Exhibit 10.63


    
      

    

    
      EXHIBIT
        10. 63

      


      


      


      COINSURANCE
        AGREEMENT

       

      by
        and
between

       

      INVESTORS
        LIFE INSURANCE COMPANY OF NORTH AMERICA

       

      Austin,
        Texas

       

      and

       

      FAMILY
        LIFE
        INSURANCE COMPANY

       

      Houston,
        Texas



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      COINSURANCE
        AGREEMENT

       

      
         

        
          

          

        



      THIS
        COINSURANCE AGREEMENT
        (the
“Agreement”) is made and entered into by and between INVESTORS
        LIFE INSURANCE COMPANY OF NORTH AMERICA (“Company”),
        a Texas
        stock
        life insurance company,
        and
FAMILY
        LIFE
        INSURANCE COMPANY
        (“Reinsurer”), a Texas
        stock life
        insurance company.

       

      WHEREAS,
        Financial Industries Corporation, the parent of both Company and Reinsurer,
        has
        agreed to sell Reinsurer to The Manhattan Life Insurance Company pursuant
        to a
        Stock Purchase Agreement that includes among its terms the reinsurance of
        the
        Policies;

       

      WHEREAS,
        Company
        is the issuer of insurance Policies (as defined herein) consisting of mortgage
        protection life insurance policies;

       

      WHEREAS,
        Company
desires
        to cede a
        portion
        of its
        risks
        under the Policies to Reinsurer
        subject
        to this Agreement;

       

      WHEREAS,
        effective as of the Effective Date, Company will cede or retrocede its risks
        under the Policies to Reinsurer, and Reinsurer will
        provide
        indemnity reinsurance of such risks,
        in each
        case on the terms and subject to the conditions set forth below;
        and

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual promises and covenants set forth herein, and
        in
        reliance upon the representations, warranties, conditions, and covenants
        contained herein, and intending to be legally bound hereby, Company and
        Reinsurer hereby agree as follows:

       

       

      ARTICLE
        I

      DEFINITION
        OF TERMS

       

      Capitalized
        terms used shall have the meaning given below.

       

      1.1.   Closing
        Date.
        The
        date of closing of the sale of Reinsurer to The Manhattan Life Insurance
        Company.

       

      1.2.   Effective
        Date.
        The
        date upon which the coinsurance of the Policies by Reinsurer under the terms
        of
        this Agreement shall be effective, which shall be 12:01 a.m. Central time,
        on the day following the effective date of termination of the Optimum Re
        Agreement.

       

      1.3.   Expense
        Allowance Percentage.
        The
        percentage of net written premium (written premium less cancellations and
        refunds) specified in Schedule 1.3.

       

      1.4.   Extracontractual
        Liabilities.
        Any
        claim or liability under, in connection with or with respect to the Policies
        for
“bad faith”, punitive, exemplary or other extra-contractual damages that are
        based upon, relate to or arise out of any act, error or omission of Company,
        or
        any of its officers, directors, agents or employees, whether intentional
        or
        otherwise.


      
        
          Coinsurance
            Agreement

          
          

        

        
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      1.5.   Optimum
        Re Agreement.
        The
        Automatic Reinsurance Agreement between Company and Optimum Re Insurance
        Company
        dated January 19, 2005.

       

      1.6.   Policies.
        All
        of
        those mortgage protection life insurance policy contracts and riders (but
        not
        universal life plans) issued or to be issued by the Family Sales Division
        of
        Company including those either identified by policy form number or Plan Code
        on
Schedule 1.3.

       

      1.7.   Policy.
        Each
        Policy reinsured by Reinsurer under this Agreement.

       

      1.8.   Policyholder.
        Any
        individual or entity which is the owner of a Policy or which has the right
        to
        terminate or lapse the Policy, effect changes of beneficiary, coverage limits,
        add or terminate persons covered under such Policy or direct any other policy
        changes in such Policy.

       

      1.9.   Reinsurance
        Percentage.
        The
        percentage of contractual liability of Company reinsured by Reinsurer as
        specified in Schedule 1.9.

