Exhibit (g)(31)
AUTOMATIC AND FACULTATIVE
REINSURANCE AGREEMENT
YEARLY RENEWABLE TERM
EFFECTIVE April 29, 1999
Between
IDS LIFE INSURANCE COMPANY
("CEDING COMPANY")
Minneapolis, Minnesota
And
[NAME OF REINSURANCE COMPANY]
("REINSURER")
[city and state of reinsurance company]
AUTOMATIC AND FACULTATIVE REINSURANCE AGREEMENT
Table of Contents
1. PARTIES TO AGREEMENT................................................. 1
2. REINSURANCE BASIS.................................................... 1
3. AUTOMATIC REINSURANCE TERMS.......................................... 1
a. CONVENTIONAL UNDERWRITING..................................... 1
b. RETENTION..................................................... 2
c. AUTOMATIC ACCEPTANCE LIMITS................................... 2
d. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT...................... 2
e. RESIDENCE..................................................... 2
f. MINIMUM CESSION............................................... 2
g. AUTOMATIC REINSURANCE FOR FACULTATIVE RISKS................... 2
4. AUTOMATIC REINSURANCE NOTICE PROCEDURE............................... 2
5. FACULTATIVE REINSURANCE.............................................. 3
6. COMMENCEMENT OF REINSURANCE COVERAGE................................. 3
a. AUTOMATIC REINSURANCE......................................... 3
b. FACULTATIVE REINSURANCE....................................... 3
c. PRE-ISSUE COVERAGE............................................ 4
7. REINSURANCE RISK AMOUNT AND REINSURANCE PREMIUM RATES................ 4
a. REINSURANCE RISK AMOUNT....................................... 4
b. REINSURANCE PREMIUMS.......................................... 5
c. TABLE RATED SUBSTANDARD PREMIUMS.............................. 5
d. FLAT EXTRA PREMIUMS........................................... 5
e. RATES NOT GUARANTEED.......................................... 5
8. CASH VALUES OR LOANS................................................. 5
9. PAYMENT OF REINSURANCE PREMIUMS...................................... 6
a. PREMIUM DUE................................................... 6
b. FAILURE TO PAY PREMIUMS....................................... 6
c. OVERPAYMENT OF REINSURANCE PREMIUM............................ 6
d. UNDERPAYMENT OF REINSURANCE PREMIUM........................... 6
e. RETURN OF REINSURANCE PREMIUM................................. 6
f. UNEARNED PREMIUMS............................................. 7
10. PREMIUM TAX REIMBURSEMENT............................................ 7
11. DAC TAX AGREEMENT.................................................... 7
12. REPORTS.............................................................. 8
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13. RESERVES FOR REINSURANCE............................................. 8
14. CLAIMS............................................................... 8
a. NOTICE OF CLAIM............................................... 8
b. REQUEST FOR PAYMENT........................................... 8
c. CONTESTED CLAIMS.............................................. 10
d. ASSIGNMENT OF REINSURANCE CLAIMS ADMINISTRATOR................ 10
e. AMOUNT AND PAYMENT OF BENEFITS................................ 10
f. CLAIMS EXPENSES............................................... 10
g. EXTRACONTRACTUAL DAMAGES...................................... 11
15. POLICY CHANGES....................................................... 11
a. NOTICE........................................................ 11
b. INCREASES..................................................... 11
c. REDUCTION OR TERMINATION...................................... 12
d. INTERNAL REPLACEMENTS......................................... 12
16. REINSTATEMENTS....................................................... 13
a. REINSTATEMENT WITHOUT EVIDENCE................................ 13
b. REINSTATEMENT WITH EVIDENCE................................... 13
c. PREMIUM ADJUSTMENT............................................ 13
17. INCREASE IN RETENTION................................................ 13
a. NEW BUSINESS.................................................. 13
b. RECAPTURE..................................................... 13
18. ERRORS AND OMISSIONS................................................. 14
19. INSOLVENCY........................................................... 14
20. ARBITRATION.......................................................... 15
a. GENERAL....................................................... 15
b. NOTICE........................................................ 15
c. PROCEDURE..................................................... 15
d. COSTS......................................................... 16
21. GOOD FAITH; FINANCIAL SOLVENCY....................................... 16
22. TERM OF THIS AGREEMENT............................................... 16
23. MEDICAL INFORMATION BUREAU........................................... 16
24. SEVERABILITY......................................................... 16
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Listing of Schedules:
SCHEDULE A
1. Plans Reinsured
2. Net Amount At Risk
3. Automatic Shares
4. Automatic Acceptance Limits
5. Automatic In Force And Applied For Limit
6. Facultative Shares
7. Premium Due
8. Recapture Period
SCHEDULE B - REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. Life Insurance
2. Age Basis
SCHEDULE C - REPORTING INFORMATION
Information on Risks Reinsured
Policy Exhibit Summary
Reserve Credit Summary
Accounting Summary
SCHEDULE D - FACULTATIVE FORMS
Application for Reinsurance
Notification of Reinsurance
EXHIBIT I
Underwriting Guidelines for Internal Replacements to Permanent Insurance
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AUTOMATIC AND FACULTATIVE AGREEMENT
1. PARTIES TO AGREEMENT.
This Agreement is solely between REINSURER and CEDING COMPANY. There is no
third party beneficiary to this Agreement. Reinsurance under this
Agreement will not create any right nor legal relationship between
REINSURER and any other person, for example, any insured, policy owner,
agent, beneficiary, or other reinsurer. CEDING COMPANY agrees that it will
not make REINSURER a party to any litigation between any such third party
and CEDING COMPANY. REINSURER and CEDING COMPANY agree that neither shall
use the other's name in any of its sales or marketing transactions.
2. REINSURANCE BASIS.
This Agreement, including the attached Schedules, states the terms and
conditions of automatic and facultative reinsurance that is on a Yearly
Renewable Term basis. This Agreement is applicable only to reinsurance of
policies directly written by CEDING COMPANY. Any policies acquired through
merger of another company, reinsurance, or purchase of another company's
policies are not included under the terms of this Agreement.
3. AUTOMATIC REINSURANCE TERMS.
REINSURER agrees to automatically accept contractual risks on the life
insurance plans, riders, and supplemental benefits shown in Schedule A,
subject to the following requirements:
a. CONVENTIONAL UNDERWRITING.
Automatic reinsurance applies only to insurance applications
underwritten by CEDING COMPANY with conventional underwriting and
issue practices that are consistently applied. Conventional
underwriting and issue practices are those customarily used and
generally accepted by life insurance companies. Some examples of
non-customary underwriting practices that are not accepted for
automatic reinsurance under this Agreement are guaranteed issue, any
form of simplified underwriting, short-form applications, or any form
of non-customary, non-medical underwriting limits. An example of an
unacceptable issue practice is the issuance of a policy that has
contestability or suicide clauses with time limitations that are
shorter than the maximum allowed by state law.
Automatic reinsurance will also be available for policies issued
pursuant to an internal replacement or exchange when issued and
underwritten in accordance with CEDING COMPANY's Underwriting
Guidelines for Internal Replacements which are set forth in Exhibit I
to this Agreement.
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b. RETENTION.
CEDING COMPANY will retain, and not otherwise reinsure, an amount
equal to its full Automatic Share as shown in Schedule A.
c. AUTOMATIC ACCEPTANCE LIMITS.
On any one life the sum of all amounts inforce and applied for with
CEDING COMPANY, excluding amounts being replaced, shall not exceed
the Automatic Acceptance Limits shown in Schedule A.
d. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT.
On any one life, the total amount of life insurance in force and
applied for with all companies, of which CEDING COMPANY is aware,
cannot exceed the Automatic In Force and Applied For Limit shown in
Schedule A.
e. RESIDENCE.
Each insured must be a resident of the United States or Canada, or
an international client meeting CEDING COMPANY's published
guidelines, at the time of issue.
f. MINIMUM CESSION.
