EXHIBIT 10.7








                      AMERICAN MEDICAL SECURITY GROUP, INC.

                      VOLUNTARY DEFERRED COMPENSATION PLAN

             (AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 25, 1998)

<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.
                      VOLUNTARY DEFERRED COMPENSATION PLAN


SECTION  ARTICLE I. PURPOSE, DEFINITIONS AND CONSTRUCTION                   PAGE
-------  ------------------------------------------------                   ----
1.1      Purpose                                                              4
1.2      Definitions                                                          4
                (a)      Administration Committee                             4
                (b)      Adoption Agreement                                   4
                (c)      Beneficiary                                          5
                (d)      Board                                                5
                (e)      Company                                              5
                (f)      Deferral Account                                     5
                (g)      Deferral Contributions                               5
                (h)      Deferral Form                                        5
                (i)      Disability                                           5
                (j)      Effective Date                                       5
                (k)      Insolvency                                           6
                (1)      Participant                                          6
                (m)      Plan                                                 6
                (n)      Plan Year                                            6
                (o)      Trust                                                6
                (p)      Trust Agreement                                      6
                (q)      Trustee                                              6
1.3      Gender and Number                                                    6
1.4      Headings                                                             7
1.5      Plan Provisions Controlling                                          7
1.6      Severability                                                         7
1.7      Applicable Law                                                       7


<PAGE>



     ARTICLE II. DEFERRAL ELECTIONS, CONTRIBUTIONS AND ACCOUNTING PROCEDURES
     -----------------------------------------------------------------------
2.1      Availability of Deferral Election                                    7
2.2      Maintenance of Separate Deferral Accounts                            8
2.3      Treatment of Amounts Deferred                                        8
2.4      Irrevocability and Nonassignability of Deferrals                     8
2.5      Accounting Procedure                                                 9
2.6      Earnings Allocation                                                  9


                   ARTICLE III. DEFERRED COMPENSATION PAYMENTS
                   -------------------------------------------
3.1      Eligibility for Deferred Compensation                               10
                (a)      Retirement or Termination                           10
                (b)      Disability                                          10
                (c)      Death                                               10
3.2      Amount and Method of Payment of Deferred Compensation               10


                             ARTICLE IV. TRUST FUND
                             ----------------------
4.1      Establishment of Trust                                              12


                            ARTICLE V. ADMINISTRATION
                            -------------------------
5.1      Committee to Administer Agreement                                   12
5.2      Claims Procedure                                                    13


                            ARTICLE VI. MISCELLANEOUS
                            -------------------------
6.1      Employment Rights                                                   13
6.2      Absence of Liability                                                13
6.3      Amendment and Termination                                           14
6.4      Company Not an Advisor                                              14


<PAGE>



                      AMERICAN MEDICAL SECURITY GROUP, INC.
                      VOLUNTARY DEFERRED COMPENSATION PLAN

                ARTICLE I - PURPOSE, DEFINITIONS AND CONSTRUCTION

     SECTION  1.1  -  PURPOSE.   American  Medical  Security  Group,  Inc.  (the
"Company"),  acting for itself and on behalf of its subsidiaries,  hereby adopts
this  Voluntary  Deferred  Compensation  Plan (the "Plan") and separate Trust to
permit certain salaried  employees selected by the Company to defer a portion of
their  anticipated  salary and to have such deferred  salary amounts held in the
separate Trust.
     It is intended that the Plan and the Trust shall  constitute,  and shall be
construed and administered as, an unfunded plan of deferred  compensation within
the meaning of the Employee  Retirement  Income  Security Act of 1974 as amended
("ERISA") and the Internal  Revenue Code of 1954,  as amended (the "Code").  The
Plan and Trust are not  intended to be  qualified  under  Section 401 (a) of the
Code.

