Document:

<PAGE>

                                                                   EXHIBIT 10(y)

                                   AMENDMENT

                          Dated as of August 31, 2001

                                      to

                        RECEIVABLES PURCHASE AGREEMENT

                        Dated as of  December 21, 1999

          THIS AMENDMENT (this "Amendment") dated as of August 31, 2001  is
entered into among:

          (i)    AILIC RECEIVABLES CORPORATION, a Delaware corporation
                 ("Seller"),
                   ------

          (ii)   AMERICAN INCOME LIFE INSURANCE COMPANY, an insurance company
                 organized under the laws of Indiana ("AIL"), as the initial
                                                       ---
                 Servicer (the Servicer together with the Seller, the "Seller
                                                                       ------
                 Parties" and each a "Seller Party"),
                 -------              ------------

          (iii)  PREFERRED RECEIVABLES FUNDING CORPORATION, a Delaware
                 corporation ("PREFCO"),
                               ------

          (iv)   certain financial institutions parties hereto as the "Financial
                                                                       ---------
                 Institutions" (and, together with PREFCO, the "Purchasers"),
                 ------------                                   ----------
                 and

          (v)    BANK ONE, NA (with headquarters in Chicago, Illinois), as agent
                 for the Purchasers (the "Agent").
                                          -----

                             PRELIMINARY STATEMENT

          Reference is made to that certain Receivables Purchase Agreement dated
as of December 21, 1999 (as amended, restated, supplemented or otherwise
modified since such date, the "Receivables Purchase Agreement") among the
                               ------------------------------
Seller, AIL, PREFCO, certain financial institutions and the Agent.  Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in the Receivables Purchase Agreement.

                                       1
<PAGE>

          Among the assets and interests in property transferred under the
Receivables Purchase Agreement are accounts receivable commonly known as "agent
debit balances."  The willingness of AIL to create agent debit balances is
dependent in large part on the expectation that the receipt of premiums from
Policy Holders shall provide the funds necessary to satisfy the payment
obligations represented by such agent debit balances.  Likewise, the willingness
of any Person to purchase from AIL or the Seller any agent debit balances or
interest therein is dependent in large part on the ability of such Person to
claim an interest in the premiums from Policy Holders that are expected to
satisfy such payment obligations.

          Under the terms and provisions of the Receivables Purchase Agreement,
the Purchasers heretofore have obtained, and will continue to obtain, an
interest in such premiums in connection with their purchases of interests in
agent debit balances.  In light of the importance of the acquisition by the
Purchasers of an interest in the premiums, the parties have agreed to enter into
this Amendment to set forth certain clarifying provisions and certain additional
covenants relating to the interests held by the Purchasers in the premiums.

          SECTION 1.  Amendments to the Receivables Purchase Agreement.  The
                      ------------------------------------------------
Receivables Purchase Agreement is, effective the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof, hereby
amended as follows:

          1.1  Article II of the Receivables Purchase Agreement is amended to
               ----------
add the following new Section 2.7 thereto:
                      -----------

               Section 2.7  Application of Collections in respect of Premium
                            ------------------------------------------------
          Interest.  Upon receipt by the Servicer, for the benefit of the
          --------
          Purchasers, of any amount in immediately available funds constituting
          a portion of any Premium, the Servicer is instructed, unless and until
          otherwise directed by the Agent, to apply such amount toward a
          reduction in the Outstanding Balance of the related Receivable, such
          application (a "Premium Application") to be based upon such
                          -------------------
          information as may then be available to the Servicer and as may be
          determined by the Servicer to be true, accurate and correct in respect
          of the Outstanding Balance of such Receivable and the commissions then
          owing to the Obligor on such Receivable and arising by reason of the
          receipt by AIL of such Premium. Upon and to the extent of any Premium
          Application in accordance with the foregoing,  (i) the Agent and the
          Purchasers waive any subrogation rights arising by statute or
          otherwise in respect of any commissions due from AIL to the Obligor on
          the affected Receivable, (ii) the Servicer shall be permitted to
          provide AIL and the Seller such evidence as AIL and the Seller may
          reasonably request to the effect that, by reason of such Premium
          Application, the affected Obligor shall have received the economic
          benefit of payment to it of any commission due in connection

                                       2
<PAGE>

          with the receipt by AIL of the related Premium and (iii) the
          obligation of a Torchmark Entity under the second sentence of Section
                                                                        -------
          7.1(j) to remit to the Servicer an amount calculated in reference to
          ------
          the corresponding commission payable to such Obligor shall be deemed
          satisfied. This Section 2.7 merely sets forth the anticipated
                          -----------
          accounting as among AIL, the Seller, the Agent and the Purchasers in
          relation to any Premium (or portion thereof) remitted to the Servicer
          for the benefit of the Agent and the Purchasers. Nothing contained
          herein or otherwise in this Agreement shall give rise to, or be deemed
          to be an assumption of, any obligation or liability on the part of the
          Agent or any Purchaser, or any of their respective successors or
          assigns, to pay any commission, fee or other remuneration, cost or
          expense to any Obligor or any member of any Agent-Hierarchy in
          connection with the receipt or application by AIL or any other Person
          of any Premium or any other aspect of the arrangements in effect from
          time to time between AIL and any such Obligor or Agent-Hierarchy.

