COINSURANCE AGREEMENT

                                  between

                 UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

                                    and

                FIRST INTERNATIONAL LIFE INSURANCE COMPANY

<PAGE>

                            TABLE OF CONTENTS
                                                                    Page
     
         ARTICLE I - DEFINITIONS                                      2
         ARTICLE II - COVERAGE                                        5
         ARTICLE III - GENERAL PROVISIONS                             5
         ARTICLE IV - REINSURANCE AND POLICY PREMIUMS                 9
         ARTICLE V - EXPENSE ALLOWANCE                               11
         ARTICLE VI - DEATH BENEFITS AND OTHER PAYMENTS              11
         ARTICLE VII - DIVIDENDS                                     12
         ARTICLE VIII - ACCOUNTING                                   12
         ARTICLE IX - DURATION AND TERRITORY                         13
         ARTICLE X - INSOLVENCY                                      14
         ARTICLE XI - ARBITRATION                                    14
         ARTICLE XII - REINSURING CLAUSE AND CONTRACTUAL
                       CONDITIONS                                     16
         ARTICLE XIII -EXECUTORY CONTRACT AND INSOLVENCY-SETOFF.      17
         ARTICLE XIV - REPRESENTATIONS AND WARRANTIES                 18
         ARTICLE XV - CONDITIONS PRECEDENT                            19
         ARTICLE XVI - ASSUMPTION REINSURANCE                         20
         ARTICLE XVII - INDEMNIFICATION                               21
         ARTICLE XVIII - ESTABLISHMENT OF AN ASSET TRUST              21
         ARTICLE XIX - MISCELLANEOUS PROVISIONS                       22
              SCHEDULE A - ADMINISTRATIVE SERVICE
                             AND STANDARDS                           A-1
              SCHEDULE B - EXPENSE ALLOWANCE                         B-1
              SCHEDULE C - INITIAL REINSURANCE REPORT                C-1
              SCHEDULE D - PART I - MONTHLY PERIOD REINSURANCE
                             REPORTS                                 D-1
              SCHEDULE D - PART II - QUARTERLY POLICY EXHIBIT        D-2
              SCHEDULE D - PART III - ANNUAL REPORTS                 D-3
              SCHEDULE E - RECAPTURE PROVISIONS                      E-1
              SCHEDULE F - DAC TAX ELECTION                          F-1
                 
              EXHIBIT 1 -  ASSUMPTION REINSURANCE AGREEMENT         [   ]

<PAGE>
                           COINSURANCE AGREEMENT

                 This Coinsurance Agreement (the "Agreement") is made and
     entered into as of the 30th day of September, 1996 between UNIVERSAL
     GUARANTY LIFE INSURANCE COMPANY, a life insurance company (the
     "Company"), and FIRST INTERNATIONAL LIFE INSURANCE COMPANY, a
           life insurance company (the "Reinsurer").

                 WHEREAS, the Company has agreed to cede to the Reinsurer,
     and the Reinsurer has agreed to accept on a coinsurance basis, 100% of
     the Reserves and Liabilities (as hereinafter defined) arising under or
     with respect to the Reinsured Policies (as hereinafter defined) issued
     by the Company on or before the Effective Date (as hereinafter
     defined); and

                WHEREAS, the Reinsurer, is simultaneously entering into an
     Assumption Reinsurance Agreement (the "Assumption Reinsurance
     Agreement") with the Company, pursuant to which, contingent upon
     certain events specified in Article XVI below, the Reinsurer may elect
     to assumption reinsure the Reinsured Policies, with a concurrent
     novation and complete release of the Company from any liability under
     such Reinsured Policies, on a state by state basis upon the receipt of
     any and all applicable regulatory approvals and notice to relevant
     Policyholders followed by expiration of the applicable period with no
     opt out by such Policyholders or the obtaining of required consents
     from such Policyholders, as the case may be; and

               WHEREAS, should the Reinsurer elect to assumption reinsure
     the Reinsured Policies pursuant to the Assumption Reinsurance
     Agreement, certain of the Company's Policyholders may opt out of or not
     consent to the assumption of their policies by the Reinsurer, in which
     event the Company will remain primarily obligated to such Policyholders
     under the Non-Assumed Policies (as hereinafter defined); and
     WHEREAS, the Reinsurer acknowledges and agrees that it
     shall be bound to perform its obligations as Reinsurer to the Company
     as primary insurer under this Agreement with respect to the Non-Assumed
     Policies subsequent to the Effective Date of the Assumption Reinsurance
     Agreement;

               WHEREAS, the Reinsurer acknowledges and agrees that it shall
     be bound to perform its obligations as Reinsurer to the Company as
     primary insurer under this Agreement with respect to the Non-Assumed
     Policies Subsequent to the Effective Date of the Assumption 
     Reinsurance Agreement;

               NOW, THEREFORE, in consideration of the foregoing the
     Company and the Reinsurer mutually agree that they shall enter into
     this Agreement under the terms and conditions stated herein.

               This Coinsurance Agreement is between the Company and the
     Reinsurer, or their assignees or successors, and the performance of the
     obligations of each party under this Agreement shall be rendered solely
     to the other party or parties.  In no instance shall anyone other than
     the Company or the Reinsurer, or their assignees or successors, have
     any rights under this Agreement.  Until the Reinsurer has reinsured a
     Reinsured Policy on an assumption reinsurance basis pursuant to Article
     XVI below, the Reinsurer shall not be liable to any insured, contract
     owner, or beneficiary under any insurance policy or contract reinsured
     hereunder.

                                   ARTICLE I
                                              
                                  DEFINITIONS 

               As used in this Agreement, the following capitalized terms
     shall have the following meanings (definitions are applicable to both
     the singular and the plural forms of each term defined in this
     Article):

              "Accounting Period" means the calendar month, except that
     the first Accounting Period shall be the period commencing with the
     Effective Date and ending with the last day of the then current
     calendar month, and the final Accounting Period shall be the period
     commencing with the first day of the calendar month that includes the
     day on which the last Reinsured Policy terminates, and ending on such
     day.

              "Administration Cost" shall have the meaning set forth in
     Section 3.01.

              "Annual Report" means the report required to be prepared in
     accordance with Section 8.05 and providing the data as shown on
     Schedule D - Part III.

              "Benefits" shall have the meaning set forth in Section
     6.01.

              "Business Day" means any day other than a Saturday, Sunday
     or a day on which banking institutions in the States of New York, Ohio
     and Delaware are permitted or obligated by law to be closed.

              "Closing Date" shall be that date ten (10) Business Days
     following receipt of notice from the Company to the Reinsurer that all
     of the conditions in Article XV hereunder have been satisfied.

              "Effective Date" means the date specified in Section 2.01.

              "Expense Allowance" shall mean the ceding commission
     payable in connection with the acquisition of the Reinsured Policies
     and as described in Schedule B.

              "Extra Contractual Liabilities" means all liabilities,
     other than the express obligations set forth in the Reinsured Policies,
     including, without limitation, any liability for consequential,
     exemplary, punitive or similar damages, relating to the Reinsured
     Policies, which liability arises from any act, error or omission by the
     Company, its directors, officers, employees or agents prior to the
     Effective Date, whether intentional or otherwise, or from any bad faith
     prior to the Effective Date in connection with the handling of any
     claim or obligation under any of the Reinsured Policies or in
     connection with the issuance, delivery or cancellation of any of the
     Reinsured Policies.

              "Dividends" shall have the meaning set forth in Section
     7.01.

              "Gross Premiums" means the premiums collected on or after
     the Effective Date from Policyholders for the Reinsured Policies.

              "Initial Reinsurance Consideration" shall mean the
     difference between the Initial Reinsurance Premium and the Expense
     Allowance, as described in Schedule B.

              "Initial Reinsurance Premium" shall have the meaning set
     forth in Section 4.02.