     SECTION 1.2 - DEFINITIONS.  For purposes of this Plan, the following  words
and phrases  shall have the meanings set forth below unless a different  meaning
is plainly required by the context.
          (a) ADMINISTRATION  COMMITTEE (OR COMMITTEE) - means the  persons from
     time to time  designated  and appointed by the Board to have general charge
     of the  administration  and interpretation of the Plan. In the absence of a
     specifically  appointed  Committee,  the Board  itself  shall  serve as the
     Committee.
          (b) ADOPTION  AGREEMENT (OR  AGREEMENT) - means the separate  Adoption
     Agreement between a Participant and the Company,  which forms a part of the
     Plan,  under  which the  Company  has  agreed to allow the  Participant  to
     participate in the Plan and under which the  Participant  has agreed to his
     participation in the Plan on the terms set forth herein.
          (c) BENEFICIARY  -  means  the   person  or  persons  designated  by a
     Participant  in his most  recent  Beneficiary  Designation  Form to receive
     payments under the Plan in the event of the Participant's  death;  provided
     that if the  Participant  has failed to designate a Beneficiary,  or if all
     designated   Beneficiaries   predecease  the  Participant,   any  remaining
     distribution  due  under the Plan  shall be  payable  to the  Participant's
     surviving  spouse or, if none,  to his  surviving  issue PER STIRPES or, if
     none, then to his estate.
          (d) BOARD - means the Board of Directors of the Company.
          (e) COMPANY - means American Medical Security Group, Inc., a Wisconsin
     corporation,  acting for itself and on behalf of its subsidiaries,  and any
     successor  thereto which assumes the rights and  obligations of the Company
     under the Plan and Trust Agreement.
          (f) DEFERRAL ACCOUNT - means the account  maintained for a Participant
     to record  the total of his  deferred  compensation  under the Plan and any
     adjustments relating thereto.
          (g) DEFERRAL  CONTRIBUTIONS - means  contributions  to the Trust which
     are made by the Company pursuant to this Plan and the then current Deferral
     Form.
          (h) DEFERRAL  FORM -  means a  Participant's  then   current  Deferral
     Election Form, if any, to be executed by the Participant prior to the start
     of each Plan Year  specifying  the  percentage  or dollar  amount of salary
     elected to be deferred  during the upcoming  Plan Year.  The Deferral  Form
     shall  remain  in  effect  until  the end of the Plan  Year for which it is
     executed  unless  earlier  revoked or amended to reduce the  percentage  or
     dollar amount of the deferral for amounts not yet earned during such year.
          (i) DISABILITY  - means such total  and  permanent  physical or mental
     disability  as, in the  Committee's  sole and  absolute  discretion,  would
     prevent the Participant from engaging in substantially gainful employment.
          (j) EFFECTIVE DATE - means December 1, 1995, the date as of which,  by
     resolution of the Board,  the provisions of this Plan became  effective and
     the date after which Participants were permitted to participate in the Plan
     by entering into an Adoption Agreement with the Company.
          (k) INSOLVENCY  - means (i) the  Company is unable to pay its debts as
     they become due, or (ii) the Company is subject to a pending  proceeding as
     a debtor under the United Sates  Bankruptcy  Code,  or (iii) the Company is
     determined to be insolvent by the Wisconsin Commissioner of Insurance.
          (l) PARTICIPANT  - means a  person who is one of the  Company-selected
     salaried  employees who, by having executed an Adoption  Agreement with the
     Company,  is  participating  in the Plan.  Such person  shall cease to be a
     Participant  after  his  employment  with the  Company  terminates,  or the
     balance in his  Deferral  Account is  reduced  to zero ($0),  whichever  is
     later.
          (m) PLAN - means the American Medical Security Group,  Inc.  Voluntary
     Deferred Compensation Plan as set forth herein.
          (n) PLAN YEAR - means the twelve (12) month period  adopted under this
     Plan for reporting  purposes,  which is the period  commencing on January 1
     and ending on December 31.
          (o) TRUST - means the American Medical Security Group, Inc.  Voluntary
     Deferred  Compensation  Trust and the entire Trust  estate as it may,  from
     time to  time,  be  constituted,  including  but not  limited  to  Deferral
     Contributions, investments, income from any and all investments and any and
     all other assets,  property or money received by or held by the Trustee for
     the uses and purposes of the Trust.
          (p) TRUST AGREEMENT - means the separate agreement between the Company
     and the Trustee under which the Trust is established and maintained.
          (q) TRUSTEE  - means   the  individual  or  individuals  or  entity or
     entities  appointed by the Board to administer the Trust;  provided that an
     individual who is a Participant,  a member of the Board of Directors of the
     Company or the Chief Executive Officer of the Company may not be a Trustee.

