EXHIBIT 99.7C
YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
EFFECTIVE AS OF MARCH 14, 1996
BETWEEN
FARM BUREAU LIFE INSURANCE COMPANY
OF
WEST DES MOINES, IOWA,
REFERRED TO IN THIS AGREEMENT AS "FARM BUREAU," AND
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
OF
FORT ▇▇▇▇▇, INDIANA,
REFERRED TO IN THIS AGREEMENT AS "LINCOLN."
INSPECTED BY E/G
DATE 8/30/96
DOC 960898.agm
CCN/AGMT. NO. 537 / 21
TABLE OF CONTENTS
Reinsurance Coverage 1
Automatic Reinsurance 1
Facultative Reinsurance 2
Continuations 3
Terms Of Reinsurance 4
Payments By Farm Bureau 4
Payments By Lincoln 5
Reinsurance Administration 6
Settlement Of Claims 6
Reinstatements 8
Reductions In Insurance 8
Increases In Policy Net Amount At Risk 8
Changes In Retention 8
Assignment Of Reinsurance 10
Material Changes 10
Errors 10
Audits Of Records And Procedures 11
Arbitration 11
Insolvency Of Farm Bureau 11
Offset 12
Parties To The Agreement 12
Commencement And Termination 12
Entire Agreement 13
Deferred Acquisition Cost Tax Election 13
Definitions 14
Execution 16
LIFE BENEFITS SCHEDULE 18
ADMINISTRATION SCHEDULE 20
PREMIUM SCHEDULE 24
ARBITRATION SCHEDULE 27
WAIVER OF PREMIUM BENEFIT ADDENDUM 29
PREMIUM RECEIPT ADDENDUM 32
LAST SURVIVOR ADDENDUM 33
GUARANTEED PURCHASE OPTION ADDENDUM 35
FIRST-TO-DIE ADDENDUM 37
REINSURANCE COVERAGE
A. Farm Bureau agrees to cede, and Lincoln agrees to accept, reinsurance of
the Policies specified in the Life Benefits Schedule. (The term "Policies"
and certain other terms used in this Agreement are defined in the
"Definitions" article.)
B. The death benefits provided by the Policies are reinsured. Supplemental
benefits are reinsured if and as specified in applicable Addenda.
C. Farm Bureau agrees to either
(1) cede reinsurance of a Policy to Lincoln as Automatic Reinsurance;
(2) submit the Policy to Lincoln for consideration as Facultative
Reinsurance; or
(3) cede reinsurance of a Policy as a Continuation.
AUTOMATIC REINSURANCE
A. Farm Bureau agrees to cede the Reinsurance Amount of a Policy as Automatic
Reinsurance if the following conditions are met:
(1) it retains its Retention on the insured life when the Policy is
issued;
(2) it underwrites and issues the Policy in accordance with its normal
individual life insurance underwriting rules and practices
previously disclosed to Lincoln;
(3) the sum of (a) and (b) does not exceed the sum of its Retention and
the Automatic Limit, where (a) equals the amount of individual life
insurance issued by Farm Bureau then in force on the insured life,
or in the case of individual life insurance with increasing death
benefits, the Ultimate Amount of such policies, and (b) equals the
amount of life insurance currently being applied for from Farm
Bureau, or in the case of individual life insurance with increasing
death benefits, the Ultimate Amount;
(4) the sum of (a) and (b) does not exceed the Participation Limit,
where (a) equals the amount of individual life insurance then in
force on the insured life in all companies, or in the case of
individual life insurance with increasing death benefits, the
Ultimate Amount of such policies, and (b) equals the amount
currently applied for on the insured life from all companies, or in
the
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case of individual life insurance with increasing death benefits,
the Ultimate Amounts;
(5) it has not submitted a facultative application to Lincoln or any
other insurance or reinsurance company for reinsurance of the
current application; and
(6) the Policy is not a Continuation.
B. Policies issued pursuant to any special underwriting program adopted by
Farm Bureau may be ceded as Automatic Reinsurance only with Lincoln's
consent to reinsure such Policies.
C. A Policy shall not be ceded as Automatic Reinsurance if the Reinsurance
Amount of the Policy is less than the minimum cession amount specified in
the Administration Schedule.
FACULTATIVE REINSURANCE
A. Farm Bureau agrees to submit Policies not satisfying the conditions for
Automatic Reinsurance, and Policies which it does not wish to cede as
Automatic Reinsurance, for consideration by Lincoln as Facultative
Reinsurance. Farm Bureau may also submit for consideration as Facultative
Reinsurance any individual life insurance issued on a Policy form that is
not specified in the Life Benefits Schedule provided reinsurance terms and
conditions are established and agreed upon by means of the Facultative
Reinsurance application process.
B. An application for Facultative Reinsurance shall be made in the manner set
forth in the Administration Schedule. Copies of all information which Farm
Bureau has pertaining to the insurability of the proposed insured,
including written summaries of any such information which cannot be copied,
shall accompany the application.
C. Upon receipt of an application, Lincoln agrees to promptly examine the
underwriting information and communicate
(1) an offer to reinsure the Policy as applied for;
(2) an offer to reinsure the Policy other than as applied for,
(3) an offer to reinsure the Policy subject to the satisfaction of
additional underwriting requirements;
(4) a request for additional underwriting information; or
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(5) its unwillingness to make an offer to reinsure the Policy.
D. To accept an offer to reinsure made by Lincoln, Farm Bureau agrees to (1)
satisfy any conditions stated in the offer to reinsure and (2) follow the
procedure for placing reinsurance into effect as specified in the
Administration Schedule.
E. Farm Bureau agrees to inform Lincoln immediately of any additional
information pertaining to the insurability of a proposed insured which is
brought to Farm Bureau's attention before the completion of the procedures
for accepting Lincoln's offer to reinsure. Upon its receipt of such
information, Lincoln may withdraw or modify its earlier offer to reinsure.
F. The terms of an offer to reinsure shall supercede the terms of this
Agreement to the extent of any conflicts between the parties. Otherwise,
reinsurance of a Policy ceded as Facultative Reinsurance shall be in
accordance with the terms of this Agreement.
CONTINUATIONS
A. If Farm Bureau issues a Continuation of a Policy within its normal
continuation rules and practices, it agrees to reinsure the Continuation
with Lincoln. Reinsurance shall continue (1) under the
reinsurance
agreement between Farm Bureau and Lincoln which provides reinsurance of the
Policy form of the Continuation or (2) under this Agreement if there is no
such agreement.
B. A Policy which is a Continuation of a Policy that was not previously
reinsured with Lincoln may only be reinsured under this Agreement with the
written consent of Lincoln and the original reinsurer.
C. If the original Policy was ceded to Lincoln as Facultative Reinsurance and
Farm Bureau approves an increase in the face amount of the Continuation
based upon receipt of any new information pertaining to the insurability of
the proposed insured, Farm Bureau agrees to submit the Continuation to
Lincoln for consideration as Facultative Reinsurance. In such case, Lincoln
shall only be bound to reinsure the Continuation in accordance with its
offer to reinsure the Continuation.
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D. Reinsurance at issue of the Continuation shall not exceed the Reinsured Net
Amount at Risk of the original Policy immediately prior to the issuance of
the Continuation.
E. Premiums payable for reinsurance of a Continuation shall be calculated
using the rate schedule applicable to the Policy form of the Continuation
as specified in the Premium Schedule. If there is no rate schedule
applicable to the Policy form of the Continuation, reinsurance premiums
shall be payable using the rate schedule applicable to the original Policy.
F. If the Continuation results in a change in the life status of the insured
risk from a single-insured plan to a joint- or multiple- insured plan,
Lincoln must consent to the Continuation.
TERMS OF REINSURANCE
A. The plan of reinsurance shall be yearly renewable term reinsurance of the
Reinsured Net Amount at Risk of a Policy.
B. Reinsurance of a Policy shall commence on the Policy date, except (1) in
the case of Facultative Reinsurance, reinsurance shall commence on the
Policy date only if Lincoln's offer to reinsure is the best offer of
reinsurance received by Farm Bureau as determined by Farm Bureau's
published reinsurance placement rules in effect as of such date, and (2) if
a premium receipt is issued by Farm Bureau in connection with an
application for the Policy, reinsurance shall commence prior to the Policy
date only if and as specified in a Premium Receipt Addendum.
C. Farm Bureau agrees not to use Lincoln's name in connection with the sale of
the Policies.
D. In no event shall reinsurance under this Agreement be in force with respect
to a Policy unless the issuance and delivery of the Policy is in compliance
with the laws of all applicable jurisdictions and Farm Bureau's corporate
charter.
E. Farm Bureau agrees to maintain reinsurance of a Policy in force in
accordance with the terms of this Agreement for as long as its Policy
remains in force.
PAYMENTS BY FARM BUREAU
A. Farm Bureau agrees to pay Lincoln premiums for reinsurance of a Policy
equal to the appropriate rate specified in the Premium Schedule times the
Reinsured Net Amount at Risk of the Policy.
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B. The Premium Schedule specifies other monetary amounts which Farm Bureau
agrees to take into account when calculating the amount due Lincoln.
C. Reinsurance premiums shall be due and payable as specified in the
Administration Schedule.
D. The payment of reinsurance premiums shall be a condition precedent to the
liability of Lincoln under this Agreement. If reinsurance premiums are not
paid when due, Lincoln may give Farm Bureau thirty (30) days' written
notice of its intent to terminate reinsurance because of Farm Bureau's
failure to pay reinsurance premiums. Reinsurance of all Policies having
reinsurance premiums in arrears shall terminate as of the date to which
reinsurance premiums had previously been paid unless all premiums in
arrears are paid before the end of the thirty (30) day notice period. If
reinsurance on any Policy terminates because of Farm Bureau's failure to
pay reinsurance premiums, reinsurance of Policies with premiums
subsequently becoming due shall automatically terminate as of the date on
which new reinsurance premiums become due.
E. So that Lincoln need not maintain deficiency reserves in connection with
reinsurance premiums payable pursuant to this Agreement, the premium rates
specified in the Premium Schedule shall only be guaranteed for one Policy
year. Nevertheless, Lincoln shall anticipate continuing to accept
reinsurance on the basis of such rates for all Policies originally ceded
pursuant to such rates.
PAYMENTS BY LINCOLN
A. Lincoln agrees to pay Farm Bureau the Reinsured Net Amount at Risk of any
claim paid by Farm Bureau pursuant to a Policy in accordance with the
"Settlement of Claims" article.
▇. ▇▇▇▇▇▇▇ agrees to pay the Claims Ratio of any expenses incurred in
connection with Policy claims except as set forth in the "Settlement of
Claims" article.
C. The Premium Schedule specifies other monetary amounts that Lincoln agrees
to pay Farm Bureau pursuant to this Agreement.
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REINSURANCE ADMINISTRATION
The methods for placing reinsurance into effect, for paying reinsurance
premiums, and for notifying Lincoln of Policy lapses, reinstatements,
reductions, Continuations, increases in the Reinsured Net Amount at Risk;
and of other changes affecting reinsurance shall be specified in the
Administration Schedule.
SETTLEMENT OF CLAIMS
A. Farm Bureau agrees to give Lincoln prompt written notice of its receipt of
any claim on a Policy and to keep Lincoln informed of any legal proceedings
or settlement negotiations in connection with a claim. Copies of written
materials relating to such claim, legal proceedings or negotiation shall be
furnished to Lincoln upon request.