       

       

      ARTICLE
        II

      BASIS
        OF REINSURANCE

       

      2.1.   Reinsurance.
        Subject
        to the terms and conditions of this Agreement,
        effective as of the Effective Date, Company hereby cedes to Reinsurer, and
        Reinsurer hereby accepts and reinsures from Company the Reinsurance Percentage
        of the Policies that are issued by the Company on and after the Effective
        Date.

       

      2.2.   Liability
        of Reinsurer.
        The
        liability of Reinsurer shall begin and terminate simultaneously with that
        of
        Company, and the extent of Reinsurer’s liability shall be governed by the
        general and special policy conditions of the Policies.

       

      2.3.   Underwriting.
        All
        Policies shall be underwritten in accordance with current underwriting
        guidelines in use as of the Effective Date unless modified in accordance
        with
        Section 2.4.

       

      2.4.   Modification.
        Any
        modifications or changes to the Policies must be mutually agreed upon by
        Company
        and Reinsurer.

       

      2.5.   Premium
        Required.
        The
        receipt by Reinsurer of reinsurance premiums when and as required by this
        Agreement shall be a condition precedent to Reinsurer’s liability for each
        policy to be reinsured.

       

      2.6.   Reinstatements.
        If a
        Policy that was reduced, terminated, or lapsed is reinstated, the reinsurance
        for such Policy under this Agreement will be reinstated automatically to
        the
        amount that would have been in force if the Policy had not been reduced,
        terminated, or lapsed.

       

      2.7.   Authority
        and Territory.
        In no
        event shall the reinsurance be in force and binding unless the Policy issued
        directly by Company is in force and unless the issuance and delivery of the
        Policy constitutes the doing of business in a state of the United States
        of
        America or a country in which Company is properly licensed.


      
        
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            Agreement

          
          

        

        
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      2.8.   Non-Forfeiture
        Benefits.
        The
        liability of Reinsurer shall include a pro rata share of any non-forfeiture
        benefits under the Policies in accordance with the Reinsurance
        Percentage.

       

      2.9.   Recapture.
        The
        business reinsured is not subject to recapture except by agreement of the
        parties.

       

       

      ARTICLE
        III

      TERMINATION

       

      3.1.   Term.
        This
        Agreement shall commence on the Effective Date and continue in effect according
        to its terms, unless terminated pursuant to Section 3.2,
        until
        12:01 a.m. CST on the fifth anniversary of the Effective Date. This
        Agreement cannot be terminated with respect to the Policies except by mutual
        agreement of Company and Reinsurer.

       

      3.2.   Termination
        of New Sales.
        Reinsurer may terminate this Agreement with respect to new sales by Company
        of
        Policies as of the end of any calendar year or any renewal term by giving
        at
        least one hundred eighty (180) days notice in writing to Company prior to
        the
        end of such calendar year.

       

       

      ARTICLE
        IV


      
        PREMIUMS
          AND EXPENSE ALLOWANCE

      

       

      4.1.   Reinsurance
        Premium.
        Company
        agrees to pay Reinsurer reinsurance premiums equal to the Reinsurance Percentage
        multiplied by the collected premiums less the returns and
        cancellations.

       

      4.2.   Expense
        Allowance.
        Reinsurer will pay Company an Expense Allowance equal to the Expense Allowance
        Percentage, multiplied by the reinsurance premiums, as calculated in
        Section 4.1
        above,
        and the
        applicable fee, as specified in Schedule 1.3.

       

      4.3.   Reinsurer
        Liability.
        Reinsurer shall not be directly liable for any commissions, taxes, or expenses
        incurred by Company except as specifically set forth in this
        Agreement.

