<PAGE>   1
                                                                    EXHIBIT 10.1







                    RELIANCE STANDARD LIFE INSURANCE COMPANY

                      1998 SENIOR MANAGEMENT INCENTIVE PLAN

                           FOR THE TWELVE MONTH PERIOD
                    JANUARY 1, 1998 THROUGH DECEMBER 31, 1998


<PAGE>   2


I        OBJECTIVE

         To promote profitable growth of Reliance Standard Life Insurance
         Company ("RSL") by providing a financial incentive plan that will
         compensate its eligible employees for the achievement of results
         recommended by the Corporate Compensation Committee (the "Committee")
         of the Board of Directors of Reliance Standard Life Insurance Company
         (the "Board") and ratified by the Board. Thus, RSL will attract and
         retain employees of the highest caliber who will demonstrate
         outstanding performance and will assist in the achievement of overall
         objectives.

II       ADMINISTRATION

         The Reliance Standard Life Senior Management Incentive Plan (the
         "Plan") will be supervised by the Committee.

         The Committee shall have the authority to recommend procedures for the
         administration of the Plan to the Board for approval and to take any
         and all action necessary to implement such procedures. Any references
         in this document to the Board shall include any committee designated by
         the Board from time to time to exercise authority with respect to the
         Plan, including the Executive Committee of the Board.

III      INCENTIVE PARTICIPATION

         Eligibility to participate in the Plan is restricted to the positions
         outlined in Exhibit B. The approved percentages relate to the
         employees' December 31, 1997 base salary. Changes in incentive rates or
         participants shall be approved by the Committee and the Board.

         Each participant will be notified of his or her participation in the
         Plan, either in terms of the applicable percentage participation or
         dollar amount, if the specified results are achieved.

IV       METHOD

         Targets for Operating Results and Personal Objectives, as well as
         participants and payout schedules, must be submitted to the Committee
         and approved by the Board. The bonus paid is allocated to the
         achievement of the established objectives as outlined in Exhibit C
         (Method of Computation) and is subject to the Management Pool available
         as outlined in Exhibit A (Management Pool).

V        DISTRIBUTION

         Up to 70% of the estimated bonus amount may be distributed prior to
         year-end. Such distribution is subject to the approval of Robert
         Rosenkranz. The final payment shall not be distributed until the
         amounts are determined and verified. Any estimated payments shall be
         deducted from the final distribution which shall be made to eligible
         participants 

<PAGE>   3

         no later than 60 days following the last day of the year for the
         performance achieved for the previous year.

VI       PAYMENT OF INCENTIVE AND GENERAL GUIDELINES

         No employee shall participate in more than one Incentive Compensation
         Plan, except as required by transfer within a given year.

         Except as provided below, an employee must be employed by RSL at the
         close of the year in order to participate in and receive compensation
         under the Plan. If employment is terminated during the year on account
         of death, disability, or retirement, he or she may participate
         proportionately for the part of the year he or she was employed prior
         to termination. If employment is terminated during the year for the
         convenience of RSL, but not for cause or by resignation, he or she will
         participate to the extent (if any) deemed appropriate by the President
         of RSL, at his sole discretion. If an employee is terminated for cause
         after the close of the year but prior to the date for actual payment of
         compensation under this Plan no such compensation will be paid.

         If an employee terminates employment (other than on account of death,
         disability, or retirement) after the close of the year but prior to the
         date for actual payment of compensation under this Plan, the President
         of RSL, will unilaterally determine, at his sole discretion, whether
         and to what extent (if any), under the circumstances, payment of
         incentive compensation to the former employee under the terms of the
         Plan would be appropriate.

         Participants hired or promoted during the year to a participating
         position will become a participant on the first day of the month
         following permanent assignment to a participating position after having
         been approved by the Committee and the Board of Directors.

         This Plan does not constitute a contract between RSL and the
         participants, and no participant shall have any legal rights by reason
         of the existence of this Plan. It may be changed, modified, amended or
         terminated at any time by the Committee or the Board of Directors.

         No right or benefit under this Plan shall be subject to anticipation,
         alienation, sale, assignment, pledge, encumbrance or charge, and any
         attempt to anticipate, alienate, sell, assign, pledge, encumber or
         charge the same shall be void; and, if any participant hereunder should
         become bankrupt or attempt to participate, alienate, sell, assign,
         pledge, encumber or charge any right or benefit hereunder, then such
         right or benefit shall, at the discretion of the Committee or the Board
         of Directors, cease and terminate. RSL may offset any claim it has
         against the participant against any amount to which a participant may
         otherwise be entitled to hereunder, but rights hereunder shall not
         otherwise be subject to debts or liabilities of the participant.