     SECTION 1.3 - GENDER AND NUMBER.  Except when  otherwise  indicated  by the
context,  any masculine  terminology used herein shall also include the feminine
and the  definition  of any term herein in the  singular  shall also include the
plural.

     SECTION 1.4 - HEADINGS. The headings of the various Articles,  Sections and
Subsections are inserted for convenience of reference and are not to be regarded
as part of this Plan or as indicating or controlling the meaning or construction
of any provision.

     SECTION  1.5 - PLAN  PROVISIONS  CONTROLLING.  In the  event  the  terms or
provisions of the Trust  Agreement or of any summary or  description of the Plan
or of any other  instrument,  agreement,  or  document  are in any  construction
interpreted  as being in conflict with the  provisions of the Plan as herein set
forth, the provisions of the Plan shall be controlling.

     SECTION 1.6 - SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason,  this illegality or invalidity shall not
affect the remaining provisions of the Plan, and such remaining provisions shall
be fully severable and the Plan shall, to the extent  practicable,  be construed
and  enforced as if the  illegal or invalid  provision  had never been  inserted
therein.

     SECTION 1.7 - APPLICABLE LAW. Subject to the intent that the Plan and Trust
be unfunded and  non-qualified as provided in Section 1.1, the provisions of the
Plan shall be construed in  accordance  with the laws of the State of Wisconsin,
except to the extent, if any, preempted by federal law.

    ARTICLE II - DEFERRAL ELECTIONS, CONTRIBUTIONS AND ACCOUNTING PROCEDURES

     SECTION 2.1 -  AVAILABILITY  OF DEFERRAL  ELECTION.  The Company shall make
available,  in December of each Plan Year,  to each  Participant  who is then an
employee,  a Deferral Form which may be used by the Participant to designate for
deferral a portion of the salary he anticipates  earning from the Company in the
upcoming Plan Year. All amounts elected to be deferred by a Participant shall be
subject  to the terms and  conditions  of this Plan and shall be subject to FICA
taxes.  No requested  deferral  shall be effective  for any Plan Year unless the
appropriate  Deferral Form is completed  and filed with the  Committee  prior to
January 1 of the Plan Year for which the deferral is elected.

     SECTION 2.2 - MAINTENANCE OF SEPARATE DEFERRAL ACCOUNTS. If not done by the
Company,  the Trustee shall create and maintain adequate records to disclose the
interest in the Trust of all Participants.  Such records shall be in the form of
separate,  individual  Deferral Accounts,  and credits and charges shall be made
thereto in the manner  described in this Plan.  The  maintenance  of  individual
Deferral  Accounts  for  Participants  is only  for  accounting  purposes  and a
segregation  of the  assets  of the  Trust  Fund to each  account  shall  not be
required.  Distribution made from an account shall be charged to that account as
of the date paid.

     SECTION 2.3 - TREATMENT OF AMOUNTS  DEFERRED.  Upon execution and filing by
the Participant of an effective Deferral Form, the Company shall make a Deferral
Contribution to such Participant's Deferral Account to be deposited in the Trust
no later than ten (10) days after the end of the payroll  period(s) during which
the  Participant  would have otherwise been entitled to receive the amount to be
contributed by the Company  except for the  Participant's  election  pursuant to
this Plan and the Deferral Form.

     SECTION 2.4 - IRREVOCABILITY AND NONASSIGNABILITY OF DEFERRALS. All amounts
credited to a  Participant's  Deferral  Account  shall be treated as having been
irrevocably deferred and no payment based on such amounts may be received except
in accordance  with the eligibility  requirements,  terms and conditions of this
Plan.  Neither  the  Participant  nor any  Beneficiary  shall  have any right or
ability to  alienate,  sell,  transfer,  assign,  pledge,  encumber or submit to
garnishment,  execution or levy, either voluntarily or involuntarily, any amount
due or expected to become due under this Plan. Amounts due under this Plan shall
be paid, transferred, delivered or otherwise conveyed only to the Participant or
his Beneficiary, subject to the limitations of Section 4.l.
     Notwithstanding  the foregoing,  a Deferral Form election may be cancelled,
or amended not more than once annually to reduce the percentage or dollar amount
of the Deferral  during a Plan Year for amounts not yet earned during such year,
provided that once the Deferral  Form  election is cancelled no further  amounts
may be deferred under this Plan for such year.