          1.2  Article VII of the Receivables Purchase Agreement is amended to
               -----------
     add the following new Section 7.3 thereto:
                           -----------

               Section 7.3  Covenants Relating to Premium Interest.  As
                            --------------------------------------
          contemplated in the definition herein of "Related Security", each
          Purchaser Interest shall include, without limitation, an undivided
          percentage ownership interest in each Premium Interest.  In that
          regard, until the date on which the Aggregate Unpaids shall have been
          indefeasibly paid in full and this Agreement terminated in accordance
          with its terms, each Seller Party hereby covenants that:

                    (a)     Recordkeeping of Premium Interest. It shall (or
                            ---------------------------------
               shall cause the applicable Torchmark Entity to) maintain at all
               times recordkeeping systems such that (i) at the time an
               application for an Insurance Product is submitted by an Obligor,
               and such Torchmark Entity shall have accepted such application
               and agreed to issue the requested Insurance Product, a notation
               is encoded or otherwise made on its books and records identifying
               the commission and any similar fee that, in accordance with
               arrangements then existing between the Torchmark Entities and
               such Obligor and its Agent-Hierarchy, shall be payable to such
               Obligor or to any member of such Obligor's Agent-Hierarchy upon
               or in connection with the subsequent receipt by a Torchmark
               Entity of any Premium relating to such Insurance Product, and
               (ii) at the time any Premium relating to such Insurance Product
               is remitted by the applicable Policy Holder, the applicable
               Torchmark Entity shall be capable of immediately identifying the
               amount of the

                                       3
<PAGE>

               commission payable to the applicable Obligor and its Agent-
               Hierarchy.

                    (b) Remittance of Premium Interest.  In accordance with
                        ------------------------------
               Section 7.1(j), it shall (or shall cause the applicable Torchmark
               --------------
               Entity to), immediately upon receipt of any Premium which is
               subject to a Premium Interest, remit to the Servicer that portion
               of such Premium equal to the Premium Interest therein.  The
               Seller represents and warrants that the Agent and the Purchasers
               shall have a first priority ownership interest in each Premium
               Interest, free and clear of any Adverse Claim, including, without
               limitation, any claim of any Policy Holder, any Obligor and any
               member of an Agent-Hierarchy.

                    (c) Opinions.  It shall cause to be delivered to the Agent,
                        --------
               not less frequently than once each year, an opinion of Indiana
               insurance counsel (an "Indiana Regulatory Opinion") substantially
                                      --------------------------
               in the form of Exhibit IX hereto.  In the event there shall at
                              ----------
               any time be (i) a change in or in the interpretation of any law,
               rule or regulation relating to any Torchmark Entity which, in the
               reasonable judgment of the Agent or any Purchaser, brings into
               question the continuing validity of any of the legal conclusions
               stated in any Indiana Regulatory Opinion theretofore rendered to
               the Agent and the Purchasers in connection with this Agreement,
               or (ii) a material change in the staff of the Indiana Department
               of Insurance or any similar or successor agency having any
               oversight of any Torchmark Entity or the conduct of its business
               (the "Insurance Regulatory Agency"), the Agent may request that,
                     ---------------------------
               prior to the issuance of any Indiana Regulatory Opinion, the law
               firm rendering such opinion shall confer with the Insurance
               Regulatory Agency and seek confirmation that the legal
               conclusions to be stated in such Indiana Regulatory Opinion
               continue to be supported by the Insurance Regulatory Agency.

          Notwithstanding the calculation of any Premium Interest in reference
          to the commissions payable to any Obligor or its Agent-Hierarchy, the
          transfer to the Purchasers hereunder of any Premium Interest shall
          constitute the transfer of an asset of the Seller (which it shall have
          acquired from AIL), and neither the Agent nor any Purchaser assumes
          any obligation or liability to make any payment to any Obligor or its
          Agent-Hierarchy in respect of any commission or similar payment due to
          such Obligor or Agent-Hierarchy.  Any such obligation to pay any
          commission or similar fee to any Obligor or Agent-Hierarchy shall be
          and remain an obligation of AIL.

