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THE TRAVELERS LIFE AND ANNUITY COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE: (800) 334-4298
THE TRAVELERS MARKETLIFESM
INDIVIDUAL VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
THE TRAVELERS FUND UL II FOR VARIABLE LIFE INSURANCE
PROSPECTUS
MAY 1, 1997
This Prospectus describes The Travelers MarketLifesm, an individual variable
universal (flexible premium) life insurance Policy (the "Policy") offered by The
Travelers Life and Annuity Company (the "Company") and funded by The Travelers
Fund UL II for Variable Life Insurance ("Fund UL II"). A Policy Owner may choose
the amount of life insurance coverage desired with a minimum Stated Amount of
$50,000. The premium payment may be allocated by the Policy Owner to one or more
of the mutual funds underlying Fund UL II (the "Investment Options").
The Policy has a Right to Cancel Period during which the Applicant may return
the Policy to the Company for a refund. The Right to Cancel Period expires on
the latest of ten days after you receive the Policy, ten days after we mail or
deliver to you a written Notice of Right to Cancel, or 45 days after the
Applicant signs the application for insurance.
There is no guaranteed minimum Cash Value for a Policy. The Cash Value of the
Policy will vary to reflect the investment performance of the Investment Options
to which premium payments have been allocated, and the Policy Owner bears the
investment risk for all amounts so allocated. Additionally, the Cash Value is
reduced by the various fees and charges assessed under the Policy, as set forth
in this Prospectus. The Policy will remain in effect for as long as the Cash
Surrender Value is sufficient to pay the monthly charges imposed under the
Policy subject to the Continuation of Insurance provision of the Policy, or for
such longer period as may be provided under the Lapse Protection Guarantee.
A Policy Owner will have two options with respect to the death benefit under the
Policy -- the "Level Option" and the "Variable Option." Under either option, the
death benefit will never be less than the Stated Amount (less any outstanding
Policy loans or Monthly Deduction Amounts due and unpaid). A Policy Owner may
also elect to change the death benefit option, subject to certain conditions.
It may not be advantageous to replace your existing life insurance policy or
supplement an existing flexible premium variable life insurance policy with the
Policy described in this Prospectus.
This Policy may be or become a modified endowment Policy under federal tax law.
If it is classified as a modified endowment Policy, any partial withdrawal,
Policy surrender or loan may result in adverse tax consequences or penalties.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
EACH OF THE INVESTMENT OPTIONS. EACH OF THE INVESTMENT OPTION PROSPECTUSES ARE
INCLUDED WITH THE PACKAGE CONTAINING THIS PROSPECTUS. ALL PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
VARIABLE LIFE INSURANCE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED
OR GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.................................................... Glossary 1-2
PROSPECTUS SUMMARY........................................................... Summary 1-3
THE INSURANCE COMPANY........................................................ 1
THE POLICY................................................................... 1
The Policy Application..................................................... 1
Beneficiary................................................................ 2
Assignment................................................................. 2
Allocation of Premium Payments............................................. 2
Right to Cancel............................................................ 2
Statements to Policy Owners................................................ 2
CHARGES AND DEDUCTIONS....................................................... 3
Charges Against Premium.................................................... 3
Front-End Sales Charge.................................................. 3
State Premium Tax Charge................................................ 3
Monthly Deduction Amount................................................... 3
Cost of Insurance Charge................................................ 3
Policy Administrative Charge............................................ 3
Charges for Supplemental Benefit Provisions............................. 4
Charges Against the Separate Account....................................... 4
Mortality and Expense Risk Charge....................................... 4
Administrative Expense Charge........................................... 4
Charges Against the Investment Options..................................... 4
Surrender Charges.......................................................... 4
Percent of Premium Charge............................................... 4
Per Thousand of Stated Amount Charge.................................... 5
Maximum Sales Charges...................................................... 5
Reduction or Elimination of Charges........................................ 6
Transaction Charge......................................................... 6
POLICY BENEFITS AND RIGHTS................................................... 6
Cash Value and Cash Surrender Value........................................ 6
Policy Loans............................................................... 7
Lapse and Reinstatement.................................................... 7
Lapse Protection Guarantee................................................. 8
Exchange Rights............................................................ 8
Death Benefit.............................................................. 8
Changes in Death Benefit Option......................................... 10
Payment Options......................................................... 10
Limit on Right to Contest and Suicide Exclusion......................... 11
Misstatement as to Sex and Age.......................................... 11
Changes in Stated Amount................................................ 11
Maturity and Maturity Extension Benefits................................ 12
</TABLE>
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<TABLE>
<S> <C>
THE SEPARATE ACCOUNT AND THE INVESTMENT OPTIONS.............................. 12
The Travelers Fund UL II for Variable Life Insurance (Fund UL II).......... 12
The Investment Options..................................................... 12
General.................................................................... 17
Accumulation Unit Values................................................... 18
Mixed and Shared Funding................................................... 18
Substitution............................................................... 18
TRANSFER OF CASH VALUE....................................................... 19
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS).................................. 19
PERFORMANCE INFORMATION...................................................... 19
MISCELLANEOUS................................................................ 22
Voting Rights.............................................................. 22
Disregarding Voting Instructions........................................... 23
Suspension of Valuation.................................................... 23
Dividends.................................................................. 23
Distribution............................................................... 23
Legal Proceedings and Opinion.............................................. 23
Independent Accountants.................................................... 24
Registration Statement..................................................... 24
FEDERAL TAX CONSIDERATIONS................................................... 24
General.................................................................... 24
TAX STATUS OF THE POLICY..................................................... 24
Definition of Life Insurance............................................... 24
Diversification............................................................ 25
Investor Control........................................................... 25
TAX TREATMENT OF POLICY BENEFITS............................................. 26
In General................................................................. 26
Modified Endowment Contracts............................................... 26
Exchanges.................................................................. 26
Policies which are not Modified Endowment Contracts........................ 27
Treatment of Loan Interest................................................. 27
Aggregation of Modified Endowment Contracts................................ 27
The Company's Income Taxes................................................. 27
MANAGEMENT................................................................... 28
ILLUSTRATIONS................................................................ 29
APPENDIX..................................................................... 35
A -- Annual Minimum Premiums............................................... 35
B, B(1), B(2) -- Surrender Charges......................................... 36-38
C -- Current Monthly Administrative Charge................................. 39-40
C(1) -- Guaranteed Monthly Administrative Charge........................... 41
Financial Statements
</TABLE>
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GLOSSARY OF SPECIAL TERMS
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The following terms are used throughout the Prospectus, and have the indicated
meanings:
ACCUMULATION UNIT -- a standard of measurement used to calculate the values
allocated to the Investment Options.
ANNUAL MINIMUM PREMIUM -- the Policy Owner must pay a first premium greater than
or equal to one-quarter of this amount for the Policy to be issued. (Please
refer to Appendix A.)
BENEFICIARY(IES) -- the person(s) named to receive the death benefits of this
Policy at the Insured's death.
CASH SURRENDER VALUE -- the Cash Value less any outstanding Policy loan and
surrender charges.
CASH VALUE -- the current value of Accumulation Units credited to each of the
Investment Options available under the Policy, plus the value of the Loan
Account.
COMPANY'S HOME OFFICE -- the principal executive offices of The Travelers Life
and Annuity Company located at One Tower Square, Hartford, Connecticut 06183.
DEDUCTION DATE -- the day in each Policy Month on which the Monthly Deduction
Amount is deducted from the Policy's Cash Value.
INSURED -- the person on whose life the Policy is issued.
INVESTMENT OPTIONS -- the Portfolios to which you may allocate premiums or Cash
Value through segments of the Separate Account available under Fund UL II.
ISSUE DATE -- the date on which the Policy is issued by the Company for delivery
to the Policy Owner.
LAPSE PROTECTION GUARANTEE -- a benefit which provides that the Policy will not
lapse during the first three Policy Years if a required amount of premium is
paid.
LOAN ACCOUNT -- an account in the Company's general account to which we transfer
the amount of any Policy loan, and to which we credit a fixed rate of interest.
MATURITY DATE -- The anniversary of the Policy Date on which the Insured is age
95.
MINIMUM AMOUNT INSURED -- the amount of Death Benefit required to qualify this
Policy as life insurance under federal tax law.
MONTHLY DEDUCTION AMOUNT -- the amount of charges deducted from the Policy's
Cash Value which includes cost of insurance charges, administrative charges, and
any charges for supplemental benefits.
MONTHLY PREMIUM THRESHOLD -- an amount shown on the Policy Summary page, the
cumulative amount of which must be paid during the first three Policy Years in
order for the Lapse Protection Guarantee to be in effect.
NET AMOUNT AT RISK -- an amount equal to the death benefit minus the Cash Value.
NET PREMIUM -- the amount of each premium payment applied to purchase
Accumulation Units under the Policy, less the deduction of front-end sales
charges and premium tax charges.
PLANNED PREMIUM -- the amount of premium which the Policy Owner chooses to pay
to the Company on a scheduled basis, and for which the Company will bill the
Policy Owner, either annually, semiannually or through automatic monthly
checking account deductions.
POLICY DATE -- the date on which the Policy, benefits and provisions of the
Policy become effective.
POLICY MONTH -- monthly periods computed from the Policy Date.
Glossary-1
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POLICY OWNER (YOU, YOUR OR OWNER) -- the person having rights to benefits under
the Policy during the lifetime of the Insured; the Policy Owner may or may not
be the Insured.
POLICY YEARS -- annual periods computed from the Policy Date.
SEPARATE ACCOUNT -- assets set aside by The Travelers Life and Annuity Company,
the investment experience of which is kept separate from that of other assets of
The Travelers Life and Annuity Company; for example, The Travelers Fund UL II
for Variable Life Insurance.
STATED AMOUNT -- the amount originally selected by the Policy Owner used to
determine the Death Benefit, or as may be increased or decreased as described in
this Prospectus.