B. Farm Bureau's obligation to provide notice of a claim on a Policy shall
not be construed as a condition precedent to Lincoln's obligation to pay
the claim. Farm Bureau's failure to provide notice shall be considered a
breach of a promise which may entitle Lincoln to damages.
C. Farm Bureau agrees to act in accord with its standard practices applicable
to all claims in enforcing the terms and conditions of the Policies and
with respect to the administration, negotiation, payment, denial, or
settlement of any claim or legal proceeding.
▇. ▇▇▇▇▇▇▇ agrees to accept the good faith decision of Farm Bureau in payment
or settlement of any claim for which Lincoln has received the required
notice. Lincoln agrees to pay Farm Bureau the Reinsured Net Amount at Risk
on which reinsurance premiums have been computed upon receiving proper
evidence that Farm Bureau has paid a Policy claim. Payment of the Reinsured
Net Amount at Risk on account of death shall be made in one lump sum.
▇. ▇▇▇▇▇▇▇'▇ liability shall include indemnification of the Claims Ratio of
any expenses incurred by Farm Bureau in defending or investigating a Policy
claim with the exception of
(1) salaries of employees or other internal expenses of Farm Bureau;
(2) routine investigative or administrative expenses;
(3) expenses incurred in connection with a dispute arising out of
conflicting claims of entitlement to proceeds of a Policy that Farm
Bureau admits are payable;
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(4) any gratuitous payments made by Farm Bureau; and
(5) any punitive damages awarded against Farm Bureau, and expenses
incurred in connection with such damages, that are based on the acts
or omissions of Farm Bureau or its agents.
▇. ▇▇▇▇▇▇▇ agrees to hold Farm Bureau harmless from certain expenses and
liabilities that result from Lincoln's own acts or omissions as provided in
this section. For this purpose, Lincoln agrees to indemnify Farm Bureau for
Lincoln's equitable share of those punitive and exemplary damages awarded
against Farm Bureau, and expenses incurred in connection with a claim for
such damages, if (1) Lincoln actively participated in the acts or
omissions, including the decision to deny a claim for Policy benefits, and
(2) those acts or omissions serve as a material basis for the punitive or
exemplary damages. Lincoln's equitable share shall be determined by an
assessment of Lincoln's participation in the particular case.
G. If Farm Bureau should contest or compromise any claim and the amount of
Farm Bureau's liability is thereby reduced, Lincoln's liability shall be
reduced by the Claims Ratio of the reduction.
H. If Farm Bureau should recover monies from any third party in connection
with or arising out of any Policy, Farm Bureau agrees to pay Lincoln the
Claims Ratio of the recovery.
I. If the amount of insurance provided by a Policy is increased or reduced
because of a misstatement of age or sex, Lincoln's liability shall be
increased or reduced by the Claims Ratio of the amount of the increase or
reduction.
J. If Farm Bureau pays interest on a claim, Lincoln agrees to pay the interest
on the Reinsured Net Amount at Risk computed at the same rate and for the
same period as that paid by Farm Bureau, but in no event later than the
date the claim is finally adjudicated by Farm Bureau.
K. If Farm Bureau is required to pay penalties and interest imposed
automatically by statute, Lincoln shall indemnify Farm Bureau for the
Claims Ratio of such penalties and interest.
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REINSTATEMENTS
A. If Farm Bureau reinstates a lapsed Policy in accordance with the terms of
the Policy and Farm Bureau's underwriting rules and practices, Lincoln
agrees to reinstate reinsurance of the Policy automatically unless
Lincoln's offer to reinsure the Policy specifies that reinsurance of the
Policy may only be reinstated as Facultative Reinsurance.
B. If Farm Bureau collects premiums in arrears from the policyholder of a
reinstated Policy, it agrees to pay Lincoln all corresponding reinsurance
premiums in arrears in connection with the reinstatement, plus Lincoln's
Proportionate Share of any interest received by Farm Bureau in connection
with the reinstatement.
REDUCTIONS IN INSURANCE
If individual life insurance on a life reinsured under this Agreement
terminates, the Reinsurance Amount shall be reduced as specified in the
Administration Schedule.
INCREASE IN POLICY NET AMOUNT AT RISK
A. If the Policy Net Amount at Risk on a Policy increases and the increase is
subject to Farm Bureau's underwriting approval, the Reinsured Net Amount at
Risk of the Policy shall only increase if the conditions of either the
"Automatic Reinsurance" or "Facultative Reinsurance" articles are
satisfied.
B. If the Policy Net Amount at Risk on a Policy increases causing the
Reinsured Net Amount at Risk to exceed the Reinsurance Amount, and the
increase is not subject to Farm Bureau's underwriting approval, Lincoln
agrees to accept a portion of such increases only if and as specified in a
Increasing Policy Addendum.
CHANGES IN RETENTION
A. If Farm Bureau increases its Retention on new Policies, it agrees to notify
Lincoln in writing within sixty (60) days of such increase. The notice
shall specify the new Retention and the Effective Date thereof.
B. Whenever Farm Bureau increases its Retention on new Policies, it also
agrees to indicate in its notice whether it wishes to (1) continue its
previous retention on in force Policies or (2) increase its Retention on in
force Policies and recapture reinsurance. If Farm Bureau elects (2), Farm
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Bureau's new Retention on an in force Policy shall be calculated using the
insured's age, mortality class, Policy form, and country of residence at
issue of the Policy.
C. If Farm Bureau elects to increase its Retention on in force Policies
pursuant to section B, its new Retention for such Policies shall become
effective on the later of (1) the reinsurance renewal date of the Policy
first following the effective date of its new Retention for new Policies
and (2) the Policy anniversary date specified in the Administration
Schedule. If Farm Bureau fails to initiate recapture of reinsurance within
one hundred and eighty (180) days of when the first of its Policies becomes
eligible for recapture, its election to recapture reinsurance shall be
considered waived.
D. If an in force Policy is subject to a waiver of premium claim on the date
the Policy qualifies for a new Retention, the new Retention shall
nonetheless become effective on such date for purposes of life reinsurance.
E. Farm Bureau may only elect to increase its Retention on in force Policies
if
1) it maintained a Retention greater than $0 at the time the Policy
was issued and retained its Retention at such time;
2) it increases its Retention on all eligible in force Policies; and
3) it retains the insurance recaptured from Lincoln at its own risk
without benefit of any proportional or nonproportional reinsurance
other than catastrophe accident reinsurance.
F. Notwithstanding the preceding:
(1) the recapture of the Reinsurance Amount shall be limited to
Lincoln's portion of all reinsurance ceded by Farm Bureau on the
Policy; and
(2) if Farm Bureau gives notice of its intent to increase its Retention
on in force Policies within five (5) years following a merger with
another insurance company or the date it accepts the Policies by
means of an assignment, the new Retention applicable to such
Policies shall be limited to 200% of the original reinsured's pre-
merger or pre-assignment Retention.
G. For purposes of this article, Continuations shall be considered issued on
the issue date of the original Policy.
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ASSIGNMENT OF REINSURANCE
If Farm Bureau sells, assumption reinsures or otherwise transfers the
Policies to another insurer, it agrees to require that the other insurer
assume all rights and obligations of Farm Bureau under this Agreement.
Lincoln may object to any such transfer that would result in a material
adverse economic impact to Lincoln. If Lincoln so objects, Farm Bureau and
Lincoln agree to mutually calculate a termination charge that shall be paid
by Farm Bureau to Lincoln upon the transfer and this Agreement shall be
terminated with respect to all Policies transferred by Farm Bureau.
MATERIAL CHANGES
A. Farm Bureau agrees to notify Lincoln in writing of any anticipated Material
Change in any terms or conditions of the Policies, in Farm Bureau's
underwriting rules and practices applicable to the Policies or in Farm
Bureau's claims practices and procedures.
B. In the event of a Material Change to the Policies, to Farm Bureau's
underwriting rules and practices or to its claims practices and procedures,
Lincoln may at its option
(1) continue to reinsure the Policies under current terms;
(2) reinsure Policies under modified terms to reflect the Material
Change; or
(3) consider future Policies as issued in a Policy form that is not
reinsured under this Agreement.
ERRORS
A. Any Error by either Farm Bureau or Lincoln in the administration of
reinsurance under this Agreement shall be corrected by restoring both Farm
Bureau and Lincoln to the positions they would have occupied had no Error
occurred. Any monetary adjustments made between Farm Bureau and Lincoln to
correct an Error shall be without interest.
B. When a party claims that an Error should be corrected pursuant to
section A, that party agrees to investigate whether other instances of the
Error have also occurred and agrees to report its findings to the other
party.
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AUDITS OF RECORDS AND PROCEDURES
A. Lincoln or Farm Bureau may audit, at any reasonable time and at its own
expense, all records and procedures relating to reinsurance under this
Agreement. The party being audited agrees to cooperate in the audit,
including providing any information requested by the other in advance of
the audit.
B. Upon request, Farm Bureau agrees to furnish Lincoln with copies of any
underwriting information in Farm Bureau's files pertaining to a Policy.
ARBITRATION
A. If Farm Bureau and Lincoln cannot mutually resolve a dispute that arises
out of or relates to this Agreement, the dispute shall be decided through
arbitration as specified in the Arbitration Schedule. The arbitrators shall
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 applicable law.
There shall be no appeal from their decision, except that either party may
petition a court having jurisdiction over the parties and the subject
matter to reduce the arbitrators' decision to judgement.
B. The parties intend this article to be enforceable in accordance with the
Federal Arbitration Act (9 U.S.C. Sections 1 et seq.), including any
amendments to that Act which are subsequently adopted. If either party
refuses to submit to arbitration as required by section A, the other party
may request a United States Federal District Court to compel arbitration in
accordance with the Federal Arbitration Act. Both parties consent to the
jurisdiction of such court to enforce this article and to confirm and
enforce the performance of any award of the arbitrators.
INSOLVENCY OF FARM BUREAU
A. In the event of the insolvency of Farm Bureau and the appointment of a
conservator, liquidator or statutory successor of Farm Bureau, reinsurance
shall be payable immediately upon demand to such conservator, liquidator or
statutory successor, with reasonable provision for verification before
payment, on the basis of claims allowed against Farm Bureau by any court of
competent jurisdiction or by the conservator, liquidator or statutory
successor of Farm Bureau without diminution because of the insolvency of
Farm Bureau or because such conservator, liquidator or
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statutory successor has failed to pay all or a portion of any claims.
B. In the event of the insolvency of Farm Bureau, the liquidator, receiver, or
other statutory successor of Farm Bureau agrees to give Lincoln written
notice of the pendency of a claim on a Policy within a reasonable time
after such claim is filed in the insolvency proceeding. During the pendency
of any such claim, Lincoln may investigate the claim and interpose in the
name of Farm Bureau (its conservator, liquidator, or statutory successor),
but at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses which Lincoln may deem available to
Farm Bureau or its conservator, liquidator, or statutory successor.
C. The Claims Ratio of the expense thus incurred by Lincoln shall be charged,
subject to court approval, against Farm Bureau as part of the expense of
liquidation.
OFFSET
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against
either Farm Bureau or Lincoln with respect to this Agreement or any other
reinsurance agreement between the parties, shall be offset and only the
balance allowed or paid. If either Farm Bureau or Lincoln is then under
formal insolvency proceedings, this right of offset shall be subject to the
laws of the state exercising primary jurisdiction over such proceedings.
