Exhibit 1.A(3)(b)(i)
SCHEDULE J
COMPENSATION SCHEDULE
TO SELLING AGREEMENT FOR SECURITY LIFE
ESTATE DESIGNER
JOINT SURVIVOR VARIABLE UNIVERSAL LIFE
This Schedule is an attachment to the ING America Equities, Inc. ("ING AMERICA
EQUITIES") Selling Agreement by and among the parties pursuant to paragraph 17
of that Selling Agreement, effective as of May 1, 2000, or the date that Selling
Broker-Dealer submits an application for this product, whichever is later. The
provisions of this Schedule shall apply only to Security Life ESTATE DESIGNER
policies solicited and issued while this Schedule is in effect. All compensation
payable under this Schedule shall be subject to the terms and conditions
contained herein at the time of issue of the policy by Security Life of Denver
Insurance Company ("SECURITY Life").
1. Commission Structure - Option L (Levelized):
----------- ------------- ---------- ------------------------------------------------
PCA SCA RCA Trail
----------- ------------- ---------- ------------------------------------------------
Years 1 - 7 Years 1 - 7 Years 8+ Years Years Years 21+
1 - 10 11 - 20
----------- ------------- ---------- --------------- --------------- ----------------
12% 4% 2% 0.20% net 0.15% net 0.10% net
account value account value account value
----------- ------------- ---------- --------------- --------------- ----------------
PCA (PRIMARY COMMISSIONABLE AMOUNT) is equal to the first year's target
premium (shown on policy schedule pages and illustrations). Gross
premiums paid up to the PCA in any year are commissioned at the full
PCA rate. If the gross premium paid in one year is less than the PCA,
that difference is carried over to the next year. A new PCA is
generated any time a new base coverage segment is created. Note that a
death benefit option change does not create a new PCA. Premium dollars
are allocated first to PCA, then to SCA, and then to RCA.
SCA (SECONDARY COMMISSIONABLE AMOUNT) is equal to the difference
between the gross premium received in each segment year in years one
through seven and the corresponding PCA for that year.
RCA (RENEWABLE COMMISSIONABLE AMOUNT) equals the gross premium received
per segment year in years 8 and thereafter.
Schedule J Page 1 of 4
2. Commission Structure - Option M (Modified):
---------------------------- ------------------------- ------------ ---------------------------------------
PCA SCA RCA Trail
---------------------------- ------------------------- ------------ ---------------------------------------
Year 1 Years Year 1 Years Years 8+ Years Years Years
2 - 7 2 - 7 1 - 10 11 - 20 21+
--------------- ------------ ------------ ------------ ------------ ------------ ------------ -------------
30% 7.5% 2% 4% 2% 0.20% net 0.15% net 0.10% net
account account account
value value value
--------------- ------------ ------------ ------------ ------------ ------------ ------------ -------------
PCA (PRIMARY COMMISSIONABLE AMOUNT) is equal to the first year's target
premium (shown on policy schedule pages and illustrations). A new PCA
is generated any time a new base coverage segment is created. Note that
a death benefit option change does not create a new PCA. Premium
dollars are allocated first to PCA, then to SCA, and then to RCA.
SCA (SECONDARY COMMISSIONABLE AMOUNT) is equal to the difference
between the gross premium received in each segment year in years one
through seven and the corresponding PCA for that year.
RCA (RENEWABLE COMMISSIONABLE AMOUNT) equals the gross premium received
per segment year in years 8 and thereafter.
3. Premium Receipt: Premium received within 15 days prior to a policy
anniversary will result in the agent receiving commissions at the same
rate as if the premium was paid on the anniversary date.
4. Selection of Commission Structure: is made at the time of policy
application and cannot be changed once the application is received by
Security Life. If no commission structure is requested on the
application, Option L will apply.
5. Trail Commissions: are payable at each policy (not segment) anniversary
based on the policy's average net account value at the end of each of
the prior twelve months.
The trail commission is payable annually at the end of a policy year
provided the policy is in force, and not subject to grace period
provisions, on that date.
6. Riders: Commissionable riders will have a separate target premium which
is set at issue and is level thereafter. The Adjustable Term Insurance
Rider has no target premium associated with it.
7. Commission Calculation: Commissions shall be calculated only on premium
actually received an accepted by SECURITY LIFE. Commissions shall be
paid only on an earned basis. Outstanding loan amounts carried over as
part of a 1035 exchange are not considered commissionable premium.
