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           COINSURANCE LIFE REINSURANCE AGREEMENT (PreNeed Plans)
                                   BETWEEN
                   LINCOLN MEMORIAL LIFE INSURANCE COMPANY
                                     AND
                      EMPLOYERS REASSURANCE CORPORATION

LINCOLN MEMORIAL LIFE INSURANCE COMPANY, an insurer organized and operating
under the laws of the state of Texas (hereinafter referred to as "Ceder"),
and EMPLOYERS REASSURANCE CORPORATION, an insurer organized and operating
under the laws of the state of Kansas (hereinafter referred to as
"Reinsurer"), enter into this Reinsurance Agreement hereinafter referred to
as the "Agreement") and mutually agree and covenant as follows:


                                  ARTICLE I

                                 DEFINITIONS

As used in this Agreement:

A.       Coinsurance Effective Date shall mean November 1, 2000.
         --------------------------

B.       Coinsurance Percentage shall mean 100%.
         ----------------------

C.       Net Policy Reserves means reserves established for the Policies in an
         -------------------
amount equal to the sum of the unearned premium reserve, the actuarial
reserve, other premium reserves (including advance premiums and net of due
and deferred premium assets) and other miscellaneous reserves and policy
liabilities (including the claim liability) associated with the policies
reinsured hereunder. Such Net Policy Reserves shall be computed in accordance
with commonly accepted actuarial standards consistently applied and fairly
stated in accordance with sound actuarial principles and practices on a
statutory basis.

D.       Policies mean all Policies that are described in Exhibit A and are in
         --------
force on the


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Coinsurance Effective Date. A policy will be deemed to be in force on the
Coinsurance Effective Date if the premium thereon has been paid to or beyond
the Coinsurance Effective Date or if the premium shall be paid to or beyond
the Coinsurance Effective Date within the grace period permitted in the
policy and by Ceder's customary practice. If, on the Coinsurance Effective
Date, the premium on a policy is unpaid beyond said grace period, it will be
deemed not to be in force; except that if the holder of such policy pays the
premium and complies with Ceder's usual and customary reinstatement
requirements and practices or those provided by applicable law, the policy
will be deemed to be in force on the Coinsurance Effective Date. A policy
that on the Coinsurance Effective Date is on extended term insurance status
or reduced paid up status under a nonforfeiture option shall be deemed to be
in force.

E.       Claim Expenses mean statutory interest payable on insurance proceeds,
         --------------
court costs, interest upon judgments and allocated investigation, adjustment
and legal expenses. The term "Claim Expenses" excludes salaries paid to
employees of the Ceder.


                                  ARTICLE II

                           COINSURANCE OF POLICIES

A.       General
         -------
Subject to the terms and conditions of this Agreement, Ceder hereby cedes to
Reinsurer and Reinsurer hereby accepts the Coinsurance Percentage of Ceder's
obligations and liabilities under the Policies as of the Coinsurance
Effective Date. As of the Coinsurance Effective Date, Reinsurer agrees to be
responsible for the reserves and liabilities applicable to Reinsurer's
portion of the Policies.

B.       Commencement of Reinsurance Liability
         -------------------------------------


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Reinsurer shall bear and have responsibility for the payment of liabilities
arising from or with respect to the Reinsurer's portion of the Policies on
and after the Coinsurance Effective Date.

C.       Termination of Coinsurance
         --------------------------
The coinsurance under this Article II shall remain in full force and effect
until the liabilities under the Policies have been discharged in full.

D.       Coinsurance Terms
         -----------------

         1.       Definitions

                  a.       Initial Reinsurance Premium
                  The Initial Reinsurance Premium, which is the initial
                  consideration for this agreement shall be equal to the Net
                  Policy Reserves less an Initial Ceding Allowance equal to
                  fifteen million dollars ($15,000,000) on the Coinsurance
                  Effective Date. This net amount shall be paid by Ceder to
                  Reinsurer on the Coinsurance Effective Date. Any assets,
                  which shall include any policy loans on business reinsured
                  under the terms of this Agreement, transferred to Reinsurer
                  to satisfy the amount due hereunder shall be valued at
                  their respective market values. The market value of policy
                  loans means their statutory book value.