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<PAGE>

          1.3   Exhibit I to the Receivables Purchase Agreement is amended to
                ---------
     add the following new definitions thereto:

                "Premium" means, with respect to any Insurance Product, any and
                 -------
          all premiums received and to be received by AIL from the applicable
          Policy Holder in connection with the issuance of such Insurance
          Product.

                "Premium Interest" means, with respect to any Premium received
                 ----------------
          or receivable by AIL in respect of any Insurance Product that shall
          have been arranged by any Obligor, a portion of such Premium equal in
          amount to the commission or other similar fee that is or will be
          payable to such Obligor by AIL upon remittance of such Premium to AIL.

          1.4   Exhibit I to the Receivables Purchase Agreement is further
                ---------
     amended to delete the definition therein of "Liquidity Termination Date" in
                                                  --------------------------
     its entirety and to substitute the following new definition therefor:

                "Liquidity Termination Date" means August 30, 2002."
                 --------------------------

          1.5   Exhibit VIII to the Receivables Purchase Agreement is amended to
                ------------
     delete such exhibit in its entirety and to substitute therefor the new
     exhibit attached as Exhibit A to this Amendment.

          1.6   The exhibits to the Receivables Purchase Agreement are further
     amended to add as a new Exhibit IX the exhibit attached as Exhibit B to
                             ----------
     this Amendment.

          SECTION 2.  Conditions Precedent.  This Amendment shall become
                      --------------------
effective and be deemed effective as of the date hereof upon receipt by the
Agent of

          (i)   counterparts of this Amendment executed by each of the Seller
     Parties and the Purchasers;

          (ii)  counterparts of an amendment dated as of the date hereof to the
     Receivables Sale Agreement, executed by each of the named parties thereto,
     which amendment shall be in form and substance satisfactory to the Agent;

          (iii) a reaffirmation of guaranty executed by Torchmark, substantially
     in the form of Exhibit C hereto;

          (iv)  an opinion of Wood Tuohy Gleason Mercer & Herrin, P.C.,
     substantially in the form of Exhibit B hereto, accompanied by a letter from
     Mr. William J. Wood identifying the members of the staff of the Insurance
     Regulatory Agency that he consulted prior to rendering such opinion;

                                       5
<PAGE>

          (v)   a reaffirmation and date-down of the opinion issued by Maynard,
     Cooper & Gale, P.C. in connection with the initial closing of the
     Receivables Purchase Agreement and relating to certain "true sale" issues,
     in form and substance satisfactory to the Agent; and

          (vi)  an amended and restated Fee Letter, in form and substance
     satisfactory to the Agent, together with any fees payable thereunder on the
     date of closing of this Amendment.

          SECTION 3.  Covenants, Representations and Warranties of the Seller
                      -------------------------------------------------------
Parties.
-------

          3.l   Upon the effectiveness of this Amendment, each of the Seller
Parties hereby reaffirms all covenants, representations and warranties made by
it in the Receivables Purchase Agreement and agrees that all such covenants,
representations and warranties shall be deemed to have been re-made as of the
effective date of this Amendment.

          3.2   Each of the Seller Parties hereby represents and warrants that
this Amendment constitutes a legal, valid and binding obligation of such Person,
enforceable against it in accordance with its terms.

          SECTION 4.  Reference to and Effect on the Receivables Purchase
                      ---------------------------------------------------
Agreement.
---------

          4.l   Upon the effectiveness of this Amendment, each reference in the
Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and each reference to the
Receivables Purchase Agreement in any other document, instrument or agreement
executed and/or delivered in connection with the Receivables Purchase Agreement
shall mean and be a reference to the Receivables Purchase Agreement as amended
hereby.

          4.2   Except as specifically amended above, the Receivables Purchase
Agreement and all other documents, instruments and agreements executed and/or
delivered in connection therewith shall remain in full force and effect and are
hereby ratified and confirmed.

          4.3   The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of any Purchaser or
the Agent under the Receivables Purchase Agreement or any other document,
instrument or agreement executed in connection therewith, nor constitute a
waiver of any provision contained therein, except as specifically set forth
herein.