Schedule J Page 2 of 4
8. Premium Allocation: If the Stated Death Benefit has been increased
since the policy date, premiums received are allocated to the coverage
segments in the same proportion that the commission target premium for
each segment bears to the total commission target premium of the
policy.
9. Death Benefit Increases: If a premium payment accompanies a request for
a Stated Death Benefit increase or is received while a request is
pending, the payment will be applied to the policy but commissions
shall not be payable until the increase is effective. The commission
shall then be payable based on the premium being allocated among all
segments as it would normally and the new target premium after the
increase.
10. Compensation Payments: Compensation on initial premiums shall be due to
the SELLING BROKER-DEALER at the time of the issuance of the policy.
Thereafter, it shall be payable at the time of the receipt and
acceptance of premium by SECURITY LIFE, except that the amount, and the
time of payment of compensation on stated death benefit increases,
replacements, reissues, changes, conversions, exchanges, term renewals,
term conversions, premiums paid in advance, policies issued on a
"guaranteed issue" basis, policies requiring facultative reinsurance
arrangements, and other special cases and programs shall be governed by
SECURITY LIFE'S underwriting and administrative rules then in effect.
The Compensation shall be payable to the SELLING BROKER-DEALER in
accordance with the Schedule J in effect at the time of issue of the
policy.
11. Commission Chargeback: In the event that a policy (for which a
commission has been paid) is lapsed or surrendered by the Policy Owner
during the first six months, or is returned to SECURITY LIFE for refund
of premium during the Free Look Period as described in the policy,
SECURITY LIFE and ING AMERICA Equities shall require reimbursement from
SELLING BROKER-DEALER equal to 100% of the commissions paid. If a
premium payment for which a commission has been paid is refunded by
SECURITY LIFE, a reimbursement of the commission paid on the amount
refunded will be due from the SELLING BROKER-DEALER. Further, if a
policy is surrendered or has a death benefit reduction during the first
three policy years, a commission chargeback applies.
------------------------------------------- -------------------------------------------
OPTION L OPTION M
------------------------------------------- -------------------------------------------
Premiums Received in PCA RCA & SCA PCA RCA & SCA
---------------------- --------------------- ------------------- ---------------------- --------------------
Months 12% 4% 30% 2%
1 - 6
---------------------- --------------------- ------------------- ---------------------- --------------------
Months N/A N/A 30% 2%
7 - 12
---------------------- --------------------- ------------------- ---------------------- --------------------
Months N/A N/A 14% 0.94%
13-24
---------------------- --------------------- ------------------- ---------------------- --------------------
Months N/A N/A 4% 0.27%
25-36
---------------------- --------------------- ------------------- ---------------------- --------------------
Schedule J Page 3 of 4
The reimbursement may be deducted by ING AMERICA EQUITIES from the
next, or any subsequent, commission payment to SELLING BROKER-DEALER.
If the amount to be reimbursed exceeds compensation otherwise due,
SELLING BROKER-DEALER shall promptly reimburse ING AMERICA EQUITIES
before the next commission cycle.
12. Internal Exchanges: Commissions on the exchange of any policy issued by
SECURITY LIFE or any other ING affiliate for an ESTATE DESIGNER policy,
if any, will be paid in accordance with the internal exchange
procedures in effect at SECURITY LIFE on the date the exchange is
completed. The commission rates and/or target premiums may be adjusted
in accordance with the rules in effect at the time of the exchange. If
the Representative responsible for the exchange is not the producer of
the original policy, and the original producer is still active with
SECURITY LIFE, no commission will be payable to the Representative or
the SELLING BROKER-DEALER.
13. Commission Payment for Early Second Death:
In the event that the death of both insured persons under a policy
occurs in the first seven policy years, SELLING BROKER/DEALER shall be
entitled to compensation on the policy subject to the following rules:
o The policy when sold was a commissionable policy (i.e., not an
internal exchange as defined in section 12 above)
o The policy must be in active status with SECURITY LIFE and some
premium must have been paid into the policy during the 12 months
prior to the death of the second insured person
o The payment due if these conditions are met is the present value of
the remaining premium-based commissions from the policy month in
which the second death occurred through the end of policy year
seven, as calculated by SECURITY LIFE at 10.5%.
o The calculation shall use the premium stream, payment mode and
commission structure as reflected on the "as sold" illustration on
file at SECURITY LIFE
o This payment is due to SELLING BROKER/DEALER only after payment of
the death benefit under the policy has been determined and made by
SECURITY LIFE to policy beneficiaries
o Trail commissions are excluded from the calculation for this
payment and are not payable after termination of the policy whether
terminated by death or otherwise.
Schedule J Page 4 of 4