PARTIES TO THE AGREEMENT
This is an Agreement for indemnity reinsurance solely between Farm Bureau
and Lincoln. The acceptance of reinsurance under this Agreement shall not
create any right or legal relation whatever between Lincoln and an insured,
policyholder, beneficiary, or any other party to or under any Policy.
COMMENCEMENT AND TERMINATION
A. This Agreement shall be effective as of the date set forth on the cover
page.
B. Either Farm Bureau or Lincoln may terminate this Agreement for new
reinsurance by giving ninety (90) days' written notice to the other party.
In such case, Farm Bureau
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agrees to continue to cede, and Lincoln agrees to continue to accept,
reinsurance in accordance with this Agreement of Policies issued prior to
the expiration of the ninety (90) day period. All reinsurance that has been
placed in effect prior to such date shall remain in effect in accordance
with the terms of this Agreement, until the earlier of (1) the termination
or expiration of the Policy and (2) the termination of this Agreement
pursuant to sections C or D below.
C. Reinsurance of a Policy shall terminate as of the reinsurance premium
renewal date on which the Reinsured Net Amount at Risk for such Policy is
less than the automatic termination amount specified in the Administration
Schedule, provided the reinsurance has been in force for the period
specified in the Administration Schedule.
▇. ▇▇▇▇▇▇▇ may terminate all reinsurance under this Agreement in accordance
with section D of the "Payments by Farm Bureau" article if Farm Bureau
fails to pay reinsurance premiums when due.
ENTIRE AGREEMENT
A. This Agreement represents the entire agreement between Farm Bureau and
Lincoln and supercedes any prior oral or written agreements between the
parties regarding its subject matter.
B. No modification of this Agreement shall be effective unless set forth in a
written amendment executed by both parties.
C. A waiver of a right created by this Agreement shall constitute a waiver
only with respect to the particular circumstance for which it is given and
not a waiver in any future circumstance.
DEFERRED ACQUISITION COST TAX ELECTION
A. Lincoln and Farm Bureau each acknowledge that it is subject to taxation
under Subchapter "L" of the Internal Revenue Code of 1986 (the "Code").
B. With respect to this Agreement, Lincoln and Farm Bureau agree to the
following pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations
issued December 1992, whereby:
(1) Each party agrees to attach a schedule to its federal income tax
return which identifies this Agreement for which the joint election
under the Regulation has been made;
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(2) The party with net positive consideration, as defined in the
Regulation promulgated under Code Section 848, for this Agreement
for each taxable year, agrees to capitalize specified Policy
acquisition expenses with respect to this Agreement without regard
to the general deductions limitation of Section 848(c)(l);
(3) Each party agrees to exchange information pertaining to the amount
of net consideration under this Agreement each year to ensure
consistency; and
(4) This election shall be effective for the year that this Agreement
was entered into and for all subsequent years that this Agreement
remains in effect.
DEFINITIONS
A. AUTOMATIC LIMIT - the amount specified in the Life Benefits Schedule used
to calculate the maximum Reinsurance Amount that may be ceded as Automatic
Reinsurance.
B. AUTOMATIC REINSURANCE - reinsurance satisfying certain conditions relating
to the reinsurance as specified in the Agreement that is ceded to Lincoln
without obtaining a specific offer to reinsure from Lincoln.
C. CLAIMS RATIO - the Reinsured Net Amount at Risk on which reinsurance
premiums have been computed divided by the Policy Net Amount at Risk
calculated as of the date of the last premium payment.
D. CONTINUATION - a new Policy replacing a Policy or a change in an existing
Policy issued or made either (1) in compliance with the terms of the Policy
or (2) without (a) the same new underwriting information Farm Bureau would
obtain in the absence of the Policy, (b) a suicide exclusion or contestable
period as long as those contained in other new issues of Policies, or (c)
the payment of the same commissions in the first year that Farm Bureau
would have paid in the absence of the original Policy.
E. EFFECTIVE DATE - the date specified on the cover page on which this
Agreement becomes binding on Farm Bureau and Lincoln.
F. ERROR - any isolated deviation from the terms of this Agreement resulting
from the act or omission of an employee of either Farm Bureau or Lincoln
whose principal function
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relates to the administration of reinsurance, whether such deviation
results from inadvertence or a mistake in judgment. "Error" shall not
include any failure to comply with the terms of an offer of Facultative
Reinsurance or any negligent or deliberate deviation from the terms of this
Agreement.
G. FACULTATIVE REINSURANCE - reinsurance that is ceded to Lincoln only after
Farm Bureau has obtained and accepted a specific offer to reinsure made by
Lincoln. Such reinsurance may be ceded to Lincoln only upon the terms
specified by Lincoln in its offer to reinsure and the terms of this
Agreement that do not conflict with the specific offer to reinsure.
▇. ▇▇▇▇▇▇▇'▇ PROPORTIONATE SHARE - the Reinsurance Amount divided by the death
benefit of a Policy as of the date of issue or as of the date of a
subsequent change to the Policy that affects the Reinsurance Amount.
I. MATERIAL CHANGE - a change that a prudent insurance or reinsurance
executive would consider as likely to impact upon a party's financial
experience under this Agreement.
J. PARTICIPATION LIMIT - the amount specified in the Life Benefits Schedule
used as a condition for ceding Automatic Reinsurance.
K. POLICY - an individual life insurance contract issued by Farm Bureau on any
of the Policy forms specified in the Life Benefits Schedule. A "Policy"
shall include any attached riders and endorsements specified in the Life
Benefits Schedule or any Addendum to this Agreement.
L. POLICY NET AMOUNT AT RISK - on the reinsurance premium renewal date, the
death benefit of a Policy less either the terminal reserve or, in the case
of interest sensitive Policies, the accumulation account or cash value on
the Policy, such difference taken to the nearest dollar. The terminal
reserve or cash value shall be disregarded if a Policy is on either a level
term plan of twenty years or less or on a decreasing term plan. The basis
for determining the Policy Net Amount at Risk may be modified with the
consent of both Farm Bureau and Lincoln without the need for a formal
amendment of this Agreement.
M. REINSURANCE AMOUNT - the Policy death benefit at issue less any
accumulative value, if applicable, less the Retention on the Policy times
the percentage of Automatic Reinsurance ceded to Lincoln as specified in
the Life Benefits Schedule. For Facultative Reinsurance, the "Reinsurance
Amount" is
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that amount of the Policy death benefit at issue for which Farm Bureau
accepts Lincoln's offer to reinsure.
N. REINSURED NET AMOUNT AT RISK - the percentage of Automatic Reinsurance
ceded to Lincoln as specified in the Life Benefits Schedule or the
percentage ceded as modified pursuant to the Facultative Reinsurance
process times the remainder of (1) the Policy Net Amount at Risk less (2)
the Retention on the Policy.
O. RETENTION - the amount specified in the Life Benefits Schedule that is held
by Farm Bureau at its own risk on a life without the benefit of
proportional reinsurance. In calculating the Retention, the sum retained by
Farm Bureau on the life and in force as of the date of issue of the Policy
shall be taken into account.
P. ULTIMATE AMOUNT - the projected maximum Policy Net Amount at Risk that a
Policy could achieve based on reasonable assumptions made about the
operation of certain characteristics of the Policy form.
EXECUTION
Farm Bureau and Lincoln, by their respective officers, executed this
Agreement in duplicate on the dates shown below. As of the Effective Date,
this Agreement consists of:
- this Yearly Renewable Term
Reinsurance Agreement numbered 21;
- a Life Benefits Schedule;
- an Administration Schedule;
- a Premium Schedule;
- an Arbitration Schedule;
- a Waiver of Premium Benefit Addendum;
- a Premium Receipt Addendum;
- a Last Survivor Addendum;
- a Guaranteed Purchase Option Addendum; and
- a First-To-Die Addendum.
16
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
-------------------------------------
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title VICE PRESIDENT-CHIEF FINANCIAL OFFICER
------------------------------------------
Date Sept. 12, 1996
-------------------------------------------
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title FINANCIAL PLANNING VICE PRESIDENT
------------------------------------------
Date Sept. 12, 1996
-------------------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Vice President
Date August 30, 1996
-------------------------------------------
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Assistant Secretary
Date August 30, 1996
-------------------------------------------
17
LIFE BENEFITS SCHEDULE
(Effective as of March 14, 1996)
to
Agreement Number 537/21
POLICIES REINSURED: Farm Bureau agrees to cede reinsurance in the listed
percentages of Policies issued on the following Policy forms with issue
dates from and until the dates listed below to insureds having surnames
beginning with the letters of the alphabet shown. Any Addenda referred to
in the last column shall also be applicable to reinsurance of the Policy.
PERCENT OF POLICY
REINSURANCE ISSUE DATES ALPHA APPLICABLE
POLICY FORM CEDED TO LINCOLN FROM/UNTIL SPLIT ADDENDA
----------- ---------------- ----------- ----- ----------
Universal Life
(Form 434-112
(03-96)) 100% 03-14-96/-- A-Z WP,PR,GP
Universal First-
To-Die Rider
(Form 434-850
(03-96)) 100 03-14-96/-- A-Z FD
Universal Adult
Term Rider
(Form 434=862R
(03-96)) 100 03-14-96/-- A-Z --
Universal Children's
Term Rider
(Form 434-832R
(03-96)) 100 03-14-96/-- A-Z --
Variable Universal
Life (Form 434-114
(03-96)) 100 03-14-96/-- A-Z WP,PR,GP
Last Survivor
Universal Life
(Form 434-158
(03-96)) 100 03-14-96/-- A-Z LS,PR,GP
Universal Cost of
Living Increase Benefit
(Form 434-091(03-96)) 100 03-14-96/-- A-Z --
18
RETENTION: Farm Bureau agrees to hold the following Policy Net Amounts at Risk
at its own risk on a life without the benefit of proportional reinsurance. In
calculating its Retention, amounts retained by Farm Bureau on other individual
life insurance Policies in force as of the issue date of the Policy shall be
taken into account.
AGES STANDARD-TABLE P
---- ----------------
All $ 500,000
The above limits may be exceeded by as much as $25,000 in order to avoid
reinsurance.
AUTOMATIC LIMITS: To bind Automatic Reinsurance, the maximum amount of life
insurance in force with Farm Bureau on a single life, or in the case of
individual life insurance with increasing death benefits, the Ultimate Amounts,
plus all amounts applied for from Farm Bureau on that life, or in the case of
individual life insurance with increasing death benefits, the Ultimate Amounts,
may not exceed the sum of the Retention on the life plus the following amounts.
AGES STANDARD-TABLE P OVER TABLE P
---- ---------------- ------------
0-70 $ 2,500,000 None
Over 70 None None
PARTICIPATION LIMITS: To bind Automatic Reinsurance, the sum of (1) the maximum
amount of individual life insurance in force on the insured in all companies or,
in the case of individual life insurance with increasing death benefits, the
Ultimate Amounts, as of the Policy Date of a Policy and (2) the amount then
being applied for by all companies, or in the case of individual life insurance
with increasing death benefits, the Ultimate Amounts, on the insured, may not
exceed the following amounts.
