AMENDMENT NO. 2 TO
                               ------------------
                                   INDENTURE
                                   ---------

         THIS  AMENDMENT  NO. 2 TO  INDENTURE  (this  "Amendment")  dated as of
August 5,  1996,  is made by and among  Dignity  Partners  Funding  Corp.  I, a
Delaware  corporation  (the  "Issuer"),  Dignity  Partners,  Inc.,  a  Delaware
corporation  (the  "Servicer"),  and Bankers Trust Company,  a New York banking
corporation,  as trustee (herein, together with its permitted successors in the
trusts hereunder, called the "Indenture Trustee").

                                    RECITALS
                                    --------

         WHEREAS,  the Issuer,  the  Servicer  and the  Indenture  Trustee have
entered into the  Indenture,  dated as of February 1, 1995,  as amended by that
certain Amendment No. 1 to Indenture dated September 29, 1995 (as amended,  the
"Indenture"),  whereby  the Issuer has  issued its Senior  Viatical  Settlement
Notes, Series 1995-A (the "Notes");

         WHEREAS, Heller Financial, The Lincoln National Life Insurance Company
and First  Penn-Pacific Life Insurance Company together  constitute the Holders
of 100% of the Notes (together, the "Holders");

         WHEREAS,  the Holders are  willing to consent to an  amendment  to the
Indenture, subject to the terms and conditions of this Amendment.


                                   AGREEMENT 
                                   ---------

         NOW, THEREFORE, in exchange for good and valuable  consideration,  the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
covenant and agree as follows:

Section 1.         Definitions.
                   -----------

         Capitalized  terms used herein which are not otherwise  defined herein
have the meanings ascribed to such terms in the Indenture.

Section 2.         Amendment.
                   ---------

        (a)       Clause (iv) of Section 12.03(d) of the Indenture is hereby 
amended and restated to read as follows:

                  "(iv) Until the  principal  amount of the Notes has been paid
                  in  full,  the  Indenture  Trustee  shall  withdraw  from the
                  Liquidity  Account and deposit into the  Collection  Account,
                  the  amount,  if any,  by which  the  funds  then held in the
                  Liquidity  Account  exceeds  the  greater  of (x)  10% of the
                  Outstanding  Principal  Balance,  after giving  effect to the
                  payment of  principal to be made on the Notes on such Payment
                  Date and (y) the Required Liquidity Amount."

Section 3.        Representations and Warranties.
                  ------------------------------

(a)     Each party by executing this Amendment hereby  represents and warrants 
that the person  executing


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<PAGE>


this Amendment on behalf of such party is duly  authorized to do so, such party
has full right and authority to enter into this Amendment and to consummate the
transaction  described in this  Amendment,  and this Amendment  constitutes the
valid and legally binding obligation of such party, and is enforceable  against
such party in accordance with its terms.

(b)     The Issuer represents and warrants that all of the representations  and
warranties  of the Issuer set forth in Section  11.01 of the Indenture are true
and correct as of the date hereof.

Section 4.         Effective Date.
                   --------------

        This Amendment shall become  effective as of the date specified in the
first  paragraph  of  this  Amendment,  provided  that  each  of the  following
conditions is satisfied:

        (a)        The  Indenture  Trustee shall have received from each of the
        parties  hereto and each  Noteholder  an executed  counterpart  of this
        Amendment.

        (b)        The  Indenture   Trustee  and  the  Noteholders  shall  have
        received  written   confirmation   from  the  Rating  Agency  that  the
        execution,  delivery and performance of this Amendment will not cause a
        downgrading or withdrawal of the current rating by the Rating Agency on
        the Notes.

Section 5.        Miscellaneous.
                  -------------

        (a)       Ratification  of  Indenture.  The terms and  provisions  set
                  ---------------------------
        forth in this  Amendment  shall modify and supersede  all  inconsistent
        terms and provisions set forth in the Indenture and except as expressly
        modified and  superseded by this  Amendment,  the Indenture is ratified
        and  confirmed  in all  respects  and shall  continue in full force and
        effect.  The  security  interests  and  assignments  granted  under the
        Indenture shall in no manner be waived, impaired or otherwise adversely
        affected hereby, and are hereby ratified and confirmed.
         

        (b)        References.  The Indenture and any and all other agreements,
                   ----------
        documents  or  instruments  now or  hereafter  executed  and  delivered
        pursuant to the terms hereof or pursuant to the terms of the  Indenture
        as amended  hereby,  are hereby  amended so that any  reference in such
        agreements to the Indenture  shall mean a reference to the Indenture as
        amended hereby.

        (c)        Counterparts.  This Amendment may be executed in two or more
                   ------------
        counterparts, each or which will be deemed to be an original but all of
        which together will constitute one and the same instrument.

        (d)        Governing  Law.  This  Amendment  shall be  governed  by and
                   --------------
        construed in accordance with the laws of the State of New York, without
        regard to the  application of choice of law  principles,  except to the
        extent that such laws are superseded by federal law.

        (e)        Binding Agreement.  This Amendment shall be binding upon an
                   -----------------
        inure  to the  benefit  of the  Issuer,  the  Servicer,  the  Indenture
        Trustee, the Noteholders and their respective successors and assigns.

        (f)        Notice to Rating Agency.  Promptly after the Effective Date,
                   -----------------------
        the  Servicer  shall mail an  executed  copy of this  Amendment  to the
        Rating Agency.

                            [Signature Page Follows]

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<PAGE>


         IN WITNESS WHEREOF,  this Amendment No. 2 to Indenture has been signed
and delivered by the parties as of the date first above written.

                             DIGNITY PARTNERS FUNDING CORP. I

                             /s/ John Ward Rotter
                             --------------------
                             Secretary


                            Point West Capital Corporation.

                             /s/ John Ward Rotter
                             --------------------
                             Secretary

                             BANKERS TRUST COMPANY,
                             as Indenture Trustee

                             /s/Melissa Kaye Adelson
                             ------------------------                
                             Assistant Vice President


 Consented and Agreed to as of the date first above written:

                             HELLER FINANCIAL

                             /s/ Hugh Wilder
                             ---------------------------
                             Senior Vice Presdient


                             THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
                             By:Lincoln Investment Management,Inc.
                             Its Attorney-In-Fact,having changed its name from  
                             Lincoln National Investment Management Company
                                                      
                             /s/Tim Powell
                             ----------------------------
                             Second Vice President


                             FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
                             By:    Lincoln Investment Management, Inc.
                             Its Attorney-In-Fact,having changed its name from  
                             Lincoln National Investment Management Company
 

                              /s/Tim Powell
                             ----------------------------
                             Second Vice President