VALUATION DATE -- a day on which the Separate Account is valued. A Valuation
Date is any day on which the New York Stock Exchange is open for trading. The
value of Accumulation Units will be determined as of the close of trading on the
New York Stock Exchange.
VALUATION PERIOD -- the period between the close of business on successive
Valuation Dates.
Glossary-2
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PROSPECTUS SUMMARY
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WHAT IS VARIABLE UNIVERSAL LIFE INSURANCE?
The Flexible Premium Variable Universal Life Insurance Policy is designed to
provide insurance protection on the life of the Insured and to build Cash Value.
Like other life insurance it provides an income-tax free death benefit that is
payable to the Beneficiary upon the Insured's death. Unlike traditional,
fixed-premium life insurance, the Policy allows you, as the Owner, to allocate
your premium, or transfer Cash Value to various Investment Options. These
Investment Options include equity, bond, money market and other types of
portfolios. Your Cash Value may increase or decrease daily, depending on
investment return. There is no minimum amount guaranteed as it would be in a
traditional life insurance policy.
SUMMARY OF MARKETLIFE FEATURES
INVESTMENT OPTIONS: You have the ability to choose from a wide variety of
well-known Investment Options. These professionally managed stock, bond and
money market funding options cover a broad spectrum of investment objectives and
risk tolerance. Currently, the following Investment Options (subject to state
availability) are available under Fund UL II:
<TABLE>
<S> <C> <C> <C>
AIM CAPITAL APPRECIATION PORTFOLIO TEMPLETON ASSET ALLOCATION FUND
ALLIANCE GROWTH PORTFOLIO TEMPLETON BOND FUND
DREYFUS STOCK INDEX FUND TEMPLETON STOCK FUND
FIDELITY VIP EQUITY-INCOME PORTFOLIO TRAVELERS CAPITAL APPRECIATION FUND
FIDELITY VIP GROWTH PORTFOLIO TRAVELERS CASH INCOME TRUST
FIDELITY VIP HIGH INCOME PORTFOLIO TRAVELERS MANAGED ASSETS TRUST
TRAVELERS U.S. GOVERNMENT SECURITIES
FIDELITY VIP II ASSET MANAGER PORTFOLIO PORTFOLIO
MFS TOTAL RETURN PORTFOLIO TRAVELERS ZERO COUPON BOND PORTFOLIO 1998
SMITH BARNEY HIGH INCOME PORTFOLIO TRAVELERS ZERO COUPON BOND PORTFOLIO 2000
SMITH BARNEY INCOME AND GROWTH PORTFOLIO TRAVELERS ZERO COUPON BOND PORTFOLIO 2005
SMITH BARNEY TOTAL RETURN PORTFOLIO UTILITIES PORTFOLIO
</TABLE>
For more information, including the investment objectives and investment
advisers, refer to page 12, and the prospectuses for each Investment Option.
PREMIUMS: When applying for your Policy, you state how much you intend to pay,
and whether you will pay annually, semiannually or monthly via checking account
deductions. You may also make unscheduled premium payments in any amount. No
premium payments will be accepted if receipt of such premiums would disqualify
the Policy as life insurance under applicable federal tax laws.
You indicate on your application what percentage of each Net Premium you would
like allocated to the Investment Options. You may change your allocations by
writing to the Company or by calling 1-800-334-4298.
During the underwriting period, any premium paid will be held in a non-interest
bearing account. After the Policy Date and until the applicants' right to cancel
has expired, your Net Premium will be invested in Cash Income Trust. After that,
the value will be distributed to each Investment Option in the percentages
indicated on your application.
RIGHT TO EXAMINE POLICY: You may return your Policy for any reason and receive a
full refund of your premium by mailing us the Policy and a written request for
cancellation within a specified period (p. 2).
Summary-1
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CHARGES AND DEDUCTIONS: Your Policy is subject to the following charges, which
compensate the Company for administering and distributing the Policy as well as
paying Policy benefits and assuming related risks:
POLICY CHARGE
- - Premium Expense Charge -- A sales charge and a premium tax charge are applied
to each premium based on the size of your Policy.
<TABLE>
<CAPTION>
TOTAL
SALES PREMIUM PREMIUM
STATED AMOUNT CHARGE TAX EXPENSE
------------------------- ------ ------- -------
<S> <C> <C> <C>
less than $500,000 2.5% 2.5% 5.0%
$500,000 to $999,999 2.0% 2.5% 4.5%
$1,000,000 and over 0% 2.5% 2.5%
</TABLE>
This charge pays some distribution expenses and state and local premium taxes
(p. 3).
- - Monthly Deduction -- deductions taken from the value of your Policy each month
to cover cost of insurance charges, Policy administrative charges and charges
for optional benefits (p. 3).
- - Surrender Charge -- applies if you surrender your Policy for its full Cash
Value or the Policy lapses, during the first 10 years and for 10 years after
requesting an increase in coverage. The surrender charge consists of a percent
of premium charge and a per thousand of face amount charge (p. 4).
- - Partial Surrender Charge -- applies if you surrender part of the value of your
Policy (p. 4).
ASSET-BASED CHARGES
- - Mortality and Expense Risk Charge -- applied to the assets of the Investment
Options on a daily basis which equals an annual rate of .80% for the first
fifteen years and .45% thereafter (p. 4).
- - Administrative Charge -- applies to the assets of the Investment Options on a
daily basis which equals an annual rate of .10% for the first fifteen years
and 0% thereafter (p. 3).
- - Fund Investment Management Fees -- the purchase of shares of the Investment
Options happens on a net asset value basis. The shares purchased already
reflect the deduction of investment advisory fees and other expenses.
DEATH BENEFITS: At time of application, you select a death benefit option. Under
certain conditions you may be able to change the death benefit option at a later
date. The options available are:
- - Level Option (Option 1): the death benefit will be equal to the Stated Amount
or the Minimum Amount Insured.
- - Variable Option (Option 2): the death benefit will be equal to the greater of
the Stated Amount of the Policy plus the Cash Value or the Minimum Amount
Insured.
POLICY VALUES: As with other types of insurance policies, MarketLife will
accumulate a Cash Value. The Cash Value of the Policy will increase or decrease
to reflect the investment experience of the Investment Options. Monthly charges
and any partial surrenders taken will also decrease the Cash Value. There is no
minimum guaranteed Cash Value.
ACCESS TO POLICY VALUES: You may borrow against your Policy's Cash Surrender
Value. The maximum loan amount allowable is 90% of the Cash Surrender Value.
After year 13, the Company offers zero net cost loans (p. 7).
You may cancel a portion of your Policy while the Insured is living and receive
a portion of the Cash Surrender Value. You may also cancel the entire Policy to
receive the full Cash Surrender Value. Depending on the amount of time the
Policy has been in force, there may be a charge for the partial or full
surrender (p. 4).
Summary-2
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TRANSFERS OF POLICY VALUES: You may transfer all or a portion of your Cash Value
among the Investment Options. You may do this by writing to the Company or
calling 1-800-334-4298 (p. 19).
You can use automated transfers to take advantage of dollar cost
averaging -- investing a fixed amount at regular intervals. For example, you
might have a set amount transferred from a relatively conservative Investment
Option to a more aggressive one, or several others (p. 19).
LAPSE PROTECTION GUARANTEE: This guarantees that, regardless of the performance
of the Investment Options that you select, your Policy will remain in effect for
the first three Policy Years. You are required to pay at least the cumulative
applicable Monthly Premium Threshold displayed on your Policy's Contract Summary
page. Any loans or partial surrenders are deducted from premium paid to
determine if the Lapse Protection Guarantee is in effect.
GRACE PERIOD: If the Cash Surrender Value of your Policy becomes less than the
amount needed to pay the Monthly Deduction Amount, and the lapse protection
rider is not in effect, you will have 61 days to pay a premium that is
sufficient to cover the Monthly Deduction Amount. If the premium is not paid,
your Policy will lapse.
EXCHANGE RIGHTS: During the first two Policy Years, you can exchange this Policy
for one that provides benefits that do not vary with the investment return of
the Investment Options (p. 8).
TAX CONSEQUENCES: Currently, the federal tax law excludes all Death Benefit
payments from the gross income of the Beneficiary (p. 26). At any point in time,
the Policy may become a modified endowment contract ("MEC"). A MEC has an
income-first taxation of all loans, pledges, collateral assignments or partial
surrenders. A 10% penalty tax may be imposed on such income distributed before
the Policy Owner attains age 59 1/2. The Company has established safeguards for
monitoring whether a Policy may become a MEC (p. 26).
Summary-3
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THE INSURANCE COMPANY
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The Travelers Life and Annuity Company (the "Company") is a stock insurance
company which has been continuously engaged in the insurance business since its
incorporation in the state of Connecticut in 1973. The Company writes individual
life insurance and individual and group annuity contracts on a non-participating
basis, and acts as depositor for Fund UL II. The Company is licensed to conduct
life insurance business in a majority of the states of the United States, and
intends to seek licensure in the remaining states, except New York. The
Company's obligations as depositor for Fund UL II may not be transferred without
notice to and consent of Policy Owners.
The Company is a wholly owned subsidiary of The Travelers Insurance Company,
which is an indirect wholly owned subsidiary of Travelers Group Inc. The
Company's principal executive offices are located at One Tower Square, Hartford,
Connecticut 06183, telephone number (860) 277-0111.
The Company is subject to Connecticut law governing insurance companies and is
regulated and supervised by the Connecticut Commissioner of Insurance. An annual
statement in a prescribed form must be filed with the Commissioner on or before
March 1 in each year covering the operations of the Company for the preceding
year and its financial condition on December 31 of such year. The Company's
books and assets are subject to review or examination by the Commissioner, and a
full examination of its operations is conducted at least once every four years.