       

       

      ARTICLE
        V

      ADMINISTRATION

       

      5.1.   Quarterly
        Report.
        Company
        shall submit to Reinsurer a statement listing reinsurance premiums, new policies
        issued, paid claims and non-forfeiture benefits, expense allowances, premium
        taxes, assessments, reserves, and other pertinent data mutually agreed upon
        by
        both parties relating to the Policies by the fifteenth (15th) of the month
        following the end of each calendar quarter that this Agreement is in effect.
        Any
        balance due Reinsurer by Company shall be paid with the report. Any balance
        due
        Company from Reinsurer shall be paid within fifteen (15) days of receipt
        of such
        report.

       

      5.2.   Access
        to Books and Records.
        Company
        and Reinsurer shall, have at all times, full and free access during regular
        business hours, at the home office of the other party, to inspect all books,
        record and files relating to the Policies in accordance with the terms of
        this
        Agreement.


      
        
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            Agreement

          
          

        

        
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      5.3.   Error
        or Omission.
        It is
        expressly understood and agreed that if non-payment of reinsurance premium
        within the time specified or failure to comply with other terms of this
        Agreement is shown to be the result of a misunderstanding, oversight or clerical
        error, both Company and Reinsurer shall be restored to the positions they
        would
        have occupied had no such misunderstanding, oversight or clerical error
        occurred. Upon discovery of the oversight, clerical error or misunderstanding,
        the party that committed the oversight or clerical error or acted incorrectly
        as
        a result of a misunderstanding shall promptly notify the other party in
        writing.

       

      5.4.   Lapses.
        If a
        Policy lapses for nonpayment of premium and is subsequently reinstated in
        accordance with the terms of the Policy and rules of Company, the reinsurance
        hereunder with respect to such Policy shall be reinstated automatically.
        Reinsurance premiums shall be payable hereunder with respect to any such
        Policy
        in full, as if such Policy had continued uninterrupted in force.

       

      5.5.   Cooperation.
        Each
        party hereto shall cooperate fully with the other in all reasonable respects
        in
        order to accomplish the objectives of this Agreement.

       

      5.6.   Premium
        Taxes.
        Company
        shall be liable for the payment of all Premium Taxes on premiums received
        under
        the Policies. Reinsurer shall allow Company a provision for Premium Taxes
        incurred in connection with premiums received under the Policies in proportion
        to the percentage under Schedule 1.3.
        The
        provision for Premium Taxes shall be two percent (2%) of premiums collected,
        as
        calculated on a calendar quarter basis, minus: (a) the sum of any Premium
        Taxes withheld by Company from amounts transferred to Reinsurer during such
        calendar quarter; and (b) the amount of any Premium Tax offset directly or
        indirectly available for use by Company during such calendar quarter as a
        consequence of any assessment or payment for which Company has been reimbursed
        by Reinsurer pursuant to Section 5.7
        hereof,
        and shall be paid by Reinsurer to Company within thirty (30) days of the
        end of
        each calendar quarter.

       

      5.7.   Guaranty
        Fund Assessments. In
        the
        event that Company is required to pay to any guaranty fund, insolvency fund,
        or
        similar plan, pool, association or organization maintained by any jurisdiction
        an assessment in respect of the Policies, the portion of such payment that
        relates to the Policies for such period shall be reimbursed to Company by
        Reinsurer in
        proportion to the Reinsurance Percentage. Company shall credit Reinsurer
        with
        any Premium Tax offset for such assessments relating to Policies in the
        proportion of the Reinsurance Percentage.

       

      5.8.   Reserves.
        Reinsurer shall establish and maintain reserves in proportion to the Reinsurance
        Percentage in accordance with applicable statutory accounting
        standards.

       

      5.9.   Other
        Reinsurance.
        The
        Company shall provide notice of termination with respect to the Optimum Re
        Agreement prior to the Closing and shall retain its pro rata share of liability
        without other reinsurance of any type.