There will be no minimum cession for this Agreement.
g. AUTOMATIC REINSURANCE FOR FACULTATIVE RISKS
For risks that have been facultatively submitted to any reinsurer:
i. If a risk has been submitted facultatively to any reinsurer
less than twenty-four months before the current application,
it is not eligible for automatic reinsurance coverage under
this Agreement.
ii. If the current application has been submitted to any reinsurer
for facultative underwriting, it is not eligible for automatic
reinsurance coverage under this Agreement.
iii. If a risk has been submitted facultatively to any reinsurer
more than twenty-four months before the current application,
the risk will be eligible for automatic reinsurance coverage
under this Agreement, subject to the conditions of this
Section 3.
4. AUTOMATIC REINSURANCE NOTICE PROCEDURE.
After the policy has been paid for and delivered, CEDING COMPANY shall
submit all relevant individual policy information, as defined in Schedule
C, in its next statement to REINSURER.
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5. FACULTATIVE REINSURANCE.
CEDING COMPANY may apply for facultative reinsurance with REINSURER on a
risk if the automatic reinsurance terms are not met, or if the terms are
met and CEDING COMPANY prefers to apply for facultative reinsurance. The
following items must be submitted to obtain a facultative quote:
a. A form substantially similar to REINSURER's "Application for
Reinsurance" form shown in Schedule D.
b. Copies of the original insurance application, medical examiner's
reports, financial information, and all other papers and information
obtained by CEDING COMPANY regarding the insurability of the risk.
After receipt of CEDING COMPANY's application, REINSURER will promptly
examine the materials and notify CEDING COMPANY either of the terms and
conditions of REINSURER's offer for facultative reinsurance or that no
offer will be made. REINSURER's offer expires 120 days after the offer is
made, unless the written offer specifically states otherwise. If CEDING
COMPANY accepts REINSURER's offer, then CEDING COMPANY will note its
acceptance in its underwriting file and submit all relevant individual
policy information, as defined in Schedule C, in its next statement to
REINSURER.
6. COMMENCEMENT OF REINSURANCE COVERAGE.
Commencement of REINSURER's reinsurance coverage on any policy or
pre-issue risk under this Agreement is described below:
a. AUTOMATIC REINSURANCE.
REINSURER's reinsurance coverage for any policy that is ceded
automatically under this Agreement shall begin and end simultaneously
with CEDING COMPANY's contractual liability for the policy reinsured,
except as provided below in Section 6(c).
b. FACULTATIVE REINSURANCE.
REINSURER's reinsurance coverage for any policy that is ceded
facultatively under this Agreement shall begin when;
i. CEDING COMPANY accepts REINSURER's offer; and
ii. The policy has been issued.
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c. PRE-ISSUE COVERAGE.
REINSURER will not be liable for benefits paid under CEDING COMPANY's
conditional receipt or temporary insurance agreement unless all the
conditions for automatic reinsurance coverage under Section 3 of this
Agreement are met. REINSURER's liability under CEDING COMPANY's
conditional receipt or temporary insurance agreement is equal to
REINSURER's Automatic Reinsurance Share of the lesser of i. or ii.
below:
i. The Automatic Acceptance Limits, defined in Schedule A,
Paragraph 4.
ii. The amount for which CEDING COMPANY is liable.
The pre-issue liability applies only once on any given life
regardless of how many receipts were issued or initial premiums were
accepted by CEDING COMPANY. After a policy has been issued, no
reinsurance benefits are payable under this pre-issue coverage
provision.
In the event that CEDING COMPANY's rules with respect to cash
handling and the issuance of conditional receipt or temporary
insurance are not followed, REINSURER will participate in the
pre-issue contract liability if the conditions for automatic
reinsurance are met and CEDING COMPANY does not knowingly allow such
rules to be violated or condone such a practice. Such liability shall
be limited to the lesser of i. or ii. above. As in all cases, the
provisions of Section 14 apply to such a claim.
7. REINSURANCE RISK AMOUNT AND REINSURANCE PREMIUM RATES.
a. REINSURANCE RISK AMOUNT.
Reinsurance shall be on a first dollar, quota share basis. The
Reinsurance Risk Amount will be REINSURER's Automatic Reinsurance
Share, or Facultative Reinsurance Share, of the Net Amount at Risk.
REINSURER's share of Net Amount of Risk will be the same as
REINSURER's share of the Specified Amount, as set forth in Schedule
A.
Reinsurance Risk Amount will be calculated on the policy or rider
anniversary, unless there is an increase or decrease in the Specified
Amount during a policy year. If the Specified Amount increases or
decreases during the policy year, the Reinsurance Risk Amount will be
recalculated at the time of the increase or decrease.
In calculating Reinsurance Risk Amount, the Policy Account Value used
in the calculation shall be the Policy Account Value at the policy's
most recent monthly deduction.
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b. REINSURANCE PREMIUMS.
Reinsurance premiums will be based on the Reinsurance Risk Amount.
The reinsurance premiums per $1000 of Reinsurance Risk Amount are
shown in Schedule B.
c. TABLE RATED SUBSTANDARD PREMIUMS.
If CEDING COMPANY's policy is issued with a table rated substandard
premium, the reinsurance premiums shown in Schedule B will apply.
d. FLAT EXTRA PREMIUMS.
If CEDING COMPANY's policy is issued with a flat extra premium, the
reinsurance premiums shown in Schedule B will apply.
e. RATES NOT GUARANTEED.
For the reinsurance of new business, REINSURER reserves the right to
change reinsurance rates after 90 days written notice.
For the ongoing reinsurance of existing in force business, REINSURER
will accept YRT reinsurance at the current reinsurance premium rates,
as shown in Schedule B, unless CEDING COMPANY increases the current
cost of insurance rates charged to the policyholder. REINSURER
reserves the right to increase the current reinsurance premium rates
in the event CEDING COMPANY increases current cost of insurance rates
charged on the underlying policies. The maximum reinsurance premiums
are equal to the statutory valuation premiums for yearly renewable
term insurance at the maximum interest rates and minimum mortality
rates for each year of issue. Any increases in current reinsurance
premium rates will apply as of the date that the CEDING COMPANY
increase in policyholder current cost of insurance rates becomes
effective. CEDING COMPANY will have the right to immediate recapture
of all of the reinsured business for which the overall percentage
increase in reinsurance premium rates is greater than the overall
percentage increase in current cost of insurance rates.
CEDING COMPANY agrees to notify REINSURER, of any intent to increase
current cost of insurance rates charged for new or existing business.
8. CASH VALUES OR LOANS.
This Agreement does not provide reinsurance for cash surrender values. In
addition, REINSURER will not participate in policy loans or other forms of
indebtedness on reinsured business.
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9. PAYMENT OF REINSURANCE PREMIUMS
a. PREMIUM DUE.
The reinsurance premiums for each reinsurance cession are due as
shown in Schedule A and payable to REINSURER within 30 days after the
end of the month in which they become due. The reinsurance premiums
are determined according to Schedule B. On any payment date, monies
payable between REINSURER and CEDING COMPANY under this Agreement may
be netted to determine the payment due.
b. FAILURE TO PAY PREMIUMS.
If the reinsurance premiums are 60 days past due, for reasons other
than those due to error or omission as defined below in Section 18,
the premiums will be considered in default and REINSURER may
terminate the reinsurance upon 30 days' prior written notice.
REINSURER will have no further liability as of the termination date.
CEDING COMPANY will be liable for the prorated reinsurance premiums
to the termination date. CEDING COMPANY agrees that it will not force
termination under the provisions of this paragraph solely to avoid
the recapture requirements or to transfer the block of business
reinsured to another reinsurer.
c. OVERPAYMENT OF REINSURANCE PREMIUM.