In addition, the Company is subject to the insurance laws and regulations of any
jurisdiction in which it sells its insurance policies, as well as to various
federal and state securities laws and regulations.
THE POLICY
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The Policy described in this Prospectus is both an insurance product and a
security. The Policy is first and foremost a life insurance Policy with death
benefits, Cash Values and other features traditionally associated with life
insurance. The Policy is deemed to be "variable" because unlike the fixed
benefits of an ordinary whole life insurance Policy, the Cash Value and, under
certain circumstances, the Death Benefit of the Policy may increase or decrease
depending on the investment experience of the Investment Options to which the
Premium Payment has been allocated. As an insurance product, the Policy is
subject to the insurance laws and regulations of each state or jurisdiction in
which it is available for distribution.
THE POLICY APPLICATION
Individuals wishing to purchase a Policy must submit an application to the
Company. As with traditional insurance Policies, a Policy Owner may state the
amount of insurance desired (the "Stated Amount"), which amount may not be less
than $50,000. A Policy Owner may request an increase or decrease in the Stated
Amount of the Policy in writing from time to time. (See "Changes in Stated
Amount," page 11.) No change in the terms or conditions of the Policy will be
made without the consent of the Policy Owner.
A Policy will be issued only on the life of an Insured who supplies evidence of
insurability satisfactory to the Company. Acceptance is subject to the Company's
underwriting rules.
No premium payments will be accepted if receipt of such premiums would
disqualify the Policy as life insurance.
Insurance coverage under a Policy will begin only after the Applicant has
satisfied all outstanding underwriting delivery requirements, and after the
Company has received the first premium. The Policy Date is the date used to
determine all future cyclical transactions on the Policy, e.g., Deduction Dates,
Policy Months and Policy Years. The Policy Date may be prior to, or the same
date as, the date on which the Policy is issued (the "Issue Date"). During the
underwriting period, any premium paid under the Policy will be held in a
non-interest bearing suspense account.
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BENEFICIARY
The Applicant names the Beneficiary in the application for the Policy. The
Policy Owner may change the Beneficiary (unless irrevocably named) during the
Insured's lifetime by sending a written request to the Company. If no
Beneficiary is living when the Insured dies, the Death Benefit will be paid to
the Policy Owner, if living; otherwise, the Death Benefit will be paid to the
Policy Owner's estate.
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation. The
Company is not responsible for any payment made or action taken before receipt
of written notice of such assignment. Proof of interest must be filed with any
claim under a collateral assignment.
ALLOCATION OF PREMIUM PAYMENTS
The first premium will be applied to the Policy on the later of the Policy Date
or the date it is received at the Company's Home Office. During the Applicant's
Right to Cancel Period, the Company will allocate Net Premiums to the Cash
Income Trust. At the end of the Applicant's Right to Cancel Period, the account
value in Cash Income Trust will be allocated (in whole percentages) among the
Investment Option(s) selected on the Application to purchase Accumulation Units.
Net Premium payments received on or after the expiration of the Applicant's
Right to Cancel Period will be allocated among the Investment Options to
purchase Accumulation Units in such Investment Options as directed by the Policy
Owner or, in the absence of directions, as stated in the original application.
The number of Accumulation Units of each Investment Option to be credited to the
Policy once a Premium Payment has been received by the Company will be
determined by dividing the Premium Payment applied to the Investment Option by
the Accumulation Unit Value of the Investment Option next computed following
receipt of the payment.
RIGHT TO CANCEL
An Applicant has a limited right to return the Policy for cancellation by
returning the Policy, by mail or personal delivery, to the Company or to the
agent who sold the Policy. The Policy must be returned either (1) within 10 days
after delivery of the Policy to the Policy Owner, (2) within 45 days of
completion of the Policy application, or (3) within 10 days after the Notice of
Right to Cancel has been mailed or delivered to the Applicant whichever is
latest. The Company will return to the Applicant a refund of the greater of all
premium payments paid for the Policy, or the sum of (1) the difference between
the premium paid, including any fees or charges, and the amounts allocated to
the Investment Option(s), (2) the value of the amounts allocated to the
Investment Option(s) on the date on which the Company receives the returned
Policy, and (3) any fees and other charges imposed on amounts allocated to the
Investment Option(s).
STATEMENTS TO POLICY OWNERS
The Company will maintain all records relating to Fund UL II and the Investment
Options. At least once in each Policy Year, the Company will send to Policy
Owners a statement containing the following information: (1) the Stated Amount
and the Cash Value of the Policy (indicating the number of Accumulation Units
credited to the Policy in each Investment Option and the corresponding
Accumulation Unit Value); (2) the date and amount of each premium payment; (3)
the date and amount of each Monthly Deduction; (4) the amount of any outstanding
Policy loan as of the date of the statement, and the amount of any loan interest
charged on the Loan Account; (5) the date and amount of any partial cash
surrenders and the amount of any partial surrender charges; (6) the annualized
cost of any supplemental benefits purchased under the Policy; and (7) a
reconciliation since the last report of any change in Cash Value and Cash
Surrender Value. The Company will also send any other reports required by any
applicable state or federal laws or regulations.
2
<PAGE> 11
CHARGES AND DEDUCTIONS
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CHARGES AGAINST PREMIUM
FRONT-END SALES CHARGE
Upon receipt of a Premium Payment, and before allocation of the payment among
the Investment Options, the Company deducts a front-end sales charge of 2.5%.
This charge is reduced to 2% for Policies with an initial Stated Amount of
$500,000 or more, and to 0% for Policies with an initial Stated Amount of
$1,000,000 or more. Additional sales charges may be assessed upon any full or
partial surrender. (See "Surrender Charges" page 4.)
Sales charges are intended to cover the Company's actual sales expenses,
including agent sales commissions, advertising and the printing of the
prospectuses. The Company expects to recover the sales expenses of a Policy. To
the extent sales expenses are not covered by the sales charges, the Company will
recover such expenses from its surplus. This surplus may include profit from the
mortality and expense risk charge.
STATE PREMIUM TAX CHARGE
A charge of 2.5% of each premium payment will be deducted for state premium
taxes (except for Policies issued in the Commonwealth of Puerto Rico where no
premium tax is deducted). These taxes vary from state to state and currently
range from 0.75% to 3.5%; 2.5% is an average. Because there is a range of
premium taxes, a Policy Owner may pay a premium tax charge that is higher or
lower than the premium tax actually assessed in his or her jurisdiction.
The Company also reserves the right to charge the assets of each Investment
Option for a reserve for any income taxes payable by the Company on the assets
attributable to that Investment Option. (See "Federal Tax Considerations," page
24.)
MONTHLY DEDUCTION AMOUNT
The Company will deduct from the Cash Value of the Policy a Monthly Deduction
Amount to cover certain charges and expenses incurred in connection with the
Policy. The Monthly Deduction Amount will be deducted pro rata from each of the
Investment Options values attributable to the Policy on the first day of each
Policy Month (the "Deduction Date"), commencing on the Policy Date. The dollar
amount of the Deduction Amount will vary from month to month. The following is a
summary of monthly charges and expenses which make up the Monthly Deduction
Amount:
COST OF INSURANCE CHARGE
Cost of Insurance is deducted from the Policy Cash Value on a monthly basis. The
amount of deduction is a function of the amount of insurance coverage on the
date of the deduction and the current cost per dollar for insurance coverage.
The cost per dollar of insurance coverage varies annually and is based on age,
sex and risk class of the Insured.
POLICY ADMINISTRATIVE CHARGE
For the first three Policy Years, a monthly administrative charge is deducted
from the Cash Value of the Policy. This charge also applies to any increase in
the Stated Amount excluding Cost of Living Adjustments and increases in Stated
Amounts due to Death Benefit Option changes. This charge is used to cover
expenses associated with issuing the Policy.
The amount charged varies by Policy and will be stated in the Policy. The charge
currently varies by issue age, Stated Amount and smoker/non-smoker
classification (see Appendix C for chart of current charges). The current Policy
administrative charge are lower than the guaranteed maximum charge (see Appendix
C(1) for the guaranteed maximum charges).
3
<PAGE> 12
CHARGES FOR SUPPLEMENTAL BENEFIT PROVISIONS
The Company will include a supplemental benefits charge in the Monthly Deduction
Amount if the Policy Owner has elected any of the following supplemental benefit
provisions: Waiver of Monthly Deduction Rider, Child Term Rider, and Primary or
Other Insured Term Rider. The amount of this charge will vary depending upon the
actual supplemental benefits selected.
CHARGES AGAINST THE SEPARATE ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE
A daily charge is deducted from Fund UL II for mortality and expense risks. This
charge is at an annual rate of 0.80% for the first fifteen (15) Policy Years,
and 0.45% thereafter. The mortality risk assumed is that the cost of insurance
charge specified in the Policy may be insufficient to meet actual claims. The
expense risk assumed is that expenses incurred in issuing and administering the
Policies will exceed the administrative charges set forth in the Policy. If all
money collected by the Company from this charge is not needed to cover the
mortality and expenses costs, the excess will be contributed to the Company's
general account.
ADMINISTRATIVE EXPENSE CHARGE
The Company reserves the right to deduct a daily charge from Fund UL II for
administrative expenses incurred by the Company. The charge is equivalent on an
annual basis to 0.10% of the assets in the Investment Options for the first
fifteen (15) Policy Years and 0% thereafter. The administrative expense charge,
is designed to cover administrative costs associated with the maintenance of the
Policies and the maximum fee is set at a level which does not exceed the average
expected cost of the administrative services to be provided while the Policy is
in force.
CHARGES AGAINST THE INVESTMENT OPTIONS
Fund UL II purchases shares of the Investment Options at net asset value. The
net asset value of the Investment Option shares reflects investment advisory
fees and other expenses already deducted from the assets of the Investment
Options. The investment advisory fees and other expenses applicable to each of
the Investment Options are described in the individual prospectuses for the
Investment Options.
