EXHIBIT 10.3


                      AMERICAN MEDICAL SECURITY GROUP, INC.
                              EQUITY INCENTIVE PLAN
                    NONQUALIFIED STOCK OPTION AWARD AGREEMENT

     You have been selected to be a Participant in the American Medical Security
Group, Inc. Equity Incentive Plan (the "Plan"), as specified below:

PARTICIPANT: _________________________
DATE OF GRANT: _______________________
DATE OF EXPIRATION: __________________
NUMBER OF SHARES COVERED BY THIS OPTION: _____________ Shares
OPTION PRICE: _________________ per Share

     THIS  AGREEMENT,  effective  as of the Date of Grant  set forth  above,  is
between  American  Medical  Security Group,  Inc., a Wisconsin  corporation (the
"Company")  and the  Participant  named above  pursuant to the provisions of the
Plan. Unless otherwise  indicated,  capitalized terms used herein shall have the
meanings  assigned  to such terms  under the Plan,  a copy of which is  attached
hereto and incorporated  herein. In consideration of the foregoing,  the parties
hereto agree as follows:

     1.  GRANT OF  STOCK OPTION.  The Company  hereby grants to  Participant the
option (the "Option(s)") to purchase the number of Shares of common stock of the
Company set forth above at the above-stated  Option Price,  which is one hundred
percent  (100%) of the Fair  Market  Value on the Date of Grant,  subject to the
terms and conditions of the Plan and this  Agreement.  This award is intended to
be a Nonqualified  Stock Option,  and therefore is not subject to Section 422 of
the Code.

     2.  VESTING OF STOCK OPTION.Except as hereinafter provided, with respect to
the Options granted hereunder, vesting shall occur at a rate of thirty-three and
one third percent  (33-1/3%) per year beginning on the first  anniversary of the
Date of Grant and each  subsequent  anniversary  date  thereafter,  provided the
Participant remains a Director of the Company.

     3.  EXERCISABILITY OF OPTION. The Options are exercisable at any time after
six months  following the Date of Grant, in whole or in part, but only if all of
the following conditions are met at the time of exercise:

          (a) The Options to be  exercised  are vested as described in Section 2
     above;

          (b) The date of  exercise is on or before the Date of  Expiration  set
     forth above;

          (c) The Options to be exercised are exercised only in compliance  with
     the Company's then current Insider Trading Policy; and

          (d) Participant is a Director of the Company or any  present or future
     parent,  subsidiary  or Affiliate  of the  Company;  or, if he or she is no
     longer  a  Director,  the  date  of  exercise  is in  accordance  with  the
     provisions of this Agreement and the Plan.

     4.  TERMINATION OF DIRECTORSHIP  BY DEATH.  In the event the  Participant's
tenure as a Director is terminated by reason of death,  all outstanding  Options
granted  pursuant to this Agreement shall  immediately  vest one hundred percent
(100%),  and shall remain  exercisable for a period ending on the earlier of (i)
the Date of Expiration  identified above, or (ii) one (1) year after the date of
the Participant's death.

     5.  TERMINATION  OF   DIRECTORSHIP   BY  DISABILITY.   In   the  event  the
Participant's  tenure as a Director is terminated by reason of  Disability,  all
outstanding  Options granted  pursuant to this Agreement shall  immediately vest
one  hundred  percent  (100%)  as of the date the  Compensation  Committee  (the
"Committee") determines the definition of Disability to have been satisfied, and
shall remain  exercisable  for a period ending on the earlier of (i) the Date of
Expiration  identified  above, or (ii) one (1) year after the date the Committee
determines the definition of Disability to have been satisfied.

     6.  TERMINATION  OF   DIRECTORSHIP   BY  RETIREMENT.   In   the  event  the
Participant's  tenure as a Director is terminated  by reason of  Retirement  (as
hereinafter defined), all outstanding Options granted pursuant to this Agreement
shall immediately vest one hundred percent (100%),  and shall remain exercisable
for a period  ending on the  earlier  of (i) the Date of  Expiration  identified
above, or (ii) the end of the third (3rd) year following the date of termination
of the  Participant's  tenure as a Director by reason of Retirement.  Retirement
shall mean (a) a Director's  determination  after serving a full three-year term
not to stand for reelection to the Board of Directors at the next annual meeting
of the Board,  (b) the inability of the Director to stand for  reelection to the
Board  due  to  age  guidelines  adopted  by  the  Board,  or  (c) a  Director's
resignation from the Board after reaching seventy (70) years of age.