              "Initial Reinsurance Report" shall have the meaning set
     forth in Section 8.02.

              "Insolvency Proceedings" shall have the meaning set forth
     in Section 13.05.
 
              "Monthly Report" means the report required to be prepared
     in accordance with Section 8.03 and providing the data as shown on
     Schedule D - Part I.

              "Monthly Settlement" means the net amount due and payable
     to either party with respect to any Accounting Period.
 
              "Non-Assumed Policies" means Reinsured Policies that shall
     not have been novated to the Reinsurer under the terms of the
     Assumption Reinsurance Agreement, and under which the Company retains
     primary liability.
 
              "Other Amounts" shall have the meaning set forth in Section
     4.02.

              "Policyholder" means the holder of any Reinsured Policy.

              "Policy Loan" shall have the meaning set forth in Section
     2.05.

              "Policy Loan Interest or Repayments" shall have the
     meaning set forth in Section 2.05.

              "Quarterly Report" means the report required to be prepared
     in accordance with Section 8.04 and providing the data as shown on
     Schedule D - Part II.

              "Reinsurance Agreement" means any reinsurance agreement
     between the Company as cedent and any third party reinsurer under which
     the Company's Reserves and Liabilities with respect to the Reinsured
     Policies or some portion thereof are transferred, whether or not such
     contract of reinsurance is also applicable to business other than the
     Reinsured Policies.

             "Reinsurance Premiums" shall have the meaning set forth in
     Section 4.02.

             "Reinsured Policies" means all paid-up insurance policies,
     contracts, binders or certificates of insurance, and all riders,
     endorsements and amendments thereto, whether written or oral, issued or
     assumed by the Company, that are in force on the Effective Date, except
     those offered in settlement to so called "HIV" policyholders and paid-up
     business associated with the Company's Jr./Sr. Plan Single Premium
     Interest Sensitive Whole Life policies, including, without limitation,
     policy loans.

             "Reserves and Liabilities" means the statutory reserves
     required to be held by the Company as of the Effective Date (subject to
     the provisions of Section 4.01 hereof)in support of the policy
     liabilities arising under the Reinsured Policies and payable after the
     Effective Date (determined by reference to lines 1, 5, 7 and 8 on page
     3 of the 1995 Annual Statement Blank) less Policy Loans.

             "Risk Based Capital" shall mean the National Association
     of Insurance Commissioners Risk Based Capital Model Act as codified in
     the Ohio Insurance Code at Sections 3903.81 to 3903.93.


                                  ARTICLE II
                                              
                                   COVERAGE 
              2.01.  Coverage.  As of September 30, 1996 (the
     "Effective Date"), upon the terms and conditions, including, but not
     limited to, the Company's satisfaction on or before the Closing Date of
     all the conditions contained in Article XV hereunder, and for the
     considerations hereinafter contained, the Company agrees to cede and
     transfer to the Reinsurer, and the Reinsurer agrees to accept and
     reinsure, 100% of the Reserves and Liabilities, which excludes all
     claim liabilities, arising under the Reinsured Policies.

             2.02.  Conditions.  The reinsurance hereunder is subject
     to the same limitations, terms and conditions as the Reinsured
     Policies, except as otherwise provided in this Agreement.

             2.03.  Exclusions.  This Agreement does not apply to and
     specifically excludes from coverage any Extra Contractual Liabilities.

             2.04.  Plan of Reinsurance.  This reinsurance shall be on
     the coinsurance basis.

             2.05.  Policy Loans.  The Reinsurer shall participate in
     any policy loan ("Policy Loan") effected by the Company with respect
     to a Reinsured Policy, and shall receive all policy loan repayments and
     interest ("Policy Loan Repayments and Interest") thereon.

             2.06.  Maintenance of Licenses.  The Company shall use its
     reasonable efforts to maintain its licenses and other approvals in all
     jurisdictions to the extent necessary for the Company to insure and
     cede the Reinsured Policies.


                                   ARTICLE III
                                              
                                GENERAL PROVISIONS 

             3.01.  Administration.  (a)  So long as this Agreement is
     in effect, the Company shall remain responsible for the administration
     of each and every Reinsured Policy reinsured hereunder.  The Company
     shall be compensated at the rate of $7.50 per Reinsured Policy per
     calendar year (the "Administration Cost"), payable at the rate of
     $0.625 per policy per month based upon the beginning of quarter in
     force.

            (b)  Should the Reinsurer exercise its rights under Article
     XVI to assumption reinsure the business reinsured hereunder, the
     Reinsurer shall then be responsible for the administration and shall no
     longer be obligated to pay the Administration Cost for such policies. 
     The Reinsurer reserves the right to appoint a subcontractor to perform
     part or all of the services set forth above as the agent of the
     Reinsurer.

            (c)  Notwithstanding 3.01(a), above, should service
     standards not meet those specified in Schedule A, the Reinsurer shall
     notify the Company as to which standards the Company has not satisfied. 
     The Company shall have thirty (30) days to meet standards specified in
     such notice.  Should any such standards not be met within the thirty
     (30) day cure period, the administration fee shall be reduced to $7.00
     per Reinsured Policy per year.  If standards are not met for any three
     (3) consecutive months in a calendar year or four (4) months in any
     rolling twelve (12) month ending period the Reinsurer shall have the
     right to take over administration.

            (d)  Notwithstanding any other provisions of this Section
     3.01, the Reinsurer reserves the right to purchase the administrative
     capabilities of the Company, for a price to be agreed upon by the
     parties hereto, if the Reinsurer determines that administration of the
     Reinsured Policies should be transferred from the Company.

            3.02.  Inspection.  The Reinsurer or its designated
     representative may inspect, at the offices of the Company where such
     records are located, the papers and any and all other books or
     documents of the Company reasonably relating to the Reinsured Policies,
     during normal business hours for such period as this Agreement is in
     effect or for as long thereafter as the Company seeks performance by
     the Reinsurer pursuant to the terms of this Agreement.  The information
     obtained shall be used only for purposes relating to reinsurance under
     this Agreement.  The Reinsurer's rights under this Section shall
     survive termination of this Agreement.

            3.03.  Misunderstandings and Oversights.  If any delay,
     omission, error or failure to pay amounts due or to perform any other
     act required by this Agreement is unintentional and caused by
     misunderstanding or oversight, the Company and the Reinsurer will
     adjust the situation to what it would have been had the misunderstanding
     or oversight not occurred.  The party first discovering such
     misunderstanding or oversight, or act resulting from the
     misunderstanding or oversight, will notify the other party in writing
     promptly upon discovery thereof, and the parties shall act to correct
     such misunderstanding or oversight within twenty (20) Business Days of
     receipt of such notice.  However, this Section shall not be construed
     as a waiver by either party of its right to enforce strictly the terms
     of this Agreement.

              3.04.  Age, Sex and Other Adjustments.  If the Company's
     liability under any of the Reinsured Policies is changed because of a
     misstatement of age or sex or any other material fact, the Reinsurer
     will share in the change proportionately to the amount reinsured
     hereunder.

              3.05.  Reinstatements.  If a Reinsured Policy that is or
     has been put on paid-up status is reinstated to a premium paying basis
     while this Agreement is in force, the reinsurance for such Reinsured
     Policy shall be recaptured under the terms specified in Schedule E
     attached.

              3.06.  Non-Compete.  The Company shall take no direct or
     indirect action to induce any policyholder of a Reinsured Policy to
     terminate, reinstate, lapse or exchange such policy.

              3.07.  Contract Changes or Reserve Assumption Changes. 
     The Company, on its own initiative, shall not change (i) the terms and
     conditions of any Reinsured Policies or (ii) the assumptions, including
     the statutory reserve accumulation rate assumption, used by the Company
     to establish the Reserves and Liabilities with respect to such
     Reinsured Policies.  The Reinsurer shall share proportionately in any
     change in contract or in Reserves and Liabilities required by any
     regulatory authority having jurisdiction over the Company in the
     ordinary course of exercising its powers or otherwise required by law
     and in any such changes made by the Company and consented to by the
     Reinsurer.