SURRENDER CHARGES
There are two types of contingent surrender charges that can apply under the
Policy: a Percent of Premium Charge and a Per Thousand of Stated Amount Charge.
These surrender charges are contingent because they only apply during the first
ten Policy Years (or the first ten years following an increase in Stated
Amount). Both charges apply upon a full surrender of the Policy. Only the
Percent of Premium Charge applies upon a partial surrender.
PERCENT OF PREMIUM CHARGE
A Percent of Premium surrender charge will be assessed upon a full or partial
surrender of the Policy during the first ten Policy Years (or during the first
ten years following an increase in Stated Amount). The charge will be the
smallest of:
(a) 6% of the amount of Cash Value being surrendered; or
(b) 6% of the amount of premiums actually paid within the five years
preceding the surrender; or
(c) 9% of the total Annual Minimum Premiums for each full or partial Policy
Year during the five years preceding the surrender, whether paid or
not. (See Appendix A, "Annual Minimum Premiums.")
4
<PAGE> 13
For example (as illustrated on page 33), a Policy with a Stated Amount of
$150,000 for a 45-year old male who pays a premium of $1,969 per year for five
years (a total of $9,845), and then fully surrenders the Policy for its Cash
Value of $7,476 (assuming a 6% rate of return), the Percent of Premium surrender
charge would be $449, because (a) is $449 (6% of $7,476); (b) is $591 (6% of the
$9,845 in premiums paid); and (c) is approximately $682 (9% of the annual
minimum premium for five years). The smallest, $449, is the applicable charge.
PER THOUSAND OF STATED AMOUNT CHARGE
A Per Thousand of Stated Amount surrender charge is imposed on full surrenders,
but not on partial surrenders, and applies only during the first ten Policy
Years or the ten years following an increase in Stated Amount (other than an
increase due to a Cost of Living Adjustment or a change in Death Benefit
Option). The charge is equal to a specified dollar amount for each $1,000 of
Stated Amount to which it applies, and will apply only to that portion of the
Stated Amount (except for increases excluded above) which has been in effect for
less than ten years.
The Per Thousand of Stated Amount Charge varies by Stated Amount and original
issue age, and increases with the issue age of the Insured. For Stated Amounts
of $499,999 or less, this charge varies in the first year from $2.04 per $1,000
of Stated Amount for issue ages of 4 years or less, to $25.40 per $1,000 of
Stated Amount for issue ages of 65 years or higher. The charge is lower for
Stated Amounts over $499,999, and even lower for Stated Amounts over $999,999.
Additionally, the charge decreases by 10% each year over the ten-year period.
For example, for a 45-year old with a Stated Amount of $150,000, the charge in
the first year is $7.18 for each $1,000 of Stated Amount, or $1,077. The charge
decreases 10%, or approximately $0.72, each year, so in the fifth year, it is
$4.31 for each $1,000 of Stated Amount, or $64.65; in the tenth year, it is
$0.72 for each $1,000, or $108.
No more than 20% of the Per Thousand of Stated Amount Charge is a sales charge.
The remainder is designed to compensate the Company for administrative expenses
not covered by other administrative charges. The administrative expense
component of the Per Thousand of Stated Amount charge is set at a level which
does not exceed the average expected cost of the administrative services to be
provided while the Policy is in force. This administrative charge component of
the Surrender Charge may be reduced or eliminated when sales are made under
certain arrangements. (See "Reduction or Elimination of Charges," Page 6.) The
Per Thousand of Stated Amount surrender charges are set forth in Appendix B, and
have been further split into the sales charge component and the administrative
charge component in Appendices B(1) and B(2), respectively.
MAXIMUM SALES CHARGES
Although the total sales charges assessed under the Policy will vary based on
issue age, sex, year of surrender, amount of premium paid and amount
surrendered, the maximum total sales charge for any Policy will never exceed
26.7% of the total premiums paid.
As stated above, the front-end sales charge for a Policy with no full or partial
surrenders will never exceed 2.5% of actual premiums paid. The sales charges for
a Policy with full or partial surrenders will vary, but in no event will they
exceed the percentage of premiums paid as shown below.
5
<PAGE> 14
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGES (AS A % OF
POLICY YEAR OF SURRENDER PREMIUM PAYMENTS)
- ------------------------ -----------------
<S> <C>
1 26.7%
2 24.9
3 23.1
4 21.2
5 19.4
6 16.1
7 14.4
8 12.5
9 10.6
10 8.8
11+ 2.5
</TABLE>
As the table demonstrates, the maximum sales charge for any Policy is less than
26.7% in every Policy Year other than the first (or in every year after the
first year following an increase). (See the illustrations for an example.)
REDUCTION OR ELIMINATION OF CHARGES
The Company may offer the Policy in arrangements where an employer or trustee
will own a group of policies on the lives of certain employees, or in other
situations where groups of policies will be purchased at one time. The Company
may reduce or eliminate sales charges and administrative charges in such
arrangements to reflect the reduced sales expenses and administrative costs
expected as a result of sales to a particular group.
TRANSACTION CHARGE
The Company reserves the right to limit free transfers of Cash Value from one
Investment Option to another by the Policy Owner to four times in any Policy
Year, and to charge $10 for any additional transfers. There is currently no
charge for transfers.
POLICY BENEFITS AND RIGHTS
- --------------------------------------------------------------------------------
CASH VALUE AND CASH SURRENDER VALUE
The Cash Value of a Policy changes on a daily basis and will be computed on each
Valuation Date. The Cash Value will vary to reflect the investment experience of
the Investment Options, as well as any partial Cash Surrenders, Monthly
Deduction Amount, daily Separate Account charges, and any additional premium
payments. There is no minimum guaranteed Cash Value.
The Cash Value of a particular Policy is related to the net asset value of the
Investment Options to which premium payments on the Policy have been allocated.
The Cash Value on any Valuation Date is calculated by multiplying the number of
Accumulation Units credited to the Policy in each Investment Options as of the
Valuation Date by the current Accumulation Unit Value of that Investment Option,
then adding the collective result for each of the Investment Options credited to
the Policy, and finally adding the value (if any) of the Loan Account. A Policy
Owner may withdraw Cash Value from the Policy, or transfer Cash Value among the
Investment Options on any day that the Company is open for business.
As long as the Policy is in effect, a Policy Owner may elect, without the
consent of the Beneficiary (provided the designation of Beneficiary is not
irrevocable), to surrender the Policy and receive its "Cash Surrender Value";
i.e., the Cash Value of the Policy determined as of the day the Company receives
the Policy Owner's written request, less any outstanding Policy loan, and less
any applicable Surrender Charges. For full surrenders, the Company will pay the
Cash Surrender Value of the Policy within seven days following its receipt of
the written request, or on the date requested by the Policy Owner, whichever is
later. The Policy will terminate on the Deduction
6
<PAGE> 15
Date next following the Company's receipt of the written request, or on the
Deduction Date next following the date on which the Policy Owner requests the
surrender to become effective, whichever is later.
In the case of partial surrenders, the Cash Surrender Value will be equal to the
net amount requested to be surrendered minus any applicable Surrender Charges.
The deduction from Cash Value for a partial surrender will be made on a pro rata
basis against the Cash Value of each of the Investment Options attributable to
the Policy (unless the Policy Owner states otherwise in writing).
In addition to reducing the Cash Value of the Policy, partial cash surrenders
will reduce the Death Benefit payable under the Policy. Under Option 1, the
Stated Amount of the Policy will be reduced by the amount of the partial cash
surrender. Under Option 2, the Cash Value, which is part of the Death Benefit,
will be reduced by the amount of the partial cash surrender. The Company may
require return of the Policy to record such reduction.
POLICY LOANS
A Policy Owner may obtain a cash loan from the Company secured by the Policy not
to exceed 90% of the Policy's Cash Value (determined on the day on which the
Company receives the written loan request), less any surrender penalties which
include a percent of premium charge and per thousand of Stated Amount charge, as
described on page 5 in more detail. No loan requests may be made for amounts of
less than $100. If there is a loan outstanding at the time a subsequent loan
request is made, the amount of the outstanding loan will be added to the new
loan request. The Company will charge interest on the outstanding amounts of the
loan, which interest must be paid in advance by the Policy Owner. The amount of
the loan will be transferred as of the date the loan is made on a pro rata basis
from each of the Investment Options attributable to the Policy (unless the
Policy Owner states otherwise) to another account (the "Loan Account"). Amounts
in the Loan Account will be credited by the Company with a fixed annual rate of
return of 4% (6% in Massachusetts) and will not be affected by the investment
performance of the Investment Options. During the first thirteen Policy Years,
the full Loan Account Value will be charged an annual interest rate of 7.4%;
thereafter 3.85% will be charged. When loan repayments are made, the amount of
the repayment will be deducted from the Loan Account and will be reallocated
based upon premium allocation percentages among the Investment Options
applicable to the Policy (unless the Policy Owner states otherwise). The Company
will make the loan to the Policy Owner within seven days after receipt of the
written loan request.
An outstanding loan amount decreases the Cash Surrender Value. If a loan is not
repaid, it permanently decreases the Cash Surrender Value, which could cause the
Policy to lapse (see "Lapse and Reinstatement" below). For example, if a Policy
has a Cash Surrender Value of $10,000, the Policy Owner may take a loan of 90%
or $9,000, leaving a new Cash Surrender Value of $1,000. In addition, the Death
Benefit actually payable would be decreased because of the outstanding loan.
Furthermore, even if the loan is repaid, the Death Benefit and Cash Surrender
Value may be permanently affected since the Policy Owner was not credited with
the investment experience of an Investment Option on the amount in the Loan
Account while the loan was outstanding. All or any part of a loan secured by a
Policy may be repaid while the Policy is still in effect.