     SECTION 2.5 -  ACCOUNTING  PROCEDURE.  As of the close of each quarter of a
Plan Year after the Effective Date, the Committee shall:
          (a) First, charge to the proper accounts all payments or distributions
     made from the Deferral Accounts of Participants since the close of the last
     preceding quarter of a Plan Year that have not been charged previously;
          (b) Second,  credit to  the  proper  Deferral  Accounts  the  Deferral
     Contributions  that were made since the close of the last preceding quarter
     of a Plan Year that have not been credited previously; and
          (c) Third,  adjust  the net  balances  of  the  Deferral  Accounts  of
     Participants  upward or downward by allocating  net Trust  earnings to such
     accounts in accordance with Section 2.6.

     SECTION  2.6 -  EARNINGS  ALLOCATION.  Subject  to  the  provisions  hereof
relative to separate accounts,  the respective Deferral Accounts of Participants
shall be adjusted as soon as is practicable  after, but as of, the close of each
quarter of a Plan Year (and as of any other date if the Committee  determines it
advisable for any reason) to reflect the net income or loss of the Trust for the
period then completed, as follows:
          (a) The Committee shall at such times determine the value of the Trust
     as of that date which determination shall be final and not open to question
     by anyone;
          (b) For purposes of allocating  Trust earnings under this Section 2.6,
     the  balances of  Participants'  Deferral  Accounts as of the close of such
     quarter of a Plan Year,  reflecting  any  distributions  made  during  such
     quarter,  shall be  adjusted  downward  by  one-half  (1/2)  of any  salary
     deferred during such quarter of a Plan Year by any Participant; and
          (c) The  percentage  that such  adjusted  value bears to the aggregate
     amount  of such  adjusted  balances  at that  date of the  accounts  of all
     Participants shall be applied to the net Trust earnings for the quarter and
     credited or charged by  appropriate  entries to such accounts so that after
     such entries the aggregate  amount of the actual Deferral  Account balances
     (i.e.,  adding back in any adjustment  described in this Section 2.6) shall
     equal the value of the Trust.

     In the administration of the accounts of Participants and the allocation of
Trust  income  or loss,  appropriate  adjustment  shall be made in the case of a
Participant,  any of whose  account  is  invested  in  investments  held for his
separate benefit.

                  ARTICLE III - DEFERRED COMPENSATION PAYMENTS

     SECTION  3.1 -  ELIGIBILITY  FOR  DEFERRED  COMPENSATION.  Subject  to  any
limiting conditions set forth in this Plan, the Participant,  or in the event of
Participant's  death his  Beneficiary,  will  become  eligible  for  receipt  of
deferred compensation under this Plan as follows:
          (a) RETIREMENT OR TERMINATION - Upon  retirement or other  termination
     of regular  employment  with the  Company,  the  Participant  shall  become
     eligible for deferred compensation payments under this Plan.
          (b) DISABILITY - Upon cessation of active  employment with the Company
     as a result of Disability,  Participant  shall become eligible for deferred
     compensation payments under this Plan.
          (c) DEATH  - In  the  event  of  Participant's  death  prior   to  the
     Participant's  receipt of  deferred  compensation  payments  under the Plan
     reducing   Participant's   Deferral  Account  balance  to  zero  ($O),  the
     Participant's  Beneficiary  shall be  eligible  for  deferred  compensation
     payments under the Plan.