      
        
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            Agreement

          
          

        

        
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      ARTICLE
        VI

      CLAIMS

       

      6.1.   Notice
        and Settlement.
        Company
        shall give Reinsurer prompt notice of any and all claims. The settlement
        of any
        claim paid by Company shall be binding on Reinsurer. Reinsurer shall pay
        its
        Reinsurance Percentage to Company pursuant to Section 5.1

       

      6.2.   Reduced
        Settlement and Expense.
        Should
        any claim be settled for a reduced sum, Company and Reinsurer shall participate
        in such reduction in proportion to their respective liabilities. Likewise,
        Reinsurer and Company shall share, in the same proportion as the Reinsurance
        Percentage, any special expenses for investigative or legal fees (excluding
        salaries, retainers, or ordinary administrative and overhead expenses). Claim
        expenses in connection with settlements such as external legal counsel fees,
        costs of investigative agency reports and case management fees from outside
        agencies shall be considered special expenses.

       

      6.3.   Extracontractual
        Liabilities.
        Reinsurer shall not be liable for any extracontractual liabilities or any
        expense relating thereto.

       

       

      ARTICLE
        VII

      INDEMNIFICATION

       

      7.1.   Indemnification.
        From
        and after the Effective Date, (a) Company shall indemnify, defend and hold
        harmless Reinsurer
        and its
        officers, directors, employees, agents and affiliates (collectively, the
        “Reinsurer Indemnified Parties”) from
        and
        against any costs and expenses (including interest, fines, penalties, statutory,
        punitive or extracontractual damages, refunds, reasonable attorneys’,
        accountants’, and actuaries fees and disbursements, and any other costs and
        expenses incident to any suit, action, investigation, or proceeding), damages,
        losses, charges, deficiencies, liabilities, obligations, claims, settlements,
        judgments, or diminution in value (“Loss” or “Losses”) sustained or incurred by,
        or asserted against Reinsurer which arises out of: (i) any breach or
        non-fulfillment by Company of, or any failure by Company to perform, any
        of the
        covenants, terms or conditions of or any of its duties or obligations under
        this
        Agreement, and (ii) any enforcement of this indemnity,
        and
        (b) Reinsurer shall indemnify, defend and hold harmless Company, and its
        officers, directors, employees, agents and affiliates (collectively, the
        “Company Indemnified Parties”) from and against any Loss sustained or incurred
        by, or asserted against, Company Indemnified Parties which arises out of
        (i) any breach or non-fulfillment by Reinsurer of, or any failure by
        Reinsurer to perform, any of the covenants, terms or conditions of or any
        of its
        duties or obligations under this Agreement, and (ii) any enforcement of
        this indemnity.

       

       

      ARTICLE
        VIII

      INSOLVENCY

       

      8.1.   Payment
        of Benefits under Insolvency.
        The
        obligations of Reinsurer under this Agreement shall be payable by Reinsurer
        while in force on the basis of the contractual liability of Company under
        the
        Policies without diminution or in any way affected or diminished because
        of the
        insolvency of Company. In the event of the insolvency of Company and the
        appointment of a conservator, liquidator, receiver, or statutory successor
        of
        Company while coinsurance under this Agreement is in effect as to any Policy,
        all coinsurance made, ceded, renewed or otherwise becoming effective shall
        be
        payable directly to such conservator, liquidator, receiver, or statutory
        successor immediately upon demand, with reasonable provision for verification,
        on the basis of claims allowed against Company by any court of competent
        jurisdiction or by any conservator, liquidator, receiver, or statutory successor
        of Company having authority to allow such claims, without diminution because
        of
        such insolvency or because such conservator, liquidator, receiver, or statutory
        successor has failed to pay all or a portion of any claims.


      
        
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      8.2.   Required
        Notice of and Defense against Claims.
        In the
        event of the insolvency of Company while reinsurance as to any Policy is
        in
        effect under this Agreement, the conservator, liquidator, receiver, or statutory
        successor of Company shall give Reinsurer written notice of the pendency
        of a
        claim against Company on a Policy within a reasonable time after such claim
        is
        filed in the insolvency proceeding. Such notice shall indicate the Policy
        reinsured and whether the claim could involve a possible liability on the
        part
        of Reinsurer. During the pendency of any such claim, Reinsurer may, at its
        own
        expense, investigate such claim and interpose, at its own expense, in the
        proceeding where such claim is to be adjudicated, any defense or defenses
        that
        Reinsurer may deem available to Company or its conservator, liquidator,
        receiver, or statutory successor. The expense thus incurred by Reinsurer
        shall
        be payable, subject to court approval, out of the estate of Company as a
        part of
        the expense of conservation or liquidation to the extent of a proportionate
        share of the benefit which may accrue to Company in conservation or liquidation
        solely as a result of the defense undertaken by Reinsurer,
        all in
        accordance with Sections 10-3-118(3)(b) and (8), Texas Revised
        Statutes.