LAPSE AND REINSTATEMENT
Except as provided below under "Lapse Protection Guarantee," the Policy will
remain in effect until the Cash Surrender Value of the Policy is insufficient to
cover the Monthly Deduction Amount. If such event occurs, the Company will give
written notice to the Policy Owner indicating that if the amount shown in the
notice (which will be sufficient to cover the Deduction Amount due) is not paid
within 61 days (the "Late Period"), the Policy may lapse. The Policy will
continue through the Late Period, but if no payment is forthcoming, it will
terminate at the end of
7
<PAGE> 16
the Late Period. If the person Insured under the Policy dies during the Late
Period, the Death Benefit payable under the Policy will be reduced by the
Monthly Deduction Amount due plus the amount of any outstanding loan. (See
"Death Benefit," page 8.)
If the Policy lapses, the Policy Owner may reinstate the Policy upon payment of
the reinstatement premium (and any applicable charges) shown in the Policy. A
request for reinstatement may be made at any time within three years of lapse
(unless a different period is required under applicable state law). The Net
Premium due upon reinstatement is at least one-quarter of the Annual Minimum
Premium, as shown in Appendix A, less any charges or fees, calculated as of the
Deduction Date next following receipt of premium by the Company. The Cash Value
of the Policy upon reinstatement will be equal to the Net Premium. In addition,
the Company reserves the right to require satisfactory evidence of insurability.
LAPSE PROTECTION GUARANTEE
Policy Owners may elect to have a Lapse Protection Guarantee benefit as part of
their Policy (as long as the Insured is not a substandard risk). The Lapse
Protection Guarantee benefit provides that if during the first three Policy
Years (the "Guarantee Period") the total premiums paid under the Policy, less
any Loan Account Value or partial surrenders, equal or exceed the cumulative
applicable Monthly Premium Threshold shown on the Policy Summary Page of the
Policy, a Lapse Protection Guarantee will be in effect. (This guarantee may not
be available in all jurisdictions.) This benefit provides that the Policy will
not lapse during the next Policy Month even if the Cash Surrender Value is
insufficient to pay the Monthly Deduction Amount due, provided the next Policy
Month is within the Guarantee Period. The Premium Threshold will change if the
Policy Owner makes a change in the Stated Amount or adds or eliminates
supplemental benefit riders under the Policy. In such event, the Company will
send the Policy Owner notice of the new applicable Premium Threshold which must
be met until the expiration of the Guarantee Period in order for the guarantee
to remain in effect.
EXCHANGE RIGHTS
Once the Policy is in effect, it may be exchanged at any time during the first
24 months after its issuance for a general account life insurance policy issued
by the Company (or an affiliated company) on the life of the Insured. Benefits
under the new life insurance policy will be as described in that policy. No
evidence of insurability will be required. The Policy Owner has the right to
select the same Death Benefit or Net Amount At Risk as the former Policy. Cost
of insurance rates will be based on the same risk classification as those of the
former Policy. Any outstanding Policy loan must be repaid before the Company
will make an exchange. In addition, there may be an adjustment for the
difference in Cash Value between the two Policies.
DEATH BENEFIT
As with traditional life insurance Policies, the Death Benefit under the Policy
is the amount paid to the Beneficiary upon the Insured's death. The Death
Benefit will be reduced by any outstanding charges, fees and Policy loans. All
or part of the Death Benefit may be paid in cash or applied to one or more of
the payment options described below.
You may elect one of two Death Benefit options. As long as the Policy remains in
effect, the Company guarantees that the Death Benefit under either option will
not be less than the current Stated Amount of the Policy less any outstanding
Policy loan or Deduction Amount due but unpaid. The Death Benefit under either
option may vary with the Cash Value of the Policy. The Death Benefit under
either option may vary with the Cash Value of the Policy. Under Option 1 (the
"Level Option"), the Death Benefit will be equal to the Stated Amount of the
Policy or, if greater, a specified multiple of Cash Value (the "Minimum Amount
Insured"). Under Option 2 (the "Variable Option"), the Death Benefit will be
equal to the Stated Amount of the Policy plus the Cash Value (determined as of
the date of the Insured's death) or, if greater, the Minimum Amount Insured.
8
<PAGE> 17
The Minimum Amount Insured is the amount required to qualify the Policy as a
life insurance Policy under the current federal tax law. Under that law, the
Minimum Amount Insured is equal to a stated percentage of the Cash Value of the
Policy determined as of the first day of each Policy Month. The percentages
differ according to the attained age of the Insured. The Minimum Amount Insured
will be set forth in the Policy and may change as federal income tax laws or
regulations change. The percentages used to calculate the Minimum Amount Insured
decrease after the age of 40. The following is a schedule of the applicable
percentages:
<TABLE>
<CAPTION>
% SHALL
DECREASE BY
A RATABLE
PORTION FOR
ATTAINED AGE EACH FULL
MORE BUT NOT YEAR:
THAN MORE THAN FROM TO
- ---- --------- ---- ---
<S> <C> <C> <C>
0 40 250 250
40 45 250 215
45 50 215 185
50 55 185 150
55 60 150 130
60 65 130 120
65 70 120 115
70 75 115 105
75 90 105 105
90 95 105 100
</TABLE>
Federal tax law imposes another cash funding limitation on cash value life
insurance Policies that, when applicable, may increase the Minimum Amount
Insured in excess of the figures shown in the schedule above. This limitation is
known as the "guideline premium limitation," and it is generally applicable
during the early years of variable universal life insurance Policies.
The following examples demonstrate the relationship between the Death Benefit,
the Cash Surrender Value and the Minimum Amount Insured under Options 1 and 2 of
the Policy. Both sets of examples assume an Insured of age 40, a Minimum Amount
Insured of 250% of Cash Value (assuming the preceding table is controlling as to
Minimum Amount Insured), and no outstanding Policy loan.
OPTION 1 -- "LEVEL" DEATH BENEFIT
STATED AMOUNT: $50,000
In the following examples of an Option 1 "Level" Death Benefit, the Death
Benefit under the Policy is generally equal to the Stated Amount of $50,000.
Since the Policy is designed to qualify as a life insurance Policy, the Death
Benefit cannot be less than the Minimum Amount Insured (or, in this example,
250% of the Cash Value).
EXAMPLE ONE. If the Cash Value of the Policy equals $10,000, the Minimum Amount
Insured would be $25,000 ($10,000 X 250%). Since the Death Benefit in the Policy
is the greater of the Stated Amount ($50,000) or the Minimum Amount Insured
($25,000), the Death Benefit would be $50,000.
EXAMPLE TWO. If the Cash Value of the Policy equals $40,000, the Minimum Amount
Insured would be $100,000 ($40,000 X 250%). The resulting Death Benefit would be
$100,000 since the Death Benefit is the greater of the Stated Amount ($50,000)
or the Minimum Amount Insured ($100,000).
OPTION 2 -- "VARIABLE" DEATH BENEFIT
STATED AMOUNT: $50,000
In the following examples of an Option 2 "Variable" Death Benefit, the Death
Benefit varies with the investment experience of the applicable Investment
Options and will generally be equal to the
9
<PAGE> 18
Stated Amount plus the Cash Value of the Policy (determined on the date of the
Insured's death). The Death Benefit cannot, however, be less than the Minimum
Amount Insured (or, in this example, 250% of the Cash Value).
EXAMPLE ONE. If the Cash Value of the Policy equals $10,000, the Minimum Amount
Insured would be $25,000 ($10,000 X 250%). The Death Benefit ($60,000) would be
equal to the Stated Amount ($50,000) plus the Cash Value ($10,000), unless the
Minimum Amount Insured ($25,000) was greater.
EXAMPLE TWO. If the Cash Value of the Policy equals $60,000, then the Minimum
Amount Insured would be $150,000 ($60,000 X 250%). The resulting Death Benefit
would be $150,000 because the Minimum Amount Insured ($150,000) is greater than
the Stated Amount plus the Cash Value ($50,000 + $60,000 = $110,000).
Death Benefits are payable within seven days of the Company's receipt of
satisfactory proof of the Insured's death. The amount of Death Benefit paid to
the Policy Beneficiary may be adjusted to reflect any Policy loan, any material
misstatements in the Policy application as to age or sex of the Insured, and any
amounts payable to an assignee under a collateral assignment of the Policy. (See
"Assignment," page 2.) If the Insured commits suicide within two years following
the issue date limits on the amount of Death Benefit paid will apply. (See
"Limit on Right to Contest and Suicide Exclusion", page 11) In addition, if the
Insured dies during the 61-day period after the Company gives notice to the
Policy Owner that the Cash Surrender Value of the Policy is insufficient to meet
the Monthly Deduction Amount due against the Cash Value of the Policy, the Death
Benefit actually paid to the Policy Owner's Beneficiary will be reduced by the
amount of the Deduction Amount that is due and unpaid. (See "Cash Value and Cash
Surrender Value," page 6, for effects of partial cash surrenders on Death
Benefits.)
CHANGES IN DEATH BENEFIT OPTION
You may change the Death Benefit option at any time prior to the Insured's death
by sending a written request to the Company. There is no direct consequence of
changing a Death Benefit option, except as described under "Tax Treatment of
Policy Benefits" on page 26. However, the change could affect future values of
Net Amount At Risk, and with some Option 2 to Option 1 changes involving
substantially funded Policies, there may be a cash distribution which is
included in the gross income of the Policy Owner. The cost of insurance charge
which is based on the Net Amount At Risk may be different in the future. A
change from Option 1 to Option 2 will not be permitted if the change results in
a Stated Amount of less than the minimum amount of $50,000. Contact your
registered representative for more information.
PAYMENT OPTIONS
Proceeds payable under the Policy will be paid in a lump sum, unless the Policy
Owner or Beneficiary selects one of the Company's payment options. Payment of
proceeds which exceed the Death Benefit may be deferred for up to six months
from the date of the request for the payment. A combination of options may be
used. The minimum amount that may be placed under a payment option is $5,000
unless the Company consents to a lesser amount. Proceeds applied under an option
will no longer be affected by the investment experience of the Investment
Options.
