Robert D. Booth and Janice Booth, et al. - Page 19

                                       - 19 -                                         
          uninsurable, in a tax-exempt money market fund.  Prime maintained           
          commission-sharing arrangements with the insurance companies that           
          wrote these insurance policies.  Prime usually earned a                     
          commission equal to 22 percent of the amount paid for life                  
          insurance and 1.2 percent of the amount paid to fund DWB's.                 
          Employers typically contributed $50,000 to the Trust.  Generally,           
          $6,000 of this amount was used to purchase life insurance and the           
          balance ($44,000) to fund DWB's.                                            
               3.  Death Benefits                                                     
               If a Covered Employee died while employed, a death benefit             
          became payable to his or her beneficiary in the amount set forth            
          by the employer in the Adoption Agreement.  This amount was                 
          generally stated as a percentage of the Covered Employee's                  
          compensation or, if higher, a set minimum amount.  For a Covered            
          Employee who was other than a standard underwriting risk, the               
          death benefit could be reduced or eliminated, depending on the              
          provisions of the employer's Adoption Agreement.                            
               Death benefits were typically funded through universal life            
          policies.  Under such a policy, the premiums in excess of the               
          amount necessary to fund current mortality and administrative               
          expenses are typically invested by the carrier at a fixed rate of           
          return.  This rate of return may vary over time, although                   
          carriers generally guarantee a specified minimum return.                    
               The amounts paid by the Trust for the universal life                   
          policies were generally separated into two amounts:  (1) The                




Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011