If CEDING COMPANY overpays a reinsurance premium and REINSURER
accepts the overpayment, REINSURER's acceptance will not constitute
nor create a reinsurance liability nor result in any additional
reinsurance. Instead, REINSURER will be liable to CEDING COMPANY for
a credit in the amount of the overpayment, without interest.
d. UNDERPAYMENT OF REINSURANCE PREMIUM.
If CEDING COMPANY fails to make a full premium payment for a policy
or policies reinsured hereunder, due to an error or omission as
defined below in Section 18, the amount of reinsurance coverage
provided by REINSURER shall not be reduced. However, once the
underpayment is discovered, CEDING COMPANY will be required to pay to
REINSURER the difference between the full premium amount and the
amount actually paid, without interest. If payment of the full
premium is not made within 60 days after the discovery of the
underpayment, the underpayment shall be treated as a failure to pay
premiums and subject to the conditions of Paragraph 9.b., above.
e. RETURN OF REINSURANCE PREMIUM
If CEDING COMPANY returns the policy premiums to the policy owner
rather than pay the policy benefits, REINSURER will refund all of the
reinsurance premiums it received on that policy to CEDING COMPANY,
without interest.
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This refund given by REINSURER will be in lieu of all other
reinsurance benefits payable on that policy under this Agreement. If
there is an adjustment to the policy benefits due to a
misrepresentation or misstatement of age or sex, a corresponding
adjustment will be made to the reinsurance benefits.
f. UNEARNED PREMIUMS
Unearned premiums will be returned on deaths, surrenders and other
terminations. This refund will be on a prorated basis without
interest from the date of termination of the policy to the date to
which a reinsurance premium has been paid.
10. PREMIUM TAX REIMBURSEMENT.
Premium taxes will not be reimbursed.
11. DAC TAX AGREEMENT.
CEDING COMPANY and REINSURER, herein collectively called the "Parties", or
singularly the "Party", hereby enter into an election under Treasury
Regulations Section 1.848-2(g) (8) whereby:
a. For each taxable year under this Agreement, the party with the net
positive consideration, as defined in the regulations promulgated
under Treasury Code Section 848, will capitalize specified policy
acquisition expenses with respect to this Agreement without regard to
general deductions limitation of Section 848 (c) (1);
b. CEDING COMPANY and REINSURER agree to exchange information pertaining
to the net consideration under this Agreement each year to insure
consistency or as otherwise required by the Internal Revenue Service;
c. CEDING COMPANY will submit to REINSURER by April 1 of each year its
calculation of the net consideration for the preceding calendar year.
This schedule of calculations will be accompanied by a statement
signed by an officer of CEDING COMPANY stating that CEDING COMPANY
will report such net consideration in its tax return for the
preceding calendar year;
d. REINSURER may contest such calculation by providing an alternative
calculation to CEDING COMPANY in writing within 30 days of
REINSURER's receipt of CEDING COMPANY's calculation. If REINSURER
does not so notify CEDING COMPANY, REINSURER will report the net
consideration as determined by CEDING COMPANY in REINSURER's tax
return for the previous calendar year;
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e. If REINSURER contests CEDING COMPANY's calculation of the net
consideration, the parties will act in good faith to reach an
agreement as to the correct amount within 30 days of the date
REINSURER submits its alternative calculation. If CEDING COMPANY and
REINSURER reach agreement on the net amount of consideration, each
party will report such amount in their respective tax returns for the
previous calendar year.
Both Parties represent and warrant that they are subject to U.S. taxation
under either Subchapter L of Chapter 1, or Subpart F of Subchapter N of
Chapter 1 of the Internal Revenue Code of 1986, as amended.
12. REPORTS.
The reporting period is monthly. The administrating party is CEDING
COMPANY. For each reporting period, CEDING COMPANY will submit a statement
to REINSURER with information that is substantially similar to the
information displayed in Schedule C. The statement will include
information on the risks reinsured with REINSURER, premiums owed, policy
exhibit activity, and an accounting summary. Within 30 days after the end
of each calendar quarter, CEDING COMPANY will submit a reserve credit
summary similar to that shown in Schedule C.
13. RESERVES FOR REINSURANCE.
Reserves for this YRT Agreement shall be based on 1/2cx using the minimum
valuation mortality table and maximum valuation interest rate. The
statutory reserve basis for the reinsurance will be shown on the reserve
credit summary provided each quarter.
14. CLAIMS.
a. NOTICE OF CLAIM
For all claims, CEDING COMPANY will promptly send a Notice of Claim
to REINSURER. The Notice of Claim will include: the insured's name
and date of birth, the policy number and policy issue date, the
Specified Amount and Reinsured Risk Amount, and the cause and date of
death.
b. REQUEST FOR PAYMENT.
For all claims, CEDING COMPANY will submit to REINSURER a request for
payment of the Reinsurance Risk Amount as follows:
i. For all non-contestable claims and Automatic contestable claims
with a death benefit less than or equal to [dollar amount],
CEDING COMPANY will send to REINSURER a Proof of Claim which
will include: an itemized statement of the benefits paid by
CEDING COMPANY, copy of proof of payment by CEDING COMPANY, and
insured's death certificate.
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ii. For Automatic contestable claims between [dollar amount] and
[dollar amount], CEDING COMPANY will send to REINSURER a Proof
of Claim which will include: an itemized statement of the
benefits paid by CEDING COMPANY, copy of proof of payment by
CEDING COMPANY, and insured's death certificate. In order to
streamline the amount of information sent to all REINSURERS, a
copy of the underwriting file and claims investigation
information will be provided by CEDING COMPANY only to the
Reinsurance Claim Administrator (assigned in paragraph 14(d).
below) if all of the following criteria is met:
o The insured was a resident of the United States or Canada at
the time of death.
o There is no evidence of misrepresentation, fraud or other
circumstances that would require special claims handling or
investigation.
o CEDING COMPANY has not decided to deny or contest the claim.
o Legal proceedings have not been initiated against CEDING
COMPANY in connection with the claim.
iii. For all Automatic contestable claims greater than [dollar
amount], and Automatic contestable claims with a death benefit
between [dollar amount] and [dollar amount] where the criteria
in 14(b.)(ii.) above is not met, CEDING COMPANY will send all
REINSURERS a Proof of Claim which will include: an itemized
statement of the benefits paid by CEDING COMPANY, copy of proof
of payment by CEDING COMPANY, insured's death certificate, and a
copy of the underwriting file and claims investigation
information.
iv. For contestable Facultative claims, CEDING COMPANY will send
REINSURER(s) on the Facultative risk a Proof of Claim which will
include: an itemized statement of the benefits paid by CEDING
COMPANY, copy of proof of payment by CEDING COMPANY, insured's
death certificate, and a copy of the underwriting file and
claims investigation information.
c. CONTESTED CLAIMS.
CEDING COMPANY will notify REINSURER of its intention to contest,
compromise, or litigate a claim involving a reinsured policy. After
receiving notice, REINSURER may elect to release all of its liability
by paying CEDING COMPANY its full share of reinsurance and not
sharing in any subsequent reduction in liability. If REINSURER does
not elect to release its liability, REINSURER will share in any
subsequent reduction in CEDING COMPANY's liability. REINSURER will
share in such reduction in the proportion that REINSURER's net
liability bears to the sum of the net liability before reduction of
CEDING COMPANY and all reinsurers on the insured's date of death.
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d. ASSIGNMENT OF REINSURANCE CLAIM ADMINISTRATOR:
The role of Reinsurance Claim Administrator will be assigned on the
following alphabetic split of the surname of the insured:
-----------------------------------------------------------
REINSURANCE CLAIM ADMINISTRATOR SURNAMES
-----------------------------------------------------------
[name of reinsurance company] A - D
-----------------------------------------------------------
[name of reinsurance company] E - H
-----------------------------------------------------------
[name of reinsurance company] I - L
-----------------------------------------------------------
[name of reinsurance company] M - P
-----------------------------------------------------------
[name of reinsurance company] Q - Z
-----------------------------------------------------------
e. AMOUNT AND PAYMENT OF BENEFITS.