10
<PAGE> 19
The following payment options are available under the Policy:
OPTION 1 -- Payments of a Fixed Amount
OPTION 2 -- Payments for a Fixed Period
OPTION 3 -- Amounts Held at Interest
OPTION 4 -- Monthly Life Income
OPTION 5 -- Joint and Survivor Level Amount Monthly Life Income
OPTION 6 -- Joint and Survivor Monthly Life Income-Two-thirds to Survivor
OPTION 7 -- Joint and Last Survivor Monthly Life Income -- Monthly Payment
Reduces on Death of First Person Named
OPTION 8 -- Other Options
The Company will make any other arrangements for periodic payments as may be
agreed upon. If any periodic payment due any payee is less than $50, the Company
may make payments less often. If the Company has declared a higher rate under an
option at the date the first payment under an option is due, the Company will
base the payments on the higher rate.
LIMIT ON RIGHT TO CONTEST AND SUICIDE EXCLUSION
The Company may not contest the validity of the Policy after it has been in
effect during the Insured's lifetime for two years from the Issue Date. If the
Policy is reinstated, the two-year period will be measured from the date of
reinstatement. Each requested increase in Stated Amount is contestable for two
years from its effective date. In addition, if the Insured commits suicide
during the two-year period following issue, subject to state law, the Death
Benefit will be limited to the premiums paid less (i) the amount of any partial
surrender, (ii) the amount of any outstanding Policy loan, and (iii) the amount
of any unpaid Deduction Amount due. During the two-year period following an
increase, the Death Benefit in the case of suicide will be limited to an amount
equal to the Deduction Amount for such increase.
MISSTATEMENT AS TO SEX AND AGE
If there has been a misstatement with regard to sex or age, benefits payable
will be adjusted to what the Policy would have provided with the correct
information. A misstatement with regard to sex or age in a substantially funded
Policy may cause a cash distribution that is includable in whole or in part in
the gross income of the Policy Owner.
CHANGES IN STATED AMOUNT
A Policy Owner may request in writing that the Stated Amount of the Policy be
increased or decreased, provided that the Stated Amount after any decrease may
not be less than the minimum amount of $50,000. For purposes of determining the
cost of insurance charge, a decrease in the Stated Amount will reduce the Stated
Amount in the following order:
1) against the most recent increase in the Stated Amount;
2) to other increases in the reverse order in which they occurred;
3) to the initial Stated Amount.
A decrease in Stated Amount in a substantially funded Policy may cause a cash
distribution that is includable in the gross income of the Policy Owner.
For increases in the Stated Amount, the Company may require a new application
and evidence of insurability as well as an additional premium payment. The
effective date of any increase will be as shown on the new Policy Summary which
the Company will send to the Policy Owner. The effective date of any increase in
the Stated Amount will generally be the Deduction Date next following either the
date of a new application or, if different, the date requested by the Applicant.
There is an additional Policy Administrative Charge and a Per Thousand of Stated
Amount Surrender Charge associated with a requested increase in Stated Amount.
There is no additional charge for a decrease in Stated Amount.
11
<PAGE> 20
MATURITY AND MATURITY EXTENSION BENEFITS
If the Insured is living on the Maturity Date (the anniversary of the Policy
Date on which the Insured is age 95), the Company will pay the Policy Owner the
Cash Value of the Policy, less any outstanding Policy loan or Deduction Amount
due and unpaid. The Policy Owner must surrender the Policy to the Company before
such payment can be made, at which point the Policy will terminate and the
Company will have no further obligations under the Policy.
Upon the Insured's attaining age 94, and at any time during the twelve months
thereafter, the Policy Owner may request that coverage be extended beyond the
Maturity Date (the "Maturity Extension Benefit"). (This Maturity Extension
Benefit may not be available in all jurisdictions.) After the Company has
received such request, but prior to the Maturity date, the Policy will continue
in force until the earlier of the death of the Insured or the date on which the
Policy Owner requests that the Policy terminate. Upon termination of the
Maturity Extension Benefit, a Death Benefit will be paid as follows. On the
Maturity Date, the Death Benefit will be the Cash Value less any Loan Account
Value and less any Deduction Amounts due but not paid. After the Maturity Date,
the Death Benefit will be the Cash Value less any Loan Account Value. The Death
Benefit is based on the experience of the Investment Options selected and is
variable and is not guaranteed. After the Maturity Date, periodic Deduction
Amounts will no longer be charged against the Cash Value and additional premiums
will not be accepted.
The Company intends that the Policy and the Maturity Extension Benefit be
considered life insurance for tax purposes. The Death Benefit is designed to
comply with Section 7702 of the Internal Revenue Code of 1986, as amended, or
other equivalent section of the Code. However, the Company does not give tax
advice, and cannot guarantee that the Death Benefit and Cash Value will be
exempt from any future tax liability. The tax results of any benefits under the
Maturity Extension provision depend upon interpretation of the Internal Revenue
Code. The Policy Owner should consult his or her own personal tax adviser prior
to the exercise of the Maturity Extension Benefit to assess any potential tax
liability.
THE SEPARATE ACCOUNT AND THE INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
THE TRAVELERS FUND UL II FOR VARIABLE LIFE INSURANCE (FUND UL II)
Fund UL II was established on October 17, 1995 pursuant to the insurance laws of
the state of Connecticut, and is registered with the Securities and Exchange
Commission ("SEC") as a unit investment trust under the Investment Company Act
of 1940, as amended (the "1940 Act"). The assets of Fund UL II will be invested
exclusively in shares of the Investment Options. Fund UL II meets the definition
of a Separate Account under the federal securities laws, and will comply with
the provisions of the 1940 Act. Registration of Fund UL II with the SEC does not
involve supervision by the SEC of the management or investment policies of Fund
UL II. Additionally, the operations of Fund UL II are subject to the provisions
of Section 38a-433 of the Connecticut General Statutes which authorizes the
Connecticut Insurance Commissioner to adopt regulations under it. The Section
contains no restrictions on the investments of Fund UL II, and the Commissioner
has adopted no regulations under the Section that affect Fund UL II.
Under Connecticut law, the assets of Fund UL II will be held for the exclusive
benefit of Policy Owners and the persons entitled to payments under the Policy
offered by this Prospectus. The assets held in Fund UL II are not chargeable
with liabilities arising out of any other business which the Company may
conduct. Any obligations arising under the Policy are general corporate
obligations of the Company.
THE INVESTMENT OPTIONS
You may allocate Premium Payments to one or more of the available Investment
Options. The Investment Options currently available under the Policy may be
added or withdrawn as permitted by applicable law. Please read carefully the
complete risk disclosure in each Portfolio's prospectus
12
<PAGE> 21
before investing. For more detailed information on the investment advisers and
their services and fees, please refer to the prospectuses for the Investment
Options.
The Investment Options currently available under Fund UL II are as follows:
<TABLE>
<CAPTION>
INVESTMENT OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
AIM Capital Appreciation Seeks capital appreciation by Smith Barney Mutual Funds
Portfolio investing primarily in common Management, Inc.
stock, with emphasis on Subadviser: AIM Capital
medium sized and smaller Management, Inc.
emerging growth companies.
Alliance Growth Portfolio Seeks long-term growth of Smith Barney Mutual Funds
capital by investing Management, Inc.
predominantly in equity Subadviser: Alliance Capital
securities of companies with Management
a favorable outlook for
earnings and whose rate of
growth is expected to exceed
that of the U.S. economy over
time. Current income is only
an incidental consideration.
Dreyfus Stock Index Fund Seeks to provide investment Mellon Equity Associates
results that correspond to
the price and yield
performance of publicly
traded common stocks in the
aggregate, as represented by
the Standard & Poor's 500
Composite Stock Price Index.
Fidelity VIP Equity-Income Seeks reasonable income by Fidelity Management &
Portfolio investing primarily in Research Company
income-producing equity
securities; in choosing these
securities, the portfolio
manager will also consider
the potential for capital
appreciation. The Portfolio's
goal is to achieve a yield
which exceeds the composite
yield on the securities
comprising the Standard &
Poor's 500 Composite Stock
Price Index.
</TABLE>
13
<PAGE> 22
<TABLE>
<CAPTION>
INVESTMENT OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Fidelity VIP Growth Portfolio Seeks capital appreciation by Fidelity Management &
investing primarily in common Research Company
stocks of well-known,
established companies and
smaller, emerging growth
companies, although its
investments are not
restricted to any one type of
security. Capital
appreciation may also be
found in other types of
securities, including bonds
and preferred stocks.
Fidelity VIP High Income Seeks to obtain a high level Fidelity Management &
Portfolio of current income by Research Company
investing primarily in high
yielding, lower rated,
fixed-income (high risk)
securities, while also
considering growth of
capital.
Fidelity VPI II Asset Manager Seeks high total return with Fidelity Management &
Portfolio reduced risk over the long- Research Company
term by allocating its assets
among stocks, bonds and
short-term fixed-income
instruments.
MFS Total Return Portfolio Seeks to obtain above-average Smith Barney Mutual Funds
income (compared to a Management, Inc.
portfolio entirely invested Subadviser: Massachusetts
in equity securities) Financial Services Company.
consistent with the prudent
employment of capital.
Generally, at least 40% of
the Portfolio's assets will
be invested in equity
securities.
Smith Barney High Income Seeks high current income. Smith Barney Mutual Funds
Portfolio Capital appreciation is a Management, Inc.
secondary objective. The
Portfolio will invest at
least 65% of its assets in
high-yielding corporate debt
obligations and preferred
stock.