             3.08.  Compliance with Applicable Laws and Regulations.

                (a)  Intent of Parties.  It is the intention of the
     parties that this Agreement shall be interpreted in accordance with the
     laws as of the date of execution hereof by both parties and comply with
     all existing applicable state and federal laws and regulations, and as
     from time to time are or may be in effect, in such a way that the
     Reinsured Policies remain reinsured on the coinsurance plan.

                (b)  Procedures to Reflect Changes in Laws or
     Regulations.  In the event that it is determined by an insurance
     regulatory authority or the Internal Revenue Service or by either party
     upon the advice of an insurance regulatory authority or the Internal
     Revenue Service that this Agreement fails to conform to the
     requirements of existing applicable laws and regulations and that the
     Agreement may be brought into conformity with said requirements only by
     means of a material change to the Agreement, or in the event that such
     laws or regulations are changed subsequent to the Effective Date and
     such change has a material adverse affect on either party or requires a
     material change to the Agreement in order for the Agreement to conform
     with applicable laws and regulations, the parties shall exercise
     reasonable efforts to reach an agreement to amend the Agreement so as
     to return the parties to the economic position that they would have been
     in had no such change occurred or so that both parties share the
     economic position that they would have been in had no such change
     occurred or so that both parties share the economic detriment of such
     change equally.  If the parties are unable to reach an agreement to
     amend the Agreement, then the differences between the parties shall be
     resolved through arbitration in accordance with the provisions of
     Article XI.  In the event that any change required to conform the
     Agreement to the requirements of applicable law or regulation is not
     material, the Agreement shall be amended accordingly.  In no event,
     however, shall this provision prevent either party from exercising any
     right it otherwise has under this Agreement.  For purposes of this
     Section 3.08(b), the word "material" shall mean, when used with
     respect to (i) any change in law or regulation, or any change into the
     Agreement necessary to bring the Agreement into conformity with the
     requirements of any law or regulation; or (ii) any delay, omission,
     error or failure to pay amounts due or to perform any other act required
     under this Agreement; or (iii) any default, that the effect or effects
     of any of (i), (ii) or (iii) above (either individually or
     cumulatively) results in a deviation from a projected return  under
     this Agreement (absent the occurrence of (i), (ii) or (III) above,
     either individually or cumulatively) by at least five percent (5%),
     measured from the first day that the occurrence of (i), (ii) or (iii)
     above, or series thereof, taken into account on a cumulative basis,
     occurred or becomes effective.

              (c)  Notification of Disapproval or Change in Law. 
     The Company shall promptly notify the Reinsurer of any disapprovals,
     recommended changes or statements regarding the Agreement that are made
     by any insurance regulatory or tax authorities and of any change in
     law, regulation or rulings affecting the Agreement.  The Reinsurer
     shall be allowed to make its own defense of the Agreement with said
     authorities.

            3.09.  Payments.  All payments made pursuant to this
     Agreement (other than the Initial Reinsurance Premium described in
     Section 4.01 of this Agreement) shall be made in immediately available
     funds.

            3.10.  Investigations.  The Company shall notify the
     Reinsurer immediately, in writing, of any and all investigations of the
     Company or its principal officers or shareholders conducted by any
     federal, state or local governmental or regulatory agency.

            3.11.   Conduct of Business.  Between the Effective Date
     and the Closing Date, the Company shall continue the operations of its
     business with respect to the Reinsured Policies in accordance with
     prior practices and will not engage in any additional Reinsurance
     Agreements.

            3.12.   Duty of Cooperation.  Each party hereto shall
     cooperate fully with the other in all reasonable respects in order to
     accomplish the objectives of, and consummate the transactions
     contemplated under, this Agreement.  This duty to cooperate shall
     include, but not be limited to, making all necessary insurance
     regulatory filings and obtaining all insurance regulatory approvals
     required, making available any Reinsured Policy records which either
     party subsequently may require to resolve issues related to claims or
     Reserves and Liabilities.

            3.13.  Compliance.  The Company covenants to maintain the
     Reinsured Policies in compliance with all applicable requirements of
     law and on forms approved in all material respects by the appropriate
     governmental authorities except to the extent that such failure to be in
     compliance therewith does not have a material adverse effect.


                                    ARTICLE IV
                                              
                          REINSURANCE AND POLICY PREMIUMS 

            4.01.  Initial Reinsurance Consideration.  On the Closing
     Date, as consideration for the assumption by the Reinsurer of the
     Reserves and Liabilities under the Reinsured Policies, the Company
     shall transfer to the Reinsurer assets ("Assets") with an aggregate
     market value  equal to one hundred percent (100%) of Reserves and
     Liabilities as of the Effective Date, which excludes all claim
     liabilities, (the "Initial Reinsurance Premium"), less the Expense
     Allowance described in Article V below (such net amount being the
     "Initial Reinsurance Consideration" as described in Schedule C
     attached hereto).  The Assets being transferred shall be based upon
     valuations and estimates made three (3) Business Days prior to the
     Closing Date.  Both the Assets and the Initial Reinsurance Premium
     (shown on Schedule C) shall be subject to further and final adjustment
     as follows: (1) within 90 days after the Closing Date, the Reinsurer
     shall send a notice to the Company advising the Company of the final
     valuation of both the Assets (valued as of the Closing Date) and the
     Initial Reinsurance Premium (valued as of the Effective Date), (2)
     the Company shall then have five (5) Business Days from receipt of the
     aforementioned notice to make an adjustment to the Assets, including
     any additional transfers to the Reinsurer, in order to reflect the
     final valuation of the Assets and Initial Reinsurance Consideration
     pursuant to this Section 4.01.
 
            4.02. Reinsurance Premium.  As additional consideration
     for the assumption by the Reinsurer of the Reserves and Liabilities
     under the Reinsured Policies, the Reinsurer shall be entitled to
     collect and retain 100% of all Gross Premiums, Policy Loan Interest or
     Repayments and any other amounts ("Other Amounts") received from
     Policyholders or others on and after the Effective Date with respect to
     the Reinsured Policies less Dividends paid in cash, as described in
     Article VII, less reinsurance premiums payable under the Reinsurance
     Agreements, less Administration Costs, as described in Article III. 
     The Company will promptly remit to the Reinsurer all other amounts that
     may be remitted to it by Policyholders or others with respect to the
     Reinsured Policies.  Furthermore, with respect to any such
     remittances, the Company shall also promptly furnish the Reinsurer with
     all pertinent information that the Company receives on and after the
     Effective Date pertaining thereto (e.g., the nature of payment, source
     of funds, policy number or agreement (as appropriate) and period(s) to
     which it relates and any instructions accompanying same), in a form
     acceptable to the Reinsurer.

             4.03.  Credit for Recoverables from Ceded Reinsurance. 
     From the Effective Date, in any Monthly Settlements, the computation
     of Benefits paid on Reinsured Policies shall include a credit in favor
     of the Reinsurer in  the amount of reinsurance that is recoverable
     pursuant to the terms of any Reinsurance Agreement for any payments
     made to Policyholders pursuant to the terms of the Reinsured Policies. 
     The Company shall continue to pay any premiums or other charges for any
     such Reinsurance Agreements until termination of this Agreement, and
     the Company shall continue to collect reinsurance recoverables, if any,
     made pursuant to such Reinsurance Agreements. 

              4.04.  Reserves.  The Reinsurer shall establish and
     maintain appropriate reserves with respect to the Reinsured Policies.


                                    ARTICLE V
                                              
                                EXPENSE ALLOWANCE

              5.01.  Expense Allowance.  On the Closing Date, the
     Reinsurer shall pay the Company an expense allowance (the "Expense
     Allowance") in the amount as set forth in Schedule B.


