GUARANTEE AGREEMENT

General American Life Insurance Company ("General American") by resolution of
its Board of Directors, has guaranteed that Paragon Life Insurance Company
("Paragon") will have sufficient funds to meet all of its contractual
obligations. In order to give full effect to this guarantee the parties hereto
agree as follows:

   1) The General American guarantee is a guarantee of payment. In the event a
   Paragon policyholder presents a legitimate claim for payment under a Paragon
   insurance policy General American promises to pay such a claim directly to
   the policyholder if Paragon is unable to make such payment.

   2) General American guarantees payment of Paragon's contractual obligations
   even if the reason Paragon is not liable to pay them is insolvency,
   bankruptcy, assignment for the benefit of creditors, appointment of
   receiver, or any court order or legal process affecting Paragon's ability to
   honor its obligations to policyholders.

   3) The General American guarantee is explicitly for the benefit of Paragon
   policyholders and shall be directly enforceable by them without a
   requirement, if Paragon is unable to pay claims on its policies, that the
   party seeking to enforce the guarantee first file a claim with Paragon or in
   an insolvency proceeding. If any payment of Paragon under an insurance
   policy must be returned by a policyholder as a preference in bankruptcy or
   for any other reason, General American's guarantee will take effect with
   respect to that policyholder. Paragon shall be entitled to bring this
   guarantee to the attention of all of its customers and potential customers.

   4) General American shall be entitled to adequate notice of any claim before
   the obligation to make good on the guarantee shall take effect, but any
   delay in presenting notice of a claim shall not affect General American's
   obligations hereunder. General American does not waive, by giving this
   guarantee, its right to investigate claims made against Paragon in the same
   manner and to the same extent that it investigates claims made in the
   ordinary course of its own business. General American reserves the right to
   assert conventional defenses to the payment of any insurance claim.

   5) The General American guarantee shall not be affected by amendments or
   additions made by Paragon to its insurance policies, or by waivers or
   extensions granted by Paragon except that General American's guarantee shall
   not give Paragon's policyholders rights to a greater recovery than they
   would obtain under the terms of the policy of insurance they have with
   Paragon. General American waives its right to assert defenses against
   payment of a claim arising from illegality, unenforceability, and failure to
   give notices or take other formal steps which might at law otherwise be
   required of one seeding to enforce the guarantee.

   6) Any change in this Agreement shall have prospective effect only so that
   contracts issued prior to the effective date of any change shall not be
   affected by any



   subsequent modification of the guarantee unless the modification is an
   enhancement of the guarantee or the policyholder consents in writing to the
   new terms of the guarantee.

   7) General American's guarantee of Paragon's contractual obligations is
   given in consideration of General American's desire to see Paragon, its
   wholly-owned subsidiary, grown and prosper, without constraints caused by
   customer concerns about Paragon's financial strength. Paragon's obligations
   as the recipient of the guarantee are to operate as a successful insurance
   company in its chosen areas of endeavor and to keep General American
   informed of its financial situation and of any instance in which General
   American might be called upon to honor its guarantee.

   8) Upon payment of any claim General American shall be subrogated to the
   rights of Paragon for that amount, and Paragon agrees to cooperate with
   General American to effect such subrogation rights against third parties.
   General American and Paragon agree to hold any sums they collect from third
   parties in trust for Paragon policyholders and to pay claims from such sums
   as they become due. Paragon further agrees to repay General American any
   amounts due under this Agreement to policyholders and not reimbursed by
   other parties.

   9) This Agreement shall be governed by the law of Missouri. If any part of
   this Agreement shall be held invalid, illegal, or unenforceable the
   remaining parts of the Agreement shall not be affected and shall continue in
   effect. This Agreement shall be binding upon any successor or assign of
   General American or Paragon, provided however that General American's
   obligations hereunder shall cease and determine only if this Agreement is
   assigned to an entity having a rating from Standard & Poor's, attesting to
   financial strength, credit-worthiness, or claims-paying ability equal to or
   better than General American's rating.

In witness whereof the parties have signed this Guarantee Agreement this 13th
day of June 1991.

GENERAL AMERICAN LIFE INSURANCE         PARAGON LIFE INSURANCE COMPANY
COMPANY

By: /s/ H. Edwin Trusheim               By: /s/ Carl H. Anderson
    ----------------------------------      ---------------------------------
    H. Edwin Trusheim,                      Carl H. Anderson,
    Chairman Of the Board, Chief            President
    Executive Officer