<PAGE>

                                                                   EXHIBIT 10.47

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT is effective this 1st day of July, 2004, by and
between CERES GROUP, INC., a Delaware corporation, referred to in this Agreement
as "Employer," and ERNEST T. GIAMBRA, JR., referred to in this Agreement as
"Employee."

                                    RECITALS:

      Employer is engaged in the insurance business and maintains its corporate
office in the City of Strongsville, Ohio; and

      Employer wished to employ Employee, and Employee wishes to be employed by
Employer on the terms, covenants and conditions set forth in this Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:

      Employer hereby employs Employee and Employee hereby accepts such
employment upon the terms, covenants and conditions hereinafter set forth.

      1.    SERVICES. Employer shall employ Employee as Executive Vice President
            and Chief Marketing Officer, solely subject to the supervision and
            pursuant to the assignments, advices and directions of Employer.
            Employee's duties and responsibilities shall include duties and
            responsibilities as are customarily performed by one holding such a
            position for Employer and/or other similar businesses or
            enterprises.

            Employee shall devote all Employee's time, attention, knowledge, and
            skill solely and exclusively to the business and interest of
            Employer, and Employer shall be entitled to all of the benefits,
            emoluments, profits or other issues arising from or incident to any
            and all work, services and advice of Employee, and Employee
            expressly agrees that during the term of this Agreement, Employee
            will not be interested, directly or indirectly, in any form, fashion
            or manner, as partner, officer, director, 5% or more stockholder,
            advisor, employee or in any other form or capacity, in any other
            business similar to Employer's business or any allied trade.

            Employee represents and warrants to Employer that his employment
            hereunder and compliance with the terms and conditions of this
            Agreement will not conflict with or result in the breach of any
            agreement or obligation to which he is a party or may be bound.

      2.    TERM AND TERMINATION. The duration of employment pursuant to this
            Agreement shall be for a period of two (2) years, commencing on July
            1, 2004 through June 30, 2006; provided, however, that this
            Agreement shall automatically renew for succeeding one (1) year
            terms, unless the Employer provides Employee with at least sixty
            (60) days' advance written notice that this Agreement and Employee's
            employment shall terminate as of the close of business on June 30 of
            the then-current original or renewal termination date (as the case
            may be).

<PAGE>

            Termination without cause. Regardless of any provisions of this
            Agreement to the contrary, or which could be construed to the
            contrary, in the event that (a) Employer chooses to terminate this
            Agreement upon sixty (60) days' advance written notice prior to the
            end of the initial term or then-current renewal term, (b) Employee's
            annual salary is reduced, or (c) Employee shall leave the employment
            of Employer at any time other than as a voluntary quit or for
            "cause" (as defined below) or Employee's employment is terminated in
            connection with a "change of control" (as defined below), this
            Agreement shall terminate and Employee shall be entitled to
            severance pay equal to twelve (12) months of Employee's then-current
            annual salary (less normal administrative deductions), payable in
            twelve (12) equal monthly installments. Such payments shall be in
            lieu of any other payments from Employer, including, without
            limitation, severance or termination payments contained herein or
            otherwise and Employer shall have no further liability or obligation
            to Employee for compensation or benefits.

            "Change of Control." In the event that Employee's employment is
            terminated in connection with a "change of control" of Employer,
            Employee shall be entitled to receive cash compensation equal to
            eighteen (18) months of Employee's then-current annual salary (less
            normal administrative deductions), payable in lump sum within thirty
            (30) days of such "change of control." Such payment shall be in lieu
            of any other payments from Employer, including, without limitation,
            severance or termination payments contained herein or otherwise and
            Employer shall have no further liability or obligation to Employee
            for compensation or benefits.