                                    ARTICLE VI
                                              
                         DEATH BENEFITS AND OTHER PAYMENTS 

              6.01.  Death Benefits and Payments under Settlement
     Options.  The Reinsurer shall assume liability for, subject to Section
     2.03, all death benefits, all periodic or lump sum payments on
     settlement options or withdrawals from Dividends on deposit, and all
     surrender and endorsement payments to Policyholders with respect to
     Reinsured Policies (such death benefits and other payments are referred
     to collectively as "Benefits"), and shall indemnify the Company with
     respect to any such Benefits paid by the Company incurred after the
     Effective Date.

              6.02.  Claims.  The reinsurance claim and copies of
     notification, claim papers, and proofs will be furnished by the Company
     to the Reinsurer upon request.

              6.03.  Liability and Payment.  The Reinsurer shall be
     responsible for the handling of, and all costs and expenses relating
     to, the contest, compromise or litigation of claims under the Reinsured
     Policies which arise after the Effective Date. The Company will not
     contest, compromise, or litigate a claim with respect to a Reinsured
     Policy unless delegated to do so in writing by the Reinsurer. 
     Notwithstanding the foregoing, the Reinsurer shall have no liability
     for costs and expenses for any litigation arising out of or based on any
     bad faith claims practices, willful misconduct, fraud or gross
     negligence of the Company (without attributing to the Company the
     actions of the Reinsurer).


                                ARTICLE VII
                                              
                            DIVIDENDS AND COUPONS

             7.01.  Participation.  The Reinsurer shall participate in
     the dividend and coupon ("Dividends") scales in effect on the
     Effective Date of this Agreement.  Should the Company desire to change
     said scales, it shall do so only upon the consent of the Reinsurer,
     which shall not be unreasonably withheld.  The Reinsurer shall only
     reimburse those Dividends that are incurred after the Effective Date.

             7.02.  Options.  The Reinsurer shall participate in all
      Dividend options provided under Reinsured Policies.


                                ARTICLE VIII
                                              
                                 ACCOUNTING 

             8.01.  Amounts Due the Reinsurer or the Company.  Except
     as otherwise specifically provided herein, all amounts due the
     Reinsurer or the Company under this Agreement shall be determined on a
     net basis, giving full effect to Article XII hereof.  

             The Initial Reinsurance Premium, as described on the
     Initial Insurance Report described below, is due on the Closing Date. 
     If positive the Initial Reinsurance Premium shall be paid to the
     Reinsurer, and if negative it shall be paid to the Company.  The
     Initial Reinsurance Premium is subject to further and final adjustment
     pursuant to the procedures set forth in Section 4.01 hereunder.
     The Monthly Settlement shall be paid to the party to whom a
     balance is owed within seven (7) days of receipt of the Monthly Report
     described below.
 
              8.02.  Initial Reinsurance Report.  The Company shall
     deliver to the Reinsurer, on or before the Closing Date, a report (the
     "Initial Reinsurance Report") that shall provide the data required in
     Schedule C.

              8.03.  Monthly Reports.  Within seven (7) Business Days
     of the end of each Accounting Period the Company shall supply the
     Reinsurer with a report that shall provide the data required in
     Schedule D - Part I, attached hereto (the "Monthly Report").

              8.04.  Quarterly Reports.  Within ten (10) Business Days
     after the end of each calendar quarter the Company shall supply the
     Reinsurer with a report that shall provide the data required in
     Schedule D- Part II, attached hereto (the "Quarterly Report").

              8.05.  Annual Reports.  Within ten (10) Business Days
     after the end of each calendar year the Company shall supply the
     Reinsurer with a report that shall provide the data required in
     Schedule D - Part III, attached hereto (the "Annual Report").

              8.06.  Best Efforts to Supply Actual Data.  In preparing
     all Reports required in this Agreement, the Company shall make its best
     efforts to supply the actual data.  If the actual data cannot be
     supplied with the appropriate Report, the Company shall produce best
     estimates, and shall provide amended reports based on actual data no
     more than twenty (20) Business Days after such Report was originally
     due.

              8.07.  Survival of Article.  This Article shall survive
     termination of this Agreement.


                                 ARTICLE IX
                                              
                            DURATION AND TERRITORY

              9.01.  Duration.  Except as otherwise provided herein,
     this Agreement shall be unlimited in duration.
 
              9.02.  The Reinsurer's Liability.  The Reinsurer's
     liability hereunder with respect to any Reinsured Policy will terminate
     on the earlier of the date on which the Reinsured Policy is terminated
     by death, recapture, surrender, lapse or expiry.

              9.03.  New Business.  This Agreement shall not apply to
     any business of the Company entered into after the Effective Date or
     entering paid-up status after the Effective Date.
 
              9.04.  Novated Policies.  This Agreement shall cease to
     apply to any Reinsured Policy on the date that such Reissued Policy
     becomes assumed by the Reinsurer by novation pursuant to the Assumption
     Reinsurance Agreement.

              9.05.  Territory.  This Agreement shall apply to Reinsured
     Policies covering lives and risks wherever resident or situated.

              9.06.  Recapture.  Upon a Reinsured Policy reinstating to
     a premium paying basis, such Reinsured Policy shall be recaptured based
     upon the terms in Schedule E.


                                  ARTICLE X
                                              
                                  INSOLVENCY 

              10.01.  Payments by the Reinsurer.  The Reinsurer hereby
     agrees that, as to all reinsurance made, ceded or otherwise becoming
     effective hereunder, the reinsurance shall be payable by the Reinsurer
     on the basis of the liability of the Company under the Non-Assumed
     Policies, without diminution because of the insolvency, liquidation or
     rehabilitation of the Company or the appointment of a conservator,
     receiver, liquidator or statutory successor of the Company, directly to
     the Company or to its conservator, liquidator, receiver or other
     statutory successor.

              10.02.  Claims.  It is agreed that the conservator,
     receiver, liquidator or statutory successor of the Company shall give
     prompt written notice to the Reinsurer of the pendency or submission of
     a claim under any Non-Assumed Policies.  During the pendency of such
     claim, the Reinsurer may investigate such claim and interpose, at its
     own expense, in the proceeding where such claim is to be adjudicated
     any defense available to the Company or its conservator, receiver,
     liquidator or statutory successor.  The expense thus incurred by the
     Reinsurer is chargeable against the Company as a part of the expense of
     insolvency, liquidation or rehabilitation to the extent of a
     proportionate share of the benefit which accrues to the Company solely
     as a result of the defense undertaken by the Reinsurer.  If two or more
     assuming reinsurers are involved in the same claim and a majority in
     interest elect to interpose defenses to such claim, the expense shall
     be apportioned in accordance with the terms of this Agreement as though
     such expense had been incurred by the Company.
 

                                   ARTICLE XI
                                              
                                   ARBITRATION 

              11.01.  Appointment of Arbitrators.  In the event of any
     disputes or differences arising under or relating in any way to this
     Agreement as to which agreement between the parties hereto cannot be
     reached, then either party can give  notice, pursuant to Section 19.02
     hereunder, to the other party that such dispute or difference shall be
     decided by arbitration.  Three arbitrators will decide any dispute or
     difference.  The arbitrators must be disinterested officers or retired
     officers of life insurance or life reinsurance companies other than the
     two parties to this Agreement or their affiliates.  Each of the
     contracting parties agrees to appoint one of the arbitrators with the
     third, the "Umpire," to be chosen by the two party-appointed
     arbitrators.  In the event that either party should fail to choose its
     arbitrator within twenty (20) Business Days following written
     notification by the other party to do so, the requesting party may
     choose the second arbitrator before entering upon arbitration.  The two
     arbitrators shall select a third arbitrator to act as "Umpire."  In the
     event that the two arbitrators shall not be able to agree on the choice
     of the Umpire within twenty (20) Business Days following the
     appointment of the second, each arbitrator shall nominate candidates
     within the five (5) Business Days thereafter, four of whom the other
     shall decline, and the Umpire shall be chosen from the two remaining
     candidates by drawing lots.  Should the chosen Umpire decline to serve,
     the candidate whose lot was not drawn shall be appointed.  This process
     shall continue until a candidate has agreed to serve.