          SECTION 5.  Performance Guaranty.  Section 9 of the Performance
                      --------------------
Guaranty sets forth the circumstances under which the Performance Guaranty shall
be

                                       6
<PAGE>

released and terminated.  The Agent, on behalf of itself and the Purchasers,
agrees for the benefit of the Performance Guarantor that, notwithstanding the
continued existence of any other "Guaranteed Obligations" at such time, the
Agent shall provide a written notice to the Performance Guarantor promptly
following the later to occur of (i) the Amortization Date (or any earlier date
as of which the parties to the Receivables Purchase Agreement agree that the
purchase facility contemplated thereunder shall terminate) and (ii) the
reduction to zero of the Capital and Aggregate Unpaids under the Receivables
Purchase Agreement, which written notice  (a "Guaranty Release Notice") shall
                                              -----------------------
release and terminate the Performance Guaranty .  The Performance Guaranty shall
be released and terminated effective upon issuance by the Agent of a Guaranty
Release Notice; provided that the terms and provisions of Sections 7(d), 8 and 9
                --------
(except as expressly modified herein) of the Performance Guaranty shall remain
in full force and effect and shall survive any such release and termination.
Without limiting the generality of the foregoing, the Performance Guaranty shall
continue to be effective or shall be reinstated, as the case may be, following
the issuance of any Guaranty Release Notice upon the occurrence of any of the
circumstances described in the proviso in Section 9 of the Performance Guaranty.
                               -------
It is expressly understood that, to the extent the Performance Guaranty is
continued in effect or reinstated at any time following the issuance of a
Guaranty Release Notice, the claims of the Agent and the Purchasers thereunder
shall be limited to claims relating to the recovery of Capital or reimbursement
in respect of losses, costs or expenses that are in the nature of Aggregate
Unpaids.

          SECTION 6.  Execution in Counterparts.  This Amendment may be executed
                      -------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.

          SECTION 7.  Governing Law.  This Amendment shall be governed by and
                      -------------
construed in accordance with the laws of the State of Illinois.

          SECTION 8.  Headings.  Section headings in this Amendment are included
                      --------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

                                       7
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.

                                        AILIC RECEIVABLES CORPORATION

                                        By:    /s/  Danny H. Almond
                                           ------------------------------------
                                        Name:  Danny H. Almond
                                        Title: Vice President

                                        Address:    3700 South Stonebridge Dr.
                                                    McKinney, Texas  75070
                                                    FAX: (972) 569-3282

                                        Attention:  Danny Almond

                                        AMERICAN INCOME LIFE INSURANCE COMPANY,
                                        as Servicer

                                        By:    /s/  Danny H. Almond
                                           ------------------------------------
                                        Name:  Danny H. Almond
                                        Title: Vice President

                                        Address:    1200 Wooded Acres
                                                    Waco, Texas  76710
                                                    FAX: (205) 325-4157

                                        Attention:  Michael J. Klyce
                                                    Vice President and Treasurer

                                       8
<PAGE>

                              PREFERRED RECEIVABLES FUNDING CORPORATION

                              By: /s/ Edwin J. Reisinger
                                 -----------------------------------------
                              Name:  Edwin J. Reisinger
                              Title: Authorized Signatory

                              Address:  c/o Bank One, NA, as Agent
                                        Asset Backed Finance
                                        Suite IL1-0079, 1-19
                                        1 Bank One Plaza
                                        Chicago, Illinois 60670-0019

                              Fax:      (312) 732-1844

                              BANK ONE, NA,
                              as a Financial Institution and as Agent

                              By: /s/ Edwin J. Reisinger
                                 -----------------------------------------
                              Name:  Edwin J. Reisinger
                              Title: Authorized Signatory

                              Address:  Bank One, NA
                                        Asset Backed Finance
                                        Suite IL1-0079, 1-19
                                        1 Bank One Plaza
                                        Chicago, Illinois 60670-0019

                              Fax:      (312) 732-4487

                                       9
<PAGE>

                                   Exhibit A

                                      to

                                   Amendment

                          Dated as of August 31, 2001

              NEW EXHIBIT VIII TO RECEIVABLES PURCHASE AGREEMENT

                            FORM OF MONTHLY REPORT

                                  (Attached)

                                       10
<PAGE>

                                   Exhibit B

                                      to

                                   Amendment

                          Dated as of August 31, 2001

               NEW EXHIBIT IX TO RECEIVABLES PURCHASE AGREEMENT

                      FORM OF INDIANA REGULATORY OPINION

                                  (Attached)

                                       11
<PAGE>

                                   Exhibit C

                                      to

                                   Amendment

                          Dated as of August 31, 2001

                 FORM OF REAFFIRMATION OF PERFORMANCE GUARANTY

               TORCHMARK CORPORATION ("Torchmark") hereby (a) acknowledges, and
consents to, the execution of the following documents, each dated on or as of
August 31, 2001 (collectively, the "Amendment Documents"):