            "Change of control" shall mean the occurrence of any of the
            following events:

                  (i)   a tender offer shall be made and consummated for the
                        ownership of 50.1% or more of the outstanding voting
                        securities of Employer;

                  (ii)  Employer shall be merged or consolidated with another
                        corporation and, as a result of such merger or
                        consolidation, less than 50.1% of the outstanding voting
                        securities of the surviving or continuing corporation
                        shall be owned in the aggregate by the former
                        stockholders of Employer as the same shall have existed
                        immediately prior to such merger or consolidation; or

                  (iii) Employer shall sell substantially all of its operating
                        assets to another corporation which is not a
                        wholly-owned subsidiary;

                  (iv)  a person, within the meaning of Section 3(a)(9) or of
                        Section 13(d)(3) (as in effect on the date hereof) of
                        the Exchange Act shall acquire, other than by reason of
                        inheritance, (50.1%) or more of the outstanding voting
                        securities of Employer (whether directly, indirectly,
                        beneficially or of record).

                  In determining whether a Change of Control has occurred,
                  gratuitous transfers made by a person to an affiliate of such
                  person (as determined by the Board of Directors of Employer),
                  whether by gift, devise or otherwise,

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<PAGE>

                  shall not be taken into account. For purposes of this
                  Agreement, ownership of voting securities shall take into
                  account and shall include ownership as determined by applying
                  the provisions of Rule 13d-3(d)(1)(i) as in effect on the date
                  hereof pursuant to the Exchange Act."

            Termination for "cause." Notwithstanding any other provisions of
            this Agreement to the contrary, Employee's employment and this
            Agreement may be terminated by the Employer at any time without
            further compensation or severance pay or fringe benefits for
            "cause."

            For purposes of this paragraph, "cause" shall mean if Employee (a)
            has refused, failed or neglected to perform duties or render
            services hereunder or has performed or rendered them incompetently;
            (b) has been dishonest or committed a fraud or breach of trust or
            engaged in illegal or wrongful conduct substantially detrimental to
            the business or reputation of Employer; (c) has developed or pursued
            interests substantially adverse to Employer; (d) has been charged
            with, indicted for, or convicted of, a crime that constitutes a
            felony; or (e) has otherwise materially breached this Agreement.

            If, in the opinion of the Board of Employer, Employee's employment
            shall become subject to termination for "cause," the Board shall
            give Employee written notice to that effect which notice shall
            describe the matter or matters constituting such "cause." In the
            case of clauses (b) and (d) above, such notice shall constitute
            notice of termination of Employee's employment and Employee's
            employment will terminate immediately. In the case of clauses (a),
            (c) and (e) above, if, within 15 days of receipt of such notice,
            Employee has not substantially eliminated, resolved or cured each
            such matter or matters to the satisfaction of the Board in its sole
            discretion, then Employer shall have the right to give Employee
            notice that Employee's employment will terminate immediately.

            Voluntary Quit. Notwithstanding any other provision of this
            Agreement, Employee shall have the right to voluntarily quit
            Employee's employment and terminate this Agreement by giving sixty
            (60) days' advance written notice to Employer at the address
            provided herein. Notwithstanding any other provision of this
            Agreement, if Employee shall so voluntarily quit and terminate this
            Agreement, Employer shall have no further obligations pursuant to
            the terms of this Agreement, except to pay to Employee accrued
            salary to the date of termination.

            In the event Employee voluntarily terminates his employment with
            Employer during the first twelve (12) months of employment, Employee
            shall reimburse Employer, on a pro rata basis, all relocation
            benefits previously paid to him. Employee will also reimburse
            Employer, on a pro rata basis, the amount of Employee's Signing
            Bonus, as defined in Section 3.

      3.    COMPENSATION.

            Base Compensation. During this Agreement, Employer shall pay
            Employee (according to Employer's normal payroll procedures) and
            Employee agrees to

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            accept from Employer, in full payment for services under this
            Agreement, a salary set by the Board of Directors and Employee shall
            receive annual reviews and merit increases. Employee's initial
            salary shall be $300,000 per annum.

            Signing Bonus. Upon execution of this Agreement, Employer shall pay
            Employee a one-time signing bonus of $50,000.00 (the "Signing
            Bonus").