                  b.       Coinsurance Premium
                  The Coinsurance Premium, for each month, shall be equal to
                  the gross premiums collected, net of any premium refunds,
                  on Reinsurer's portion of business reinsured hereunder.

                  c.       Coinsurance Claims


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                  The Coinsurance Claims, for each month, shall be equal to
                  Reinsurer's portion of the claims incurred and paid by
                  Ceder during the month, on insurance policies covered
                  hereunder net of any outstanding policy loans. Claims
                  incurred prior to the Coinsurance Effective Date shall
                  remain a liability of the Ceder.

                  d.       Surrenders
                  The Surrenders, for each month, shall be equal to
                  Reinsurer's portion of the cash surrender values incurred
                  and paid by Ceder during the month, on insurance policies
                  covered hereunder net of any outstanding policy loans. Cash
                  surrender values incurred prior to the Coinsurance
                  Effective Date shall remain a liability of the Ceder.

                  e.       Premium Taxes
                  Reinsurer shall reimburse Ceder for premium taxes paid on
                  Reinsurer's portion of the business reinsured hereunder.
                  Premium taxes incurred prior to the Coinsurance Effective
                  Date shall remain a liability of the Ceder.

                  f.       Expense Allowance
                  The Expense Allowance shall be equal to the amounts shown
                  in Exhibit C.

                  g.       Policyholder Dividends and Benefit Increases
                  Reinsurer shall not participate in any Policyholder
                  Dividends declared by Ceder nor participate in any death
                  benefit increases unless required by law. Reinsurer shall
                  participate in annuity account increases according to the
                  procedure described in Exhibit B.

                  h.       Policy Loans
                  Policy loans will be reinsured and thus Reinsurer shall
                  participate in policy loans made by Ceder.


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                  i.       Experience Rating Refund
                  An Experience Rating Refund shall be calculated according
                  to Exhibit D.

         2.       Settlement Terms

                  a.       By Ceder:

                  Ceder will pay Reinsurer the sum of:

                           i.    the Coinsurance Premium for the month; and

                           ii.   interest and principal payments received
                                 by Ceder on Policy Loans for the month.

                  b.       By Reinsurer:

                  Reinsurer will pay Ceder the sum of:

                           i.    Coinsurance Claims paid by the Ceder during
                                 the month;

                           ii.   Claim Expenses paid by the Ceder during the
                                 month with respect to the Policies;

                           iii.  The Expense Allowance for the month;

                           iv.   Surrenders for the month;

                           v.    Premium taxes for the month; and

                           iv.   Policy Loans made by Ceder for the month.

                  Within 10 days after the end of each month, Ceder will
                  prepare a monthly settlement report containing at least the
                  items delineated in Article II(D)(2). Payments, as required
                  by this provision, shall be netted. If according to the
                  monthly settlement report, Ceder owes Reinsurer, such
                  amount due will accompany the settlement report. If
                  Reinsurer owes Ceder, Reinsurer will pay Ceder the amount
                  due within 10 days after receipt of the settlement report.


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                  Within 30 days at the end of each six month period
                  beginning from the Coinsurance Effective Date, the
                  Reinsurer will pay the Ceder the Experience Rating Refund
                  calculated by the Ceder according to Exhibit D if such
                  Experience Rating Refund is positive. If the Experience
                  Rating Refund is negative, the Experience Rating Refund
                  shall be deferred according to Exhibit D. If according to
                  the Experience Rating Refund calculation, Reinsurer owes
                  Ceder, such amount due will accompany the settlement
                  report. If there is a delayed settlement of any payment,
                  there will be an interest penalty at the rate of 9.0% per
                  annum applied to the amount of the delayed settlement.

E.       Segregated Asset Portfolio
         --------------------------
For the purposes of determining the Experience Rating Refund
Interest Rate, the Reinsurer shall deposit sixteen million dollars
($16,000,000) in its general account, which deposit shall be
segregated based on the unique investment coding assigned by the
Reinsurer to this Agreement (the "Segregated Account"). All
investment decisions with respect to funds deposited in the
Segregated Account shall be made in accordance with the investment
guidelines attached to this Agreement as Exhibit E, unless
otherwise agreed upon in writing by the Ceder or its designated
investment advisor and the Reinsurer. All interest, dividends or
other returns on contained in the Segregated Account shall be
credited to the Segregated Account net of investment expenses.

