<Page>
FORM OF OPINION OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
[__], 2001
American Equity Investment Life
Holding Company
5000 Westown Parkway, Suite 440
West Des Moines, Iowa 50266
Ladies and Gentlemen:
We have acted as special tax counsel for American Equity
Investment Life Holding Company, an Iowa corporation (the "Corporation"), and
American Equity Capital Trust III, a statutory business trust organized under
the laws of the State of Delaware (the "Trust"), in connection with the
issuance and sale by the Trust of 4,000,000 [__]% Trust Preferred Securities
of the Trust ("Trust Preferred Securities," with a liquidation amount $25 per
Trust Preferred Security), representing undivided beneficial interests in the
assets of the Trust under the Amended and Restated Declaration of Trust of
the Trust, dated as of [__], 2001 (the "Restated Declaration"), among the
Corporation, as sponsor of the Trust, First Union Trust Company, National
Association, as property trustee (the "Property Trustee"), First Union Trust
Company, National Association, as Delaware trustee (the "Delaware Trustee"),
and the Administrative Trustees named therein (the "Administrative Trustees").
The Trust Preferred Securities are guaranteed (the "Guarantee")
by the Corporation with respect to the payment of distributions and payments
upon liquidation, redemption and otherwise pursuant to, and to the extent set
forth in, the Trust Preferred Securities Guarantee Agreement, dated as of [__],
2001 (the "Guarantee Agreement"), between the Corporation and First Union Trust
Company, National Association, as guarantee trustee (the "Guarantee Trustee"),
for the benefit of the holders of the Trust Preferred Securities. In connection
with the issuance of the Trust Preferred Securities, the Trust is also issuing
[__] common securities ("Trust Common Securities"), representing
<Page>
American Equity Investment Life Holding Company
Page 2
[__], 2001
common undivided beneficial ownership interests in the assets of the Trust
with a liquidation amount of $[__] per Trust Common Security, or $[__] in the
aggregate.
The entire proceeds from the sale of the Trust Preferred
Securities and the Trust Common Securities are to be used by the Trust to
purchase [__]% Junior Subordinated Debentures due [__] (the "Subordinated
Debentures") to be issued by the Corporation. The Subordinated Debentures are
to be issued pursuant to an indenture, dated as of [__], 2001 (the
"Indenture"), between the Corporation and First Union Trust Company, National
Association, as trustee (the "Debenture Trustee").
In connection with our opinion, we have reviewed originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
certificate of trust (the "Certificate of Trust") filed by the Trust with the
Secretary of the State of Delaware on November 6, 2001; (ii) the Amended and
Restated Declaration of Trust, dated as of [__], 2001; (iii) the Guarantee
Agreement; (iv) the Indenture; (v) the form of the Subordinated Debentures
and a specimen certificate thereof; (vi) the form of the Trust Preferred
Securities; (vii) the Form S-1 registration statement filed with the United
States Securities and Exchange Commission (the "Commission") on November 7,
2001 (and all exhibits, attachments, amendments and supplements thereto) in
connection with the transaction (the "Registration Statement"); and (viii)
such other records and documents as we have deemed necessary or appropriate
as a basis for the opinion set forth below.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of
all records and documents submitted to us as originals, the conformity to
original records and documents of all records and documents submitted to us
as certified, conformed, or photostatic copies, and the authenticity of the
originals of such copies. As to any facts material to this opinion that we
did not independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Corporation, and
we have assumed that such statements and representations are and will
continue to be correct without regard to any qualifications as to knowledge
or belief. In rendering this opinion, we have assumed that the transactions
were consummated in accordance with the descriptions thereof set forth in
such records and documents and that such records and documents accurately
reflect the material facts of the transactions. Our opinion is limited to
legal rather than factual matters.
<Page>
American Equity Investment Life Holding Company
Page 3
[__], 2001
In rendering our opinion, we have relied on the Internal Revenue
Code of 1986, as amended, Treasury Regulations, judicial authorities, published
positions of the Internal Revenue Service, and such other authorities as we have
considered relevant, all as in effect as of the date of this opinion and all of
which are subject to change or differing interpretations (possibly with
retroactive effect). A change in the authorities upon which our opinion is based
could affect our conclusions. There can be no assurances, moreover, that the
opinion expressed herein will be accepted by the Internal Revenue Service or, if
challenged, by a court.
Based upon and subject to the foregoing, we are of the opinion
that the Trust will be classified as a grantor trust and not as an association
taxable as a corporation for United States federal income tax purposes.
We express no opinion as to any United States federal tax
consequences other than as set forth above or as to any state, local or foreign
tax consequences. This opinion is expressed as of the date hereof, and we
disclaim any undertaking to advise you of any subsequent changes of the matters
stated or assumed herein or any subsequent changes in applicable law.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to
the reference to our firm under the headings "MATERIAL UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES - Classification of the Trust" and "LEGAL MATTERS" in
the Registration Statement. In giving this consent, we do not thereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or 1933, as amended, or the rules and
regulations of the Commission.
Very truly yours,