            Bonuses. Employee shall also participate in Employer's bonus plan
            for officers or such other incentive compensation or plans as may be
            established by the Board of Directors of Employer (the "Officer
            Bonus Plan"). Employee's bonus shall be payable as soon as it
            reasonably can be determined. Notwithstanding the foregoing,
            Employee shall be entitled to defer the receipt of his salary and/or
            bonus pursuant to procedures adopted or plans maintained by
            Employer.

            Expenses. Employer agrees that it will reimburse Employee for any
            and all necessary, customary and usual business expenses incurred by
            Employee, subject to Employer's then-current policies regarding such
            expenses.

            Benefits. In addition to the above salary and reimbursement,
            Employee shall be provided all fringe benefits on the same basis
            that Employer normally provides to a regular full-time employee
            holding Employee's position with Employer, including, but not
            limited to, health/dental insurance, life insurance, holidays, paid
            time off ("PTO") (etc.). Employee will be entitled to four (4) weeks
            of PTO per year.

            Options. Upon approval by the Compensation Committee, Employer shall
            grant to Employee a nonqualified option to purchase one hundred
            thousand (100,000) shares of Employer's common stock pursuant to
            Employer's 1998 Key Employee Share Incentive Plan ("Share Option").
            The Share Option shall have an exercise price equal to the closing
            price on the first day of employment. All of the shares underlying
            the Share Option shall vest on the third anniversary of the
            effective date of this Agreement if Employee is still employed by
            Employer on such date; provided, however, the shares shall also vest
            in full upon a "change of control" of Employer as that term is
            defined in Section 2 above. The Share Option shall expire ten (10)
            years from the date of this Agreement. The Share Option shall be on
            the terms and conditions contained in a Nonqualified Stock Option
            Agreement in the form attached hereto as Annex A.

      4.    COVENANTS.

            Non-Disclosure. During Employee's employment by Employer, Employee
            will enjoy access to Employer's "confidential information" and
            "trade secrets." For the purposes of this Agreement, "confidential
            information" shall mean information which is not publicly available
            including, without limitation, information concerning customers,
            material sources, suppliers, financial projections, marketing plans
            and operation methods, Employee's access to which derives solely
            from Employee's employment with Employer. For purposes of this
            Agreement, "trade secrets" shall mean Employer's processes,
            methodologies and techniques known only to those employees of
            Employer who need to know such

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            secrets in order to perform their duties on behalf of Employer.
            Employer takes numerous steps, including these provisions, to
            protect the confidentiality of its confidential information and
            trade secrets, which it considers unique, valuable and special
            assets.

            Employee, recognizing Employer's significant investment of time,
            effort and money in developing and preserving its confidential
            information and trade secrets, shall not, during his employment
            hereunder and for a period of three (3) years after the end of
            Employee's employment hereunder, use for his direct or indirect
            personal benefit any of Employer's confidential information or trade
            secrets. During the term of this Agreement and for a period of three
            (3) years after the end of Employee's employment hereunder, Employee
            shall not disclose to any person any of Employer's confidential
            information or trade secrets.

            Non-Competition. During Employee's employment hereunder and, in the
            event of a change of control or termination of Employee's employment
            for any reason other than for "cause" (under Section 2) or a
            voluntary quit, for a period of one (1) year, Employee shall not
            engage, directly or indirectly, whether as an owner, partner,
            employee, officer, director, agent, consultant or otherwise, in any
            location where Employer or any of its subsidiaries is engaged in
            business after the date hereof and prior to the termination of
            Employee's employment, in a business the same or similar to, any
            business now, or at any time after the date hereof and prior to
            Employee's termination, conducted by Employer or any of its
            subsidiaries, provided, however, that the mere ownership of 5% or
            less of the stock of a company whose shares are traded on a national
            securities exchange or are quoted on the National Association of
            Securities Dealers Automated Quotation System shall not be deemed
            ownership which is prohibited hereunder.

            Non-Solicitation. Employee agrees that regardless of any termination
            of this Agreement, during or at the end of this Agreement or any
            renewal thereof, Employee will not, for a period of one (1) year
            thereafter, (i) hire, retain or recruit any of Employer's insurance
            agents for the purpose of performing services for Employee or
            another insurance company, or (ii) contact or solicit, directly or
            indirectly, any person, firm or entity connected with Employer,
            including its customers or clients, for the purpose of diverting
            work or business from the Employer.