     SECTION  3.2 - AMOUNT AND METHOD OF PAYMENT OF DEFERRED  COMPENSATION.  The
total deferred  compensation to be paid to a Participant shall be distributed to
the Participant and, upon the Participant's death, to his Beneficiary, in one of
the following modes of distribution selected by the Participant:
          (a) Lump sum payment; or
          (b) Annual  installments  over  a  period  not   to  exceed  the  life
     expectancy  of the  Participant  (as  determined by the Committee as of the
     date payment is to commence) or fifteen (15) years, whichever is greater.
     Each  Participant  shall  notify  the  Company  in  writing  of the mode of
distribution  he has selected prior to the  commencement  of the first Plan year
for which such  Participant has made a deferral  election  hereunder;  provided,
however,  that  if a  Participant  fails  to  notify  the  Company  of a mode of
distribution  before the deadline prescribed by this section, he shall be deemed
to have selected the installment  mode of  distribution  described in (b) above.
Once the mode of distribution is determined,  it shall remain in force until the
Participant's  account  balance  is reduced  to zero  ($0),  except  that if the
Participant has an  unforeseeable  emergency,  as hereunder  defined,  or if the
Participant  has died and his Beneficiary has an  unforeseeable  emergency,  the
Committee  may  direct  that  any or all of the  remaining  account  balance  be
distributed at any time as the Committee may deem advisable and proper, but only
to the extent  reasonably  needed to satisfy the emergency need.  "Unforeseeable
emergency"  means a  severe  financial  hardship  resulting  from a  sudden  and
unexpected  illness  or  accident  to  the  Participant,  the  Beneficiary  or a
dependent (as defined in Section 152(a) of the Code),  loss of the Participant's
or Beneficiary's  property due to casualty,  or other similar  extraordinary and
unforeseeable  circumstances arising as a result of events beyond the control of
the Participant or the Beneficiary.
     If a lump sum mode of distribution is used, the total deferred compensation
to be paid to a  Participant  or  Beneficiary  shall be an  amount  equal to the
Participant's  Deferral  Account  balance as of the close of the Plan Year which
coincides with or follows his  retirement,  termination,  disability or death. A
lump sum payment of deferred  compensation  under this Plan shall be made within
sixty  (60)  days  following  the  close  of the  Plan  Year  during  which  the
Participant retired, died, terminated or became disabled, or, if later, within a
reasonable time after the Participant's  interest is determined  pursuant to the
preceding sentence.
     If an  installment  mode of  distribution  is used,  the first  installment
payment of deferred  compensation under the Plan shall be made within sixty (60)
days following the close of the Plan Year during which the Participant  retired,
died,  terminated  or  became  disabled,  and each  annual  installment  payable
thereafter  shall be  distributed  within  sixty  (60)  days  after the close of
subsequent  Plan Years.  The installment  amount to be distributed  within sixty
(60)  days  after  the close of any Plan Year  shall  equal the  balance  of the
Participant's  Deferral  Account  determined at the beginning of such Plan Year,
divided  by the  number of years  remaining  in the  payment  period  over which
payment of benefits is being made.

                             ARTICLE IV - TRUST FUND

     SECTION 4.1 - ESTABLISHMENT OF TRUST. All Deferral Contributions under this
Plan shall be paid to the Trustee and deposited in the Trust Fund,  and shall be
subject to the provisions of the Trust Agreement. Participants and Beneficiaries
have  only an  unsecured  interest  in the  Trust  assets  in the  event  of the
Company's  Insolvency  (as defined in Section  1.2).  The company  makes only an
unsecured  promise to pay any deferred  amounts plus income thereon in the event
of the Company's Insolvency. Subject to the foregoing limitations, all assets of
the Trust Fund, including investment income, shall be retained for the exclusive
benefit of Participants and  Beneficiaries  (but the Company's general creditors
shall have access to Trust assets in the event of the Company's  Insolvency  and
shall be used to pay benefits to such persons and to pay administrative expenses
and taxes of the Trust Fund as provided in Section 8 of the Trust  Agreement  to
the  extent  not paid by the  Company  and shall not  revert to or accrue to the
benefit of the  Company,  except to the extent  that  contributions  made by the
Company  by a mistake  of fact  shall  revert  and be paid  back to the  Company
provided the Company has made a timely demand therefor.
     The Trustee  shall be required to hold the Trust  assets and income for the
benefit  of the  Company's  general  creditors  in the  event  of the  Company's
Insolvency and in such case no Participant or Beneficiary shall have a preferred
claim on the Trust  assets.  The  Board of  Directors  and the  Chief  Executive
Officer of the  Company  shall have the duty to inform the Trustee in writing of
the Company's  Insolvency within three (3) days of such event. When so informed,
the Trustee shall suspend payments to all Participants  and  Beneficiaries,  and
shall hold Trust assets for the benefit of the Company's general  creditors.  In
the case of the  Trustee's  actual  knowledge of the Company's  Insolvency,  the
Trustee will deliver  Trust assets to satisfy  claims of the  Company's  general
creditors as directed by a court of competent jurisdiction.