The reinsurance benefit will be limited to REINSURER's share of
CEDING COMPANY's contractual liability for the claim. For purposes of
this Paragraph 14, contractual liability shall mean the benefits
payable by CEDING COMPANY pursuant to the terms and conditions of the
reinsured policy. CEDING COMPANY's contractual liability for claims
is binding on REINSURER. The total reinsurance benefit recovered by
CEDING COMPANY from all reinsurers on a policy must not exceed CEDING
COMPANY's total contractual liability on the policy, less CEDING
COMPANY's quota share retention on the policy. If the total amount of
reinsurance exceeds CEDING COMPANY's contractual liability, the quota
share of CEDING COMPANY and each reinsurer shall be reduced
proportionately.
REINSURER shall pay to CEDING COMPANY the Reinsurance Risk Amount
after REINSURER receives the information required in paragraphs
14(a.), and 14(b.). REINSURER also agrees to pay to CEDING COMPANY
its share of any interest paid out to the claimant by CEDING COMPANY.
f. CLAIM EXPENSES.
REINSURER will pay its share of reasonable investigation expenses and
CEDING COMPANY's legal expenses connected with the litigation or
settlement of contractual liability claims unless REINSURER has
released its liability pursuant to Paragraph 14(c.), above. If
REINSURER has released its liability, REINSURER will not participate
in any expenses after the date of release.
Claim expenses do not include routine claim and administration
expenses, including CEDING COMPANY's home office expenses and any
legal expenses other than defense legal expenses incurred by CEDING
COMPANY. Also, expenses incurred in connection with a dispute or
contest arising out of conflicting claims of entitlement to policy
proceeds or benefits that CEDING COMPANY admits are payable are not a
claim expense under this Agreement.
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g. EXTRACONTRACTUAL DAMAGES.
Except as explicitly provided in this Paragraph 14(g.), RENSURER will
not participate in and shall not be liable to reimburse CEDING
COMPANY or others for any amounts in excess of REINSURER's share of
the Reinsurance Risk Amount, including extra-contractual damages or
liabilities and related expenses and fees. Extra-contractual damages
are any damages awarded against CEDING COMPANY, including, for
example, those resulting from negligence, reckless or intentional
conduct, fraud, oppression, or bad faith committed by CEDING COMPANY
in connection with the mortality risk insurance reinsured under this
Agreement.
For purposes of this agreement, the term "extra-contractual damages"
shall include, by way of example and not by limitation:
i. actual and consequential damages;
ii. damages for emotional distress or oppression;
iii. punitive, exemplary or compensatory damages;
iv. statutory damages, fines, or penalties;
v. amounts in excess of the risk reinsured hereunder that CEDING
COMPANY pays to settle a dispute or claim;
vi. third-party attorney fees, costs and expenses.
REINSURER will reimburse CEDING COMPANY for CEDING COMPANY's
extra-contractual damages that result from REINSURER's actions that
directly and proximately cause such extra-contractual damages. Any
such reimbursement will be in proportion to REINSURER's direct and
proximate participation in the actions that lead to the
extra-contractual damages.
15. POLICY CHANGES.
a. NOTICE.
If a reinsured policy is changed, a corresponding change will be made
in the reinsurance for that policy. CEDING COMPANY will notify
REINSURER of the change in CEDING COMPANY's next accounting
statement.
b. INCREASES.
Increases in Specified Amount will be handled as follows:
i. Increases underwritten in accordance with CEDING COMPANY's
guidelines may be reinsured automatically if the following
conditions are met:
o The Specified Amount after the increase, along with other
amounts inforce and applied for, does not exceed the
Automatic Acceptance Limits or Automatic In-Force and
Applied for Limit shown in Schedule A; and
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o The initial Specified Amount was reinsured automatically.
ii. Increases made pursuant to the Automatic Increasing Benefit
Rider will be reinsured automatically so long as the sum of all
increases made under the Automatic Increasing Benefit Rider have
not exceeded the maximum increase amount available under the
Automatic Increasing Benefit Rider.
CEDING COMPANY's share and REINSURER's share of Specified Amount
after an increase will be the same as their respective shares before
the increase, except CEDING COMPANY will not retain an amount more
than the per policy Retention Limit shown in Schedule A.
If an increase in Specified Amount occurs on a date other than the
policy anniversary, a pro-rata reinsurance premium will be paid to
REINSURER. The reinsurance premium rates will be based on the
original issue age, duration since issuance of the original policy
and the most recent underwriting classification.
c. REDUCTION OR TERMINATION.
If life insurance on a reinsured policy is reduced, then the
reinsurance will be reduced proportionately so that each party's
quota share portion remains the same. If life insurance on a
reinsured policy is terminated, then the reinsurance will cease on
the date of such termination. If a decrease in Specified Amount
occurs on a date other than the policy anniversary, a pro-rata
reinsurance premium will be refunded to CEDING COMPANY.
d. INTERNAL REPLACEMENTS.
If a CEDING COMPANY policy reinsured under this Agreement is replaced
with another CEDING COMPANY policy, reinsurance will continue under
this Agreement or under another agreement between CEDING COMPANY and
REINSURER. Reinsurance premium rates for the new policy will be based
on the issue age and duration since issue of the original policy, but
on the underwriting classification of the new policy.
If a CEDING COMPANY policy not reinsured under this Agreement is
replaced with a CEDING COMPANY policy of the plan covered by this
Agreement, other than as the result of a contractual term conversion,
the new policy will be eligible for reinsurance under this Agreement.
A policy issued as a result of a contractual term conversion will be
eligible for reinsurance under this Agreement if the term policy was
applied for on or after the effective date of this Agreement and
conversion occurs within one year of the policy issue date.
Reinsurance may be ceded automatically subject to the conditions
listed in Section 3. or facultatively as provided by Section 5.
Reinsurance premium rates will be based on the issue age, issue date
and underwriting classification of the new policy.
12
16. REINSTATEMENTS.
a. REINSTATEMENT WITHOUT EVIDENCE.
If CEDING COMPANY reinstates a policy without evidence, REINSURER's
reinsurance for that policy will be automatically reinstated.
b. REINSTATEMENT WITH EVIDENCE.
If CEDING COMPANY has been requested to reinstate a policy with
evidence that was originally ceded to REINSURER as facultative
reinsurance, then CEDING COMPANY will resubmit the case to REINSURER
for underwriting approval before the reinsurance can be reinstated.
If the policy was originally ceded to REINSURER as automatic
reinsurance, REINSURER's reinsurance for that policy will be
automatically reinstated.
c. PREMIUM ADJUSTMENT.
The reinsurance premiums for the interval during which the policy was
lapsed will be paid to REINSURER on the same basis as CEDING COMPANY
charged its policy owner for the reinstatement. However, REINSURER is
not responsible for claims, under Section 14 of this Agreement, that
occur when the policy is lapsed.
17. INCREASE IN RETENTION.
a. NEW BUSINESS.
CEDING COMPANY may, at its option and with 90 days' written notice to
REINSURER, increase its Automatic Share and/or its per policy
Retention Limit shown in Schedule A for policies issued after the
effective date of the retention increase.
b. RECAPTURE.
If CEDING COMPANY increases its Automatic Share and/or its per policy
Retention Limit, then it may, with 90 days' written notice to
REINSURER, reduce or recapture the reinsurance in force subject to
the following requirements:
i. Eligible Policies:
o For Automatic policies, CEDING COMPANY retained its full
Automatic Share.
o For Facultative policies, CEDING COMPANY retained a minimum
[percentage] share up to its per policy Retention Limit.
ii. A cession is not eligible for recapture until it has been
reinsured for the minimum number of years shown in Schedule A.