            No termination of this Agreement shall terminate the rights and
            obligations of the parties under this Section, but such rights and
            obligations shall serve such termination in accordance with the
            terms of this Section.

      5.    NON-DISPARAGEMENT. Following the termination of this Agreement for
            any reason, Employee hereby agrees and acknowledges that Employee
            will continue to have a duty of loyalty to Employer, and to the
            officers, directors, shareholders and employees of Employer, and in
            recognition of that duty of loyalty, Employee agrees that Employee
            shall not indulge in any conduct which may reflect adversely upon,
            nor make any statements disparaging of, Employer, or the officers,
            directors, shareholders or employees of Employer.

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<PAGE>

      6.    REMEDIES. Employee agrees that the remedy at law for any violation
            or threatened violation by Employee of Sections 4 and 5 will be
            inadequate and that, accordingly, Employer shall be entitled to
            injunctive relief in the event of a violation or threatened
            violation without being required to post bond or other surety. The
            foregoing remedies shall be in addition to, and not in limitation
            of, any other rights or remedies to which Employer is or may be
            entitled at law, or in equity, or under this Agreement.

      7.    DEATH. Notwithstanding any other provisions of this Agreement, this
            Agreement shall be deemed automatically terminated upon death of the
            Employee. In such event, Employer shall pay to Employee's personal
            representative or executor any compensation accrued but unpaid as of
            such date. Upon the payment of such accrued compensation, Employer
            shall have no further obligations under this Agreement, including,
            but not limited to, an obligation to pay a salary, severance or
            termination pay or any other form of compensation, or to provide any
            further fringe benefits of any kind or nature.

      8.    ENTIRE AGREEMENT. This written Agreement contains the sole and
            entire agreement between the parties and shall supersede any and all
            other agreements, whether oral or written, between the parties. The
            parties acknowledge and agree that neither of them has made any
            representation with respect to the subject matter of this Agreement
            or any representations inducing its execution and delivery, except
            such representations as are specifically set forth in this writing,
            and the parties acknowledge that they have relied on their own
            judgment in entering into the same. The parties further acknowledge
            that any statements or representations that may have been made by
            either of them to the other are void and of no effect and that
            neither of them has relied on such statements or representations in
            connection with its dealings with the other.

      9.    CONFIDENTIALITY. The terms of this Agreement are to be confidential,
            and Employee shall disclose its terms only to Employee's attorney,
            tax advisor and/or spouse, if any, subject to disclosure that may be
            necessary to comply with applicable law or in the event of a dispute
            leading to mediation and/or arbitration.

      10.   WAIVER/MODIFICATION. It is agreed that no waiver or modification of
            this Agreement or of any covenant, condition or limitation contained
            in it shall be valid unless it is in writing and duly executed by
            the party to be charged with it, and that no evidence of any waiver
            or modification shall be offered or received in evidence in any
            proceeding, arbitration or litigation between the parties arising
            out of or affecting this Agreement, or the rights or obligations of
            any party under it, unless such waiver or modification is in
            writing, duly executed as above. The parties agree that the
            provisions of this paragraph may not be waived, except by a duly
            executed writing.

      11.   ARBITRATION. If a dispute of any kind arises from or relates in any
            manner to this Agreement or the breach thereof, and if such dispute
            cannot be settled through direct discussions, the parties agree to
            endeavor to first settle the dispute in an amicable manner by
            mediation administered by and through the American

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            Arbitration Association in accordance with its Commercial Mediation
            Rules before resorting to arbitration. Thereafter, any unresolved
            controversy or claim arising from or relating to this Agreement or
            breach thereof shall be settled by arbitration administered by and
            through the American Arbitration Association in accordance with its
            Commercial Arbitration Rules, provided however that only one
            arbitrator shall be appointed, which arbitrator shall be an attorney
            licensed in the State of Ohio or an active or retired judge, having
            experience in employment contracts, and judgment on the award
            rendered by the arbitrator may be entered in any court having
            jurisdiction thereof.