               11.02.  Decision.  The arbitrators shall consider
     customary and standard practices in the life reinsurance business. 
     They shall decide by a majority vote of the arbitrators.  There shall
     be no appeal from their written decision.  Judgment may be entered on
     the decision of the arbitrators by any court having jurisdiction.

               11.03.  Expenses of Arbitration.  Each party shall bear
     the expense of its own arbitrator (whether selected by that party, or
     by the other party pursuant to the procedures set out in Section
     11.01) and related outside attorneys' fees, and shall equally bear
     with the other party the expenses of the third arbitrator and of the
     arbitration.

              11.04.  Site and Applicable Rules of Arbitration.  Any
     arbitration instituted pursuant to this Article shall be held in New
     York, New York and, to the extent applicable, the Federal Arbitration
     Act shall govern the interpretation and application of this Article.
     11.05.  Survival of Article.  This Article shall survive
     termination of this Agreement.
 

                                ARTICLE XII
                                              
                  REINSURING CLAUSE AND CONTRACTUAL CONDITIONS 

              12.01.  Reinsuring Clause.  The amount owed the Company
     for any accounting period shall be the excess, if any, of Benefits less
     Reinsurance Premiums, and the amount owed the Reinsurer for any
     accounting period shall be the excess, if any, of Reinsurance Premiums
     over Benefits.  If such amounts cannot be determined at such date on an
     exact basis, such payments may be determined on an estimated basis and
     any final adjustments are to be made within twenty (20) Business Days
     after the end of the Accounting Period.
 
             12.02.  Consideration.  The performance of all promises of
     one party shall be deemed the consideration for the performance of all
     the promises of the other party.

             12.03.  Conditions Precedent.  It is a condition precedent
     to the Reinsurer's liability to pay any amount for the current or
     future Monthly Settlements that the Company shall pay all amounts due
     the Reinsurer from prior Monthly Settlements.
 
             12.04   Utmost Good Faith.  Both parties promise "utmost
     good faith" and each is under the affirmative duty to report any
     adverse information with respect to its solvency or with respect to the
     particular facts which relate to the Reinsured Policies.  

             12.05.   Recoupment and Failure of Consideration.  If
     either party to this Agreement fails to perform this Agreement in full,
     then the other party has the right to suspend performance, and if the
     defaults cannot be cured, within one hundred and twenty (120) days
     following delivery of written notice from the non-defaulting party to
     the defaulting party, to terminate this Agreement.  Alternatively, the
     non-defaulting party can recoup damages (including, without limitation,
     the amount owed plus interest from the date owed and calculated at the
     Chase Bank prime rate plus two points) from future Monthly
     Settlements.

              12.06.   Gain or Loss Clause.  The various items of
     account (e.g., Reinsurance Premium and Benefits) shall not be deemed
     to be separate debts but shall be used to determine the Monthly
     Settlements.

              12.07.   No Waiver.  The acceptance of the net accounting
     reports and the sums due under this Agreement shall never constitute a
     waiver by either party with regard to fraud or other rights.

              12.08.   Limitations on Assignment.  No assignment of
     rights or delegation of duties of the Company shall be effective unless
     approved by the other party in writing, signed in duplicate. 
     Furthermore, such assignment shall not operate as a novation, but
     merely as a delegation of duties, and the assignor shall remain liable
     to the other party as a surety and such other party shall have no duties
     to the assignee beyond that as specified in this Agreement.


                                   ARTICLE XIII
                                              
                       EXECUTORY CONTRACT AND INSOLVENCY-SETOFF

              13.01.  Insolvency-Setoff (or Offset).  In the event
     either party to the Agreement shall be the subject of insolvency
     proceedings ("Insolvency Proceedings") all independent debts on
     unrelated contracts between the parties shall be setoff to the extent:

              (a) the debt from the creditor to the insolvent arose
      pre-petition.

              (b) the debt from the insolvent to the creditor arose
      pre-petition.

              (c) the debts are mutual, meaning they are between the two
     parties to this Agreement, and in the same right and the same capacity.
     The cash payment due on each reinsurance agreement between the parties
     shall constitute the "debt" on such agreement.

              13.02.  Adequate Assurance.  In the event of Insolvency
     Proceedings involving the Company, the Reinsurer's future performance
     is conditioned on receiving adequate assurance of future performance,
     as defined in the Uniform Commercial Code,  2-206, and the Official
     Comments thereunder.

              13.03.  Ipso Facto Clause.  If the receiver, including
     any liquidator or rehabilitator, of one of the parties assigns the
     rights or delegates the duties of this Agreement, and the assignee is
     the subject of Insolvency Proceedings then the other party may
     immediately terminate the Agreement without further performance.

              13.04.  Executory Contract.  In the event either party to
     the Agreement is the subject of Insolvency Proceedings, the receiver of
     the insolvent, with respect to future Monthly Settlements, may affirm
     or reject the Agreement, but not affirm the rewards and reject the
     burdens.  If this Agreement is neither affirmed nor rejected within one
     hundred and twenty (120) days after a party becomes the subject of
     Insolvency Proceedings, then the Agreement shall be deemed to be
     rejected.

              If either party is the subject of Insolvency Proceedings
     other than liquidation proceedings, then the other party may request
     adequate assurance of continued performance and the first priority
     administrative expense with respect to future performance prior to the
     time the Agreement is either affirmed or rejected, and if such is not
     provided, then, after one hundred and twenty (120) days, the other
     party may treat its future performance as terminated.

              13.05.  Insolvency Proceedings.  For purposes of this
     Agreement the term "Insolvency Proceedings" shall include, but not be
     limited to, any action by a state insurance regulatory authority to
     place a party in, or the actual commencement of, delinquency
     proceedings, including conservatorship, receivership, rehabilitation,
     reorganization, "adjustment of debts,"  "voluntary supervision," or
     liquidation.
 

                                   ARTICLE XIV
                                              
                          REPRESENTATIONS AND WARRANTIES 

              14.1.  Representations and Warranties of the Company.  The
     Company hereby represents and warrants to the Reinsurer that:

                 14.1.a.  The Company has made available to the
     Reinsurer copies of all forms, applications, rates, and values with
     respect to the policies and shall keep the Reinsurer promptly informed
     with respect to any changes or modifications to such forms,
     applications, or rates;

                 14.1.b.  The Company is licensed in good standing in
     all jurisdictions in which Reinsured Policies were issued or assumed
     and all Policies are in full compliance with applicable laws,
     regulations and rules.  The Company has not been placed in, nor does it
     have any reason to believe that it is about to be placed in
     supervision, rehabilitation, receivership, revocation, suspension or
     liquidation by any insurance department;

                 14.1.c.  The Company is duly organized, validly
     existing and in good standing under the laws of the State of Ohio, and
     has all necessary corporate power and authority to entitle it to use its
     name, to own, lease or otherwise hold its properties and assets, to
     carry on its business as currently conducted, and to perform its
     obligations;

                 14.1.d.  The Reinsured Policies are in compliance
     with all applicable requirements of law and are on forms approved in all
     material respects by the appropriate governmental authorities except to
     the extent that failure to be in compliance therewith does not have a
     material adverse effect; and

                 14.1.e.  Appropriate, reasonable and adequate 
     statutory reserves are being held by the Company in support of the
     Reinsured Policies.