F.       Coinsurance Administration
         --------------------------
Ceder shall administer the Policies and perform all accounting.
Reporting shall be on a bulk basis. An annual listing of coinsurance
in force shall be provided to Reinsurer.


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At least quarterly, a report known as the Periodic Report shall be furnished
to Reinsurer detailing the reserves, experience and such other items as are
required to compute the Net Policy Reserves and any other information
required for the functioning of this Agreement, including those amounts
referenced in Section D.2 of this article. Both the annual listing and the
Periodic Report shall be in a format that is mutually agreed to by the Ceder
and the Reinsurer. Ceder shall bear all expenses incurred in connection with
the Policies reinsured hereunder, except as otherwise provided herein.

G.       Insolvency
         ----------
The Reinsurer hereby agrees that in the event of the insolvency of the Ceder,
this Reinsurance Agreement shall be so construed that the reinsurance shall
be payable directly to the Ceder or to its liquidator, receiver or statutory
successor by the Reinsurer, without diminution because of the insolvency of
the Ceder and on the basis of the liability of the Ceder under the Policies.
It is further agreed that the liquidator, the receiver, or the statutory
successor of the Ceder shall give written notice to the Reinsurer of the
pendency of claims. The Reinsurer may investigate any such claim and
interpose at its own expense in the proceedings where such claim is to be
adjudicated any defenses which it may deem available to the Ceder, or its
liquidator, receiver, or statutory successor. The expense thus incurred by
the Reinsurer shall be chargeable, subject to court approval, against the
Ceder as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the Ceder or to its liquidator,
receiver, or statutory successor solely as a result of the defense undertaken
by the Reinsurer.


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                                 ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF CEDER

Ceder hereby represents and warrants to Reinsurer that:

A.       Organization, Standing and Power
         --------------------------------
Ceder is a corporation duly organized, validly existing, and in good standing
under the laws of the state of Texas and is duly licensed, qualified or
admitted to do business and is in good standing in all jurisdictions in which
the ownership, use or leasing of its assets or properties or the conduct or
nature of its business makes such licensing, qualification or admission
necessary. Ceder has full corporate power and authority to enter into this
Agreement and perform its obligations hereunder.

B.       Authority
         ---------
The execution, delivery and compliance with the terms of this Agreement by
Ceder and performance by Ceder of its obligations hereunder has been duly and
validly authorized by all necessary corporate action on the part of Ceder;
and this Agreement constitutes a valid and binding obligation of Ceder which
is enforceable against Ceder in accordance with its terms.

C.       Effect of Agreement
         -------------------
The execution and delivery of this Agreement by Ceder does not and the
performance by Ceder of its obligations under this Agreement will not:

         1.       violate any existing term or provision of any law or any writ,
         judgment, decree, injunction or similar order applicable to Ceder;

         2.       conflict with or result in a violation or breach of, or
         constitute (with or without notice or lapse of time or both) a
         default under, any of the terms, conditions, or provisions of the
         articles or certificate of incorporation or bylaws of Ceder;


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         3.       result in the creation or imposition of any lien, charge, or
         encumbrance upon Ceder or any of its assets or properties that
         individually or in the aggregate with any other liens, charges, or
         encumbrances has or may reasonably be expected to have a material
         adverse effect on the validity or enforceability of this Agreement,
         or on the ability of Ceder to perform its obligations under this
         Agreement; or

         4.       conflict with or result in a violation or breach of, or
         constitute (with or without notice or lapse of time or both) a
         default under, or give to any person or entity any right of
         termination, cancellation, acceleration, or modification in or with
         respect to, any contract or agreement to which Ceder is a party or
         by which its assets or properties may be bound, and as to which any
         such conflicts, violations, breaches, defaults or rights
         individually or in the aggregate have or may reasonably be expected
         to have a material adverse effect on the validity or enforceability
         of this Agreement, or on the ability of Ceder to perform its
         obligations under this Agreement, except as to any rights preserved
         by federal or state laws to the policyowners of the Policies.


                                  ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF REINSURER

Reinsurer hereby represents and warrants to Ceder that:

A.       Organization, Standing and Power
         --------------------------------
Reinsurer is a corporation duly organized, validly existing, and in good
standing under the laws of the state of Kansas and is duly licensed,
qualified or admitted to do business and is in good standing in all
jurisdictions in which the ownership, use or leasing of its assets or
properties or the conduct or nature of its business makes such licensing,
qualification or


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admission necessary. Reinsurer has full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder.