AGES STANDARD-TABLE P
---- ----------------
0-70 $ 5,000,000
19
ADMINISTRATION SCHEDULE
(Effective as of March 14, 1996)
to
Agreement Number 537/21
TO PLACE REINSURANCE INTO EFFECT
(1) FOR AUTOMATIC REINSURANCE: Farm Bureau agrees to cede Automatic Reinsurance
of a Policy by including all required information about the Policy on the new
business segment of the next self administered statement submitted in accordance
with the REPORTS section below following issuance of the Policy.
(2) FOR FACULTATIVE REINSURANCE: Farm Bureau agrees to submit an application
form for Facultative Reinsurance in substantial accord with the attached form.
It agrees to allocate reinsurance in accordance with its published facultative
placement rules among those reinsurers making facultative offers to reinsure a
Policy. If according to such rules Lincoln's offer is the one Farm Bureau
intends to accept, Farm Bureau shall cede Facultative Reinsurance of the Policy
by including all required information about the Policy on the new business
segment of the next self-administered statement submitted in accordance with the
REPORTS section below within one hundred twenty (120) days from date of
Lincoln's facultative offer or the date specified in Lincoln's approval of a
written request from Farm Bureau to grant an extension to the facultative offer.
MINIMUM CESSION REQUIREMENT
Farm Bureau agrees not to cede any Policy as Automatic Reinsurance if the
Reinsurance Amount of the Policy is less than $25,000.
REPORTS
Within thirty (30) days following the end of each month, Farm Bureau agrees to
send Lincoln the following three (3) reports:
(1) A BILLING STATEMENT containing Policy level detail in a form mutually
acceptable to Farm Bureau and Lincoln. At a minimum, it shall contain
the data elements specified in the attached Policy Detail Report. If
the Policy contains supplemental benefits that are also reinsured, each
segment of the Billing Statement shall include supplemental benefit
detail.
20
The Billing Statement shall be segmented as follows:
- NEW ISSUES and first-year premiums due for new reinsurance.
- BALANCE OF FIRST-YEAR POLICIES (Policies previously reported as
new issues) and corresponding balance of first-year reinsurance
premiums due for the reporting period.
- POLICIES WITH RENEWAL REINSURANCE PREMIUMS due during the
reporting period.
- POLICIES THAT HAVE UNDERGONE A CHANGE that affects reinsurance.
Separate segments may be submitted for any change affecting
reinsurance of a Policy, including
- reissues,
- reinstatements,
- terminations,
- reductions,
- changes in Retention,
- changes in mortality ratings,
- issuance of a Continuation, and
- increases or decreases in the Net Amount at Risk
(2) A SUMMARY ACCOUNTING REPORT that summarizes all financial transactions
during the reporting period. The report shall separately total life
and supplemental benefits for the first year reinsurance premiums are
due, shall total life and supplemental benefits for renewal
reinsurance premiums due, and shall identify all adjustments
therefrom.
(3) A POLICY EXHIBIT REPORT in substantial accord with the attached form
that indicates in force reinsurance as of the beginning of the
reporting period, increases during the reporting period (new
reinsurance, reinstatements, recoveries, or other increases) and all
decreases during the reporting period (terminations, reductions,
surrenders, death claims or other decreases); and the resulting in
force reinsurance as of the end of the reporting period.
Farm Bureau agrees to send Lincoln within ten (10) working days following each
quarter-end a RESERVE REPORT in substantial accord with the attached form.
Lincoln may request a change in the reporting requirements in order to obtain
data it reasonably needs to properly administer this Agreement or to prepare its
financial statements.
21
REINSURANCE PREMIUMS DUE
Reinsurance premiums are payable monthly in arrears and are due with the reports
submitted pursuant to the REPORTS section above.
INCREASE IN LIMIT OF RETENTION
If Farm Bureau elects to increase its Retention on in force Policies, the
increased Retention may not become effective for a Policy until the Policy's
tenth anniversary date.
REDUCTIONS IN INSURANCE
(1) For purposes of this section only, the term "Policy" shall refer to any life
insurance issued by Farm Bureau on the insured person, whether or not reinsured
with Lincoln.
(2) If life insurance retained by Farm Bureau on an insured person reduces
because a Policy on that life lapses or reduces in accordance with the terms of
a Policy, the Reinsurance Amount shall be reduced as of the effective date of
the termination or reduction in insurance to restore, as far as possible, the
Retention of Farm Bureau on the life.
(3) Reinsurance shall first be reduced on the specific Policy that was
terminated or reduced. The balance, if any, of the reduction in the Reinsurance
Amount shall be applied to reinsurance of other policies on the life beginning
with the first Policy issued.
(4) Notwithstanding the preceding, the reduction of the Reinsurance Amount shall
not exceed the amount of the reduction times Lincoln's share of the total
reinsurance on the life prior to the reduction and shall not include any Policy
ceded as Facultative Reinsurance on which, at the time of issue, Farm Bureau
retained less than its Retention on the life.
AUTOMATIC TERMINATION
Reinsurance of a Policy shall terminate as of the beginning of the Policy year
during which the Reinsured Net Amount at Risk will be less than $5,000, provided
reinsurance of the Policy has been in force for a period of at least three (3)
years.
22
CLAIMS ADMINISTRATION
Claims shall be individually reported as incurred using a form in substantial
accord with the attached form. Farm Bureau may take credit for unearned
reinsurance premiums from the date of death to the next Policy paid to date on
its next billing statement.
PREMIUM TAX ADMINISTRATION
Payment to Farm Bureau from Lincoln for any premium tax reimbursement shall be
made annually following each year end.
23
PREMIUM SCHEDULE
(Effective as of March 14, 1996)
to
Agreement Number 537/21
STANDARD REINSURANCE PREMIUMS
BASIC REINSURANCE PREMIUM RATES: The monthly reinsurance premium rates for
reinsurance ceded under this Agreement shall be Farm Bureau's applicable
attached cost of insurance rates charged the insured per thousand dollars
of Reinsured Net Amount At Risk times the following percentages:
SMOKING POLICY YEAR
PLAN STATUS 1 2-10 11+
---- ------- - ---- ---
Universal Life (Form 434-112 (03-96)) and
Variable Universal Life (Form 434-114 (03-96))
Preferred Plus 0% 52% 73%
Non-Tobacco 0 54 75
Tobacco 0 47 68
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10* 11+*
---- ------- ----- - ----- ----
Last Survivor Universal Life
(Form 434-158 (03-96)) Non-Tobacco/ 0-69 0% 37% 78%
Non-Tobacco Over 69 0 72 93
Non-Tobacco/ 0-69 0 32 68
Tobacco Over 69 0 52 88
Tobacco/ 0-69 0 22 53
Tobacco Over 69 0 27 78
* Renewal premiums shall be subject to a minimum rate, after
allowances, of .015 per thousand per month.
24
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10 11+
---- ------- ----- - ---- ---
Universal First-To-Die Rider
(Form 434-850 (03-96)) Non-Tobacco/ 0-69 0% 62% 88%
Non-Tobacco Over 69 0 93 100
Non-Tobacco/ 0-69 0 62 88
Tobacco Over 69 0 83 95
Tobacco/ 0-69 0 62 88
Tobacco Over 69 0 73 95
The reinsurance premium for the Universal Adult Term Rider (Form 434-862R
(03-96)) and the Universal Children's Term Rider (Form 434-832R (03-96)) shall
be the same as the base plan to which the rider is attached.
ADDITIONAL AMOUNTS PAID BY FARM BUREAU:
(1) SUBSTANDARD PREMIUMS: For Policies written on substandard risks, the
appropriate premium rate shall be adjusted by multiplying the rate by 25% for
each table assessed the risk and adding such amount to the reinsurance premiums
due.
(2) TEMPORARY FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln a temporary
flat extra premium equal to the product of the flat extra premium assigned by
Farm Bureau or Lincoln on the Policy times the Reinsured Net Amount at Risk
minus an allowance often percent (10%) for all renewal years such premium is
payable.
(3) PERMANENT FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln's
Proportionate Share of any permanent flat extra premium paid calculated on the
initial Reinsured Net Amount at Risk minus an allowance of seventy-five percent
(75%) for the first year such premium is payable and ten percent (10%) for all
renewal years such premium is payable.
(4) CONTINUATIONS: Premiums payable for reinsurance of a Continuation shall be
based on the age at issue and duration from issue of the original Policy. If the
premium scale applicable to a Continuation contains a Policy fee, Farm Bureau
agrees to pay a first-year Policy fee on the Continuation if a Policy fee was
not paid at issue of the original Policy.
25
ADDITIONAL AMOUNTS PAID BY LINCOLN:
(1) PREMIUM TAXES. When Lincoln is not obligated to pay state premium taxes on
reinsurance premiums received from Farm Bureau pursuant to this Agreement, it
agrees to reimburse Farm Bureau for premium taxes equal to the average premium
tax rate paid by Farm Bureau during the calendar year times the amount of
reinsurance premiums (excluding Policy fees, if any) paid hereunder during the
calendar year.
(2) EXPERIENCE REFUNDS: Lincoln shall not pay an experience refund to Farm
Bureau.
(3) UNEARNED PREMIUMS: Lincoln agrees to refund, without interest, any
reinsurance premiums unearned as of the date of death of an insured person or as
of the date of a reduction of reinsurance pursuant to the "Reductions" article.
SPECIAL CONSIDERATIONS:
Pursuant to paragraph 2.6 of the Last Survivor Addendum, the Joint Equal Age
shall be calculated by using the attached formula.
26
ARBITRATION SCHEDULE
(Effective as of March 14,1996)
to
Agreement Number 537/21
To initiate arbitration, either Farm Bureau or Lincoln agrees to notify the
other party in writing of its desire to arbitrate, stating the nature of its
dispute and the remedy sought. The party to which the notice is sent agrees to
respond in writing to the notification within ten (10) days of its receipt.
The arbitration hearing shall be held before a panel of three arbitrators, each
of whom must be a present or former officer of a life insurance company. An
arbitrator may not be a present or former officer, attorney, or consultant of
Farm Bureau or Lincoln, or either's affiliates.
Farm Bureau and Lincoln agree to each name five (5) candidates to serve as an
arbitrator. Each agree to choose one candidate from the other's list, and these
two candidates shall serve as the first two arbitrators. If one or more
candidates so chosen decline to serve as an arbitrator, the party that named the
candidate shall add an additional candidate to its list, and the other party
agrees to again choose one candidate from the list. This process shall continue
until two arbitrators have been chosen and have accepted. Farm Bureau and
Lincoln agree to present their initial lists of five (5) candidates by written
notification to the other party within twenty-five (25) days of the date of the
mailing of the notification initiating the arbitration. Any subsequent additions
to the list which are required shall be presented within ten (10) days of the
date the naming party receives notice that a candidate who has been chosen
declines to serve.
The two arbitrators shall select the third arbitrator from the eight (8)
candidates remaining on the lists of Farm Bureau and Lincoln within fourteen
(14) days of the acceptance of their positions as arbitrators. If the two
arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to Farm Bureau and Lincoln. Farm Bureau and Lincoln agree to take
turns striking the names of the remaining candidates from the initial eight (8)
candidates until only one candidate remains. If the candidate so chosen shall
decline to serve as the third arbitrator, the candidate whose name was stricken
last shall be nominated as third arbitrator. This process shall continue until a
candidate has been chosen and accepted. This candidate shall serve as the third
arbitrator. The first turn at striking the name of a candidate shall belong to
the party that is responding to the other party's initiation of arbitration.