      12.   GOVERNING LAW. The parties agree that it is their intention and
            covenant that this Agreement be construed in accordance with and
            under and pursuant to the laws of the State of Ohio.

      13.   SUCCESSORS AND ASSIGNS. Employee may not assign any rights or
            obligations under this Agreement without the prior written consent
            of Employer. This Agreement shall be binding upon and inure to the
            benefit of Employee and his lawful heirs, guardians, executors,
            administrators, and permitted successors and assigns.

            Employer may not assign any rights or obligations under this
            Agreement without the prior written consent of Employee except to
            the surviving corporation in connection with a merger or
            consolidation involving Employer or to the purchaser of assets in
            connection with a sale of all or substantially all of its assets, so
            long as the assignee expressly assumes Employer's rights or
            obligations. This Agreement shall be binding upon and inure to the
            benefit of Employer and its permitted successors and assigns.

            This Agreement does not create, and shall not be construed as
            creating, any rights enforceable by any person not a party to this
            Agreement, except as provided in this Section 13.

      14.   RETURN OF PROPERTY. Upon termination of this Agreement for any
            reason, Employee shall immediately return any property of Employer,
            including, but not limited to, any equipment, credit cards,
            advertising materials, booklets, training guides or any other such
            similar information, materials or documents that Employee has in
            Employee's possession or control.

      15.   COUNTERPARTS. This Agreement may be executed in one or more
            counterparts, each of which shall be deemed to constitute an
            original but all of which together will constitute one and the same
            instrument.

      16.   SEVERABILITY. If any clause, paragraph, or section of this Agreement
            be held invalid or unenforceable, the remaining provisions of this
            Agreement shall not be affected thereby and shall be valid and
            remain enforceable to the extent permitted by law. Moreover, if any
            one or more of the provisions in this Agreement shall for any reason
            by held to be excessively broad as to duration, geographical scope,
            activity, or subject, it shall be construed by limiting and reducing
            it, so as to be enforceable to the extent compatible with then
            applicable law.

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      17.   NOTICES: All notices required to be provided under the terms of this
            Agreement shall be sent by United States mail, certified, return
            receipt requested, and to the following addresses:

            TO EMPLOYER:
            Ceres Group, Inc.
            17800 Royalton Road
            Strongsville, Ohio 44136

            TO EMPLOYEE:
            Ernest T. Giambra, Jr.
            23530 Wisteria Pointe Drive, #402
            Bonita Springs, FL  34135

      ACKNOWLEDGMENT BY EMPLOYEE: BY SIGNING THIS AGREEMENT, I AFFIRM THAT I
      HAVE CAREFULLY READ AND CONSIDERED ALL OF THE TERMS AND CONDITIONS OF THIS
      AGREEMENT AND THAT SUCH TERMS AND CONDITIONS ARE UNDERSTOOD, ACCEPTED AND
      AGREED.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

EMPLOYER:                                   EMPLOYEE:
CERES GROUP, INC.                           ERNEST T. GIAMBRA, JR.

By: /s/ Thomas J. Kilian                    By: /s/ Ernest T. Giambra, Jr.
    -------------------------------             -------------------------------
Printed Name: Thomas J. Kilian              Printed Name: Ernest T. Giambra, Jr.
              ---------------------                       ---------------------
Its: CEO & President
     ------------------------------
                                        8
<PAGE>

                                     ANNEX A

                      NON-QUALIFIED STOCK OPTION AGREEMENT

                           UNDER THE CERES GROUP, INC.

                     1998 KEY EMPLOYEE SHARE INCENTIVE PLAN

            This Non-Qualified Stock Option Agreement ("Agreement") is made on
July 1, 2004, by and between Ceres Group, Inc., a Delaware corporation ("Ceres"
or the "Company"), and Ernest T. Giambra, Jr. ("Optionee").