B.       Authority
         ---------
The execution, delivery and compliance with the terms of this Agreement by
Reinsurer and performance by Reinsurer of its obligations hereunder has been
duly and validly authorized by all necessary corporate action on the part of
Reinsurer; and this Agreement constitutes a valid and binding obligation of
Reinsurer which is enforceable against Reinsurer in accordance with its
terms.

C.       Effect of Agreement
         -------------------
The execution and delivery of this Agreement by Reinsurer do not, and the
performance by Reinsurer of its obligations under this Agreement will not:

         1.       violate any existing terms or provision of any law or any
         writ, judgment, decree, injunction or similar order applicable to
         Reinsurer;

         2.       conflict with or result in a violation or breach of, or
         constitute (with or without notice or lapse of time or both) a
         default under, any of the terms, conditions, or provisions of the
         articles or certificate of incorporation or bylaws of Reinsurer;

         3.       result in the creation or imposition of any lien, charge, or
         encumbrance upon Reinsurer or any of its assets or properties that
         individually or in the aggregate with any other liens, charges, or
         encumbrances has or may reasonably be expected to have a material
         adverse effect on the validity or enforceability of this Agreement,
         or on the ability of Reinsurer to perform its obligations under this
         Agreement; or

         4.       conflict with or result in a violation or breach of, or
         constitute (with or without notice or lapse of time or both) a
         default under, or give to any person or entity any right of
         termination, cancellation, acceleration, or modification in or with


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         respect to, any contract or agreement to which Reinsurer is a party
         or by which its assets or properties may be bound, and as to which
         any such conflicts, violations, breaches, defaults or rights
         individually or in the aggregate have or may reasonably be expected
         to have a material adverse effect on the validity or enforceability
         of this Agreement, or on the ability of Reinsurer to perform its
         obligations under this Agreement.

                                  ARTICLE V

                                 ARBITRATION

Any unresolved dispute which may arise under this Agreement between Ceder and
Reinsurer shall be settled by an equitable rather than a strictly legal
interpretation pursuant to arbitration conducted in accordance with the
commercial Rules of the American Arbitration Association. In such cases, the
parties will submit their differences to three arbiters, who shall not
affiliated with the parties or their affiliates, or subsidiaries: one to be
selected by Ceder, one to be selected by Reinsurer, and the third to be
selected by the arbiters named by the parties herein. In the event of
disagreement between the arbiters, the decisions will rest with the majority.
The decision of the majority of the arbiters shall be binding upon the
parties herein without appeal. The arbiters will be relieved of all judicial
formality and may abstain from the strict rules of law. All arbiters must
either be actuaries experienced in life insurance, lawyers whose primary
practice includes insurance regulatory law or current or former life
insurance company executive officers.

Arbitration may be initiated by either Ceder or Reinsurer (the petitioner) by
written notice to the other party identifying the nature of the dispute,
demanding arbitration and naming its arbiter. The other party (the
respondent) shall have 10 days after receipt of said notice within


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which to designate its arbiter. The third arbiter shall be chosen by the two
arbiters named by the parties within 10 days thereafter and the arbitration
shall be held at the place hereinafter set forth 10 days after the
appointment of the third arbiter. Should the two arbiters not be able to
agree on the choice of the third, then the appointment shall be as follows:
Each party will chose three arbiters, two of which shall be refused by the
opposing party. The third arbiter shall then be selected by lot from the
remaining two. If the respondent does not name its arbiter within 10 days,
the petitioner may designate the second arbiter and the respondent will not
be aggrieved thereby.

Arbitration shall take place at a site agreed upon by the arbiters. The expense
of the arbitration proceeding shall be borne by the losing party; provided
that each party shall be responsible for expenses it incurs with respect to
preparation for and presentation of evidence and witnesses at the proceeding,
including the expense of the arbiter it selects. The decision of the arbiters
may be entered as a final judgment in any court of competent jurisdiction.