</TABLE>
14
<PAGE> 23
<TABLE>
<CAPTION>
INVESTMENT OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Smith Barney Income and Seeks current income and Smith Barney Mutual Funds
Growth Portfolio long-term growth of income Management, Inc.
and capital by investing
primarily, but not
exclusively, in common
stocks.
Smith Barney Total Return Seeks to provide total Smith Barney Mutual Funds
Portfolio return, consisting of Management, Inc.
long-term capital
appreciation and income. The
Portfolio will seek to
achieve its goal by investing
primarily in a diversified
portfolio of dividend-paying
common stock.
Templeton Asset Allocation Seeks high level of total Templeton Investment Counsel,
Fund return with reduced risk over Inc.
(Class 1) the long term through a
flexible policy of investing
in stocks of companies in any
nation and debt obligations
of companies and governments
of any nation. Changes in the
asset mix will be adjusted in
an attempt to capitalize on
total return potential
produced by changing economic
conditions throughout the
world.
Templeton Bond Fund Seeks high current income Templeton Investment Counsel,
(Class 1) through a flexible Policy of Inc.
investing primarily in debt
securities of companies,
governments and government
agencies of various nations
throughout the world.
Templeton Stock Fund Seeks capital growth through Templeton Investment Counsel,
(Class 1) a policy of investing Inc.
primarily in common stocks
issued by companies, large
and small, in various nations
throughout the world.
Travelers Cash Income Trust Seeks to provide high current The Travelers Asset
income while emphasizing Management International
preservation of capital and Corporation (TAMIC)
maintaining a high degree of
liquidity by investing in
short-term money market
securities deemed to present
minimal credit risks.
Allocations to this portfolio
are neither insured nor
guaranteed.
</TABLE>
15
<PAGE> 24
<TABLE>
<CAPTION>
INVESTMENT OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Travelers Capital Seeks growth of capital TAMIC
Appreciation Fund through the use of common Subadviser: Janus Capital
stocks. Income is not an Corporation
objective. The Fund invests
principally in common stocks
of small to large companies
which are expected to
experience wide fluctuations
in price in both rising and
declining markets.
Travelers Managed Assets Seeks high total investment TAMIC
Trust return with reduced risk Subadviser: The Travelers
through a fully managed Investment Management Company
investment Policy. Assets of (TIMCO)
the Managed Assets Trust will
be invested in a portfolio of
U.S. stocks, bonds and money
market securities.
Travelers U.S. Government Selects investments from the TAMIC
Securities Portfolio point of view of an investor
concerned primarily with
highest credit quality,
current income and total
return. The assets of the
U.S. Government Securities
Portfolio will be invested in
direct obligations of the
United States, its agencies
and instrumentalities.
Travelers Utilities Portfolio Seeks to provide current Smith Barney Mutual Funds
income through investment in Management, Inc.
equity and debt securities of
companies in the utility
industries.
Travelers Zero Coupon Bond Seeks to provide as high an TAMIC
Fund Portfolio 1998 investment return as Subadviser: TIMCO
consistent with the
preservation of capital
investing in primarily zero
coupon securities that pay
cash income but are acquired
by the Portfolio at
substantial discounts from
their values at maturity. The
Zero Coupon Bond Fund
Portfolios may not be
appropriate for Policy Owners
who do not plan to have their
premiums invested in shares
of the Portfolios for the
long term or until maturity.
</TABLE>
16
<PAGE> 25
<TABLE>
<CAPTION>
INVESTMENT OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Travelers Zero Coupon Bond Seeks to provide as high an TAMIC
Fund Portfolio 2000 investment return as Subadviser: TIMCO
consistent with the
preservation of capital
investing in primarily zero
coupon securities that pay
cash income but are acquired
by the Portfolio at
substantial discounts from
their values at maturity. The
Zero Coupon Bond Fund
Portfolios may not be
appropriate for Policy Owners
who do not plan to have their
premiums invested in shares
of the Portfolios for the
long term or until maturity.
Travelers Zero Coupon Bond Seeks to provide as high an TAMIC
Fund Portfolio 2005 investment return as Subadviser: TIMCO
consistent with the
preservation of capital
investing in primarily zero
coupon securities that pay
cash income but are acquired
by the Portfolio at
substantial discounts from
their values at maturity. The
Zero Coupon Bond Fund
Portfolios may not be
appropriate for Policy Owners
who do not plan to have their
premiums invested in shares
of the Portfolios for the
long term or until maturity.
</TABLE>
Each Investment Option is subject to certain investment restrictions which may
not be changed without the approval of a "majority vote of the outstanding
voting securities" of that Fund (as defined in the Investment Company Act of
1940). There is no assurance that the Investment Options will achieve their
stated objectives.
More detailed information regarding the Investment Options may be found in the
current prospectuses for the Investment Options; these prospectuses are included
with and must accompany this Prospectus. Policy Owners are urged to read these
documents carefully before investing.
GENERAL
All investment income of and other distributions to each Investment Option of
Fund UL II arising from the applicable Investment Option are reinvested in
shares of that Investment Option at net asset value. The income and realized
gains or losses on the assets of each Investment Option of Fund UL II are
therefore separate and are credited to or charged against the Investment Option
without regard to income, gains or losses from any other Investment Option or
from any other business of the Company. The Company will purchase shares in the
Investment Options in connection with premium payments allocated to the
applicable Funds in accordance with Policy Owners' directions and will redeem
shares in the Investment Options to meet Policy obligations or make adjustments
in reserves, if any. The Investment Options are required to redeem Fund shares
at net asset value and to make payment within seven days.
17
<PAGE> 26
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each segment of the Separate Account was
initially established at $1. Thereafter, the Accumulation Unit Values will vary
to reflect the investment experience of the applicable Investment Option and
will be determined on each Valuation Date by multiplying the Accumulation Unit
Value on the preceding Valuation Date by the Net Investment Factor for that
Investment Option for the Valuation Period then ended. The Net Investment Factor
for each of the Investment Options is equal to the net asset value per share of
the corresponding Investment Option at the end of the Valuation Period (plus the
per share amount of any dividends or capital gain distributions by that Fund, if
the dividend date occurs in the Valuation Period then ended, and plus or minus
any per share credit or charge by the Company for any tax reserves) divided by
the net asset value per share of the corresponding Investment Option at the
beginning of the Valuation Period (plus or minus any per share credit or charge
by the Company for any tax reserves), and subtracting from that amount any
applicable administrative expense charge, and mortality and expense risk charge.
Applicants should refer to the prospectuses for each of the Investment Options
for a description of how the assets of each Investment Option are valued. These
valuation procedures directly affect the Accumulation Unit Value of the
Investment Option, and therefore the Cash Value of the Policy.
All valuations made under the Policy (e.g., the determination of Cash Value or
Cash Surrender Value, Policy loans, partial cash surrenders, payment of death
benefits, and the determination of the number of Accumulation Units to be
credited to a Policy with each Net Premium payment), will be made on the
Valuation Date next following the Company's receipt of the request.
MIXED AND SHARED FUNDING
It is conceivable that in the future it may not be advantageous for variable
life insurance and variable annuity Separate Accounts to invest in the
Investment Options simultaneously. Although neither the Company nor the
Investment Options currently foresees any such disadvantages either to variable
life insurance or to variable annuity Policy Owners, the Investment Options'
Boards of Directors intend to monitor events to identify any material conflicts
between such Policy Owners and to determine what action, if any, should be taken
in response thereto. If any of the Investment Options' Boards of Directors
conclude that separate mutual funds should be established for variable life
insurance and variable annuity Separate Accounts, the Company will bear the
attendant expenses, but variable life insurance and variable annuity Policy
Owners would no longer have the economies of scale resulting from a larger
combined fund. Please consult the prospectuses of the Investment Options for
additional information.
SUBSTITUTION
The Company reserves the right, subject to compliance with appropriate state and
federal laws, to make additions to, deletions from, or substitutions for Fund UL
II and the Investment Options which fund the Policy. If shares of any of the
Investment Options should no longer be available for purchase by the Fund UL II,
or if, in the judgment of the Company further investment in such shares becomes
inappropriate for purposes of the Policy, shares of another open-end management
investment company, or a portfolio thereof, may be substituted for shares of the
Investment Options held in the Investment Options. Substitution may be made with
respect to both existing investments and the investment of any future Premium
Payments. However, no substitution of securities will be made without prior
notice to Policy Owners, and without prior approval of the Securities and
Exchange Commission, all to the extent required by the 1940 Act or other
applicable law. Subject to Policy Owner approval, the Company reserves the right
to end Fund UL II's registration under the 1940 Act.
18
<PAGE> 27
TRANSFER OF CASH VALUE
- --------------------------------------------------------------------------------
As long as the Policy remains in effect, the Policy Owner may request that all
or a portion of the Cash Value of a particular Investment Option be transferred
to other Investment Options.
The Company reserves the right to restrict the number of such transfers to four
times in any Policy Year and to charge $10 for each additional transfer;
however, there is currently no charge for transfers. The Policy Owner may make
the request in writing by mailing such request to the Company at its Home
Office, or by telephone (if an authorization form is on file) by calling
1-800-334-4298. The Company will take reasonable steps to ensure that telephone
transfer requests are genuine. These steps may include seeking proper
authorization and identification prior to processing telephone requests.
Additionally, the Company will confirm telephone transfers. Any failure to take
such measures may result in the Company's liability for any losses due to
fraudulent telephone transfer requests.
As a result of a transfer, the number of Accumulation Units credited to the
Investment Option from which the transfer is made will be reduced by the number
obtained by dividing the amount transferred from the Investment Option by the
Accumulation Unit Value of that Investment Option on the Valuation Date on which
the Company receives the transfer request. The number of Accumulation Units
credited to the Investment Option to which the transfer is made will be
increased by the number obtained by dividing the amount transferred to the
Investment Option by the Accumulation Unit Value of that Investment Option on
the Valuation Date on which the Company receives the transfer request.