              14.2.  Representations and Warranties of the Reinsurer. 
     The Reinsurer hereby represents and warrants to the Company that:

                 14.2.a.  The Reinsurer is duly organized, validly
     existing and in good standing under the laws of its state of domicile,
     and has all necessary corporate power and authority to entitle it to use
     its name, to own, lease or otherwise hold its properties and assets, to
     carry on its business as currently conducted, and to perform its
     obligations; and

                14.2.b.  The Reinsurer is an authorized reinsurer in
     the State of Ohio.
 

                                   ARTICLE XV
                                              
                              CONDITIONS PRECEDENT
  
             15.1.  Conditions.  The obligations of the Company and the
     Reinsurer to consummate the transactions described hereunder are
     expressly subject to:

                15.1.a.  On or before the Closing Date, except for
     the assumption reinsurance contemplated under Article XVI hereunder,
     the approvals of the insurance commissioners, directors, or
     superintendents, as the case may be, of the insurance regulatory
     authorities necessary for the consummation of the transactions
     contemplated by the Agreement, and such approvals shall be in full
     force and effect, and shall not impose upon either the Company or the
     Reinsurer any material conditions or the requirements that would impose
     upon either party any material additional costs;

                15.1.b.  On or before the Closing Date, the
     Reinsurer having discovered no material errors, omissions or
     liabilities previously undisclosed to it in the due diligence
     investigation and documentation provided the Reinsurer by the Company
     prior to the date hereof;

                15.1.c.  All of the representations and warranties
     made by the parties hereto in Article XIV hereunder shall be true and
     correct in all material respects on the date hereof and on the Closing
     Date as if made on such date; and

                15.1.d.  On or before the Closing Date, each of the
     parties obtaining full corporate power and authority to execute,
     deliver and perform their respective obligations under this Agreement
     and taking all necessary corporate and other action to authorize the
     reinsurance of the Reinsured Policies under the terms of this
     Agreement.


                                    ARTICLE XVI
                                              
                                ASSUMPTION REINSURANCE 

              16.1.  Conditions.  Should any of the conditions outlined
     below occur, the Reinsurer reserves the right to assumption reinsure
     all covered policies.  Such assumption shall take effect subject to the
     terms of the Assumption Reinsurance Agreement executed and attached
     hereto as Exhibit I:

                 16.1.a.  The Company's total adjusted Risk Based
     Capital becomes lower than 225% of the Company's authorized control
     level and remains so for more than sixty (60) days; 

                 16.1.b.  Any state regulatory authority initiates
     any proceeding against the Company on the ground that the Company is
     impaired or insolvent or in hazardous financial condition; 

                 16.1.c.  The Company defaults on any obligation set
     forth in this Agreement or any other contract or agreement to which it
     is a party and fails to cure within ten (10) Business Days of receipt
     of notice of such default;

                 16.1.d.  The Company fails three (3) or more IRIS
     ratios developed by the National Association of Insurance Commissioners
     and utilized by any insurance regulatory authority;

                 16.1.e.  The senior management team in place on the
     Effective Date of this Agreement changes; or

                 16.1.f.  The Company is technically insolvent or
     admits in writing its inability to pay its debts as they mature.


                                 ARTICLE XVII
                                              
                                INDEMNIFICATION 

               17.01.  The Reinsurer.  The Reinsurer hereby agrees on
     demand to indemnify and hold harmless the Company and its respective
     officers, directors and employees from and against any and all demands,
     actions, proceedings, suits (by any person, entity or group,
     including, without limitation, any governmental entity) and
     liabilities, paid or incurred (including reasonable attorneys' fees),
     resulting from or arising out of the breach of or failure to perform any
     of the duties, obligations, covenants or agreements of the Reinsurer
     contained in this Agreement.

               17.02.   The Company.  The Company hereby agrees on
     demand to indemnify and hold harmless the Reinsurer and its officers,
     directors and employees from and against any and all demands, actions,
     proceedings, suits (by any person, entity or group, including, without
     limitation, any governmental entity) and liabilities, paid or incurred
     (including reasonable attorneys' fees), resulting from or arising out
     of the breach of or failure to perform any of the duties, obligations,
     covenants or agreements of the Company contained in this Agreement.

              17.03.   Survival of Article.  This Article shall survive
     termination of this Agreement.


                                 ARTICLE XVIII
                                              
                         ESTABLISHMENT OF AN ASSET TRUST

              18.01.  Asset Trust.  If for any reason the Reinsurer
     shall cease to be an authorized reinsurer in the Company's state of
     domicile, or, if for any reason the Company is unable to offset its
     primary reserve liability for the liabilities assumed by the Reinsurer
     hereunder, then the Reinsurer shall place assets equal to the
     liabilities assumed hereunder into a trust with provisions satisfactory
     to the insurance regulators of the Company's state of domicile.  Such
     assets shall be satisfactory to such regulators.


                                   ARTICLE XIX
                                              
                              MISCELLANEOUS PROVISIONS 

              19.01.  Headings and Schedules.  Headings used herein are
     not a part of this Agreement and shall not affect the terms hereof. 
     The attached Schedules are a part of this Agreement.

               19.02.  Notices.  All notices and communications hereunder
     shall be in writing and shall be deemed to have been received three (3)
     Business Days after mailing, or if by telefax or by hand, when
     received, and if by overnight mail, on the next Business Day.  Any
     written notice shall be by either certified or registered mail, return
     receipt requested, or overnight delivery service (providing for
     delivery receipt) or delivered by hand.  All notices or communications
     with the Reinsurer under this Agreement shall be addressed as follows:

               First International Life Insurance Company
               c/o The Guardian Life Insurance Company of America
               201 Park Avenue South
               New York, New York  10003
               Attention:  Jeremy Starr
               Telefax No.:  (212) 598-8659

               All notices and communications with the Company under this
      Agreement shall be directed to:

               Universal Guaranty Life Insurance Company
               5250 South Sixth Street
               Springfield, Illinois  62705-5147
               Attention:  James Melville
               Telefax No.:  (217) 786-4372

               19.03.  Severability.  If any term or provision of this
     Agreement shall be held void, illegal, or unenforceable, the validity
     of the remaining portions or provisions shall not be affected thereby;
     provided, however, that to the extent that such remaining portions or
     provisions affect the economic positions of the parties hereunder, this
     Agreement shall be amended by the parties so as to return the parties
     to the economic positions that they would have been in had no such
     severance occurred or so that both parties share the economic detriment
     of such severance equally.

               19.04.  Successors and Assigns.  This Agreement may not
     be assigned by either party without the prior written consent of the
     other.  The provisions of this Agreement shall be binding upon and
     inure to the benefit of and be enforceable by the parties hereto and
     their respective successors and assigns as permitted herein.

               19.05.  Execution in Counterpart.  This Agreement may be
     executed by the parties hereto in any number of counterparts, and by
     each of the parties hereto in separate counterparts, each of which
     counterparts, when so executed and delivered, shall be deemed to be an
     original, but all such counterparts shall together constitute but one
     and the same instrument.

               19.06.  Currency.  All payments and accounts shall be made
     in United States Dollars, and all fractional amounts shall be rounded
     to the nearest whole dollar.  For the purposes of this Agreement, if
     the Company receives premiums or pays Benefits in currencies other than
     United States Dollars, such premiums and Benefits shall be converted
     into United States Dollars at the actual rates of exchange at which
     such premiums and Benefits are entered in the Company's books.

              19.07.  Amendments; Entire Agreement.  This Agreement may
     be amended only by written agreement of the parties.  This Agreement,
     the annexed Exhibit 1 and the Schedules, supersede all prior
     discussions and written and oral agreements and constitute the sole and
     entire agreement between the parties with respect to the subject matter
     hereof.

              19.08.  Investigations.  The Company will notify the
     Reinsurer immediately, in writing, of any and all investigations of the
     Company or its directors, principal officers or shareholders conducted
     by any Federal, state or local governmental or regulatory agency other
     than routine state insurance department examinations.