<PAGE>   4


VII      RESPONSIBILITY

         The Committee is responsible for establishing appropriate rationale,
         strategy and targets within the organizational structure for approval
         by the Board of Directors.

         If the agreed upon operating strategy for RSL is changed during the
         year, objectives and strategies in the Plan may be changed accordingly,
         with approval of the Committee or the Board of Directors.

         RSL is responsible for providing full financial data to establish
         appropriate rates to compute results, obtaining approval of the Plan,
         and for coordination of the total program.



<PAGE>   5


                                    EXHIBIT A

                                 MANAGEMENT POOL


I.       THE POOL

         A pool will be established for the purpose of paying incentive
         compensation to senior officers. The pool will be based on a percentage
         (1.15%) of the excess by which Delphi's pre-tax, pre-dividend income,
         per the Elements of Profit, exceeds 10% of beginning equity (before
         application of FAS 115).

         The total pool amount available will be the maximum amount which could
         be paid to participants in this plan and will be based on the following
         formula:

         o        Minimum pre-tax pre-dividend earnings for Delphi (excluding
                  compensation expense related to the incentive plan), which
                  must be achieved before any incentive compensation will be
                  paid, will be 10% of beginning equity without regard for FAS
                  115 adjustments.

<TABLE>
<CAPTION>
                           <S>                                 <C>        
                           Beginning equity (1-1-98)           $   509,486
                           FAS 115 adjustment                      (40,545)
                                                               -----------
                                                                   468,941
                                                               -----------
                           Times 10% (minimum earnings)        $    46,894
                                                               ===========
</TABLE>

         o        This amount of $46,894 will be subtracted from the actual
                  pre-tax pre-dividend earnings of Delphi Financial Group as per
                  Form 10-K, and the result multiplied by the pool (multiplier)
                  percentage of 1.15%.

         o        For example, if the actual pre-tax pre-dividend earnings,
                  exactly matched budget of $126,523, the pool amount would be
                  $916 as follows:

<TABLE>
<CAPTION>
                           <S>                                 <C>        
                           Pre-tax pre-dividend earnings        $   126,523
                           Minimum earnings                          46,894
                                                                -----------
                           Pool                                      79,629
                           (Multiplier) percentage              x      1.15%
                                                                -----------

                           Pool available                       $       916
                                                                ===========
</TABLE>

         If actual earnings deviate by 10% from plan earnings, either over or
         under, the pool (multiplier) percentage is adjusted.


<PAGE>   6


                                    EXHIBIT A

                          MANAGEMENT POOL - (Continued)


         o        If actual pre-tax pre-dividend earnings for Delphi exceed
                  budgeted pre-tax pre-dividend earnings ($126,523) by 10% or
                  more, the multiplier of 1.15% will be increased to 1.80%.
                  Therefore, pre-tax earnings must be at least $139,175 in order
                  to achieve a multiplier of 1.80%.

         o        Also, if actual pre-tax pre-dividend earnings for Delphi are
                  less than budgeted pre-tax pre-dividend earnings ($126,523) by
                  10% or more, the multiplier will be reduced to 0.75%.
                  Therefore, if pre-tax pre-dividend earnings decrease to
                  $113,871 or less, the multiplier will decrease to 0.75%



<PAGE>   7


                                    EXHIBIT B

                         SENIOR MANAGEMENT PARTICIPANTS



<TABLE>
<CAPTION>
                                                                                                BONUS
NAME                                POSITION                                                  PERCENTAGE
---------------------------------------------------------------------------------------------------------
<S>                                 <C>                                                          <C>
Charles P. O'Brien                  President & Chief Executive Officer                          75%

Lawrence E. Daurelle                Vice President & Treasurer                                   50%

Kenneth R. Hamm                     Vice President, Group Actuary                                40%

Debra Staples                       Vice President, Claims Administration                        40%
</TABLE>




<PAGE>   8


                                    EXHIBIT C

                              METHOD OF COMPUTATION



Achievement of specific operating results for Delphi Financial Group, Inc., and
subsidiaries, as described in Exhibit E, have been assigned percentages as shown
on the chart in Exhibit D. The percentage of achievement is determined pro rata
based on the actual achievement at year-end. These percentages are then
aggregated and added to the percentage of achievement awarded to each
participant for personal objectives, as described in Exhibit F.
If results exactly equaled plan, these percentages would total 120%.

The actual sum of these percentages will be multiplied by the participation
percentage (as shown on Exhibit B) and salary as of December 31, 1997 (as shown
on Exhibit G) to determine the amount of incentive compensation.