Once chosen, the arbitrators are empowered to decide all substantive and
procedural issues by a majority of votes.
27
It is agreed that each of the three arbitrators should be impartial regarding
the dispute and should resolve the dispute on the basis described in the
"Arbitration" article. At no time shall either Farm Bureau or Lincoln contact or
otherwise communicate with any person who is to be or has been designated as a
candidate to serve as an arbitrator concerning the dispute, except upon the
basis of jointly drafted communications provided by both Farm Bureau and Lincoln
to inform those candidates actually chosen as arbitrators of the nature and
facts of the dispute. Likewise, any written or oral arguments provided to the
arbitrators concerning the dispute shall be coordinated with the other party and
shall be provided simultaneously to the other party or shall take place in the
presence of the other party. Further, at no time shall any arbitrator be
informed that he or she has been named or chosen by one party or the other.
The arbitration hearing shall be held on the date and in the location set by the
arbitrators. In no event shall this date be later than six (6) months after the
appointment of the third arbitrator. As soon as possible, the arbitrators shall
establish prearbitration procedures as warranted by the facts and issues of the
particular case. At least ten (10) days prior to the arbitration hearing, each
party agrees to 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 and agree to give the
evidence such weight as they deem appropriate after consideration of any
objections raised concerning it. The party initiating the arbitration shall 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 shall issue
a written decision that sets forth their findings and any award to be paid as a
result of the arbitration, except that the arbitrators may not award punitive or
exemplary damages. In their decision, the arbitrators shall apportion the costs
of arbitration, which shall include, but not be limited to, their own fees and
expenses.
28
WAIVER OF PREMIUM BENEFIT
ADDENDUM
(Effective as of March 14, 1996)
to
Agreement Number 537/21
The provisions of the Agreement shall apply in all respects to reinsurance of
the Waiver of Premium Benefit provided by the Policies except as otherwise set
forth in this Addendum.
This Addendum is referred to as "WP" in the "Applicable Addendum" column of the
POLICIES REINSURED section of the Life Benefits Schedule.
1. DEFINITIONS
1.1. Lincoln's Proportionate Share - the face amount of the Waiver of Premium
Benefit less Farm Bureau's Waiver of Premium Retention divided by the face
amount of the Waiver of Premium Benefit.
1.2. Policy Premiums - the insurance premiums, cost of insurance rates or
other specified amounts due for the life insurance benefit of a Policy.
1.3. Waiver of Premium Benefit - a benefit provided pursuant to a Policy
wherein Farm Bureau agrees to relinquish its right to Policy Premiums in the
event of the Policyowner's disability until such disability is ended.
2. REINSURANCE TERMS
2.1. Farm Bureau agrees to cede, and Lincoln agrees to accept, Lincoln's
Proportionate Share of the Waiver of Premium Benefit if the following conditions
are met:
2.1.1. Farm Bureau retains the following amounts of Waiver of Premium Benefit
on a life:
$7,500 of Annual Premium
29
2.1.2. the sum of Waiver of Premium Benefit issued by Farm Bureau then in
force on the insured life and the amount of Waiver of Premium Benefit
then being applied for from Farm Bureau does not exceed the sum of
Farm Bureau's face amount of the Policy that corresponds with the
amount of annual premium retained as specified above and the following
amounts:
AGES STANDARD-TABLE F OVER TABLE F
---- ---------------- ------------
0-44 $ 3,000,000 None
45-65 1,500,000 None
Over 65 None None
2.1.3. the sum of the amount of Waiver of Premium Benefit then in force on
the insured life in all companies and the amount of Waiver of Premium
Benefit then being applied for on the insured life from all companies
does not exceed the following amounts:
AGES STANDARD
---- --------
0-70 $ 5,000,000
2.2. Farm Bureau agrees to place Waiver of Premium reinsurance into effect
by following the procedures for placing life reinsurance into effect as set
forth in the Administrative Schedule of the Agreement.
2.3. Waiver of Premium Benefits shall be coinsured with Lincoln Reinsurance
shall follow the forms of Farm Bureau. Farm Bureau agrees to pay Lincoln
reinsurance premiums for Waiver of Premium reinsurance equal to Lincoln's
Proportionate Share of the premium rates as shown in the Premium Schedule and
labeled "UL/VUL NEW ISSUES-Waiver of Charges Percentages" less an allowance of
75% of such premium in the first year and 10% in renewal years.
Waiver of Premium reinsurance premiums are payable with the same frequency as,
and due with, the associated life reinsurance premium. Waiver of Premium
reinsurance premiums shall not be due while a Waiver of Premium Benefit is being
paid. However, while a Waiver of Premium Benefit is being paid, Farm Bureau
agrees to continue to pay Lincoln premiums for reinsurance of other benefits
provided by the Policy in accordance with the Agreement or applicable addenda.
30
2.4. Farm Bureau agrees to give Lincoln prompt notice of any Waiver of
Premium claim, and upon request, agrees to provide proof of the insured person's
continuing disability. Lincoln's reinsurance liability for Waiver of Premium
claims shall equal Lincoln's Proportionate Share of Policy Premiums waived by
Farm Bureau under the Policy. Farm Bureau agrees to notify Lincoln upon the
termination of a Waiver of Premium claim and agrees to resume paying Waiver of
Premium reinsurance premiums starting with the beginning of the first month
following the date the person is no longer eligible for such Waiver of Premium
Benefit.
2.5 Farm Bureau may elect to recapture reinsurance of in force Waiver of
Premium reinsurance in accordance with the procedures set forth in the
Agreement. If Farm Bureau elects to recapture such reinsurance but an insured
person is subject to a Waiver of Premium claim when an increase of its Waiver of
Premium Retention would otherwise become effective, Waiver of Premium
reinsurance shall remain at the current Retention until the Policy returns to a
premium-paying status. After such time, the intended recapture shall occur.
31
PREMIUM RECEIPT ADDENDUM
(Effective as of March 14, 1996)
to
Agreement Number 537/21
The provisions of the Agreement shall apply in all respects to reinsurance of
Farm Bureau's Premium Receipt except as otherwise set forth in this Addendum.
This Addendum is referred to as "PR" in the "Applicable Addendum" column of the
POLICIES REINSURED section of the Life Benefits Schedule.
Provided the conditions specified below are fulfilled, Lincoln agrees to pay
Farm Bureau the Reinsured Net Amount at Risk on any claim paid by Farm Bureau
pursuant to a Premium Receipt, except that Lincoln's liability pursuant to this
Addendum shall not exceed the greater of (a) $250,000, the limit of liability
set forth in Farm Bureau's Premium Receipt, and (b) $1,000,000, Farm Bureau's
collection limit, only if Farm Bureau is ordered to pay such higher amount by a
court of competent jurisdiction.
The following conditions must be satisfied in order for reinsurance of a Premium
Receipt to be effective:
1. Farm Bureau must become liable for a claim pursuant to a Premium
Receipt issued in a form identical to that attached to this Addendum;
2. the Premium Receipt must be given, in return for cash received with an
application for a Policy; and
3. either the Policy being applied for must qualify for Automatic Reinsurance
or Farm Bureau has not received a facultative offer of reinsurance on the
application from another reinsurer which is a better offer than any
facultative offer made by Lincoln as determined by Farm Bureau's published
reinsurance placement rules in force on the date of death.
Reinsurance provided pursuant to this Addendum shall terminate with respect to a
Policy, and reinsurance provided pursuant to the Agreement shall commence, on
the date during the lifetime of the proposed insured that Farm Bureau approves
insurance pursuant to the application.
32
LAST SURVIVOR ADDENDUM
(Effective as of March 14,1996)
to
Agreement Number 537 / 21
The provisions of the Agreement shall apply in all respects to reinsurance of
Last Survivor Policies except as otherwise set forth in this Addendum.
This Addendum is referred to as "LS" in the "Applicable Addendum" column of the
POLICIES REINSURED section of the Life Benefits Schedule.
1. DEFINITIONS
Last Survivor Policy - a Policy insuring two or more persons wherein a death
benefit under the Policy is paid only after all insureds have died, but which
also provides that, upon the death of any insured other than the last, the
terminal reserve or cash value of the Policy will not increase. The provisions
of this Addendum assume that only two persons are insured under a Last Survivor
Policy. However, if more than two persons are insured, the word "both" as used
herein shall mean "all" and the word "either" shall mean "any."
2. REINSURANCE TERMS
2.1. Farm Bureau's Retention for Last Survivor Policies is set forth in the
Life Benefits Schedule. Farm Bureau agrees to retain the greatest amount which
it could retain of its Retention taking into account the sum of amounts
previously issued and retained on all insureds under the Last Survivor Policy.
2.2. To qualify for Automatic Reinsurance, each insured under the Last
Survivor Policy, before making age adjustments to calculate a joint equal age
for premium purposes, must satisfy the conditions for Automatic Reinsurance as
set forth in the Agreement.
2.3. Farm Bureau agrees to place reinsurance of Last Survivor Policies into
effect by following the procedures set forth in the Administrative Schedule of
the Agreement, except that the administrative information provided on each
insured shall cross reference the administrative information relating to other
insureds under the Last Survivor Policy.
33
2.4. Reinsurance premiums shall be based on the Joint Equal Age of the
insureds under the Last Survivor Policy. The Joint Equal Age shall be calculated
by using the formula described in the Premium Schedule. Reinsurance premiums
shall equal the appropriate rate from the Premium Schedule for the Joint Equal
Age times the Reinsured Net Amount at Risk. Such rates shall apply regardless of
the Reinsurance Amount under the Last Survivor Policy.
2.5. Farm Bureau shall only pay one Policy fee, if applicable, on the Last
Survivor Policy.
2.6. Farm Bureau agrees to notify Lincoln of each death and to obtain proof
of death upon the death of each insured. It agrees to investigate each death and
assert any defenses from liability under the Policy in accordance with its
normal claims procedures. Lincoln shall pay the Reinsured Net Amount at Risk
under the Policy only after receiving proof of the death of the last insured
under the Policy to die.
34
GUARANTEED PURCHASE OPTION
ADDENDUM
(Effective as of March 14,1996)
to
Agreement Number 537 / 21
The provisions of the Agreement shall apply in all respects to reinsurance of
Guaranteed Purchase Options and Opted Policies issued in connection with
Guaranteed Purchase Options.
This Addendum is referred to as "GP" in the "Applicable Addendum" column of the
POLICIES REINSURED section of the Life Benefits Schedule.
1. DEFINITIONS
1.1. Base Policy - a Policy which provides a Guaranteed Purchase Option for
an Opted Policy.
1.2. GPO - an option to purchase additional insurance triggered by the
insured reaching pre-defined ages or a specified event without providing
evidence of insurability
1.3. Maximum Face Amount - the sum of the Base Policy and the maximum face
amount on the insured life which may be purchased without evidence of
insurability under the Guaranteed Purchase Options, if all options are elected.
1.4. Opted Policy - an individual life insurance Policy, or an increase to
the face amount of an existing Policy, issued as the result of a Guaranteed
Purchase Option triggered by the insured reaching pre-defined ages or a
specified event.