            Ceres and Optionee agree that the option granted by this Agreement
does not qualify as an "incentive stock option" ("ISO") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Ceres
makes this grant of an option pursuant to the Ceres Group, Inc., 1998 Key
Employee Share Incentive Plan ("Plan"). The option granted by this Agreement
shall be subject to all the provisions of the Plan, which are incorporated
herein by reference, and shall be subject to the following provisions of this
Agreement:

            1.    NUMBER OF COMMON SHARES AND OPTION PRICE. Ceres hereby grants
Optionee an option ("Option") to purchase 100,000 shares of the Company's $0.001
par value common stock ("Common Shares") for a purchase price ("Option Price")
of $6.14 per Common Share.

            2.    GENERAL TERMS, PERIOD, VESTING AND EXERCISABILITY.

            (a)   The term of the Option and the term of this Agreement shall
commence on the date hereof ("Date of Grant") and shall terminate upon the
expiration of ten (10) years from the Date of Grant ("Maximum Term") if not
terminated or extinguished earlier by operation of this Agreement or the terms
of the Plan. Upon termination of the Optionee's employment (regardless of
reason) with Ceres or one of its subsidiary corporations, as the case may be,
all Options evidenced by this Agreement that remain outstanding but are not then
vested and exercisable shall terminate and expire. Upon termination of the
Optionee's employment with Ceres or a subsidiary company other than by death or
permanent and total disability and more than three (3) months prior to the end
of the Maximum Term, those Options evidenced by this Agreement that are vested
and exercisable shall terminate and expire three (3) months following the date
such employment terminates. Upon termination of the Optionee's employment with
Ceres or a subsidiary company, by death or permanent and total disability and
more than one (1) year prior to the end of the Maximum Term, those Options
evidenced by this Agreement that are vested and exercisable shall terminate and
expire one (1) year following the date of such death or permanent and total
disability (as determined by the Compensation Committee of the Board of
Directors of Ceres). Options that terminate, expire or lapse on a given date
shall do so on such date at 5:00 p.m., Cleveland, Ohio time.

            (b)   The Option shall vest and first become exercisable on July 1,
2007 and shall terminate on July 11, 2014.

            (c)   Notwithstanding any contrary provisions of this Agreement and
subject only to the terms of the Plan, the Compensation Committee of the Board
of Directors of Ceres

                                        1
<PAGE>

("Committee") in its sole discretion may cancel and extinguish this Agreement,
incident to or as a result of any reorganization, merger, consolidation,
recapitalization, dissolution or similar restructuring or corporate event
involving Ceres, by paying to the Optionee (or other party then in rightful
possession of the Option) the value of said Option (to the extent then vested
and exercisable), determined as of the date of such restructuring or corporate
event and based on the excess, if any, of the fair market value of Common Shares
over the Option Price.

            3.    METHOD OF EXERCISE: The Option shall be exercisable from time
to time by written notice (in substantially the form attached hereto as Exhibit
A) to the Company that shall:

      (a)   state that the Option is thereby being exercised, the number of
            Common Shares with respect to which the Option is being exercised,
            each person in whose name any certificates for the Common Shares
            should be registered and his or her address and social security
            number;

      (b)   be signed by the person or persons entitled to exercise the Option
            and, if the Option is being exercised by anyone other than the
            Optionee, be accompanied by proof satisfactory to counsel for Ceres
            of the right of such person or persons to exercise the Option under
            the Plan and all applicable laws and regulations; and

      (c)   be accompanied by such representations, warranties or agreements
            with respect to the investment intent of such person or persons
            exercising the Option as Ceres may reasonably request in form and
            substance satisfactory to counsel for Ceres.

            4.    PAYMENT OF OPTION PRICE. Upon exercise of the Option, Ceres
shall deliver a certificate or certificates for such Common Shares to the
specified person or persons at the specified time upon receipt of the full
purchase price for such Common Shares by any method of payment authorized by the
Plan.