Finally, the sum of all bonus amounts to be paid to the senior officers listed
in Exhibit G will be compared to the pool amount in Exhibit A. Any excess over
the pool amount will be eliminated pro rata.

<PAGE>   9


                                    EXHIBIT D

                   1998 INCENTIVE COMPENSATION PLAN OBJECTIVES




<TABLE>
<CAPTION>
                             Life Insurance                                   Asset
      Earnings Per             Operating               Group               Accumulation
         Share*                 Income               Production             Production                Expenses 
    ---------------        ---------------        ---------------        ---------------        -------------------
    Objective              Objective              Objective              Objective              Objective
       ($)       %          ($000)      %          ($000)      %          ($000)      %          ($000)       %    
    ---------   ---        ---------   ---        ---------   ---        ----------  ---        ---------    ---   
   <S>          <C>       <C>          <C>         <C>        <C>        <C>         <C>         <C>        <C> 
       4.74     40.0         68,200    75.0         98,600    15.0        140,000    10.0         40,600     25.0

       4.35     32.5         62,600    60.0         91,800    12.5        120,000     7.5         41,700     20.0

       3.96     25.0         57,000    45.0         85,000    10.0        100,000     5.0         42,800     15.0

       3.57     17.5         51,400    30.0         78,200     7.5         80,000     2.5         43,900     10.0

       3.18     10.0         45,800    15.0         72,600     5.0         60,000     0.0         45,000      5.0
</TABLE>


*  Base amount, to be restated for stock dividends as paid during the year.


<PAGE>   10


                                    EXHIBIT E

                               OBJECTIVES DEFINED


1. EARNINGS PER SHARE (Objective $3.96)

      A.      Earnings per share (EPS) will be "Income from Continuing
              Operations After Dividends on Capital Securities, Excluding
              Realized Investment Gains (Losses)" divided by "weighted average
              shares outstanding" as reported on the Consolidated Statements of
              Income per Form 10-K for Delphi Financial Group, Inc.

2.    LIFE INSURANCE COMPANIES OPERATING RESULTS (Objective $57,000)

      A.      This objective will be operating income per the Elements of Profit
              on page two of the monthly financial package for the life
              insurance companies only.

3.    GROUP PRODUCTION (Objective $85,000)

      A.      All wholesale and retail production generated through the efforts
              of RSL and affiliates will be considered, including business
              written by Reliance Standard Life Insurance Company of Texas
              (RSL-T) and First Reliance Standard Life Insurance Company (FRSL).

      B.      Retail Group Production is defined as total new annualized
              production for Group Life, Disability (LTD and Weekly Income),
              Dental, and Special Risk before deduction of reinsurance.

      C.      Retail production will be determined using the Paid Annualized
              Premium Production Report from the internal financial package,
              with certain adjustments. Any policy that has an effective date of
              September 30, 1998 or prior and has not been approved by the
              Underwriting department will not be included in the 1998 incentive
              calculation.

      D.      For the three-year Special risk policies which are fully paid at
              inception, the first year's annualized premium (before discount
              factor) will count as production.

      E.      If a submitted policy does not remain in force for twelve months,
              production will be reduced in the year that the policy lapses. In
              the case of submitted production in 1997 not equaling paid
              production in 1998, adjustments will be made to the Annualized
              Paid Production Report in 1998. Likewise, should submitted
              production in 1998 not equal paid production in 1999, adjustments
              will be made to the Annualized Paid Production Report in 1999.



<PAGE>   11


      F.      Wholesale production (or alternative distribution) can include
              blocks of policies in any line of business listed in Section B
              (above). Reinsurance assumed will be included only if the contract
              provides for risk transfer and material economic value.

4.    ASSET ACCUMULATION PRODUCTION (Objective $100,000)

      A.      Components of asset accumulation production will include FPA, GIC,
              SPDA, MVA, Group annuities and variable products.

      B.      Blocks of annuity business acquired, regardless of the source,
              will be counted in determining actual asset accumulation
              production.

      C.      Reinsurance assumed will be considered for purposes of determining
              achievement of this objective only if the contract provides for
              risk transfer and has material economic value.

4.    EXPENSES (Objective $42,800)

      A.      The objective is defined as total general expenses on an accrual
              basis. The objective will be the RSL-Texas Statutory General
              Expenses as shown on the Overview page in the monthly financial
              package.



<PAGE>   12


                                    EXHIBIT F

                               PERSONAL OBJECTIVES



Each senior officer has established personal goals and objectives to be achieved
during 1998.

Achievement of these goals and objectives will be reviewed at year-end 1998 and
a percentage (up to 20%) will be assigned based on results.