2. REINSURANCE OF OPTED POLICIES
2.1. Lincoln agrees to accept reinsurance of an Opted Policy only
2.1.1. when such reinsurance would otherwise fall within the automatic
provisions of the Agreement in effect between Farm Bureau and Lincoln
on the effective date of the Opted Policy that gives rise for such
reinsurance;
35
2.1.2. when the Base Policy to which the Guaranteed Purchase Option rider is
attached was issued on a standard basis with no extra premiums or
exclusion riders of any kind;
2.1.3. when, in the underwriting opinion given on a facultative submission at
the time of issue of the Guaranteed Purchase Option rider, Lincoln has
not stated that the risk is not eligible for such a rider or had not
stated that the case should be rated or issued with an exclusion rider
of any kind; and
2.1.4. when the Maximum Face amount does not exceed the sum of Farm Bureau's
Retention and the Automatic Limits specified in the Life Benefit
Schedule of the Agreement.
2.2. Farm Bureau agrees to place reinsurance into effect on the Opted
Policy by following the procedures for placing reinsurance into effect as set
forth in the Administrative Schedule of the Agreement.
2.3. Farm Bureau agrees to pay Lincoln an extra single premium at the time
of issue of the Opted Policy equal to the Reinsured Net Amount at Risk times the
appropriate rate set forth in the Premium Schedule labeled "SCHEDULE 4-91" based
on the original issue age of the insured and the attained duration of the Base
Policy.
2.4. Additionally, from the issue date of the Opted Policy and annually
thereafter. Farm Bureau agrees to pay Lincoln a reinsurance premium equal to the
Reinsured Net Amount at Risk times the appropriate rate set forth in the Premium
Schedule based on the original issue age of the insured and the attainted
duration of the Base Policy. Any reinsurance premium adjustments payable on the
Base Policy shall be payable under the Opted Policy.
2.5. Lincoln shall reimburse Farm Bureau for Farm Bureau Net Amount at Risk
of benefits paid pursuant to Opted Policies.
2.6. Farm Bureau may increase its Retention, and elect to recapture
reinsurance of Opted Policies, in accordance with the procedures set forth in
the Agreement.
36
FIRST-TO-DIE ADDENDUM
(Effective as of March 14, 1996)
to
Agreement Number 537/21
The provisions of the Agreement shall apply in all respects to reinsurance of
First-To-Die Policies except as otherwise set forth in this Addendum.
This Addendum is referred to as "FD" in the "Applicable Addendum" column of the
POLICIES REINSURED section of the Life Benefits Schedule.
1. DEFINITIONS
1.1. First-To-Die Policy - a Policy which insures two or more persons under
which a death benefit is paid only when the first of the insureds dies. The
provisions of this Addendum assume that only two persons are insured under a
First-To-Die Policy. However, if more than two persons are insured, the word
"both" as used herein shall mean "all" and the word "either" shall mean "any."
1.2. Simultaneous Death - the death of the second insured under a
First-To-Die Policy within a certain the number of days of the death of the
first insured as specified in the First-To-Die Policy.
2. TERMS OF REINSURANCE
2.1. In determining its Retention on the First-To-Die Policy, Farm Bureau
shall first determine what its Retention would be on each insured under the
First-To-Die Policy if each were obtaining a single life Policy. For the
First-To-Die Policy, it agrees to retain the lowest amount which it could retain
on either life taking into account amounts previously issued and retained on
either of the insured lives.
2.2. To qualify for Automatic Reinsurance, each insured under the
First-To-Die Policy must satisfy the conditions for Automatic Reinsurance as set
forth in the Agreement.
2.3. Farm Bureau agrees to place reinsurance of First-To-Die Policies into
effect by following the procedures set forth in the Administrative Schedule of
the Agreement, except that the administrative information provided on each
insured
37
shall cross reference the administrative information relating to other insureds
under the First-To-Die Policy.
2.4. Reinsurance premiums shall be payable for each insured under the
First-To-Die Policy. Premiums shall equal the appropriate rate from the Premium
Schedule for each insured's age, sex, smoking status and underwriting
classification times the Reinsured Net Amount at Risk for that insured. Such
rate shall apply regardless of the Reinsurance Amount under the First-To-Die
Policy.
2.5. Farm Bureau shall only pay one Policy fee, if applicable, on the
First-To-Die Policy.
2.6. Upon receiving notice from Farm Bureau of the first death under the
First-To-Die Policy, Lincoln shall pay Farm Bureau the Reinsured Net Amount at
Risk on such insured. Lincoln shall only reimburse Farm Bureau for one death
under the First-To Die Policy even if the Policy contains a Simultaneous Death
benefit provision.
38
AMENDMENT
to the Yearly Renewable Term
Reinsurance Agreement (the "Agreement")
effective March 14,1996, between
FARM BUREAU LIFE INSURANCE COMPANY of West Des Moines, Iowa,
hereinafter referred to as "Farm Bureau,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY of Fort ▇▇▇▇▇, Indiana,
hereinafter referred to as "Lincoln."
1. On and after the first day of September, 1998, the Premium Receipt
Addendum of the Agreement shall be replaced with the Temporary Insurance
Agreement Addendum, attached hereto.
2. It is hereby agreed that on and after the first day of September,
1998, all references to the Premium Receipt in the Agreement shall refer to the
Temporary Insurance Agreement.
3. The provisions of this amendment shall be subject to all the terms and
conditions of the Agreement which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to be
executed in duplicate on the dates shown below.
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------------
Title ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President Life Operations VARIABLE OPERATIONS VICE PRESIDENT
-------------------------------- ----------------------------------
Date 3/11/99 Date 3/11/99
--------------------------------- ----------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By
----------------------------------- --------------------------------------
Vice President Assistant Secretary
Date 3/8/99 Date 3/2/99
--------------------------------- ------------------------------------
1
TEMPORARY INSURANCE
AGREEMENT ADDENDUM
(Effective as of March 14,1996)
to
Agreement Number 21
The provisions of the Agreement shall apply in all respects to reinsurance of
Farm Bureau's Temporary Insurance Agreement except as otherwise set forth in
this Addendum.
This Addendum is referred to as "TIA" in the "Applicable Addendum" column of the
POLICIES REINSURED section of the Life Benefits Schedule.
Provided the conditions specified below are fulfilled, Lincoln agrees to pay
Farm Bureau the Reinsured Net Amount at Risk on any claim paid by Farm Bureau
pursuant to a Temporary Insurance Agreement, except that Lincoln's liability
pursuant to this Addendum shall not exceed the greater of (a) two hundred fifty
thousand dollars ($250,000), the limit of liability set forth in Farm Bureau's
Temporary Insurance Agreement, and (b) one million dollars ($1,000,000), Farm
Bureau's collection limit, only if Farm Bureau is ordered to pay such higher
amount by a court of competent jurisdiction.
The following conditions must be satisfied in order for reinsurance of a
Temporary Insurance Agreement to be effective:
1. Farm Bureau must become liable for a claim pursuant to a Temporary
Insurance Agreement issued in a form identical to that attached to this
Addendum;
2. The Temporary Insurance Agreement must be given, in return for cash
received with an application for a Policy; and
3. Either the Policy being applied for must qualify for Automatic
Reinsurance or Farm Bureau has not received a facultative offer of
reinsurance on the application from another reinsurer which is a better
offer than any facultative offer made by Lincoln as determined by Farm
Bureau's published reinsurance placement rules in force on the date of
death.
Reinsurance provided pursuant to this Addendum shall terminate with respect to a
Policy, and reinsurance provided pursuant to the Agreement shall commence, on
the date during the lifetime of the proposed insured that Farm Bureau approves
insurance pursuant to the application.
2
AMENDMENT
to the Yearly Renewable Term
Reinsurance Agreement (the "Agreement")
effective March 14, 1996, between
FARM BUREAU LIFE INSURANCE COMPANY
of
West Des Moines, Iowa,
hereinafter referred to as "Farm Bureau,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
of
Fort ▇▇▇▇▇, Indiana,
hereinafter referred to as "Lincoln."
1. Effective the fourteenth day of March, 1996, the current cost of
insurance rates attached to the Premium Schedule of the Agreement shall be
extended to include the cost of insurance rates, attached hereto.
2. The provisions of this amendment shall be subject to all the terms and
conditions of the Agreement which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to be
executed in duplicate on the dates shown below.
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
Title ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Title ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Exec. V.P. & General Manager Vice President-Life Administration
-------------------------------- -----------------------------------
Date August 29, 2000 Date August 29, 2000
--------------------------------- -----------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By By /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- --------------------------------------
Second Vice President Assistant Secretary
Date 8/11/00 Date 8/10/2000
--------------------------------- ------------------------------------
AMENDMENT
to the Yearly Renewable Term
Reinsurance Agreement (the "Agreement")
effective March 14, 1996, between
FARM BUREAU LIFE INSURANCE COMPANY
of
West Des Moines, Iowa,
hereinafter referred to as "Farm Bureau,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
of
Fort ▇▇▇▇▇, Indiana,
hereinafter referred to as "Lincoln."
1. The basic reinsurance premium rates as shown in the Premium Schedule,
attached hereto, shall apply to reinsurance ceded under the Agreement on and
after the first day of July, 1999.
2. The provisions of this amendment shall be subject to all the terms and
conditions of the Agreement which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to be
executed in duplicate on the dates shown below.
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
Title ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Title ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------- -----------------------------------
Exec. V.P. & General Manager Vice President-Life Administration
Date August 29, 2000 Date August 29, 2000
---------------------------------- ------------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By By /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- -------------------------------------
Sr Vice President Assistant Secretary
Date 8-11-00 Date 8-11-2000
--------------------------------- -----------------------------------
1
PREMIUM SCHEDULE
(Effective as of July 1,1999)
to
Agreement Number 21
STANDARD REINSURANCE PREMIUMS
(1) BASIC REINSURANCE PREMIUM RATES: The monthly reinsurance premium rates
for reinsurance ceded under this Agreement shall be Farm Bureau's
applicable attached(1) cost of insurance rates charged the insured per
thousand dollars of Reinsured Net Amount At Risk times the following
percentages:
SMOKING POLICY YEAR
PLAN CESSION TYPE STATUS 1 2-10 11+
---- ------------ ------- - ---- ---
Universal Life
(Form 434-112 (03-96))
and Variable Universal Life
(Form 434-114 (03-96) Automatic Reinsurance Preferred Non-Tobacco,
Standard Non-Tobacco,
Preferred Tobacco, and
Standard Tobacco 0% 43% 61%
Facultative Reinsurance Preferred Non-Tobacco,
Standard Non-Tobacco,
Preferred Tobacco,
and Standard Tobacco 0% 50% 68%
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10(2) 11+(2)
---- ------- ----- - ------- ------
Last-Survivor Universal Life
(Form 434-158 (03-96)) Non-Tobacco/ 0-69 0% 37% 78%
Non-Tobacco Over 69 0 72 93
Non-Tobacco/ 0-69 0 32 68
Tobacco Over 69 0 52 88
Tobacco/ 0-69 0 22 53
Tobacco Over 69 0 27 78
2
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10 11+
---- ------- ----- - ----- ----
Universal First-To-Die Rider
(Form 434-850(03-96)) Non-Tobacco/ 0-69 0% 62% 88%
Non-Tobacco Over 69 0 93 100
Non-Tobacco/ 0-69 0 62 88
Tobacco Over 69 0 83 95
Tobacco/ 0-69 0 62 88
Tobacco Over 69 0 73 95
(2) UNIVERSAL ADULT TERM RIDER (FORM 434-862R (03-96)) AND THE UNIVERSAL
CHILDREN'S TERM RIDER (FORM 434-832R (03-96)): The reinsurance premium shall be
the same as the base plan to which the rider is attached.