                                  ARTICLE VI

                                    NOTICE

Any notice allowed or required by the provisions of this Agreement shall be
sent by certified mail, postage pre-paid, return receipt requested, to each
party addressed as follows or to such other address as may be requested by
such party by giving notice pursuant to this provision:


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Ceder             LINCOLN MEMORIAL LIFE INSURANCE COMPANY
                  1250 Capital of Texas Hwy. S., Bld. 3, Suite 100
                  Austin, Texas 78746

Reinsurer         EMPLOYERS REASSURANCE CORPORATION
                  5200 Metcalf
                  Overland Park, Kansas 66201


                                 ARTICLE VII

                          TERMINATION AND RECAPTURE

This Agreement may not be terminated. Neither party may unilaterally cancel
this Agreement. The business reinsured under this Agreement may not be
recaptured.


                                 ARTICLE VIII

                                   DAC TAX

The parties to this Agreement need not make the joint election under
paragraph (g)(8) of section 1.848-2 of the U.S. Treasury Regulations because
the Reinsurer has not previously had, does not have during the year in which
the effective date of this Agreement occurs, and does not expect to have in
the future a capitalization shortfall, as defined in paragraph (g)(4) of this
section. In the event that the Reinsurer does have a capitalization shortfall
during any year while it has liability under this Agreement to the Ceder, the
Reinsurer will notify the Ceder and will also make the joint election with
the Ceder under paragraph (g)(8) of this section.


                                  ARTICLE IX

                              GENERAL PROVISIONS

A.       Entire Agreement
         ----------------

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This Agreement, including the exhibits attached hereto, constitutes the
entire understanding between Ceder and Reinsurer.

B.       Amendment
         ---------
This Agreement cannot be changed, modified or varied except in writing signed
by duly authorized representatives of both Ceder and Reinsurer.

C.       Costs and Expenses
         ------------------
Whether or not the transaction contemplated hereby is consummated, all costs
and expenses incurred in connection with this Agreement and the transaction
contemplated hereby shall be paid by the party incurring such costs and
expenses unless otherwise expressly provided for herein.

D.       Offset
         ------
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against either
Ceder or Reinsurer with respect to this Agreement or any other reinsurance
Agreements between Ceder and Reinsurer (regardless of whether acting as
ceding company or assuming reinsurer) are deemed mutual debts or credits, as
the case may be, and shall be set off, and only the balance shall be allowed
or paid.

E.       Further Assurances
         ------------------
Ceder and Reinsurer agree to perform such additional acts and execute such
additional documents and agreements as may be necessary or desirable to carry
out the purpose and objectives of this Agreement.

F.       Counterparts
         ------------
This Agreement may be executed in any number of counterparts each of which
shall be deemed an original, but all of which shall constitute one and the
same instrument.


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G.       Binding Effect
         --------------
This Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and approved assigns.

H.       Errors or Omissions
         -------------------
Inadvertent errors or omissions made by the Ceder in reporting to the
Reinsurer with respect to the Policies shall not prejudice the reinsurance
afforded by this agreement if the Ceder reports the error or omission to the
Reinsurer immediately after the Ceder's discovery thereof.

I.       Captions
         --------
The Article captions in this Agreement are for reference only and are not
part of this Agreement. As such, they are not to be used in the
interpretation or construction of this Agreement.

J.       Exhibits
         --------
All exhibits in this Agreement are attached hereto and incorporated into this
Agreement by reference.

K.       Governing Law
         -------------
This Agreement shall be governed by and construed in accordance with the laws
of the state of Texas.

L.       Assignment
         ----------
Neither the Ceder nor the Reinsurer will assign this Agreement without the
prior written consent of the other.


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IN WITNESS WHEREOF, Ceder and Reinsurer have caused this Agreement to
be executed by their respective officers duly authorized to do so, on
this 1st day of December.



LINCOLN MEMORIAL LIFE INSURANCE COMPANY

By: /s/ Tony B. Lumpkin
   ------------------------------------------

Title: Chief Operations Officer
      ---------------------------------------

By: /s/ Randall K. Sutton
   ------------------------------------------

Title: President
      ---------------------------------------



EMPLOYERS REASSSURANCE CORPORATION

By: /s/ Dale Filsinger
   ------------------------------------------

Title: Vice President and Actuary
      ---------------------------------------

By: /s/ Robert D. Parmly
   ------------------------------------------

Title: Second Vice President
      ---------------------------------------