       

       

      ARTICLE
        IX

      ARBITRATION

       

      9.1.   Agreement
        to Arbitrate.
        The
        parties hereto acknowledge and agree that (a) it is the intention of the
        parties
        that customs and usages of the business of insurance shall be given full
        effect
        in the interpretation of this Agreement; and (b) the parties shall act in
        all
        things with the highest good faith. All disputes between Reinsurer and Company
        arising under this Agreement on which an amicable understanding cannot be
        reached will be decided by arbitration between the parties at a location
        to be
        mutually agreed upon between the parties or as designated by the arbitrators
        if
        agreement as to a location cannot be reached by the parties. Notwithstanding
        any
        other provision of this ARTICLE
        IX,
        if
        either Reinsurer or Company seeks, consents to, or acquiesces in the appointment
        of or otherwise becomes subject to any trustee, receiver, liquidator or
        conservator (including any state insurance regulatory agency or authority
        acting
        in such a capacity), the other party shall not be obligated to resolve any
        claim, dispute or cause of action under this Agreement by arbitration.
        Notwithstanding any other provision of this ARTICLE
        IX,
        nothing
        contained in this Agreement shall require arbitration of any issue for which
        equitable or injunctive relief, including specific performance, is
        sought.


      
        
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            Agreement

          
          

        

        
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      9.2.   Method.
        The
        parties intend this Article VIII to be enforceable in accordance with the
        Federal Arbitration Act (9 U.S.C. Section 1, et seq.), including any
        amendments to that Act which are subsequently adopted, notwithstanding any
        other
        choice of law provision set forth in this Agreement. In the event that either
        party refuses to submit to arbitration as required herein, the other party
        may
        request a United States Federal District Court to compel arbitration in
        accordance with the Federal Arbitration Act. Both parties consent to the
        jurisdiction of such court to enforce this Article and to confirm and
        enforce the performance of any award of the arbitrators. To initiate
        arbitration, either party shall notify the other in writing in the manner
        set
        forth in this Agreement for sending notices to the parties of its desire
        to
        arbitrate, stating the nature of the dispute and the remedy sought, and
        designating an arbitrator. The party to which the notice is sent shall respond
        thereto in writing within thirty (30) days of its receipt of such notice.
        In
        such response, the party shall also assert any claim, defense, and other
        dispute
        it may have against the party initiating arbitration, and which arises out
        of or
        relates in any way to this Agreement and designate its arbitrator. If the
        second
        party fails to respond within the time set forth in this Section 8.2, or
        fails to designate its arbitrator in its response, the party initiating
        arbitration shall appoint a second arbitrator. The two arbitrators shall
        select
        a third arbitrator within thirty (30) days of the designation of the second
        arbitrator. If they are unable to agree upon the selection of the third
        arbitrator, they shall, within such period, each name three (3) individuals
        of
        whom the other shall decline two (2), and the decision of the third arbitrator
        shall be determined by drawing lots from the two remaining designees. All
        arbitrators shall be active or retired officers of life or health insurance
        companies and be unaffiliated in any way with the parties and disinterested
        in
        the outcome of the arbitration. The arbitrators shall have the power to
        determine all procedural rules for the conduct of the arbitration, including
        but
        not limited to the production and inspection of documents, the examination
        of
        witnesses, and any other matter relating to the conduct of the arbitration.
        The
        arbitrators shall interpret this Agreement in accordance with the standards
        identified in Section 8.1. The arbitrators shall have no authority to award
        punitive damages against or in favor of either party (except to reimburse
        a
        party for extra-contractual or punitive damages that either Company or Reinsurer
        has paid or is legally obligated to pay to third parties). The costs of the
        arbitration (except legal fees of the parties) shall be split equally between
        the parties, unless the arbitrators shall otherwise require in their award.
        Each
        party shall pay its own legal fees in connection with the arbitration, unless
        the arbitrators award legal fees and expenses of the prevailing party as
        part of
        any award. Except as otherwise specifically provided herein, the arbitration
        shall be conducted in accordance with rules established by the American
        Arbitration Association. The decision, in writing, of the arbitrators shall
        be
        final and binding upon both of the parties. Judgment may be entered upon
        the
        final decision of the arbitrators in any court having jurisdiction.