The effective date of the reduction in reinsurance will be the
latter of the first policy anniversary
13
following the expiration of the 90-day notice period to recapture and
the policy anniversary date when the required minimum of years
is attained.
iii. If any reinsurance is recaptured, all reinsurance eligible for
recapture under the provisions of this agreement must be
recaptured. On all policies eligible for recapture, reinsurance
will be reduced by the amount necessary to increase the total
insurance retained up to the new retention limits.
iv. If any policy eligible for recapture is also eligible for
recapture from other reinsurers, the reduction in REINSURER's
reinsurance on that policy will be in proportion to the total
amount of reinsurance on the policy with all reinsurers.
18. ERRORS AND OMISSIONS.
Any unintentional or accidental failure of CEDING COMPANY or REINSURER to
comply with the terms of this Agreement which can be shown to be the
result of an oversight, misunderstanding or clerical error, will not be
deemed a breach of this Agreement. Upon discovery, the error will be
corrected so that both parties are restored to the position they would
have occupied had the oversight, misunderstanding or clerical error not
occurred. Should it not be possible to restore both parties to such a
position, CEDING COMPANY and REINSURER shall negotiate in good faith to
equitably apportion any resulting liabilities and expenses.
This provision applies only to oversights, misunderstandings or clerical
errors relating to the administration of reinsurance covered by this
Agreement. This provision does not apply to the administration of the
insurance provided by CEDING COMPANY to its insured or any other errors or
omissions committed by CEDING COMPANY with regard to the policy reinsured
hereunder.
19. INSOLVENCY.
In the event that CEDING COMPANY is deemed insolvent, all reinsurance
claims payable hereunder will be payable by REINSURER directly to CEDING
COMPANY, its liquidator, receiver or statutory successor, without
diminution because of the insolvency of CEDING COMPANY. It is understood,
however, that in the event of such insolvency, the liquidator, receiver or
statutory successor of CEDING COMPANY will give written notice to
REINSURER of the pendency of a claim against REINSURER on a risk reinsured
hereunder within a reasonable time after such claim is filed in the
insolvency proceeding. Such notice will indicate the policy reinsured and
whether the claim could involve a possible liability on the part of
REINSURER.
During the pendency of such claim, REINSURER may investigate such claim
and interpose, at its own expense, in the proceeding where such claim is
to be adjudicated, any defense or
14
defenses it may deem available to CEDING COMPANY, its liquidator, receiver
or statutory successor. It is further understood that the expense thus
incurred by REINSURER will be chargeable, subject to court approval,
against CEDING COMPANY as part of the expense of liquidation to the extent
of a proportionate share of the benefit that may accrue to CEDING COMPANY
solely as a result of the defense undertaken by REINSURER.
20. ARBITRATION.
a. GENERAL.
All disputes and differences under this Agreement that cannot be
amicably agreed upon by the parties will be decided by arbitration
The arbitrators will have the authority to interpret this Agreement
and, in doing so, will consider the customs and practices of the life
insurance and reinsurance industries.
The arbitrators will consider this Agreement an honorable engagement
rather than merely a legal obligation, and they are relieved of all
judicial formalities and may abstain from following the strict rules
of the law.
b. NOTICE.
To initiate arbitration, one of the parties will notify the other, in
writing, of its desire to arbitrate. The notice will state the nature
of the dispute and the desired remedies. The party to which the
notice is sent will respond to the notification in writing within 10
days of receipt of the notice. At that time, the responding party
will state any additional dispute it may have regarding the subject
of arbitration.
c. PROCEDURE.
Arbitration will be heard before a panel of three arbitrators. The
arbitrators will be executive officers of life insurance or
reinsurance companies; however, these companies will not be either
party nor their affiliates. Each party will appoint one arbitrator.
Notice of the appointment of these arbitrators will be given by each
party to the other party within 30 days of the date of mailing of the
notification initiating the arbitration. These two arbitrators will,
as soon as possible, but no longer than 45 days after the day of the
mailing of the notification initiating the arbitration, then select
the third arbitrator. Should either party fail to appoint an
arbitrator or should the two initial arbitrators be unable to agree
on the choice of a third arbitrator, each arbitrator will nominate
three candidates, two of whom the other will decline, and the
decision will be made by drawing lots on the final selection. Once
chosen, the three arbitrators will have the authority to decide all
substantive and procedural issues by a majority vote. The arbitration
hearing will be held on the date fixed by the arbitrators at a
location agreed upon by the parties. The arbitrators will issue a
written decision from which there will be no appeal. Either party may
reduce this decision to a judgment before any court that has
jurisdiction of the subject of the arbitration.
15
d. COSTS.
Each party will pay the fees of its own attorneys, the arbitrator
appointed by that party, and all other expenses connected with the
presentation of its own case. The two parties will share equally in
the cost of the third arbitrator.
The arbitrators shall operate in a fair but cost efficient manner.
For example, the arbitrators are not bound by technical rules of
evidence and may limit the use of depositions and discovery.
21. GOOD FAITH; FINANCIAL SOLVENCY.
CEDING COMPANY agrees that all matters with respect to this Agreement
require its utmost good faith. REINSURER or its representatives have the
right at any reasonable time to inspect CEDING COMPANY's records relating
to this Agreement. Each party represents and warrants to the other party
that it is solvent on a statutory basis in all states in which it does
business or is licensed. Each party agrees to promptly notify the other if
it is subsequently financially impaired. REINSURER has entered into this
Agreement in reliance upon CEDING COMPANY's representations and
warranties.
CEDING COMPANY affirms that it has disclosed and will continue to disclose
to REINSURER all matters material to this Agreement and each reinsurance
cession. Examples of such matters are a change in underwriting or issue
practices or philosophy, a change in underwriting management personnel, or
a change in CEDING COMPANY's ownership or control.
22. TERM OF THIS AGREEMENT.
CEDING COMPANY will maintain and continue the reinsurance provided in this
Agreement as long as the policy to which it relates is in force or has not
been fully recaptured. This Agreement may be terminated, without cause,
for the acceptance of new reinsurance after 90 days' written notice of
termination by either party to the other. REINSURER will continue to
accept reinsurance during this 90-day period. REINSURER's acceptance will
be subject to both the terms of this Agreement and CEDING COMPANY's
payment of applicable reinsurance premiums.
In addition, this Agreement may be terminated immediately for the
acceptance of new reinsurance by either party if one of the parties
materially breaches this Agreement or becomes insolvent.
23. MEDICAL INFORMATION BUREAU.
REINSURER is required to strictly adhere to the Medical Information Bureau
Rules, and CEDING COMPANY agrees to abide by these Rules, as amended from
time to time. CEDING COMPANY will not submit a preliminary notice,
application for reinsurance, or reinsurance cession to REINSURER unless
CEDING COMPANY has an authentic, signed
16
preliminary or regular application for insurance in its home office and
the current required Medical Information Bureau authorization.
24. SEVERABILITY.
In the event that any provision or term of this Agreement shall be held by
any court, arbitrator, or administrative agency to be invalid, illegal or
unenforceable, all of the other terms and provisions shall remain in full
force and effect to the extent that their continuance is practicable and
consistent with the original intent of the parties. In addition, if any
provision or term is held invalid, illegal or unenforceable, the parties
will attempt in good faith to renegotiate the Agreement to carry out the
original intent of the parties.
17
SCHEDULE A
1. PLANS REINSURED:
The policy plans and supplemental benefits automatically and facultatively
reinsured are:
-------------------------------------------------------------------------------------
Plans Plan Codes
-------------------------------------------------------------------------------------
Variable Universal Life III Base Policy UVI001, UVI002, UVI003, UVI004
Automatic Increasing Benefit Rider (AIBR) AIBR02, AIBR03, AIBR04, AIBR05,
AIBR06, AIBR07, AIBR08
Other Insured Rider (OIR) ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------------------------------------------------
2. NET AMOUNT AT RISK:
The net amount at risk on the policies and riders eligible for reinsurance
under this Agreement, is defined below:
Option 1 Base Policy: The Net Amount at Risk is the Death Benefit minus
the Policy Account Value, where Death Benefit is the greater of Specified
Amount or Policy Account Value times tax corridor.