            5.    TRANSFERABILITY. The Option shall not be transferable or
assignable by the Optionee except as expressly provided by the Plan. The Option
shall be exercisable (subject to any other applicable restrictions on exercise)
only by the Optionee for his or her own account, except that (a) in the event of
the death of the Optionee, the Option shall be exercisable (subject to any other
applicable restrictions on exercise) only by the Optionee's estate (acting
through its fiduciary) or by the Optionee's duly authorized legal
representative; (b) in the event of the permanent and total disability of the
Optionee, the Option shall be exercisable by the Optionee's authorized
representative (unless the Optionee has legal capacity); and (c) in the event of
a divorce or other marriage dissolution resulting in a change in ownership of
some or all of the Options covered by this Agreement, the Option shall be
exercisable only by the ex-spouse of the Optionee within the three (3) month
period ending on the date of such change in ownership.

            6.    RESTRICTIONS ON EXERCISE. The Option is subject to all
restrictions in this Agreement or in the Plan. As a condition of any exercise of
the Option, Ceres may require the Optionee or his successor to make any
representation and warranty to comply with any applicable law or regulation or
to confirm any factual matters reasonably requested by counsel for Ceres.

                                        2
<PAGE>

            7.    TAXES. The Optionee hereby agrees to pay to Ceres, in
accordance with the terms of the Plan, any federal, state or local taxes of any
kind required by law to be withheld with respect to the Option granted
hereunder. If the Optionee does not make such payment, Ceres shall have the
right to deduct from any payment of any kind otherwise due to the Optionee from
Ceres, any federal, state or local taxes of any kind required by law to be
withheld with respect to the Option or the Common Shares to be purchased by the
Optionee under this Agreement.

            8.    NO CONTRACT OF EMPLOYMENT. Neither the Plan nor this
Agreement, nor any other action taken by Ceres or any committee or
representative thereof, shall constitute or otherwise evidence a contract of
employment, regardless whether express or implied, between the Optionee and
Ceres.

            9.    DEFINITIONS. Unless otherwise defined in this Agreement,
capitalized terms will have the same meanings given them in the Plan.

            10.   AMENDMENT AND CONTROLLING LAW. This Agreement may be amended
or modified at any time, but only by a written instrument signed by the parties
hereto (or their successors and assigns). This Agreement is to be governed and
construed according to the laws of the state of incorporation of Ceres, without
regard to its conflicts of law principles or statutes.

                                        CERES GROUP, INC.

DATE OF GRANT:  JULY 1, 2004 By  /s/ Kathleen L. Mesel
                                 ------------------------------------
                                      Kathleen L. Mesel
                                      Secretary

________________________(Return signed page 3 only)______________________

                             ACCEPTANCE OF AGREEMENT

            The Optionee hereby: (a) acknowledges receiving a copy of the Plan,
which is attached to this Non-Qualified Stock Option Agreement, and represents
that he/she is familiar with all provisions of the Plan; (b) accepts this
Non-Qualified Stock Option Agreement and the Option granted under this Agreement
subject to all provisions of the Plan and this Agreement; and (c) agrees to
accept as binding, conclusive and final all decisions or interpretations of
Ceres.

Date:                                         /s/ Ernest T. Giambra, Jr.
       ------------------                     --------------------------------
                                                       Signature

                                                  Ernest T. Giambra, Jr.
                                              --------------------------------
                                                       Printed Name
                                                       Optionee

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<PAGE>

                                    EXHIBIT A

                     Exercise of Non-Qualified Stock Option

TO:
Secretary
Ceres Group, Inc.
17800 Royalton Road
Strongsville, Ohio  44136

Dear Secretary:

            The undersigned Optionee hereby exercises the Non-qualified Stock
Option to him/her pursuant to the Non-Qualified Stock Option Agreement
dated July 1, 2004, between Ceres Group, Inc. and the Optionee with respect to
________________ Common Shares covered by said Option, and tenders herewith
$__________________________ in payment of the purchase price thereof by delivery
of _______________________________________________________.

            The name and registered address on such certificate should be:

                  _______________________________
                  _______________________________
                  _______________________________

            The Optionee's social security number is: ______-_____-______.

Dated:  __________                                      ________________________
                                                             Optionee

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