       

       

      ARTICLE
        X

      GENERAL
        PROVISIONS

       

      10.1.   Notices.
        Any and
        all notices and other communications required or permitted under this Agreement
        shall be in writing and shall be deemed to have been duly given when (i)
        received by the receiving party if mailed by United States registered or
        certified mail, return receipt requested, (ii) received by the receiving
        party
        if mailed by United States overnight express mail, (iii) sent by facsimile
        or
        telecopy machine, followed by confirmation mailed by United States first-class
        mail or overnight express mail, or (iv) delivered in person to the parties
        at
        the addresses set forth below:


      
        
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            Agreement

          
          

        

        
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                If
                  to Company:

              	 
	 	 	 	 
	 	 	
                INVESTORS
                  LIFE INSURANCE COMPANY OF NORTH AMERICA

              	 
	 	 	
                6500
                  Riverplace Blvd Bldg 1

              	 
	 	 	
                Austin,
                  TX 78730-1123

              	 
	 	 	
                Attention:
                  Michael Hydanus

              	 
	 	 	
                FAX
                  No.: (512) 404-5129

              	 
	 	 	 	 
	 	
                With
                  a concurrent copy
                  to:

              	 
	 	 	 	 
	 	 	
                Michael
                  Saslaw

              	 
	 	 	
                Weil,
                  Gotshal & Manges LLP

              	 
	 	 	
                200
                  Crescent Ct., Suite 300

              	 
	 	 	
                Dallas,
                  TX 75201

              	 
	 	 	
                FAX
                  No.: (214) 746-7777

              	 
	 	 	 	 
	 	
                If
                  to Reinsurer, to:

              	 
	 	 	 	 
	 	 	
                FAMILY
                  LIFE INSURANCE COMPANY

              	 
	 	 	
                2727
                  Allen Parkway, 5th Floor

              	 
	 	 	
                Houston,
                  Texas 77019

              	 
	 	 	
                Attention:
                  Daniel George, President

              	 
	 	 	
                FAX
                  No.: (713) 529-9425

              	 
	 	 	 	 
	 	 	
                With
                  a concurrent copy to:

              	 
	 	 	 	 
	 	 	
                Burnie
                  Burner

              	 
	 	 	
                Long,
                  Burner, Parks & DeLargy, P.C.

              	 
	 	 	
                106
                  E. 6th St., STE 300

              	 
	 	 	
                Austin,
                  TX 78701

              	 
	 	 	
                FAX
                  No.: (512) 322-0301

              	 


      

       

      10.2.   Confidentiality.
        Each of
        the parties shall maintain the confidentiality of all information related
        to the
        Policies and all other information denominated as confidential by the other
        party provided to it in connection with this Agreement and shall not disclose
        such information to any third parties without prior written consent of the
        other
        party, except as may be required by regulatory authorities or by law, or
        pursuant to legal process.

       

      10.3.   Misunderstandings
        and Oversights.
        If any
        failure to pay amounts due or to perform any other act required of either
        party
        under this Agreement is shown to be unintentional and caused by
        misunderstanding, oversight or clerical error, then this Agreement shall
        not be
        deemed in breach thereby, but such error shall be corrected by restoring
        both
        parties to the positions they would have occupied had the error not
        occurred.