Option 2 Base Policy: The Net Amount at Risk is the Death Benefit minus
the Policy Account Value, where Death Benefit is the greater of Specified
Amount or Policy Account Value or Policy Account Value times tax corridor.
Other Insured Rider: The Net Amount at Risk is the Specified Amount of the
Rider.
For purposes of this Agreement, the following will apply:
"Specified Amount" is the amount CEDING COMPANY uses to determine the
death benefit and proceeds payable under the policy upon death prior to
the insured's age 100 anniversary. The initial Specified Amount will be
shown in the Policy Data of the policy.
"Policy Account Value" is the sum of the policy fixed account value and
the variable account value.
ING VUL3 (4/29/99) A1 06/25/99
SCHEDULE A, CONTINUED
3. AUTOMATIC SHARES:
Automatic reinsurance will be on a first dollar quota share basis, with
shares assigned based on Specified Amount. CEDING COMPANY will retain an
Automatic Share of [percentage] of Specified Amount on each policy and
rider, up to a Retention Limit of [dollar amount]. Outside this agreement,
CEDING COMPANY will maintain a separate per life retention limit of
[dollar amount]. CEDING COMPANY will not reduce its retention on a policy
reinsured under this Agreement by amounts retained on policies not
reinsured under this agreement, nor reduce its retention on other policies
by amounts retained under this Agreement.
REINSURER Will assume an Automatic Share of [percentage] of the fast
[dollar amount] of Specified Amount and [percentage] of any Specified
Amount in excess of [dollar amount].
4. AUTOMATIC ACCEPTANCE LIMITS:
CEDING COMPANY may not cede reinsurance automatically if the sum of all
amounts inforce and applied for on the same life with CEDING COMPANY,
excluding amounts being replaced, exceed the following binding limits:
Binding Limits (these amounts include CEDING COMPANY's retention)
--------------------------------------------------------------------------
Issue Ages Std-Table D Table E-H Table I-P
--------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
--------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
--------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
--------------------------------------------------------------------------
In comparing against Automatic Acceptance Limits:
a. Potential increases in Specified Amount of a reinsured policy
pursuant to the Automatic Increasing Benefit Rider will not be
included as amounts inforce or applied for, so long as the total of
all increases to the Specified Amount of the Policy can not exceed
[dollar amount].
b. If the risk is insured under, or has applied for, a joint life
policy, the full joint life amount must be included.
ING VUL3 (4/29/99) A2 06/25/99
SCHEDULE A, CONTINUED
5. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT:
CEDING COMPANY may not cede reinsurance automatically if the sum of all
amounts inforce and applied for on the same life in all companies,
including amounts being replaced, exceed the following limits:
----------------------------------------------------------------
Issue Ages Limit
----------------------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------------------
In comparing against Automatic Inforce and Applied For Limits:
a. Potential increases in Specified Amount of a reinsured policy
pursuant to the Automatic Increasing Benefit Rider will not be
included as amounts inforce or applied for, so long as the total of
all increases to the Specified Amount of the Policy can not exceed
[dollar amount].
b. If the risk is insured under, or has applied for, a joint life
policy, the full joint life amount must be included.
6. FACULTATIVE SHARES:
Facultative reinsurance will also be on a first dollar, quota share basis,
with shares assigned on the basis of Specified Amount. Facultative shares
will be determined on a case by case basis, according to CEDING COMPANY's
standard facultative placement procedures. CEDING COMPANY will retain an
agreed upon Facultative Share of the Specified Amount on a particular
policy or rider, up to its per policy Retention Limit of [dollar amount].
7. PREMIUM DUE:
Reinsurance premiums are due annually in advance. These premiums become
due on the issue date and each subsequent policy anniversary.
8. RECAPTURE PERIOD:
The minimum number of years for a cession to be reinsured before it is
eligible for recapture is 10 years.
ING VUL3 (4/29/99) A3 06/25/99
SCHEDULE B
REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. LIFE INSURANCE:
a. For the base policy and the Other Insured Rider, the standard annual
reinsurance premium rates per $1000 of Reinsurance Risk Amount are
the net of the ALB Annual Cost of Insurance (COI) rates attached to
this Schedule B and the following allowances:
------------------------------------------------------------------
Years Preferred Std Non-Tobacco Tobacco
------------------------------------------------------------------
1 [percentage] [percentage] [percentage]
------------------------------------------------------------------
2-10 [percentage] [percentage] [percentage]
------------------------------------------------------------------
l1+ [percentage] [percentage] [percentage]
------------------------------------------------------------------
b. Where a substandard table rating is applied, the standard annual
reinsurance premium rate will be increased by [percentage] per table.
c. Flat Extra reinsurance premiums are the following percentages of such
premiums charged the insured:
--------------------------------------------------------------------
Permanent flat extra premiums (for more than 5 years duration)
--------------------------------------------------------------------
First Year [percentage]
--------------------------------------------------------------------
Renewal Years [percentage]
--------------------------------------------------------------------
--------------------------------------------------------------------
Temporary flat extra premiums (for 5 years or less duration)
--------------------------------------------------------------------
All Years [percentage]
--------------------------------------------------------------------
d. There will be no reinsurance premium charged for the Automatic
Increasing Benefit Rider.
2. AGE BASIS:
Age Last Birthday
ING VUL3 (4/29/99) B1 06/25/99
-----------------------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY
-----------------------------------------------------------------------------------------------
Basis for VUL III Reinsurance Premiums
-----------------------------------------------------------------------------------------------
ALB ANNUAL COST OF INSURANCE RATES PER $1000 (BEFORE ALLOWANCES)
-----------------------------------------------------------------------------------------------
Male Male Male Female Female Female
-----------------------------------------------------------------------------------------------
Attained Preferred Standard Standard Preferred Standard Standard
-----------------------------------------------------------------------------------------------
Age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
0
-----------------------------------------------------------------------------------------------
1
-----------------------------------------------------------------------------------------------
2
-----------------------------------------------------------------------------------------------
3
-----------------------------------------------------------------------------------------------
4
-----------------------------------------------------------------------------------------------
5
-----------------------------------------------------------------------------------------------
6
-----------------------------------------------------------------------------------------------
7
-----------------------------------------------------------------------------------------------
8
-----------------------------------------------------------------------------------------------
9
-----------------------------------------------------------------------------------------------
10
-----------------------------------------------------------------------------------------------
11
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12
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13
-----------------------------------------------------------------------------------------------
14
-----------------------------------------------------------------------------------------------
15
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16
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17
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18
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19
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20
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21
-----------------------------------------------------------------------------------------------
22
-----------------------------------------------------------------------------------------------
23
-----------------------------------------------------------------------------------------------
24
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25
-----------------------------------------------------------------------------------------------
26
-----------------------------------------------------------------------------------------------
27
-----------------------------------------------------------------------------------------------
28
-----------------------------------------------------------------------------------------------
29
-----------------------------------------------------------------------------------------------
30
-----------------------------------------------------------------------------------------------
31
-----------------------------------------------------------------------------------------------
32
-----------------------------------------------------------------------------------------------
ING VUL3 (4/29/99) B2 06/25/99
-----------------------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY
-----------------------------------------------------------------------------------------------
Basis for VUL III Reinsurance Premiums
-----------------------------------------------------------------------------------------------
ALB ANNUAL COST OF INSURANCE RATES PER $1000 (BEFORE ALLOWANCES)
-----------------------------------------------------------------------------------------------
Male Male Male Female Female Female
-----------------------------------------------------------------------------------------------
Attained Preferred Standard Standard Preferred Standard Standard
-----------------------------------------------------------------------------------------------
Age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
33
-----------------------------------------------------------------------------------------------
34
-----------------------------------------------------------------------------------------------
35
-----------------------------------------------------------------------------------------------
36
-----------------------------------------------------------------------------------------------
37
-----------------------------------------------------------------------------------------------
38
-----------------------------------------------------------------------------------------------
39
-----------------------------------------------------------------------------------------------
40
-----------------------------------------------------------------------------------------------
41
-----------------------------------------------------------------------------------------------
42
-----------------------------------------------------------------------------------------------
43
-----------------------------------------------------------------------------------------------
44
-----------------------------------------------------------------------------------------------
45