               (i)    that certain Amendment to the Receivables Purchase
     Agreement dated as of December 21, 1999, as amended and restated as of
     March 31, 2000, among AILIC RECEIVABLES CORPORATION ("Seller"), AMERICAN
     INCOME LIFE INSURANCE COMPANY ("AIL"), as the initial Servicer, PREFERRED
     RECEIVABLES FUNDING CORPORATION ("PREFCO") and BANK ONE, NA (with
     headquarters in Chicago, Illinois), as "Purchaser" and as "Agent";

               (ii)   that certain Amendment to the Receivables Sale Agreement
     dated as of December 21, 1999, as amended and restated as of March 31,
     2000, between the Seller and AIL; and

               (iii)  that certain amended and restated Fee Letter among the
     Agent, PREFCO, the Seller and Torchmark;

(b) reaffirms all of its obligations under that certain Performance Guaranty
(the "Performance Guaranty") dated as of December 21, 1999 made by Torchmark and
(iii) acknowledges and agrees that such Performance Guaranty remains in full
force and effect (including, without limitation, with respect to the "Guaranteed
Obligations" and "Obligations" (each as defined in the Performance Guaranty)
after giving effect to the Amendment Documents), and such Performance Guaranty
is hereby ratified and confirmed.

Dated: August 31, 2001

                                       12
<PAGE>

                              TORCHMARK CORPORATION

                              By ________________________
                                 Title:

                                      13<PAGE>

                                                                   Exhibit 10(z)

                  RETIREMENT LIFE INSURANCE BENEFIT AGREEMENT

     This Agreement between, a corporation ("Employer"), and ("Employee"),
witness that:

     WHEREAS, Employee has been a participant in a program (the "Insurance
Benefit Program") pursuant to which the Employer agreed to pay to the Employee,
commencing on the later of (i) the Employee's Normal Retirement Date or (ii),
the date on which Employee became entitled to convert the insurance then in
force on his/her life under the Employee's pre-retirement group term life
insurance plan, certain designated percentages of the premium for the amount of
pre-retirement group term life insurance which the Employee was entitled to
convert (whether or not the Employee converted any, all, or none of such
insurance) provided that, pursuant to such agreement, such payments would be
made only if the Employee's employment with the Employer continued beyond
his/her Normal Retirement Date or terminated by reason of retirement on or
before said Normal Retirement Date; and

     WHEREAS, the Insurance Payment Program was terminated effective July 2,
2001;

     WHEREAS, Employer desires to continue providing a post-retirement life
insurance benefit to each Employee eligible for and participating in the
Insurance Payment Program at the time of its termination.

     NOW THEREFORE, in consideration of the foregoing premises and Employee's
agreement to surrender all claims to any payments he/she might be entitled to
under the former Insurance Payment Program, Employer and Employee agree as
follows:

     1.  Effective upon the later of the Employee's 65th birthday or his/her
retirement date, Employer will purchase a term life insurance policy on the life
of Employee issued by the Employer or one of its affiliates with a face amount
equal to the percentage shown below of an amount equal to two times the
Employee's salary and bonus earned in his/her final year of employment prior to
retirement less $5,000; provided, however, that the face amount of such
insurance policy shall not exceed $1,995,000.
<PAGE>

             Employee's Age Nearest Birthday       Percentage of
                    at Date of Retirement          Benefit Amount
             -------------------------------       --------------
                              55                          65
                              56                          70
                              57                          75
                              58                          80
                              59                          85
                              60                          90
                              61                          95
                              62 or over                 100

     2.  Employee shall be the owner of the policy and shall, consistent
therewith, be entitled to designate a beneficiary or beneficiaries thereunder,
assign the policy, and exercise all other rights of ownership.  Employee hereby
irrevocably authorizes and directs the Employer to pay all premiums, as they
become due, directly to the issuer of the policy.  If for any reason the
Employee cancels or terminates the policy, the Employer's obligations hereunder
shall terminate.

     3.  This Agreement is not assignable by either party, except by operation
of law.
     4.  This Agreement shall be governed by the law of the State of 4, except
to the extent preempted under federal law.

     5.  This Agreement shall supersede and replace the former Insurance Payment
Program. By executing this Agreement, Employee surrenders all claims to any
payments he/she might be entitled to receive under the former Insurance Payment
Program.

     6.  Employee understands and acknowledges that he/she may owe income taxes
annually on the cost of coverage once such coverage becomes effective.  The
Employer shall determine the amount that is includable each year in the
Employee's gross income, and report such amount as required by law.

In witness whereof, this Agreement has been executed on this ___ day of August,
2001.
<PAGE>

                                         By:______________________________
Assistant Secretary                      Its:_____________________________

Witness                                  Employee

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