FOURTH AMENDMENT TO GUARANTY AGREEMENT
                     AND WAIVER OF CERTAIN EVENTS OF DEFAULT
                             UNDER CREDIT AGREEMENT


     This Fourth Amendment to Guaranty Agreement and Waiver of Certain Events of
Default under Credit Agreement (the  "Amendment") is made as of this 10th day of
August,  2000 by and among ASCENT ASSURANCE,  INC. (the "Guarantor") and LASALLE
BANK NATIONAL ASSOCIATION (the "Bank").

                               W I T N E S S E T H

     WHEREAS, the Guarantor delivered a Guaranty Agreement in favor of the Bank,
dated as of June 6, 1997, as amended by that certain First Amendment to Guaranty
Agreement, dated as of March 24, 1999, as further amended by that certain Second
Amendment to Guaranty  Agreement,  dated as of July 21, 1999, as further amended
by that certain  Third  Amendment to Guaranty  Agreement,  dated as of April 17,
2000 (collectively, the "Guaranty Agreement");

     WHEREAS,  the  Guarantor  delivered  the Guaranty  pursuant to that certain
Credit  Agreement,  dated  as of June  6,  1997  between  Ascent  Funding,  Inc.
(formerly Westbridge Funding Corporation) and the Bank (the "Credit Agreement");
and

     WHEREAS,  the parties  desire to further  amend the Guaranty  Agreement and
waive  certain  covenant  defaults and events of default  under the Guaranty and
Credit Agreement, as more fully set forth herein.

     NOW, THEREFORE,  in consideration of the mutual agreements herein contained
and other  good and  valuable  consideration,  the  adequacy  of which is hereby
acknowledged, and subject to the terms and conditions hereof, the parties hereto
agree as follows:

     SECTION 1. DEFINITIONS.  Unless otherwise  defined herein,  all capitalized
                ------------
terms shall have the meaning given to them in the Guaranty.

     Section 2. WAIVER OF CERTAIN COVENANT DEFAULTS UNDER GUARANTY AND EVENTS OF
DEFAULT UNDER CREDIT  AGREEMENT.  (i) As of June 30, 2000 each of the Guarantor,
Freedom Life Insurance Company of America ("FLICA") and National Foundation Life
Insurance  Company  ("NFL") is in  Default of  Negative  Covenants  Section  6.8
Minimum  Statutory  Surplus of  Insurance  Subsidiaries  of the  Guaranty.  Such
covenant  default  under the  Guaranty  constitutes  an Event of  Default  under
Section  8.1 (e) of the  Credit  Agreement.  The  Bank  hereby  waives  (i) such
covenant  default  under the Guaranty  and (ii) such Event of Default  under the
Credit  Agreement  or the  Installment  Note,  dated July 21,  1999 from  Ascent
Management,  Inc.  in favor of the Bank and any and all  documents  executed  in
connection therewith (collectively,  the "AMI Agreements");  provided,  however,
that such waivers  shall not  constitute a future waiver of any Default or Event
of Default  under the  Guaranty  or under  such Event of Default  section of the
Credit  Agreement  or the AMI  Agreements  or of any  other  covenant  under the
Guaranty, the Credit Agreement or the AMI Agreements.

     SECTION 3. AMENDMENTS TO GUARANTY AGREEMENT.
                ---------- -- -------- ----------

     3.1  Section  6.8 of the  Guaranty is hereby  deleted in its  entirety  and
replaced by inserting the following in its stead:

"Section 6.8 Minimum Statutory Surplus of Insurance Subsidiaries.  As of the end
of any fiscal quarter,  permit the Statutory Surplus of any Insurance Subsidiary
to be less than the Minimum  Statutory  Surplus  Requirement  for such Insurance
Subsidiary  as  specified  in  Schedule  6.8 for  the  applicable  fiscal  year;
provided, however, that for each of NFL and FLICA, the Minimum Statutory Surplus
Requirement  shall  increase by 50% of the sum of positive  Statutory Net Income
for each fiscal quarter  beginning with the fiscal quarter ending  September 30,
2000."