(1) The appropriate rates are either attached hereto or have been previously
attached to the Agreement or an earlier amendment.
(2) Renewal premiums shall be subject to a minimum rate, after allowances, of
fifteen cents ($.015) per thousand per month.
ADDITIONAL AMOUNTS PAID BY FARM BUREAU:
(1) SUBSTANDARD PREMIUMS: For Policies written on substandard risks, the
appropriate premium rate shall be adjusted by multiplying the rate by
twenty-five percent (25%) for each table assessed the risk and adding such
amount to the reinsurance premiums due.
(2) TEMPORARY FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln a temporary
flat extra premium equal to the product of the flat extra premium assigned by
Farm Bureau or Lincoln on the Policy times the Reinsured Net Amount at Risk
minus an allowance of ten percent (10%) for all renewal years such premium is
payable.
(3) PERMANENT FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln's
Proportionate Share of any permanent flat extra premium paid calculated on the
initial Reinsured Net Amount at Risk minus an allowance of seventy-five percent
(75%) for the first year such premium is payable and ten percent (10%) for all
renewal years such premium is payable.
3
(4) CONTINUATIONS: Premiums payable for reinsurance of a Continuation shall be
based on the age at issue and duration from issue of the original Policy. If the
premium scale applicable to a Continuation contains a Policy fee, Farm Bureau
agrees to pay a first-year Policy fee on the Continuation if a Policy fee was
not paid at issue of the original Policy.
ADDITIONAL AMOUNTS PAID BY LINCOLN:
(1) PREMIUM TAXES: When Lincoln is not obligated to pay state premium taxes on
reinsurance premiums received from Farm Bureau pursuant to this Agreement, it
agrees to reimburse Farm Bureau for premium taxes equal to the average premium
tax rate paid by Farm Bureau during the calendar year times the amount of
reinsurance premiums (excluding Policy fees, if any) paid hereunder during the
calendar year.
(2) EXPERIENCE REFUNDS: Lincoln shall not pay an experience refund to Farm
Bureau.
(3) UNEARNED PREMIUMS: Lincoln agrees to refund, without interest, any
reinsurance premiums unearned as of the date of death of an insured person or as
of the date of a reduction of reinsurance pursuant to the "Reductions" article.
SPECIAL CONSIDERATIONS:
Pursuant to paragraph 2.6 of the Last Survivor Addendum, the Joint Equal Age
shall be calculated by using the attached* formula.
* The appropriate Joint Equal Age formula is either attached hereto or has been
previously attached to the Agreement or an earlier amendment.
4
AMENDMENT
to the Yearly Renewable Term
Reinsurance Agreement (the "Agreement")
effective March 14, 1996, between
FARM BUREAU LIFE INSURANCE COMPANY of West Des Moines, Iowa,
hereinafter referred to as "Farm Bureau,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY of Fort ▇▇▇▇▇, Indiana,
hereinafter referred to as "Lincoln."
1. The plans reinsured under the Agreement on and after the first day of
May, 2000, shall be those specified in the Life Benefits Schedule, attached
hereto.
2. The basic reinsurance premium rates as shown in the Premium Schedule,
attached hereto, shall apply to reinsurance ceded under the Agreement on and
after the first day of May, 2000.
3. The provisions of this amendment shall be subject to all the terms and
conditions of the Agreement which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to be
executed in duplicate on the dates shown below.
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- ----------------------------------------
Title ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Title ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Exec. V.P. & General Manager Vice President - Life Administration
------------------------------ --------------------------------------
Date August 29, 2000 Date August 29, 2000
------------------------------- --------------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By By /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------- ----------------------------------------
Sr. Vice President Assistant Secretary
Date 8-11-00 Date 8-11-2000
------------------------------- -------------------------------------
1
LIFE BENEFITS SCHEDULE
(Effective as of May 1, 2000)
to
Agreement Number 21
POLICIES REINSURED: Farm Bureau agrees to cede reinsurance in the listed
percentages of Policies issued on the following Policy forms with issue dates
from and until the dates listed below to insureds having surnames beginning
with the letters of the alphabet shown. Any Addenda referred to in the last
column shall also be applicable to reinsurance of the Policy.
PERCENT OF POLICY
REINSURANCE ISSUE DATES ALPHA APPLICABLE
POLICY FORM CEDED TO LINCOLN FROM/UNTIL SPLIT ADDENDA
----------- ---------------- ----------- ----- ----------
Universal Life
(Form 434-112 (03-96)) 100% 03-14-96/ -- A-Z WP,PR,GP
Universal First-
To-Die Rider
(Form 434-850 (03-96)) 100 03-14-96/ -- A-Z FD
Universal Adult
Term Rider
(Form 434-862R (03-96)) 100 03-14-96/ -- A-Z --
Universal Children's
Term Rider
(Form 434-832R (03-96)) 100 03-14-96/ -- A-Z --
Variable Universal
Life (Form 434-114 (03-96)) 100 03-14-96/ -- A-Z WP,PR,GP
Last Survivor Universal Life
(Form 434-158 (03-96)) 100 03-14-96/ -- A-Z LS,PR,GP
Universal Cost of
Living Increase Benefit
(Form 434-091(03-96)) 100 03-14-96/ -- A-Z --
Last Survivor
Variable Universal Life 100 05-01-00/ -- A-Z WP,PR,LS,GP
2
RETENTION: Farm Bureau agrees to hold the following Policy Net Amounts at Risk
at its own risk on a life without the benefit of proportional reinsurance. In
calculating its Retention, amounts retained by Farm Bureau on other individual
lift insurance Policies in force as of the issue date of the Policy shall be
taken into account.
AGES STANDARD-TABLE P
---- ----------------
All $ 1,000,000
The above limits may be exceeded by as much as twenty-five thousand dollars
($25,000) in order to avoid reinsurance.
AUTOMATIC LIMITS: To bind Automatic Reinsurance, the maximum amount of life
insurance in force with Farm Bureau on a single life, or in the case of
individual life insurance with increasing death benefits, the Ultimate Amounts,
plus all amounts applied for from Farm Bureau on that life, or in the case of
individual life insurance with increasing death benefits, the Ultimate Amounts,
may not exceed the sum of the Retention on the life plus the following amounts.
AGES STANDARD-TABLE P OVER TABLE P
---- ---------------- ------------
0-70 $ 2,500,000 None
Over 70 None None
PARTICIPATION LIMITS: To bind Automatic Reinsurance, the sum of (1) the maximum
amount of individual life insurance in force on the insured in all companies or,
in the case of individual life insurance with increasing death benefits, the
Ultimate Amounts, as of the Policy Date of a Policy and (2) the amount then
being applied for by all companies, or in the case of individual life insurance
with increasing death benefits, the Ultimate Amounts, on the insured, may not
exceed the following amounts.
AGES STANDARD-TABLE P
---- ----------------
0-70 $ 5,000,000
3
PREMIUM SCHEDULE
(Effective as of May 1,2000)
to
Agreement Number 21
STANDARD REINSURANCE PREMIUMS
(1) BASIC REINSURANCE PREMIUM RATES: The monthly reinsurance premium rates for
reinsurance ceded under this Agreement shall be Farm Bureau's applicable
attached(1) cost of insurance rates charged the insured per thousand dollars of
Reinsured Net Amount At Risk times the following percentages:
SMOKING POLICY YEAR
PLAN CESSION TYPE STATUS 1 2-10 11+
---- ------------ ------- - ---- ---
Universal Life
(Form 434-112 (03-96))
and Variable Universal Life
(Form 434-114 (03-96) Automatic Reinsurance Preferred Non-Tobacco,
Standard Non-Tobacco,
Preferred Tobacco, and
Standard Tobacco 0% 43% 61%
Facultative Reinsurance Preferred Non-Tobacco,
Standard Non-Tobacco,
Preferred Tobacco,
and Standard Tobacco 0% 50% 68%
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10(2) 11+(2)
---- ------- ----- - ------- ------
Last Survivor Universal Life
(Form 434-158 (03-96)) Non-Tobacco/
Non-Tobacco 0-69 0% 37% 78%
Over 69 0 72 93
Non-Tobacco/
Tobacco 0-69 0 32 68
Over 69 0 52 88
Tobacco/
Tobacco 0-69 0 22 53
Over 69 0 27 78
4
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10 11+
---- ------- ----- - ----- ----
Universal First-To-Die Rider
(Form 434-850 (03-96)) Non-Tobacco/
Non-Tobacco 0-69 0% 62% 88%
Over 69 0 93 100
Non-Tobacco/
Tobacco 0-69 0 62 88
Over 69 0 83 95
Tobacco/
Tobacco 0-69 0 62 88
Over 69 0 73 95
POLICY YEAR
PLAN 1 2+(3)
---- - -----
Last Survivor Variable Universal Life 0% 54%
(2) UNIVERSAL ADULT TERM RIDER (FORM 434-862R (03-96)) AND THE UNIVERSAL
CHILDREN'S TERM RIDER (FORM 434-832R (03-96)): The reinsurance premium shall be
the same as the base plan to which the rider is attached.
(1) The appropriate rates are either attached hereto or have been previously
attached to the Agreement or an earlier amendment.
(2) Renewal premiums shall be subject to a minimum rate, after allowances, of
fifteen cents ($.015) per thousand per month.
(3) Renewal premiums shall be subject to a minimum net rate of one cent ($0.01)
per thousand per month.
ADDITIONAL AMOUNTS PAID BY FARM BUREAU:
(3) SUBSTANDARD PREMIUMS: For Policies written on substandard risks, the
appropriate premium rate shall be adjusted by multiplying the rate by
twenty-five percent (25%) for each table assessed the risk and adding such
amount to the reinsurance premiums due.
(4) TEMPORARY FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln a temporary
flat extra premium equal to the product of the flat extra premium assigned by
Farm Bureau or Lincoln on the Policy times the Reinsured Net Amount at Risk
minus an allowance of ten percent (10%) for all renewal years such premium is
payable.
(5) PERMANENT FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln's
Proportionate Share of any permanent flat extra premium paid calculated on the
initial Reinsured Net Amount at Risk minus an allowance of seventy-five percent
(75%) for the first year such premium is payable and ten percent (10%) for all
renewal years such premium is payable.
5
(6) CONTINUATIONS: Premiums payable for reinsurance of a Continuation shall be
based on the age at issue and duration from issue of the original Policy. If the
premium scale applicable to a Continuation contains a Policy fee, Farm Bureau
agrees to pay a first-year Policy fee on the Continuation if a Policy fee was
not paid at issue of the original Policy.
ADDITIONAL AMOUNTS PAID BY LINCOLN:
(1) PREMIUM TAXES:
(a) LAST SURVIVOR VARIABLE UNIVERSAL LIFE: Lincoln shall not reimburse Farm
Bureau for state premium taxes.
(b) ALL OTHER PLANS: When Lincoln is not obligated to pay state premium
taxes on reinsurance premiums received from Farm Bureau pursuant to
this Agreement, it agrees to reimburse Farm Bureau for premium taxes
equal to the average premium tax rate paid by Farm Bureau during the
calendar year times the amount of reinsurance premiums (excluding
Policy fees, if any) paid hereunder during the calendar year.
(2) EXPERIENCE REFUNDS: Lincoln shall not pay an experience refund to Farm
Bureau.