     7.  DIRECTORSHIP   TERMINATION   FOLLOWED  BY  DEATH.  In   the  event  the
Participant's  tenure  as a  Director  terminates  by reason  of  Disability  or
Retirement,  and within the exercise  period allowed by the Committee  following
such termination the Participant dies, then the remaining  exercise period under
outstanding Options shall equal the longer of: (i) one (1) year following death;
or (ii) the remaining  portion of the exercise period which was triggered by the
termination as a Director.

     8.  TERMINATION OF  DIRECTORSHIP  FOR OTHER REASONS.  If the  Participant's
tenure  as  a  Director  shall  terminate  for  any  reason  other  than  death,
Disability,  or Retirement  (and other than for Cause),  all Options held by the
Participant  which are not vested as of the effective  date of  termination as a
Director immediately shall be forfeited to the Company.  However, the Committee,
in its sole  discretion,  shall  have the right to  immediately  vest all or any
portion of such  Options  subject to such  terms as the  Committee,  in its sole
discretion, deems appropriate.

     Options  which are  vested as of the  effective  date of  termination  as a
Director may be exercised by the Participant  within the period beginning on the
effective date of  termination  as a Director,  and ending on the earlier of (i)
the Date of Expiration  identified  above, or (ii) six (6) months after the date
of termination as a Director.

     If the  Participant's  tenure  as a  Director  shall be  terminated  by the
Company for Cause, all outstanding  Options held by the Participant  immediately
shall be forfeited  to the Company and no  additional  exercise  period shall be
allowed, regardless of the vested status of the Options.

     9.  CHANGE IN  CONTROL.  In the event of a Change in Control (as defined in
the Plan) which occurs  prior to the  Participant's  termination  as a Director,
Participant's  right to exercise  the  Options  shall vest fully as of the first
date that the  definition  of Change in Control  has been  fulfilled,  and shall
become  immediately  exercisable in accordance  with the terms of this Agreement
and the Plan, without regard to the six month wait under Section 3 hereof.

     10. RESTRICTIONS  ON TRANSFER.  The Options may not  be sold,  transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the  laws of  descent  and  distribution  and  shall  be  exercisable  during
Participant's    lifetime   only   by   Participant   or   Participant's   legal
representative, except that the Options may be transferred by the Participant to
the Participant's  spouse,  children or grandchildren or a trust for the benefit
of such  spouse,  children  or  grandchildren.  In the  event  the  Options  are
transferred, they shall remain subject to this Agreement and the Plan.

     11. RECAPITALIZATION. In the event there is any change in the Shares of the
Company through the  declaration of stock dividends or through  recapitalization
resulting  in stock  split-ups  or through  merger,  consolidation,  exchange of
shares,  or  otherwise,  the number and class of Shares  subject to the Options,
and/or  the  Option  Price,  shall  be  adjusted  as  may  be  determined  to be
appropriate and equitable by the Committee,  in its sole discretion,  to prevent
dilution or enlargement of rights.

     12. PROCEDURE  FOR  EXERCISE OF  OPTIONS.  The Options may be  exercised by
giving written notice to the Company at its executive offices,  addressed to the
attention of its Secretary. Such notice is to be received by the Secretary on or
before the date on which the Options are to be exercised.  Such notice (a) shall
be  signed by the  Participant  or his or her  legal  representative;  (b) shall
specify the number of full Shares then elected to be  purchased  with respect to
the Option and the total purchase price; and (c) shall be accompanied by payment
in full of the Option Price of the Shares to be purchased.

     The  Option  Price upon  exercise  of the  Options  shall be payable to the
Company  in  full  either  (a)  in  cash  or  its  equivalent  (acceptable  cash
equivalents shall be determined at the sole discretion of the Committee); (b) by
tendering  previously  acquired  Shares  (held at least  six  months)  having an
aggregate  Fair Market Value at the time of exercise equal to the total price of
the  Shares  for  which the  Option is being  exercised;  (c)  unless  otherwise
determined by the Committee, through a "cashless exercise" procedure under which
there is delivery to a  securities  broker of an  irrevocable  direction to sell
Shares and to deliver all or part of the sales proceeds to the Company, pursuant
to the terms and  conditions  specified in the Plan; or (d) by a combination  of
(a), (b) and (c).

