X0202 4 2006-05-08 0 0000773660 HealthMarkets, Inc. N/A 0001184821 MCQUAGGE TROY A 536 SILICON DRIVE SUITE 100 SOUTHLAKE TX 76092 0 0 0 1 Division Manager Stock Option 37.00 2006-05-08 4 A 0 48667 37.00 A 2007-05-08 2016-05-08 Class A-1 Common Stock 48667 48667 D Stock Option 2006-05-08 4 A 0 48666 A 2007-05-08 2016-05-08 Class A-1 Common Stock 48666 48666 D Stock Option 11.50 2004-02-12 2008-03-13 Class A-1 Common Stock 30000 30000 D Stock Option 30.75 2006-03-16 2010-06-14 Class A-1 Common Stock 60000 60000 D Stock Option 11.40 2002-12-08 2007-01-07 Class A-1 Common Stock 4000 4000 D The options vest in 20% increments on each of the first, second, third, fourth and fifth anniversaries of May 8, 2006 The initial exercise price of the option is $37.00. The exercise price of the option will accrete by 10% per year, starting on May 8, 2008. If the optionee exercises the option prior to May 8, 2008, the exercise price will be $37.00. If the optionee exercises the option on or after May 8, 2008 but prior to May 8, 2009, the exercise price will be $40.70. If the optionee exercises the option on or after May 8, 2009 but prior to May 8, 2010, the exercise price will be $44.77. If the optionee exercises the option on or after May 8, 2010 but prior to May 8, 2011, the exercise price will be $49.25. If the optionee exercises the option on or after May 8, 2011, the exercise price will be $54.17. The option vests in different increments on each of the first five anniversaries of May 8, 2006. Twenty-five percent of the option vests on May 8, 2007. Twenty-five percent of the option vests on May 8, 2008. Seventeen percent of the option vests on May 8, 2009. Seventeen percent of the option vests on May 8, 2010. The remaining 16% of the option vests on May 8, 2011. Options vest and become exercisable in 20% annual increments on each of the first, second, third, fourth and fifth anniversaries of the grant date Troy A. McQuagge By /s/ Peggy G. Simpson, POA 2006-05-09