      
        
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            Agreement

          
          

        

        
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      10.4.   Entire
        Agreement.
        This
        Agreement supersedes all prior discussions and agreements between the parties
        with respect to the subject matter of this Agreement, and this Agreement
        contains the sole and entire agreement between the parties with respect to
        the
        reinsurance of the Policies hereunder and the obligations of the parties
        are
        determined solely by the terms of this Agreement.

       

      10.5.   Waivers
        and Amendments.
        Any
        term or condition of this Agreement may be waived at any time by the party
        that
        is entitled to the benefit thereof. Such waiver must be in writing and must
        be
        executed by an executive officer of such party. A waiver on one occasion
        will
        not be deemed a waiver of the same or any other term or condition on a future
        occasion. This Agreement may be modified or amended only by a writing duly
        executed by an executive officer of Company and Reinsurer,
        respectively.

       

      10.6.   Offsets.
        Any
        debts or credits, regardless of when they arose or were incurred, in favor
        of or
        against either Company or Reinsurer with respect to this Agreement 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.

       

      10.7.   No
        Third Party Beneficiaries.
        This
        Agreement constitutes an indemnity reinsurance agreement solely between Company
        and Reinsurer, and is intended solely for the benefit of the parties hereto
        and
        their permitted successors and assigns, and it is not the intention of the
        parties to confer any rights as a third-party beneficiary to this Agreement
        upon
        any other person.

       

      10.8.   Assignment.
        This
        Agreement shall not be assigned by either of the parties hereto without the
        prior written approval of the other party.

       

      10.9.   Governing
        Law.
        Notwithstanding anything herein to the contrary, all provisions, including
        Arbitration, of this Agreement will be governed by and construed in accordance
        with the laws of the State of Texas,
        without regard to its conflicts of law doctrine.

       

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

       

      10.11.   Severability.
        If any
        provision of this Agreement is held to be illegal, invalid or unenforceable
        under any present or future law or if determined by a court of competent
        jurisdiction to be unenforceable, and if the rights or obligations of Company
        or
        Reinsurer under this Agreement will not be materially and adversely affected
        thereby, such provision shall be fully severable, and this Agreement will
        be
        construed and enforced as if such illegal, invalid or unenforceable provision
        had never comprised a part of this Agreement, and the remaining provisions
        of
        this Agreement shall remain in full force and effect and will not be affected
        by
        the illegal, invalid or unenforceable provision or by its severance here
        from.

       

      10.12.   Schedules
        and Paragraph Headings.
        Schedules attached hereto are made a part of this Agreement. Paragraph headings
        are provided for reference purposes only and are not made a part of this
        Agreement.

       

      10.13.   Tax
        Provisions.
        With
        respect to the transaction contemplated by this Agreement, the parties hereby
        agree to make an election in accordance with Internal Revenue Regulation
        Section 1.848-2(g)(8) (the “Regulation”) under Section 848 of the
        Internal Revenue Code of 1986 (the “Code”), as amended, and to comply with all
        of the requirements of such Regulation regarding such election, including,
        without limitation, the election statement and Tax return reporting requirements
        of Regulation Sections 1.848-2(g)(8)(ii) and 1.848-2(g)(8)(iii), and further
        agree:


      
        
          Coinsurance
            Agreement

          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      


      
        	 	
                (a)

              	
                To
                  exchange information pertaining to the amount of “net consideration” under
                  this Agreement as defined in the
                  Regulation;

              


      

       

      
        	 	
                (b)

              	
                That
                  Company shall submit its calculation of the “net consideration” for
                  purposes of that Regulation to Reinsurer not later than May 1st
                  for each
                  and every taxable year for which this Agreement is in
                  effect;

              


      

       

      
        	 	
                (c)

              	
                That
                  Reinsurer may challenge such calculation within ten (10) business
                  days of
                  its receipt of Company’s
                  calculation;

              


      

       

      
        	 	
                (d)

