[FORM OF] STANCORP FINANCIAL GROUP, INC. LONG-TERM INCENTIVE AWARD AGREEMENT

EXHIBIT 10.4

[FORM OF]

STANCORP FINANCIAL GROUP, INC.

LONG-TERM INCENTIVE AWARD AGREEMENT

(20      Performance Period)

This Long-Term Incentive Award Agreement (this “Agreement”) is made effective as of                      , 20      between StanCorp Financial Group, Inc., an Oregon corporation (the “Company”) and                                  (the “Employee”).

On              , 20      , the Organization and Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”) authorized a performance-based award to the Employee pursuant to Section 8 of the Company’s 2002 Stock Incentive Plan (the “Plan”). Compensation paid pursuant to the award is intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). Employee desires to accept the award subject to the terms and conditions of this Agreement.

In consideration of the agreements set forth below, the Company and the Employee agree as follows:

1. Awards .

1.1 Restricted Shares . Subject to the terms and conditions of this Agreement, the Company hereby awards to the Employee                      shares of common stock (“Common Stock”) of the Company (the “Restricted Shares”). The Restricted Shares shall be issued to the Employee as of the date of this Agreement subject to vesting and possible forfeiture to the Company based on (a) the Company’s financial performance during the 20      calendar year (the “Performance Period”) as described in Section 3, and (b) the Employee’s continued employment until the vesting date as described in Section 4.

1.2 Cash Performance Units . Subject to the terms and conditions of this Agreement, the Company hereby awards to the Employee              performance units (the “Performance Units”), with each Performance Unit representing a right to receive cash from the Company equal to the value of one share of Common Stock at the time of payment, as described in Section 5. The number of Performance Units for which the Employee shall receive payment shall also be based on (a) the Company’s financial performance during the Performance Period as described in Section 3, and (b) the Employee’s continued employment until the vesting date as described in Section 4.

2. Escrow . For purposes of facilitating the enforcement of Sections 4.1, 5 and 8 of this Agreement, the Restricted Shares shall be delivered to a person or persons designated by the Company to serve as escrow holder (individually or jointly, as applicable, the “Escrow Holder”). The Escrow Holder may be an employee of the Company. Upon delivery into escrow of the Restricted Shares, the Employee shall deliver to the Escrow Holder duly executed stock powers with respect to the Restricted Shares. The Escrow Holder shall hold the Restricted Shares and the stock powers in escrow and shall release the Restricted Shares to the Company or the Employee, as applicable, only in accordance with Section 10 of this Agreement. The Employee

hereby acknowledges that the Company’s designee is appointed as the Escrow Holder with the foregoing authorities as a material inducement to make this Agreement and that said appointment is coupled with an interest and is irrevocable. The Employee agrees that said Escrow Holder shall not be liable to any party to this Agreement (or to any other party) for any actions or omissions unless the Escrow Holder is grossly negligent with respect thereto.

3. Performance Conditions .

3.1 Subject to Section 4.1 and Section 5, the number of Restricted Shares and Performance Units that will vest shall be determined by multiplying the number of Restricted Shares or Performance Units, as the case may be, awarded as provided in Section 1 by the Payout Factor determined under the following formula:

Payout Factor = (      % * Adjusted EPS PF) + (      % * Premiums PF) + (      % * NP Earnings PF)

where the “Adjusted EPS PF,” the “Premiums PF” and the “NP Earnings PF” are determined under the following table based on the Company’s Adjusted EPS, Premiums and NP Earnings, respectively (each as defined below), for the Performance Period.

If the Adjusted EPS for the Performance Period is between any two data points set forth in the first column of the above table, the Adjusted EPS PF shall be determined by interpolation between the corresponding data points in the second column of the table. If the Premiums for the Performance Period are between any two data points set forth in the third column of the above table, the Premiums PF shall be determined by interpolation between the corresponding data points in the fourth column of the table. If the NP Earnings for the Performance Period are between any two data points set forth in the fifth column of the above table, the NP Earnings PF shall be determined by interpolation between the corresponding data points in the sixth column of the table.

3.2 The Company’s “Adjusted EPS” for the Performance Period shall be the Company’s net income per diluted common share excluding after-tax net capital gains for the Performance Period. Adjusted EPS shall be calculated by subtracting After-Tax Net Capital Gains (Losses) (as defined below) from the Company’s net income for the year, and then

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dividing the resulting amount by the Company’s diluted weighted-average common shares outstanding for the year. “After-Tax Net Capital Gains (Losses)” shall mean the amount calculated by multiplying the Company’s net capital gains (losses) for the year by a fraction, the numerator of which shall be the Company’s net income for the year and the denominator of which shall be the Company’s income before income taxes for the year. For this purpose, the Company’s net income, diluted weighted-average common shares outstanding, net capital gains (losses) and income before income taxes for the year shall be those amounts as set forth in the audited consolidated financial statements of the Company and its subsidiaries for the year. If, after the date of this Agreement, the outstanding Common Stock is increased or decreased by reason of any stock split, combination of shares or dividend payable in shares, the Adjusted EPS targets in the above table shall each be adjusted by multiplying such targets by a fraction, the numerator of which shall be the number of outstanding shares of Common Stock immediately before the increase or decrease and the denominator of which shall be the number of outstanding shares of Common Stock immediately after the increase or decrease.

3.3 The Company’s “Premiums” for the Performance Period shall be the Company’s premium revenues for the Performance Period as set forth in the audited consolidated financial statements of the Company and its subsidiaries for the year.

3.4 The Company’s “NP Earnings” for the Performance Period shall be the Company’s Non-Premium Earnings for the Performance Period. Non-Premium Earnings shall be equal to the aggregate income before income taxes for the year of all of the Company’s business units other than the Individual and Group Life Insurance and Individual and Group Disability Insurance business units. Income before income taxes of the included business units shall be computed based on the Company’s books and records, in accordance with generally accepted accounting principles, and in a manner consistent with the manner in which the Company calculated such aggregate amount as being $              million for its 20      fiscal year.

3.5 If the Company implements a change in accounting principle between the date of this Agreement and the end of the Performance Period, either as a result of the issuance of new accounting standards or otherwise, and the effect of the accounting change was not reflected in the Company’s business plan at the time of approval of this award, then Adjusted EPS, Premiums and NP Earnings shall be adjusted to eliminate the impact of the change in accounting principle.

4. Employment Condition .

4.1 In order to become vested in any Restricted Shares or Performance Units, the Employee must not have a Termination of Employment (as defined below) prior to the February 15 immediately following the end of the Performance Period (the “Vesting Date”), other than by reason of Total Disability, Death or Retirement as such terms ar