-----------------------------------------------------------------------------------------------
46
-----------------------------------------------------------------------------------------------
47
-----------------------------------------------------------------------------------------------
48
-----------------------------------------------------------------------------------------------
49
-----------------------------------------------------------------------------------------------
50
-----------------------------------------------------------------------------------------------
51
-----------------------------------------------------------------------------------------------
52
-----------------------------------------------------------------------------------------------
53
-----------------------------------------------------------------------------------------------
54
-----------------------------------------------------------------------------------------------
55
-----------------------------------------------------------------------------------------------
56
-----------------------------------------------------------------------------------------------
57
-----------------------------------------------------------------------------------------------
58
-----------------------------------------------------------------------------------------------
59
-----------------------------------------------------------------------------------------------
60
-----------------------------------------------------------------------------------------------
61
-----------------------------------------------------------------------------------------------
62
-----------------------------------------------------------------------------------------------
63
-----------------------------------------------------------------------------------------------
64
-----------------------------------------------------------------------------------------------
65
-----------------------------------------------------------------------------------------------
ING VUL3 (4/29/99) B3 06/25/99
-----------------------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY
-----------------------------------------------------------------------------------------------
Basis for VUL III Reinsurance Premiums
-----------------------------------------------------------------------------------------------
ALB ANNUAL COST OF INSURANCE RATES PER $1000 (BEFORE ALLOWANCES)
-----------------------------------------------------------------------------------------------
Male Male Male Female Female Female
-----------------------------------------------------------------------------------------------
Attained Preferred Standard Standard Preferred Standard Standard
-----------------------------------------------------------------------------------------------
Age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
66
-----------------------------------------------------------------------------------------------
67
-----------------------------------------------------------------------------------------------
68
-----------------------------------------------------------------------------------------------
69
-----------------------------------------------------------------------------------------------
70
-----------------------------------------------------------------------------------------------
71
-----------------------------------------------------------------------------------------------
72
-----------------------------------------------------------------------------------------------
73
-----------------------------------------------------------------------------------------------
74
-----------------------------------------------------------------------------------------------
75
-----------------------------------------------------------------------------------------------
76
-----------------------------------------------------------------------------------------------
77
-----------------------------------------------------------------------------------------------
78
-----------------------------------------------------------------------------------------------
79
-----------------------------------------------------------------------------------------------
80
-----------------------------------------------------------------------------------------------
81
-----------------------------------------------------------------------------------------------
82
-----------------------------------------------------------------------------------------------
83
-----------------------------------------------------------------------------------------------
84
-----------------------------------------------------------------------------------------------
85
-----------------------------------------------------------------------------------------------
86
-----------------------------------------------------------------------------------------------
87
-----------------------------------------------------------------------------------------------
88
-----------------------------------------------------------------------------------------------
89
-----------------------------------------------------------------------------------------------
90
-----------------------------------------------------------------------------------------------
91
-----------------------------------------------------------------------------------------------
92
-----------------------------------------------------------------------------------------------
93
-----------------------------------------------------------------------------------------------
94
-----------------------------------------------------------------------------------------------
95
-----------------------------------------------------------------------------------------------
96
-----------------------------------------------------------------------------------------------
97
-----------------------------------------------------------------------------------------------
98
-----------------------------------------------------------------------------------------------
99
-----------------------------------------------------------------------------------------------
ING VUL3 (4/29/99) B4 06/25/99
SCHEDULE C
REPORTING INFORMATION
INFORMATION ON RISKS REINSURED
1. Type of Transaction
2. Effective Date of Transaction
3. Automatic/Facultative Indicator
4. Policy Number
5. Full Name of Insured
6. Date of Birth
7. Sex
8 Smoker/Nonsmoker
9. Policy Plan Code
10. Insured's State of Residence
11. Issue Age
12. Issue Date
13. Duration from Original Policy Date
14. Face Amount Issued
15. Reinsured Amount (Initial Amount)
16. Reinsured Amount (Current Amount at Risk)
17. Change in Amount at Risk Since Last Report
18. Death Benefit Option (For Universal Life Type Plans)
19. ADB Amount (If Applicable)
20. Substandard Rating
21. Flat Extra Amount Per Thousand
22. Duration of Flat Extra
23. ▇▇ ▇▇▇▇▇ (Yes or No)
24. Previous Policies (Yes or No)
25. Premiums
ING VUL3 (4/29/99) C1 06/25/99
SCHEDULE C, CONTINUED
SAMPLE
POLICY EXHIBIT SUMMARY
(LIFE REINSURANCE ONLY)
CEDING COMPANY:
---------------------------------------------------------------
REINSURER:
---------------------------------------------------------------
ACCOUNT NO:
---------------------------------------------------------------
PREPARED BY: Phone: ( )
------------------------ ------ -----------------
DATE PREPARED:
---------------------------------------------------------------
TYPE OF REINSURANCE:
Yearly Renewable Term
---------------------------------
Coinsurance
---------------------------------
Modified Coinsurance
---------------------------------
Other
---------------------------------
VALUATION DATE:
---------------
NUMBER OF AMOUNT OF
POLICIES REINSURANCE
In Force Beginning
A. of Period __/ __/ __
-------------- -----------------
B. New Paid Reinsurance Ceded
-------------- -----------------
C. Reinstatements
-------------- -----------------
D. Revivals
-------------- -----------------
E. Increases (Net)
-------------- -----------------
F. Conversion In
-------------- -----------------
G. Transfers In
-------------- -----------------
H. Total Increases (B - G)
-------------- -----------------
I. Deaths
-------------- -----------------
J. Maturities
-------------- -----------------
K. Cancellations
-------------- -----------------
L. Expiries
-------------- -----------------
M. Surrenders
-------------- -----------------
N. Lapses
-------------- -----------------
O. Recaptures
-------------- -----------------
P. Other Decreases (Net)
-------------- -----------------
Q. Reductions
-------------- -----------------
R. Conversions Out
-------------- -----------------
S. Transfers Out
-------------- -----------------
T. Total Decreases (I - S)
-------------- -----------------
U. Current In Force __/ __/ __
(A + H - T) -------------- -----------------
ING VUL3 (4/29/99) C2 06/25/99
SCHEDULE C, CONTINUED
SAMPLE
RESERVE CREDIT SUMMARY
CEDING COMPANY:
---------------------------------------------------------------
REINSURER:
---------------------------------------------------------------
ACCOUNT NO:
---------------------------------------------------------------
PREPARED BY: Phone: ( )
------------------------ ------ -----------------
DATE PREPARED:
---------------------------------------------------------------
TYPE OF REINSURANCE:
Yearly Renewable Term
---------------------------------
Coinsurance
---------------------------------
Modified Coinsurance
---------------------------------
Other
---------------------------------
VALUATION DATE:
---------------
TYPE OF RESERVES:
Statutory
-------------------------------------
GAAP
-------------------------------------
Tax
-------------------------------------
ISSUE
VALUATION BASIS YEAR IN FORCE IN FORCE RESERVE
MORTALITY INTEREST VALUATION RANGE COUNT AMOUNT CREDIT
A. Life
Insurance
---------------- ------------------ --------------- --------- ----------- ----------- ------------
---------------- ------------------ --------------- --------- ----------- ----------- ------------
B. Accidental
Death Benefit
---------------- ------------------ --------------- --------- ----------- ----------- ------------
C. Disability
Active Lives
---------------- ------------------ --------------- --------- ----------- ----------- ------------
D. Disability
Disabled Lives
---------------- ------------------ --------------- --------- ----------- ----------- ------------
E. Other
Please Explain
---------------- ------------------ --------------- --------- ----------- ----------- ------------
GRAND TOTAL:
-----------
ING VUL3 (4/29/99) C3 06/25/99
SCHEDULE C, CONTINUED
SAMPLE
ACCOUNTING SUMMARY
CEDING COMPANY:
---------------------------------------------------------------
REINSURER:
---------------------------------------------------------------
ACCOUNT NO:
---------------------------------------------------------------
PREPARED BY: Phone: ( )
------------------------ ------ -----------------
DATE PREPARED:
---------------------------------------------------------------
TYPE OF REINSURANCE:
Yearly Renewable Term
---------------------------------
Coinsurance
---------------------------------
Modified Coinsurance
---------------------------------
Other
---------------------------------
VALUATION DATE:
---------------
LIFE WP AD TOTAL
Premiums
First Year
------------ ------------ ---------- -----------
Renewal
------------ ------------ ---------- -----------
Allowances
First Year
------------ ------------ ---------- -----------
Renewal
------------ ------------ ---------- -----------
Adjustments
First Year
------------ ------------ ---------- -----------
Renewal
------------ ------------ ---------- -----------
Net Due REINSURER
First Year
------------ ------------ ---------- -----------
Renewal
------------ ------------ ---------- -----------
TOTAL DUE
------------ ------------ ---------- -----------
(The above information should be a summary of the
detail information provided to REINSURER.)
