsurance Premium less
charge backs charge backs
Year 6 3.75% of additional 1.25% of additional
Reinsurance Premium less Reinsurance Premium less
charge backs charge backs
Year 7+ 2.50% of additional 1.25% of additional
Reinsurance Premium less Reinsurance Premium less
charge backs charge backs
DISTRIBUTION ALLOWANCE
Year 1 1.43% of Reinsurance Premium
Year 2+ 1.43% of Reinsurance Premium
PREMIUM TAXES 2.25% of Reinsurance premium
FEES TO TPAS
UNDERWRITING & ISSUE
Simplified $84.00 per policy issued x Life Re's Share
Medical $280.00 per policy issued x Life Re's Share
Maintenance $52.00 annually per policy, payable quarterly x Life Re's
Share
DAC TAX REIMBURSEMENT ("DTR") (Capitalization Rate x Statutory Tax Rate x Reinsurance
Premium) / (1-Statutory Tax Rate) less Life Re's Share of DAC
Tax Amortization
13
SAGECHOICE (EFFECTIVE OCTOBER 4, 2001)
EXPENSE ALLOWANCE
ISSUE AGES ISSUE AGES
COMMISSIONS 0-80 81- 90
----------- ---- ------
Year 1 - 2 8.86% of Reinsurance Premium, 4.43% of Reinsurance Premium,
less charge backs less charge backs
Year 3 7.59% of Reinsurance Premium, 3.80% of Reinsurance Premium,
less charge backs less charge backs
Year 4 6.33% of Reinsurance Premium, 3.16% of Reinsurance Premium,
less charge backs less charge backs
Year 5 5.06% of Reinsurance Premium, 2.53% of Reinsurance Premium,
less charge backs less charge backs
Year 6 3.80% of Reinsurance Premium, 2.53% of Reinsurance Premium,
less charge backs less charge backs
Year 7+ 2.53% of Reinsurance Premium, 2.53% of Reinsurance Premium,
less charge backs less charge backs
DISTRIBUTION ALLOWANCE
Year 1 0.76% of Reinsurance Premium
Year 2+ 0.76% of Reinsurance Premium
PREMIUM TAXES 0.0% of Reinsurance Premium
FEES TO TPAS
Issue $28.00 per policy issued x Life Re's Share
Maintenance $48.00 annually per policy, payable quarterly x Life Re's Share
DAC TAX REIMBURSEMENT ("DTR") ON (Capitalization Rate x Statutory Tax Rate x NQ
NON-QUALIFIED PREMIUM ONLY Reinsurance Premium) / (1-Statutory Tax Rate); less
Life Re's Share of DAC Tax Amortization
14
SAGEPLUS (EFFECTIVE OCTOBER 4, 2001)
EXPENSE ALLOWANCE
ISSUE AGES ISSUE AGES
COMMISSIONS 0-80 81- 90
----------- ---- ------
Year 1 - 2 7.41% of Reinsurance Premium, 1.85% of Reinsurance Premium,
less charge backs less charge backs
Year 3 6.17% of Reinsurance Premium, 1.23% of Reinsurance Premium,
less charge backs less charge backs
Year 4 4.94% of Reinsurance Premium, 1.23% of Reinsurance Premium,
less charge backs less charge backs
Year 5 3.70% of Reinsurance Premium, 1.23% of Reinsurance Premium,
less charge backs less charge backs
Year 6 2.47% of Reinsurance Premium, 1.23% of Reinsurance Premium,
less charge backs less charge backs
Year 7+ 1.23% of Reinsurance Premium, 1.23% of Reinsurance Premium,
less charge backs less charge backs
DISTRIBUTION ALLOWANCE
Year 1 0.74% of Reinsurance Premium
Year 2+ 0.74% of Reinsurance Premium
INVESTMENT CREDIT 3% of First Year Reinsurance Premium if Reinsurance Premium is
below $40,500;
4% of First Year Reinsurance Premium if Reinsurance Premium is
$40,500 - $405,000; and
5% of First Year Reinsurance Premium if Reinsurance Premium is
greater than $405,000.
PREMIUM TAXES 0.0% of Reinsurance Premium
FEES TO TPAS
Issue $28.00 per policy issued x Life Re's Share
Maintenance $48.00 annually per policy, payable quarterly x Life Re's Share
DAC TAX REIMBURSEMENT ("DTR") ON (Capitalization Rate x Statutory Tax Rate x NQ
NON-QUALIFIED PREMIUM ONLY Reinsurance Premium) / (1-Statutory Tax Rate); less
Life Re's Share of DAC Tax Amortization
15
SAGESELECT (EFFECTIVE OCTOBER 4, 2001)
EXPENSE ALLOWANCE
ISSUE AGES ISSUE AGES
COMMISSIONS 0-80 81- 90
----------- ---- ------
Year 1 5.70% of Reinsurance Premium, 3.16% of Reinsurance Premium,
less charge backs less charge backs
Year 2 4.11% of Reinsurance Premium, 1.90% of Reinsurance Premium,
less charge backs less charge backs
Year 3 2.53% of Reinsurance Premium, 0.63% of Reinsurance Premium,
less charge backs less charge backs
Year 4+ 1.90% of Reinsurance Premium, 0.00% of Reinsurance Premium,
less charge backs, plus 1.0% less charge backs, plus 1.0%
of Account Value annually x of Account Value annually x
Life Re's Share, payable Life Re's Share, payable
quarterly quarterly
DISTRIBUTION ALLOWANCE
Year 1 0.76% of Reinsurance Premium
Year 2+ 0.76% of Reinsurance Premium
PREMIUM TAXES 0.0% of Reinsurance Premium
FEES TO TPAS
Issue $28.00 per policy issued x Life Re's Share
Maintenance $48.00 annually per policy, payable quarterly x Life Re's Share
DAC TAX REIMBURSEMENT ("DTR") ON (Capitalization Rate x Statutory Tax Rate x NQ
NON-QUALIFIED PREMIUM ONLY Reinsurance Premium) / (1-Statutory Tax Rate); less
Life Re's Share of DAC Tax Amortization
16
SAGEFREEDOM (EFFECTIVE OCTOBER 4, 2001)
EXPENSE ALLOWANCE
ISSUE AGES ISSUE AGES
COMMISSIONS 0-80 81- 90
----------- ---- ------
Year 1 3.26% of Reinsurance Premium, 1.81% of Reinsurance Premium,
less charge backs less charge backs
Year 2+ 1.0% of Account Value annually .75% of Account Value
x Life Re's Share, payable annually x Life Re's Share,
quarterly payable quarterly
DISTRIBUTION ALLOWANCE
Year 1 0.87% of Reinsurance Premium
Year 2+ 0.87% of Reinsurance Premium
PREMIUM TAXES 0.0% of Reinsurance Premium
FEES TO TPAS
Issue $28.00 per policy issued x Life Re's Share
Maintenance $48.00 annually per policy, payable quarterly x Life Re's Share
DAC TAX REIMBURSEMENT ("DTR") ON (Capitalization Rate x Statutory Tax Rate x NQ
NON-QUALIFIED PREMIUM ONLY Reinsurance Premium) / (1-Statutory Tax Rate); less
Life Re's Share of DAC Tax Amortization
17