     SECTION 4. AMENDMENTS TO SCHEDULE TO GUARANTY AGREEMENT.
                ---------- -- -------- -- -------- ----------

     4.1  Schedule  6.8 of the  Guaranty is hereby  deleted in its  entirety and
replaced by inserting the following in its stead:

                    "Minimum Statutory Surplus Requirements"
                                 (in Million $)

      Insurance Subsidiary            Minimum Statutory Surplus Requirement
--------------------------------- --------------------------------------------
               NFL                                 $10.2
--------------------------------- --------------------------------------------
              NFIC                                  $1.4
--------------------------------- --------------------------------------------
               AIC                                  $1.4
--------------------------------- --------------------------------------------
              FLICA                                 $5.0
--------------------------------- --------------------------------------------

     SECTION 5. CONDITIONS  PRECEDENT.  The  effectiveness  of this Amendment is
                ----------  ----------
expressly conditioned upon satisfaction of the following conditions precedent:

     5.1 The Bank shall have  received a $5,000  waiver and amendment fee due on
the date hereof.

     5.2 The Bank shall have received  copies of this Amendment duly executed by
the Guarantor.

     5.3 The Bank shall have received  such other  documents,  certificates  and
assurances as it shall reasonably  request,  all of which have been delivered on
or prior to the date hereof.



<PAGE>


     SECTION 6.  REAFFIRMATION  OF THE GUARANTOR.  The Guarantor hereby ratifies
and  reaffirms  that  certain  Guaranty  Agreement  and  each of the  terms  and
provisions  contained therein,  and agrees that the Guaranty Agreement continues
in full force and effect following the execution and delivery of this Amendment.
The Guarantor  represents  and warrants to the Bank that the Guaranty  Agreement
was, on the date of the execution and delivery thereof, and continues to be, the
valid and binding obligation of the Guarantor enforceable in accordance with its
terms and that the Guarantor has no claims or defenses to the enforcement of the
rights and remedies of the Bank under the Guaranty Agreement.

     SECTION 7.  COUNTERPARTS.  This  Amendment  may be  executed in two or more
                 -------------
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same document.


     IN WITNESS WHEREOF,  the parties hereto have executed this Amendment on the
day and year specified above.


                                 ASCENT ASSURANCE, INC.

                                 By:      /s/ Patrick J. Mitchell
                                        -----------------------------
                                 Name:    Patrick J. Mitchell
                                 Title:   Chairman of the Board and
                                          Chief Executive Officer


                                 LASALLE BANK NATIONAL ASSOCIATION

                                 By:      /s/ Linda A. Whittaker
                                        ----------------------------
                                 Name:    Linda A. Whittaker
                                 Title:   Commercial Banking Officer


<PAGE>


                    ACKNOWLEDGMENT AND AGREEMENT OF BORROWER

     The undersigned, ASCENT FUNDING, INC. hereby represents and warrants to the
Bank that (i) the warranties set forth in Article 5 of the Credit  Agreement are
true and correct on and as of the date hereof, except to the extent (a) that any
such  warranties  relate to a specific date, or (b) changes thereto are a result
of transactions for which the Bank has granted its consent; (ii) the Borrower is
on the date hereof in compliance  with all the terms and provisions set forth in
the Credit  Agreement;  and (iii) upon execution  hereof no Event of Default has
occurred and is continuing  or has not  previously  or  simultaneously  with the
execution hereof been waived.

     IN WITNESS WHEREOF,  this Acknowledgment and Agreement of Borrower has been
duly authorized as of this 10th day of August, 2000.


                                 ASCENT FUNDING, INC.

                                 By:      /s/ Patrick J. Mitchell
                                     ---------------------------------
                                 Name:    Patrick J. Mitchell
                                 Title:   Chairman of the Board and
                                          President