ING VUL3 (4/29/99) C4 06/25/99
SCHEDULE D
FACULTATIVE FORMS
Application for Reinsurance
Notification of Reinsurance
ING VUL3 (4/29/99) 06/25/99
[logo] [address, city and state of
reinsurance company]
APPLICATION FOR REINSURANCE
------------------------------------------------------------------------------------------------------------------------------------
|_| Trial |_| Facultative: Please send approval |_| Facultative Obligatory |_| Automatic
------------------------------------------------------------------------------------------------------------------------------------
|_| Joint Life |_| YRT |_| Other |_| Self-Administered |_| Age Last
------------------------------------------------------------------------------------------------------------------------------------
|_| Single Life |_| COINS |_| MRT |_| Individual Cession |_| Age Nearest
------------------------------------------------------------------------------------------------------------------------------------
Last Name First Name M.I. Date of Birth Sex Age
------------------------------------------------------------------------------------------------------------------------------------
LIFE #1
------------------------------------------------------------------------------------------------------------------------------------
LIFE #2
------------------------------------------------------------------------------------------------------------------------------------
Smoker/Non State of Birth State of Res. Occupation SS #
#1
------------------------------------------------------------------------------------------------------------------------------------
#2
------------------------------------------------------------------------------------------------------------------------------------
ACCIDENTAL DEATH
LIFE #1 LIFE #2 Premium Waiver LIFE #1 LIFE #2 Plan Name*
Previous Ins. in force
------------ ---------------------------------------- --------------- --------------- -------------
of which we retain
------------ ---------------------------------------- --------------- --------------- -------------
Rating, if substandard
------------ ---------------------------------------- --------------- --------------- -------------
Insurance now applied for
------------ ---------------------------------------- --------------- --------------- -------------
or which we will retain
------------ ---------------------------------------- --------------- --------------- -------------
Rating, if substandard
------------ ---------------------------------------- --------------- --------------- -------------
Reinsurance requested
------------ ---------------------------------------- --------------- --------------- -------------
*If this is a new plan, make sure you furnish us full plan details.
------------------------------------------------------------------------------------------------------------------------------------
This cession represents: |_| New Business |_| Term Conversion |_| Guaranteed Insurability |_| Amended
Option Cession
If Amendment: Reason Effective Date
-------------------------------------------------------------------- -----------------
Original Policy No. Date of Original Policy Valuation Basis
------------------------ -------------------- ----------------
PREMIUM WAIVER REINSURANCE ACCIDENTAL DEATH REINSURANCE
Rider Form No.
------------------
Age Expiry Rider Form No.
------------------ ---------------------
Premium to be Waived Age Expiry
------------------ ---------------------
Premium for Waiver Benefit
-----------------
------------------------------------------------------------------------------------------------------------------------------------
-------------------------------- ------------------------------------------------------- ------------------------- -------------
DATED AT CEDING COMPANY DATE BY
Other Comments:
--------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Reinsurer:
|_| [city and state of reinsurance company] |_|[city and state of reinsurance company]
This application is accepted and reinsurance is granted by the Reinsurer subject to all the terms, conditions and limitations of the
reinsurance treaty and this application.
This day of , 19
----------------------- --------------------- ------------------- ---------------------------------------------
Authorized Signature
Reinsurance Agreement No.
----------------------------------------------------
RE-16-99 [name of reinsurance company]
EXHIBIT I
Underwriting Guidelines for Internal Replacements to Permanent Insurance
EVEN EXCHANGES AND NOT REQUESTING OR NOT ELIGIBLE FOR PREFERRED CLASS
o No underwriting
EVEN EXCHANGES WITH REQUEST FOR PREFERRED RATES
Within three years (use last date underwritten):
o Application
Three to ten years:
o Application
o MIG (if necessary for new age and full amount of new policy)
o Blood, urine and physical measures
More than ten years:
o Full underwriting for new age and full amount of new policy
Exchanges with Increases
o If the original policy was underwritten non-medically, full underwriting
for new age and full amount of new policy is required
INCREASE OF $25,000 OR LESS:
o Follow guidelines for even exchanges with request for preferred rates
o Exception: Three to ten years - blood, urine and physical measures are
required only if necessary for new age and full amount of new policy
INCREASES GREATER THAN $25, 000:
Within three years (use last date underwritten):
o Application
o Full underwriting for new age and AMOUNT OF INCREASE
Three to ten years:
o Application
o MIG, blood, urine and physical measures (if necessary for new age and full
amount of new policy)
o Full underwriting for new age and AMOUNT OF INCREASE
More than ten years:
o Full underwriting for new age and FULL AMOUNT OF NEW POLICY
ING VUL3 (4/29/99) 06/25/99
AUTOMATIC AND FACULTATIVE
REINSURANCE AGREEMENT
(YEARLY RENEWABLE TERM)
This Agreement is between
IDS LIFE INSURANCE COMPANY of Minneapolis, Minnesota, hereinafter referred to as
"CEDING COMPANY"
and
[NAME OF REINSURANCE COMPANY] of Denver, Colorado, hereinafter referred to as
"REINSURER."
REINSURER agrees to reinsure certain portions of CEDING COMPANY's contract risks
as described in the terms and conditions of this Agreement.
This reinsurance Agreement constitutes the entire Agreement between the parties
with respect to the business being reinsured hereunder and there are no
understandings between the parties other than as expressed in this Agreement.
Any change or modification to this Agreement is null and void unless made by
amendment to this Agreement and signed by both parties.
To the extent that policies are eligible for coverage, policies must be applied
for on or after the effective date of this Agreement. However, policies issued
under this Agreement may be backdated, but not earlier than January 1, 1999.
In witness of the above, CEDING COMPANY and REINSURER have by their respective
officers executed and delivered this Agreement in duplicate on the dates
indicated below, with an effective date of April 29, 1999.
IDS LIFE [NAME OF REINSURANCE COMPANY]
INSURANCE COMPANY
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: [signature]
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Title: Reinsurance Actuary Title: [title]
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Date: 6/29/99 Date: July 8, 1999
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By: [ILLEGIBLE] By: [signature]
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Title: VP - Insurance Product Development Title: [title]
----------------------------------- -----------------------
Date: 6/30/99 Date: 7/8/99
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