              19.09.  Governing Law and Forum.  This Agreement shall be
     governed by the laws of the State of New York, without giving effect to
     the principles of conflicts of law thereof.  Both parties hereunder
     hereby irrevocably and unconditionally submit themselves to the
     exclusive jurisdiction of the courts of the State of New York for any
     actions, suits or proceedings of or relating to this Agreement and the
     transactions contemplated thereby that cannot be resolved pursuant to
     the provisions of Article XI hereof.

              19.10.  Interpretation.  No provision of this Agreement
     shall be construed against any party on the ground that such party
     drafted the provision or caused it to be drafted.

              19.11.  Confidentiality.  Except as required by law or
     regulatory authority, neither the Company nor the Reinsurer shall
     publicly disclose the purchase price or other terms of the transfer
     proposed herein, but this restriction shall terminate if such price and
     terms shall otherwise become public knowledge.  In the event that the
     Reinsurer or its representatives are requested or required by oral
     questions, interrogatories, requests for information or documents,
     subpoena, civil investigation, demand or similar process to disclose
     any terms or information regarding the herein transfer it may disclose
     any terms or information regarding such transfer provided, however,
     that to the extent practicable under the circumstances the Reinsurer
     shall give the Company reasonable notice of the order or request before
     making the disclosure provided that such notice can be provided without
     cost to the Reinsurer.  The provisions of this Section 19.11 shall
     survive termination of this Agreement.

               IN WITNESS WHEREOF, the parties hereto have caused this
     Agreement to be executed by their duly authorized representatives on
     the date first above written.
 
                                          UNIVERSAL GUARANTY LIFE
                                             INSURANCE COMPANY


                                    By: James E. Melville
                                        Title:   President
                                        Date:    10/18/96

    Attest:

                                    By: Theodore C. Miller               
                                        Title:   Vice President
                                        Date:    10/18/96



                                          FIRST INTERNATIONAL LIFE
                                              INSURANCE COMPANY


                                    By: Jeremy Starr
                                        Title:  Vice President, Reinsurance
                                        Date:   October 18, 1996

    Attest:
                                    By: Benjamin H. Mitchell      
                                        Title:  Actuary
                                        Date:   October 18, 1996



<PAGE>
                                   SCHEDULE A
                      ADMINISTRATIVE SERVICE AND STANDARDS
     
     On and after the date hereof, the Company will continue to service 
     the Reinsured Policies by providing the following functions which shall
     be performed by the Company in the same timely manner as currently 
     being performed and with the same diligence provided to the Company's
     other policies:

     Policy Service, Cash Loans and Cash Dividends, Change Dividend Option,
     Address Change, Ownership Change, Assignment, Benefits Change, 
     Correspondence (to Policyholders), Coverage Changes and Conversions
     (No Underwriting Required), Reinstatements, Cash Surrenders/Partial
     Withdrawals, Coverage Changes and Conversions (Underwriting
     Required), Claims, Noncontestable Life.
      
<PAGE>

A.   Policy Service

     1.  Receipt and processing of Reinsured Policy service requests within
         the Service Standards specified herein.

     2.  Updating of computer record and other files as needed to reflect
         requested changes.

     3.  Preparation and mailing of Reinsured Policy annual statement to
         Policyholder for applicable plans of insurance.

B.   Policy Loan and Surrender Processing

     1.  Receipt and processing of loan and surrender requests.

     2.  Updating of computer record and other files as needed to reflect the
         change.

     3.  Preparation and mailing of checks to Policyholders.

     4.  Generation and mailing of IRS 1099 forms to Policyholders when
         applicable.

C.    Claims Adjudication/Complaints

     1.  Adherence to applicable state fair claims settlement regulations.

     2.  Receipt, review, and processing of all complaints filed with respect
         to the Reinsured Policies with the various Departments of
         Insurance.

     3.  Oversee appropriate action to be taken with regard to a complaint
         within guidelines established by the Reinsurer.

D.   Accounting/Banking/Auditing

     1.  Providing of all accounting functions related to Reinsured Policy
         administration for the Reinsured Policies being serviced.

     2.  Processing of all receipts, disbursements, and associated Reinsured
         Policy related accounting transactions.

     3.  Preparation of daily accounting reports reflecting monetary
         transactions (checks received, checks paid, monies deposited,
         etc.).

     4.  Managing the appropriate bank accounts, including balancing and
         editing of daily bank deposits.

     5.  Retention of system generated accounting and Reinsured Policy
         transaction data and reports on a mutually agreed upon schedule.

     6.  Access to Reinsured Policy, and payment information as needed to
         support the Reinsurer's and regulatory audits.

     7.  Providing of information of annual statement schedules in annual
         statement format (for the information to which the Company has
         access).

     8.  Providing of information with respect to state business pages of
         Annual Statement, and any other information required to prepare
         premium tax returns.

     9.  Prepare cash trial balances and accrual trial balances on business
         assumed.

E.    Financial Reporting

     1.  Performance of all functions necessary to support statutory
         reporting.  Preparation of accounting reports on Policies in blue
         book format to be used by the Reinsurer.

     2.  Performance of all functions necessary to support other regulatory
         reporting requirements on the Policies to include:
         .     IRS Form 1099 (Reinsured Policy related)
         .     Other Policyholders IRS reporting requirements.

     3.  Performance of all reasonable analyses to assure accuracy of reported
         information at monthly, quarterly, and year-end periods.

     4.  Assist the Reinsurer in interfacing with the Company systems and
         processing to allow the Reinsurer to consolidate reported
         results.

     5.  Capacity to download certain information (to be defined by mutual
         agreement of the parties) into a personal computer to allow the
         Reinsurer to perform forecasting of future experience.
 
     6.  Provide necessary support for GAAP reporting purposes.

F.   Actuarial

     1.  Determination of statutory reserves on a quarterly basis for the
         Policies.

     2.  Determination of tax reserves quarterly in accordance with factors
         determined by the Reinsurer.  On an annual basis, the Company
         will provide the required reserve reporting with appropriate
         reserve schedules summarized for tax returns.

     3.  Preparation of the agreed upon annual statement schedules in annual
         statement format (for the information to which the Company has
         access).
 
     4.  General support of Policyholder administration.

G.   Reinsurance Processing

     1.  Maintenance of required reinsurance records on Reinsured Policies.

     2.  Receipt, reconciliation, and payment of invoices  from reinsurers
         assuming risk on Policies.

H.    Compliance

     1.  Monitoring statutes and regulations of the Departments of Insurance
         in the various states in which the owners of Reinsured Policies
         are located to ensure continued compliance.

     2.  Monitoring the statutes and regulations of the Department of
         Insurance in the various states in which the owners of Reinsured
         Policies are located to ensure that any communications required
         by such regulations or statutes are implemented.

     3.  Responding to inquiries from the Departments of Insurance of the
         various states in which the owners of Reinsured Policies are
         located.