     As promptly as  practicable  after receipt of such notice and payment,  the
Company shall cause to be issued and delivered to the  Participant or his or her
legal  representative,  as the  case  may be,  certificates  for the  Shares  so
purchased,  which may, if appropriate,  be endorsed with appropriate restrictive
legends.  The Company shall maintain a record of all  information  pertaining to
Participant's  rights under this  Agreement,  including the number of Shares for
which the Option is  exercisable.  If the Option  shall have been  exercised  in
full, this Agreement shall be returned to the Company and canceled.

     Notwithstanding  the foregoing,  the Company need not issue or deliver such
Shares unless and until, in the opinion of the Company's counsel, all applicable
requirements of law, including  registration of such Shares under the Securities
Act of  1933  pertaining  to the  sale  and  issuance  of  such  Shares  and all
applicable listing requirements of any national securities exchange on which the
Shares are listed, have been complied with.

     13. RIGHTS  AS A  STOCKHOLDER.  Participant  shall  have   no  rights  as a
stockholder  of the Company  with  respect to the Shares  subject to this Option
Agreement  until  such time as the  purchase  price has been paid and the Shares
have been issued and delivered to him or her.

     14. TENURE AS A DIRECTOR.  This Agreement shall not confer upon Participant
any right to continuance of tenure as a Director of the Company,  nor shall this
Agreement  interfere in any way with the Company's right to terminate his or her
tenure at any time.

     15. MISCELLANEOUS.

          (a) This Agreement and the rights of Participant hereunder are subject
     to all the terms and  conditions  of the Plan,  as the same may be  amended
     from  time  to  time,  as  well as to such  rules  and  regulations  as the
     Compensation  Committee  may adopt  for  administration  of the  Plan.  The
     Committee  shall have the right to impose  such  restrictions  on any Share
     acquired pursuant to the exercise of the Options, as it may deem advisable,
     including,  without  limitation,   restrictions  under  applicable  federal
     securities  laws,  under the  requirements  of any stock exchange or market
     upon which such Shares are then listed  and/or  traded,  and under any blue
     sky or state securities laws applicable to such Shares.

          It is  expressly  understood  that  the  Committee  is  authorized  to
     administer,  construe, and make all determinations necessary or appropriate
     to the administration of the Plan and this Agreement, all of which shall be
     binding upon Participant.  Any inconsistency between this Agreement and the
     Plan shall be resolved in favor of the Plan.

          (b) With the approval of the Board of  Directors  of the Company,  the
     Committee may terminate, amend, or modify the Plan; provided, however, that
     no such  termination,  amendment,  or  modification  of the Plan may in any
     material way adversely affect  Participant's  vested rights with respect to
     Options granted under this Agreement.

          (c) This  Agreement  may  be  amended  by  written  agreement  of  the
     Participant and the Company at any time.

          (d) In the event federal, state, or local taxes become required by law
     to be withheld with respect to any exercise of  Participant's  rights under
     this  Agreement,  the  Company  shall  have  the  authority,   without  the
     Participant's  written  consent,  to deduct or  withhold,  or  require  the
     Participant to remit to the Company,  an amount  sufficient to satisfy such
     taxes.

          Participant may elect, unless otherwise determined by the Committee in
     its sole discretion, to satisfy the withholding requirement, in whole or in
     part, by having the Company withhold Shares having an aggregate Fair Market
     Value, on the date the tax is to be determined, equal to the minimum amount
     required to be withheld. All elections shall be irrevocable and in writing,
     and shall be signed by  Participant,  and shall be made in accordance  with
     rules set forth in Section 15.2 of the Plan.

          (e) Participant  agrees to take all steps necessary to comply with all
     applicable  provisions  of federal and state  securities  law in exercising
     Participant's rights under this Agreement.

          (f) The  Plan and this  Agreement  are not  intended  to  qualify  for
     treatment under the provisions of the Employee  Retirement  Income Security
     Act of 1974, as amended, ("ERISA").

          (g) This Agreement shall be subject to all applicable  laws, rules and
     regulations, and to such approvals by any governmental agencies or national
     securities exchanges as may be required.

          (h) To the extent not preempted by federal law, this  Agreement  shall
     be governed by, and construed in  accordance  with the laws of the State of
     Wisconsin without regard to principles of conflicts of law.

     IN WITNESS  WHEREOF,  the parties  have caused this Option  Agreement to be
executed as of the Date of Grant.

                                           AMERICAN MEDICAL SECURITY GROUP, INC.


                                           By:__________________________________
                                              John R. Wirch
                                              Vice President, Human Resources


                                           _____________________________________
                                           Participant