(3) UNEARNED PREMIUM: Lincoln agrees to refund, without interest, any
reinsurance premiums unearned as of the date of death of an insured person or as
of the date of a reduction of reinsurance pursuant to the "Reductions" article.
SPECIAL CONSIDERATIONS:
Pursuant to paragraph 2.6 of the Last Survivor Addendum, the Joint Equal Age
shall be calculated by using the attached* formula.
* The appropriate Joint Equal Age formula is either attached hereto or has been
previously attached to the Agreement or an earlier amendment.
6
AMENDMENT
to the Yearly Renewable Term
Reinsurance Agreement (the "Agreement")
effective March 14, 1996, between
FARM BUREAU LIFE INSURANCE COMPANY of West Des Moines, Iowa,
hereinafter referred to as "Farm Bureau,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY OF Fort ▇▇▇▇▇, Indiana,
hereinafter referred to as "Lincoln."
1. On and after the first day of August, 2001, the Life Benefits Schedule
of the Agreement shall be replaced with the Life Benefits Schedule, attached
hereto.
2. The provisions of this amendment shall be subject to all the terms and
conditions of the Agreement which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to be
executed in duplicate on the dates shown below.
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- ----------------------------------------
Title ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Title ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------ --------------------------------------
Exec. V.P. & General Manager Vice President-Life Administration
Date October 19, 2001 Date October 19, 2001
------------------------------- --------------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By By /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------- ---------------------------------------
Sr Vice President Assistant Secretary
Date 10/2/01 Date 10/1/2001
------------------------------- -------------------------------------
1
LIFE BENEFITS SCHEDULE
(Effective as of August 1, 2001)
to
Agreement Number 21
POLICIES REINSURED: Farm Bureau agrees to cede reinsurance in the
listed percentages of policies issued on the following Policy forms
with issue dates from and until the dates listed below to insureds
having surnames beginning with the letters of the alphabet shown. Any
Addenda referred to in the last column shall also be applicable to
reinsurance of the Policy.
PERCENT OF POLICY
REINSURANCE ISSUE DATES ALPHA APPLICABLE
POLICY FORM CEDED TO LINCOLN FROM/UNTIL SPLIT ADDENDA
----------- ---------------- ----------- ----- ----------
Universal Life
(Form 434-112 (03-96)) 100% 03-14-96/-- A-Z WP,PR,GP
Universal First-
To-Die Rider
(Form 434-850 (03-96)) 100 03-14-96/-- A-Z FD
Universal Adult
Term Rider
(Form 434-862R (03-96)) 100 03-14-96/-- A-Z --
Universal Children's
Term Rider
(Form 434-832R (03-96)) 100 03-14-96/-- A-Z --
Variable Universal
Life (Form 434-114 (03-96)) 100 03-14-96/-- A-Z WP,PR,GP
Last Survivor Universal Life
(Form 434-158 (03-96)) 100 03-14-96/-- A-Z LS,PR,GP
Universal Cost of
Living Increase Benefit
(Form 434-091(03-96)) 100 03-14-96/-- A-Z --
Last Survivor
Variable Universal Life 100 05-01-00/-- A-Z WP,PR,LS,GP
2
RETENTION: Farm Bureau agrees to hold the following Policy Net Amounts at Risk
at its own risk on a life without the benefit of proportional reinsurance. In
calculating its Retention, amounts retained by Farm Bureau on other individual
life insurance Policies in forces as of the issue date of the Policy shall be
taken into account.
AGES STANDARD-TABLE P
---- ----------------
All $ 1,000,000
The above limits may be exceeded by as much as twenty-five thousand dollars
($25,000) in order to avoid reinsurance.
AUTOMATIC LIMITS: To bind Automatic Reinsurance, the maximum amount of life
insurance in force with Farm Bureau on a single life, or in the case of
individual life insurance with increasing death benefits, the Ultimate Amounts,
plus all amounts applied for from Farm Bureau on that life, or in the case of
individual life insurance with increasing death benefits, the Ultimate Amounts,
exceed the sum of the Retention on the life plus the following amounts.
AGES STANDARD-TABLE P OVER TABLE P
---- ---------------- ------------
0-70 $ 10,000,000 None
Over 70 None None
PARTICIPATION LIMITS: To bind Automatic Reinsurance, the sum of (1) the maximum
amount of individual life insurance in force on the insured in all companies or,
in the case of individual life insurance with increasing death benefits, the
Ultimate Amounts, as of the Policy Date of a Policy and (2) the amount then
being applied for by all companies, or in the case of the individual life
insurance with increasing death benefits, the Ultimate Amounts, on the insured,
may not exceed the following amounts.
AGES STANDARD-TABLE D TABLE E - H TABLES J - P
---- ---------------- ----------- ------------
0-75 $ 30,000,000 $ 30,000,000 $ 30,000,000
76-80 30,000,000 30,000,000 25,000,000
81-85 20,000,000 15,000,000 10,000,000
3
AMENDMENT
to the Yearly Renewable Term
Reinsurance Agreement (the "Agreement")
effective March 14, 1996, between
FARM BUREAU LIFE INSURANCE COMPANY of West Des Moines, Iowa,
hereinafter referred to as "Farm Bureau,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY OF Fort ▇▇▇▇▇, Indiana,
hereinafter referred to as "Lincoln."
1. The basic reinsurance premium rates as shown in the Premium Schedule,
attached hereto, shall apply to reinsurance ceded under the Agreement on and
after the first day of May, 2002.
2. The provisions of this amendment shall be subject to all the terms and
conditions of the Agreement which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to be
executed in duplicate on the dates shown below.
FARM BUREAU LIFE INSURANCE COMPANY
Signed at WEST DES MOINES, IOWA
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------------
Title ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------ -------------------------------------
Exec. V.P. & General Manager Vice President-Life Administration
Date Aug 27, 2002 Date Aug 27, 2002
------------------------------- -------------------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Signed at Fort ▇▇▇▇▇, Indiana
By By
--------------------------------- ---------------------------------------
Title VP Title 2nd VP
------------------------------ -------------------------------------
Date 8/21/02 Date 8/21/02
------------------------------- ----------------------------------
1
PREMIUM SCHEDULE
(Effective as of May 1, 2002)
to
Agreement Number 21
STANDARD REINSURANCE PREMIUMS
(1) BASIC REINSURANCE PREMIUM RATES: The monthly reinsurance premium rates for
reinsurance ceded under this Agreement shall be Farm Bureau's applicable
attached(1) Cost of insurance rates charged the insured per thousand dollars of
Reinsured Net Amount At Risk times the following percentages.
SMOKING POLICY YEAR
PLAN CESSION TYPE STATUS 1 2-10 11+
---- ------------ ------- - ---- ---
Universal Life
(Form 434-112 (03-96))
and Variable Universal Life
(Form 434-114 (03-96) Automatic Reinsurance Super Preferred Non-Tobacco
Preferred Non-Tobbaco,
Standard Non-Tobacco,
Preferred Tobacco, and
Standard Tobacco 0% 43% 61%
Facultative Reinsurance Super Preferred Non-Tobacco
Preferred Non-Tobbaco,
Standard Non-Tobacco,
Preferred Tobacco,
and Standard Tobacco 0% 50% 68%
SMOKING ISSUE Policy Year
PLAN STATUS AGE 1 2-10(2) 11+(2)
---- ------- ----- - ------- ------
Last Survivor Universal Life
(Form 434-158 (03-96)) Non-Tobacco/ 0-69 0% 37% 78%
Non-Tobacco Over 69 0 72 93
Non-Tobacco/ 0-69 0 32 68
Tobacco Over 69 0 52 88
Tobacco/ 0-69 0 22 53
Tobacco Over 69 0 27 78
2
SMOKING ISSUE POLICY YEAR
PLAN STATUS AGE 1 2-10 11+
---- ------- ----- - ----- ----
Universal First-To-Die Rider
(Form 434-850 (03-96)) Non-Tobacco/ 0-69 0% 62% 88%
Non-Tobacco Over 69 0 93 100
Non-Tobacco/ 0-69 0 62 88
Tobacco Over 69 0 83 95
Tobacco/ 0-69 0 62 88
Tobacco Over 69 0 73 95
POLICY YEAR
PLAN SMOKING STATUS 1 2+(3)
---- -------------- - -----
Last Survivor Variable Universal Life All Classes 0% 54%
(2) UNIVERSAL ADULT TERM RIDER (FORM 434-862R (03-96)) AND THE UNIVERSAL
CHILDREN'S TERM RIDER (FORM 434-832R (03-96)): The reinsurance premium shall be
the same as the base plan to which the rider is attached.
(1) The appropriate rates are either attached hereto or have been previously
attached to the Agreement or an earlier amendment.
(2) Renewal premiums shall be subject to a minimum rate, after allowances, of
fifteen cents ($0.15) per thousand per month.
(3) Renewal premiums shall be subject to a minimum net rate of one cent ($0.01)
per thousand per month.
ADDITIONAL AMOUNTS PAID BY FARM BUREAU:
(1) SUBSTANDARD PREMIUMS: For Policies written on substandard risks, the
appropriate premium rate shall be adjusted by multiplying the rate by
twenty-five percent (25%) for each table assessed the risk and adding such
amount to the reinsurance premiums due.
(2) TEMPORARY FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln a temporary
flat extra premium equal to the product of the flat extra premium assigned by
Farm Bureau or Lincoln on the Policy times the Reinsured Net Amount at Risk
minus an allowance of ten percent (10%) for all renewal years such premium is
payable.
(3) PERMANENT FLAT EXTRA PREMIUMS: Farm Bureau agrees to pay Lincoln's
Proportionate Share of any permanent flat extra premium paid calculated on the
initial Reinsured Net Amount at Risk minus an allowance of seventy-five percent
(75%) for the first year such premium is payable and ten percent (10%) for all
renewal years such premium is payable.
3
(4) CONTINUATIONS: Premiums payable for reinsurance of a Continuation shall be
based on the age at issue and duration from issue of the original Policy. If the
premium scale applicable to a Continuation contains a Policy fee, Farm Bureau
agrees to pay a first-year Policy fee on the Continuation if a Policy fee was
not paid at issue of the original Policy.
ADDITIONAL AMOUNTS PAID BY LINCOLN:
(1) PREMIUM TAXES:
(a) LAST SURVIVOR VARIABLE UNIVERSAL LIFE: Lincoln shall not reimburse Farm
Bureau for state premium taxes.
(b) ALL OTHER PLANS: When Lincoln is not obligated to pay state premium
taxes on reinsurance premiums received from Farm Bureau pursuant to
this Agreement, it agrees to reimburse Farm Bureau for premium taxes
equal to the average premium tax rate paid by Farm Bureau during the
calendar year times the amount of reinsurance premiums (excluding
Policy fees, if any) paid hereunder during the calendar year.
(2) EXPERIENCE REFUNDS: Lincoln shall not pay an experience refund to Farm
Bureau.
(3) UNEARNED PREMIUMS: Lincoln agrees to refund without interest, any
reinsurance premiums unearned as of the date of death of an insured person or as
of the date of a reduction of reinsurance pursuant to the "Reductions" article.
SPECIAL CONSIDERATIONS:
Pursuant to paragraph 2.6 of the Last Survivor Addendum, the Joint Equal Age
shall be calculated by using the attached* formula.
* The appropriate Joint Equal Age formula is either attached hereto or has been
previously attached to the Agreement or an earlier amendment.
4