              	
                That
                  should Reinsurer challenge Company’s calculation of the “net
                  consideration” and the parties be unable to agree as to the appropriate
                  methodology to determine the “net consideration” for purposes of the
                  Regulation, they shall refer such dispute to an outside Tax consultant
                  unrelated to either of the parties, in lieu of the arbitration
                  provisions
                  of this Agreement, and the parties agree to be bound by the decision
                  of
                  that consultant;

              


      

       

      
        	 	
                (e)

              	
                That,
                  pursuant to such election, the party with net positive consideration
                  with
                  respect to this Agreement for each taxable year will capitalize
                  specified
                  policy acquisition expenses with respect to this Agreement without
                  regard
                  to the general deductions limitation of Section 848(c)(1) of the
                  Code; and

              


      

       

      
        	 	
                (f)

              	
                That
                  the first taxable year for which such election shall be effective
                  is
                  taxable year 2006.

              


      

       

      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
        as
        of the date first written below.

       

      
        	 	
                INVESTORS
                  LIFE INSURANCE COMPANY OF NORTH AMERICA

              
	 	 	 	 
	 	 	 	 
	 	
                By:

              	
                /s/
                  Michael Hydanus 12/29/06

              	 
	 	Michael
                Hydanus, President	 
	 	 	 	 
	 	 	 	 
	 	
                FAMILY
                  LIFE INSURANCE COMPANY

              
	 	 	 	 
	 	 	 	 
	 	
                By:

              	
                /s/
                  David W. Harris

              	 
	 	David
                W. Harris, Chief Executive Officer	 


      


      
        
          Coinsurance
            Agreement

          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      


      Schedule 1.3

      


      EXPENSE
        ALLOWANCE PERCENTAGE

       

      
        
          
            	
                    Plans
                      Reinsured:

                  	
                    Plan
                      Codes:

                  
	
                    Univestor
                      Term

                  	
                    HA3015E,
                      HA3030E, HA2010E, HA2020E, HA1515E, HA3015K, HA3030K, HA2010K,
                      HA2020K,
                      HA1515K

                  
	
                    Univestor
                      MCI

                  	
                    UT15EF1,
                      UT15EM1, UT15FM1, UT15FF1, UT15GM1, UT15GF1, UT20EF1, UT20EM1,
                      UT20FF1,
                      UT20FM1, UT20GM1, UT20GF1, UT30EN1, UT30FN1, UT30GN1, UT30ET1,
                      UT30FT1,
                      UT30GT1

                  
	
                    Any
                      other mortgage protection life insurance

                  	 


          

        

      

      


       

      Allowances:

       

      Family
        Sales Division.
        All
        mortgage cancellation policies, including Univestor Term and Univestor
        MCI:

       

      
        	 	
                1.

              	
                123%
                  first year plus $25 underwriting/issue allowance per new policy
                  issued,
                  plus 2% premium tax, plus pro rata portion of $42/policy/year
                  administration fee according to the Reinsurance Percentage.
                  

              


        	 	 	 


      

      
        	 	
                2.

              	
                Renewal
                  year allowance is at the rate which covers writing agent renewal
                  commissions and any associated non-affiliated overrides, plus 2%
                  premium
                  tax, plus pro rata portion of $42/policy/year administration fee
                  according
                  to the Reinsurance Percentage.

              


      


      
        
          Coinsurance
            Agreement

          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      


      Schedule 1.9

      


      REINSURANCE
        PERCENTAGE

      


      


      
        	 	
                Percentage
                  of Company contractual liability reinsured by
                  line:

              


        	 	 


      

      
        	 	
                ·

              	
                35%
                  until Company retention reaches maximum of $250,000 per life,
                  and

              


        	 	 	 


      

      
        	 	
                ·

              	
                100%
                  thereafter to the Maximum Per Life
                  Amount.

              


        	 	 	 


      

      
        	 	
                ·

              	
                Maximum
                  Per Life Amount is $700,000.

              


      

       

      Coinsurance
        Agreement

       
 -12-