                                 SCHEDULE B
                              EXPENSE ALLOWANCE

     Expense Allowance = Base Allowance - Closing Interest
                                
     Base Allowance = P x Reserves and Liabilities + 
                      Interest Adjustment Factor
                                
     Interest Adjustment Factor = $1,600,000 x (A - B)
     Closing Interest = (Reserves and Liabilities - Policy Loans
                        on the Effective Date - Base Allowance)
                        x D x B/365

             Where:
                 P = 23.7% for Paid-up permanent policies
                     43.4% for Paid-up term policies
                     23.0% for Dividends on deposit, endowments  
                           on deposit and reserves on Paid-up
                           additions bought by Dividends
                      0.0% for provisions for policyholder
                           Dividends payable in the following year 
                    100.0% for immediate payment of claim
                           reserves       
                                
                A = 30 Year Treasury Rate on the Closing Date

                B = 30 Year Treasury Rate on September 6, 1996        
                        (which is 7.12%)

                D = Calendar Days between Closing Date and
                    Effective Date


                                                Records with:
                                         First Character   In-Force
                                           "class base"       Code   
                Paid-up Term
                         ETI                   A,N,T            D

                         Other Term            4,5,8         B or C 

                Paid-up Permanent              1,2,3         B or C

                Dividend Options              amounts in any record 
                              

<PAGE>
      
                                   SCHEDULE C
                           INITIAL REINSURANCE REPORT

1.    In Force by Policy Form

            i.    Policy Count              

           ii.    Amount Ceded                            

          iii.    Reserves                      

           iv.    Loans                             

2.    Accounting Transaction - Initial Reinsurance 
      Consideration equals net of:

            i.    Due First International Life Insurance Company

                  Initial Reinsurance Premium              

           ii.    Due Universal Guaranty Life Insurance Company

                  Expense Allowance                       

          iii.    Initial Reinsurance Consideration

                  = (i) - (ii)                 
 

<PAGE>                                

                               SCHEDULE D - PART I
                       MONTHLY PERIOD REINSURANCE REPORT

                From First International Life Insurance Company
                  to Universal Guaranty Life Insurance Company
                       for the Month ending           .


     REINSURANCE PREMIUMS

     1.    Gross Premiums               

     2.    a. Policy Loan Interest   
           b. Policy Loan Repayments 
           c. Other Amounts          
           d. YRT Premiums Payable   

           Subtotal (a + b + c - d)            

     3.    Dividends              

     4.    Administration Costs        

     5.    Reinsurance Premiums
           (1)+(2)-(3)-(4)                           


     BENEFITS

     1.    Death Benefits (net of reinsurance)              

     2.    Other Benefits under Death
           Benefit Settlement Options                     

     3.    Surrender and Endowment
           Payments to Policyholders                      

     4.    Policy Loans Made            

     5.    Dividend withdrawals ( = 2c + 2d 
           from Schedule D - Part I (Continued)) 

     6.    Benefits = (1) + (2) + (3) + (4) + (5)                 


     MONTHLY SETTLEMENT

     Reinsurance Premiums received by the
     Company - Benefits paid by the
     Company                                                 

     NOTE:  If Positive, payment to the Reinsurer
            If Negative, payment to the Company
            
<PAGE>
                                   
                       SCHEDULE D - PART I (Continued)
                      MONTHLY PERIOD REINSURANCE REPORT
                                


     1.    Policy loans in force              

     2.    a. Dividends on Deposit
              Beginning of Period              
           b. Deposits made during
              period              
           c. Withdrawal of 
              principle     
           d. Withdrawal of
              interest     
           e. Dividends on Deposit
              End of Period                      

     3.    Risk Based Capital                 

     4.    Number of IRIS Audits
           failed (attach details)                    
                                
                                  

<PAGE>
                                
                           SCHEDULE D - PART II
                         QUARTERLY POLICY EXHIBIT
                                
                                
                                                       Policies
                                
                                
      a.  In force beginning of year
                                    
      b.  Increases
                                    
      c.  Deaths
                                    
      d.  Surrenders
                                    
      e.  Maturities
                                    
      f.  Lapse
                                    
      g.  Expirations
                                    
      h.  Decreases
                                    
      i.  In force end of period
                     
      j.  Reserves (attach details by basis)
                                    
                                
                                
                                
<PAGE>                                
                                              
                       
                            SCHEDULE D - PART III
                               ANNUAL REPORTS

       Analysis of Increase in Reserves 

         1.    Reserve December 31 of prior year
         2.    Total Net Premiums
         4.    Tabular Interest
         5.    Tabular less Actual Reserves Released
         11.   Reserves Released by Other Termination (net)
         12.   Annuity, Supplementary contract, disability and accumulated
               dividend payments
         15.   Reserves December 31 of current year


      New York State Analysis of Reserves (Exhibit 8 with face amounts)
                                
                                
                      Total        Industrial       Ordinary        Group
                                
                                
     I. Annuities     Res No. of  Res. No. of     Res. No. of    Res. No. of
                      Pol.        Pol.            Pol.           Pol.

                                
          A.    Other than Co. Retirement Plan

          B.    Co. Retirement Plan


     II.  Supplemental Contracts

     III. Deficiency and Miscellaneous Reserves

     Tabular detail by Reinsured Policy showing age, sex, Reinsured Policy
     number, annual income, reserve factor and reserves for all reserves
     ceded on a coinsurance plan.  Such detail shall be supplied in
     duplicate in either paper, microfiche or machine readable.  If the
     latter is chosen, it must be formatted according to New York State
     requirements.

     Tax Reserves by Plan and Reserve Basis

     DAC Charge Premiums by Plan
                                

<PAGE>
      

                          
                                SCHEDULE E
                           RECAPTURE PROVISIONS

     Should the provisions of Section 9.06 be invoked, the following
     accounting would transpire for policies being recaptured:


       Due to Company:

       A.  Reserves on Recaptured 
           Policies on the Effective Date       


       Due to Reinsurer:

       B.  Recapture fee               

       Net Due
       (A - B)                         


     Where:

       B = A x C

       C = Appropriate percentage from chart below:

           Years from 
           Effective Date*   Permanent    Dividend Option    Term
                  0              23.7%         23%           43.4%  
                  1              21            20            35
                  2              18            18            29
                  3              15            15            23
                  4              13            13            19
                  5              11            11            15
                  6               9             9            12
                  7               7             7             9
                  8               5             5             6
                  9               3             3             3
                 10               0             0             0      
              
          * Years from Effective Date represents the integral number of years
            since September 30, 1996.  Thus, any recapture occurring before
            September 30, 1997 will use the factor from the row marked 0.


<PAGE>

                                     SCHEDULE F
                                   DAC TAX ELECTION
       
       
       
       The Company and the Reinsurer hereby agree to the following pursuant to
       Section 1.848-2(g)(8) of the Income Tax Regulations issued December
       29, 1992, under Section 848 of the Internal Revenue Code 1986, as
       amended.  This election shall be effective for 1991 and all subsequent
       taxable years for which this Agreement remains in effect.
       
       a.  The term "party" will refer to either the Company or the 
           Reinsurer as appropriate.
       
       b.  The terms used in this Schedule F are defined by
           reference to Treasury Regulations Section 1.848-2 in
           effect as of December 29, 1992.
       
       c.  The party with the net positive consideration for 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 IRC Section 848(c)(1).
       
       d.  Both parties agree to exchange information pertaining to
           the amount of net consideration under this Agreement
           each year to ensure consistency.  The parties also agree
           to exchange information which may be otherwise required
           by the IRS.
       
       e.  The Company will submit a schedule to the Reinsurer by
           April 1 of each year of its calculation of the net
           consideration of the preceding calendar year.  This 
           schedule will be accompanied by a statement signed by an
           officer of the Company stating that the Company will
           report such net consideration in its tax return for the 
           preceding calendar year.
       
       f.  The Reinsurer may contest such calculation by providing
           an alternate calculation to the Company in writing
           within 30 days of the Reinsurer's receipt of the 
           Company's calculation.  If the Reinsurer does not so
           notify the Company, the Reinsurer will report the net
           consideration as determined by the Company in the 
           Reinsurer's tax return for the previous calendar year.
       
       
       
       
             
       
                                    F-1
       
<PAGE>       
       
       g.  If the Reinsurer contests the Company's calculation of
           the net consideration, the parties will act in good
           faith to reach an agreement as to the correct amount
           within 30 days of the date the Reinsurer submits its
           alternate calculation.  If the Reinsurer and the Company
           reach an agreement on an amount of net consideration,
           each party shall report such amount in their respective
           tax returns for the previous calendar year.
       
       h.  If the Company and the Reinsurer both disagree upon the
           final net consideration then the parties shall seek a 
           remedy as set forth in Article XI of this Agreement.
       
       
       
       
       
       
       
       
       
       
       
                                    F-2  
<PAGE>