                           ARTICLE V - ADMINISTRATION

     SECTION 5.1 - COMMITTEE TO ADMINISTER AGREEMENT.  The Board shall appoint a
three (3) member  Administration  Committee whose  responsibility it shall be to
provide for administration of this Plan. The Committee shall have full authority
to make decisions,  issue directives, and take any and all actions reasonable or
necessary to  effectuate  this Plan and the Trust,  including  the  authority to
prescribe  the use of such forms as it may deem  necessary  and to interpret the
Plan and Trust and to resolve ambiguities,  inconsistencies and omissions in its
interpretation.

     SECTION 5.2 - CLAIMS PROCEDURE.  The Committee shall consider all claims by
the  Participant  or any  Beneficiary  for  payments  under  this Plan and shall
promptly  notify the  claimant of its action on any such claim.  In the event of
any question  regarding handling of the claim, the Committee shall meet with the
claimant at the  Company's  offices to discuss  such  question and to attempt to
resolve any areas of possible  disagreement.  If the claimant's  concerns remain
unresolved  after such meeting with the Committee,  the claimant may request the
Board to review the matter in dispute.

                           ARTICLE VI - MISCELLANEOUS

     SECTION  6.1 -  EMPLOYMENT  RIGHTS.  Any  payment  under this Plan shall be
independent  of, and in addition to,  payments made under any other agreement or
under any  qualified  retirement  plan which may be in force between the Company
and any  Participant  or  Beneficiary,  or any  other  compensation  payable  to
Participant  or his  Beneficiary  by the  Company.  Neither  this  Plan  nor any
Deferral Form executed in connection herewith shall be construed as
          (a) Constituting or creating a contract of employment,
          (b) Restricting  either the Company's  right to discharge  Participant
     with or without cause or  Participant's  right to terminate his employment,
     or
          (c) Creating  any  guarantee  or  representation  as  to the amount of
     compensation  to be paid to Participant by the Company during any period of
     regular employment.

     SECTION  6.2 - ABSENCE  OF  LIABILITY.  Any and all  liability  created  to
administer  this Plan and the Trust or to provide any Participant or Beneficiary
with  benefits  under this Plan  shall be  exclusively  and  solely  that of the
Company.  No member of the  Committee,  officer,  director  or  employee,  past,
present or future, of the Company shall have any liability to any Participant or
Beneficiary,  or to any other person or entity, to provide or pay such benefits,
such liability hereby being expressly and unconditionally denied.

     SECTION 6.3 - AMENDMENT AND TERMINATION. This Plan may be altered, amended,
or revoked  by a written  agreement  signed by the  Company  and a  Participant,
provided  that no such action shall be taken that is not allowed by Article XIII
of the Trust  Agreement,  and provided further that if any amendment to the Plan
or the  adoption of the Plan by the  Participant  would  constitute a subsequent
Participant  deferral  election that would cause a Participant or Beneficiary to
be in  constructive  receipt of past deferred  amounts,  then such  amendment or
adoption   will  only  be   applicable   with   respect  to  future   deferrals.
Notwithstanding  the foregoing,  the Company may unilaterally  amend the Plan to
provide that no future  deferrals may be made by Participants and to conform the
Plan to ERISA and Code  requirements  with respect to unfunded plans of deferred
compensation.
     The Plan may not be amended  or  terminated  during the period  immediately
preceding the Company's Insolvency if the intended result would be to accelerate
the payment of  benefits  to  Participants  or  Beneficiaries  so that the Trust
assets would be unavailable to the Company's general creditors.

     SECTION  6.4 - COMPANY  NOT AN  ADVISOR.  The  Company  offers this Plan to
Participants  without assuming any  responsibility or liability as an advisor or
consultant  relative  to tax or other  aspects of this Plan and the Trust or the
payment of benefits hereunder.