Protective Life Insurance Company P.O. Box 830771 Birmingham, AL 35283-0771

THIS FORM IS TO BE COMPLETED ONLY IF THERE IS A LOAN TO BE CARRIED OVER TO

PROTECTIVE LIFE INSURANCE COMPANY AT THE TIME OF 1035 EXCHANGE THIS AGREEMENT made between Protective Life Insurance Company, Birmingham, AL 35283-0771 (hereinafter

referred to as ‘Protective Life’) and ______________________________ of _______________________________

hereinafter referred to as ‘Owner’) WHEREAS the Owner desires to exchange the following existing life insurance

policy(ies) on his/her life.

POLICY NUMBER(S) INSURANCE COMPANY __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ WHEREAS the Owner desires that such exchange shall be effected under the provisions of Section 1035 of the Internal Revenue Code and that the new Protective Life policy(ies) shall be deemed to be a life insurance contract under the provisions of Section 1035(a) of the Code; and WHEREAS the Owner desires that loan indebtedness on the existing contract(s) shall not cause the amount of said indebtedness or gain in said contract(s) to be includible in his/her gross income under the provisions of Sections 72, 1031 or 1035 of the Code. NOW THEREFORE, Protective Life and the Owner agree to an exchange of the policy(ies) listed above for the Protective Life contract to be carried out as follows: 1. At the time of approval of the Protective Life policy(ies), Protective Life will execute Protective’s Absolute

Assignment, Change of Beneficiary and Power of Attorney form signed by the owner. 2. The owner hereby requests that the Face Amount and Cash Value of the new Protective Life policy will

be based on the surrender values actually received from the existing insurer(s) by Protective, less any unpaid policy deductions, plus any loan indebtedness on the existing contract(s), if any, as reported by the existing insurer(s), effective on the date such surrender values and loan indebtedness are transferred and applied to the new Protective Life policy. Effective on the Policy Date, the new Protective Life policy will be subject to a loan in an amount equal to the loan indebtedness on the existing contract(s).

3. Protective Life is hereby authorized to and will automatically establish policy loans and adjust the Face Amount and Cash Value in accordance with the terms of this Agreement.

The owner acknowledges receiving and reading “Notice Regarding Replacement of Life Insurance Policies With Outstanding Policy Loans” below. The owner understands that: 1. This Exchange Agreement has been executed in connection with an application for life insurance to

Protective Life. Protective Life will consider the application in accordance with its current underwriting requirements.

2. Protective Life is not responsible for keeping the existing policy(ies) in force prior to the surrender of such policy(ies).

3. After the assignment of the existing policy(ies) to Protective Life, Protective Life will not be responsible for the existing insurer’s:

a. Failure to properly calculate policy value. b. Delay in exchanging the proper policy value. c. Failure to provide or delay in providing proper information covering cost basis and gain in the policy. VUL-1016 Page 1 of 2 8/08

RESCUE LOAN AGREEMENT

d. Outstanding loan indebtedness will reduce the death benefits and surrender values payable under the new Protective Life policy. Interest is charged on the indebtedness in accordance with the Protective Life policy.

e. Interest paid as to said indebtedness is generally not tax deductible. f. THE OWNER IS SOLELY RESPONSIBLE FOR DETERMINING WHETHER THIS AGREEMENT

AND THE PROPOSED TRANSACTION WILL RESULT IN A TAX-FREE EXCHANGE UNDER INTERNAL REVENUE CODE SECTION 1035. FAVORABLE TAX RESULTS ARE NOT GUARANTEED. THE OWNER SHOULD CONSULT HIS/HER OWN TAX ADVISOR.

______________________________________ _____________ ____________________________________ Witness Date Owner

PROTECTIVE LIFE INSURANCE COMPANY Date: _____________ By: _____________________________

Notice Regarding Replacement of Life Insurance Policies With Outstanding Policy Loans Comparison of your existing life insurance policies with a new Protective Life policy may indicate replacement will be in your best interest. You may benefit from lower premiums, higher cash values, or higher death benefits. The decision to replace existing life insurance is very important and should be made carefully. Frequently replacement is accomplished through an exchange of existing policies for a new policy. An important factor to consider is tax consequences. Section 1035 of the Internal Revenue Code states the general rule that the exchange of an existing life insurance policy for a new policy is a tax free exchange. However, if the existing policy is subject to outstanding policy loan indebtedness and if there is gain in the existing policy (the amount realized is greater than the cost or basis), then the exchange may not be tax free. In the event, the amount of the outstanding policy loan (which in effect gets paid off by a reduction in cash value proceeds) may be includible in the owner ’s gross income to the extent of gain in the policy. In most cases, there will be no gain under the existing policy. In cases where a substantial gain and outstanding loan exist, there are two ways to handle this situation.

1. Payoff outstanding loans on existing policies prior to the exchange.

2. Under the rationale of Private Letter Ruling 8605033 the exchange of existing life insurance policies with an outstanding loan for a new policy which also has an outstanding loan in the same amount may be tax free if the owner agrees to such an arrangement in advance.

Protective Life is ready to help you implement a “policy with a loan” for “policy with a loan” exchange strategy. This may help you achieve the benefits of replacement without the detriment of incurring an immediate tax liability. The owner must understand:

(1) any loan against the new policy will reduce the death benefits payable under the new policy,

(2) interest will be charged against loan principal in accordance with the new policy,

(3) interest payments under the new policy may not be deductible. This notice is intended to make you aware of the tax issues discussed. Protective Life cannot and does not offer you tax advice. You must consult with and solely rely on your own tax advisors concerning the tax results of any decision to exchange existing life insurance policies with outstanding loans for a new policy.

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