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
- --------------------------------------------------------------------------------
You may establish automated transfers of Policy Values on a monthly or quarterly
basis from certain of the Investment Option to other Investment Option through
written request or other method acceptable to the Company. You must have a
minimum total Policy Value of $1,000 to enroll in the Dollar-Cost Averaging
program. The minimum total automated transfer amount is $100.
You may start or stop participation in the Dollar-Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. Automated transfers
are subject to all of the other provisions and terms of the Policy, including
provisions relating to the transfer of money between Investment Options. The
Company reserves the right to suspend or modify transfer privileges at any time
and to assess a processing fee for this service.
Before transferring any part of the Policy Value, Policy Owners should consider
the risks involved in switching between investments available under this Policy.
Dollar cost averaging requires regular investments regardless of fluctuating
price levels, and does not guarantee profits or prevent losses in a declining
market. Potential investors should consider their financial ability to continue
purchases through periods of low price levels.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, Fund UL II's Investment Options may show the percentage
change in the value of an Accumulation Unit based on the performance of the
Investment Option over a period of time, usually for the past one-, two-,
three-, five-, and ten year periods determined by dividing the increase
(decrease) in value for that unit by the Accumulation Unit Value at the
beginning of the period.
For Investment Options of Fund UL II that invest in underlying funds that were
in existence prior to the date on which the Investment Option became available
under the Policy, average annual rates of return may include periods prior to
the inception of the Investment Option. Performance
19
<PAGE> 28
calculations for Investment Options with pre-existing Investment Options will be
calculated by adjusting the actual returns of the Investment Options to reflect
the charges that would have been assessed under the Investment Options had the
Investment Option been available under Fund UL II during the period shown.
The following performance information represents the percentage change in the
value of an Accumulation Unit of the Investment Options for the periods
indicated, and reflects all expenses of the Investment Options. The following
chart reflects the guaranteed maximum .80% mortality and expense risk charge and
.10% administrative expense risk charge. The rates of return do not reflect the
2.5% front-end sales charge or the 2.5% state premium tax charge (both of which
are deducted from premium payments) nor do they reflect surrender charges or
Monthly Deduction Amounts. The surrender charges and Monthly Deduction Amounts
for a hypothetical Insured are depicted in the Example following the Rates of
Returns. For information about the Charges and Deductions assessed under the
Policy, see page 3. For illustrations of how these charges affect Cash Values
and Death Benefits, see the Illustrations beginning on page 29. The performance
information described in this prospectus, may be used from time to time in
advertisement for the Policy, subject to National Association of Securities
Dealers, Inc. ("NASD") and applicable state approval and guidelines.
AVERAGE ANNUAL RETURNS THROUGH 12/31/96
<TABLE>
<CAPTION>
UNDERLYING INVESTMENT OPTIONS ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
- ---------------------------------------------------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
STOCK FUNDS
AIM Capital Appreciation Portfolio 13.84% -- -- --
Alliance Growth Portfolio 28.12% -- -- --
Capital Appreciation Fund (Janus Sub-Adviser) 26.95% 17.39% 16.53% 11.79%
Dreyfus Stock Index Fund 21.35% 18.00% 13.56% --
Fidelity VIP Equity-Income Portfolio 13.20% 17.11% 16.86% --
Fidelity VIP Growth Portfolio 13.62% 14.70% 14.09% --
Smith Barney Income & Growth Portfolio 18.66% -- -- --
Smith Barney Total Return Portfolio 24.23% -- -- --
Utilities Portfolio (Smith Barney Sub-Adviser) 6.47% -- -- --
Templeton's Stock Fund 21.24% 13.39% 15.46% --
BOND FUNDS
Fidelity VIP High Income Portfolio 12.96% 9.61% 13.88% 10.09%
Smith Barney High Income Portfolio 12.10% -- -- --
Templeton's Bond Fund 8.43% 5.19% 6.08% --
Travelers U.S. Gov't Securities Portfolio 0.53% 5.05% -- --
Travelers Zero Coupon Bond Portfolio 1998 3.12% -- -- --
Travelers Zero Coupon Bond Portfolio 2000 1.84% -- -- --
Travelers Zero Coupon Bond Portfolio 2005 0.52% -- -- --
BALANCED FUNDS
Fidelity VIP II Asset Manager Portfolio 13.52% 6.98% 10.22% --
MFS Total Return Portfolio 13.37% -- -- --
Templeton's Asset Allocation Fund 17.73% 11.18% 12.94% --
Travelers Managed Assets Trust 12.71% 11.18% 9.18% 10.11%
MONEY MARKET FUNDS
Travelers Cash Income Trust(1) 3.42% 3.02% 2.53% --
</TABLE>
The information presented in the above chart represents the percentage change in
the value of an Accumulation Unit of the underlying investment options for the
periods indicated, and reflects all expenses of the underlying funds, as well as
the guaranteed maximum 0.80% mortality and expense risk charge and 0.10%
administrative expense charge against amounts allocated to the underlying funds.
The rates of return do not reflect the 2.5% front-end sales charge or the 2.5%
state premium tax charge (both of which are deducted from premium payments) nor
do they
20
<PAGE> 29
reflect surrender charges or monthly deduction amounts. These charges would
reduce the average annual return reflected.
(1) An investment in Cash Income Trust is neither insured nor guaranteed by the
United States Government. There is no assurance that a stable $1.00 value
will be maintained.
MARKETLIFE HYPOTHETICAL EXAMPLE2
MALE NONSMOKER AGE 40 WITH A LEVEL DEATH BENEFIT
OF $300,000 AND ANNUAL PREMIUM PAYMENTS OF $5,000
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS
------------------------------------ ------------------------------------
TOTAL ACCUMULATED SURRENDER TOTAL ACCUMULATED SURRENDER
UNDERLYING INVESTMENT OPTION INVESTMENT VALUE VALUE INVESTMENT VALUE VALUE
- ---------------------------------- ---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
STOCK FUNDS
AIM Capital Appreciation Portfolio $5,000 $ 4,267 $ 1,451 N/A N/A N/A
Alliance Growth Portfolio 5,000 4,894 2,041 N/A N/A N/A
Capital Appreciation Fund (Janus
Sub-Adviser) 5,000 4,845 1,994 $ 25,000 $32,628 $30,746
Dreyfus Stock Index Fund 5,000 4,608 1,772 25,000 30,817 28,935
Fidelity VIP Equity-Income
Portfolio 5,000 4,264 1,449 25,000 30,539 28,657
Fidelity VIP Growth Portfolio 5,000 4,282 1,465 25,000 29,112 27,230
Smith Barney Income & Growth
Portfolio 5,000 4,495 1,665 N/A N/A N/A
Smith Barney Total Return
Portfolio 5,000 4,730 1,886 N/A N/A N/A
Smith Barney Utilities Portfolio 5,000 3,981 1,182 N/A N/A N/A
Templeton's Stock Fund 5,000 4,603 1,767 25,000 30,268 28,386
BOND FUNDS
Fidelity VIP High Income Portfolio 5,000 4,254 1,439 25,000 26,511 24,629
Smith Barney High Income Portfolio 5,000 4,218 1,405 N/A N/A N/A
Templeton's Bond Fund 5,000 4,064 1,260 25,000 22,244 20,362
Travelers U.S. Gov't Securities
Portfolio 5,000 3,732 948 25,000 20,515 18,633
Travelers Zero Coupon Bond
Portfolio 1998 5,000 3,841 1,050 N/A N/A N/A
Travelers Zero Coupon Bond
Portfolio 2000 5,000 3,787 1,000 N/A N/A N/A
Travelers Zero Coupon Bond
Portfolio 2005 5,000 3,732 948 N/A N/A N/A
BALANCED FUNDS
Fidelity VIP II Asset Manager
Portfolio 5,000 4,278 1,461 25,000 24,743 22,860
MFS Total Return Portfolio 5,000 4,272 1,455 N/A N/A N/A
Templeton's Asset Allocation Fund 5,000 4,455 1,628 25,000 27,804 25,922
Travelers Managed Assets Trust 5,000 4,244 1,429 25,000 25,668 23,786
MONEY MARKET FUNDS
Travelers Cash Income Trust 5,000 3,853 1,062 25,000 19,644 17,762
</TABLE>
The charges used in the above example consist of a front-end sales charge of
2.5%, a state premium tax charge of 2.5%, the guaranteed maximum 0.80% mortality
and expense risk charge and 0.10% administrative expense charge, all expenses of
the underlying funds, and monthly deduction charges including cost of insurance
and a contract administrative charge (in this example, the administrative charge
is 0%).
(2) These hypothetical examples show the effect of the performance quoted on
cash values. Performance, loans and withdrawals will affect the cash value
and death benefit of your policy. Since the values of the portfolios will
fluctuate, the cash value at any time may be more or less than the total
principal investment made, including at the time of surrender of the policy,
when surrender charges may apply.
21
<PAGE> 30
The benefits illustrated above may differ for other policies as a result of
differences in investment allocation, premium timing and amount, death benefit
type, as well as the age and underwriting of the classification of the insured
(which could result in higher costs of insurance). Because MarketLife is a
variable universal life insurance policy, actual performance should always be
considered in conjunction with the level of death benefit and cash values.
EXAMPLE OF POLICY CHARGES
The following chart illustrates the surrender charges and Monthly Deduction
Amounts that would apply under a Policy based on the assumptions listed below.
Surrender charges and Monthly Deduction Amounts generally will be higher for an
Insured who is older than the assumed Insured, and lower for an Insured who is
younger (assuming the Insureds have the same risk classification).
- --------------------------------------------------------------------------------
Male, Age 35
Preferred Non-Smoker
Annual Premium: $850.00
Hypothetical Gross Annual Investment Rate of Return: 8%*
Face Amount: $100,000
Level Death Benefit Option
Current Charges
<TABLE>
<CAPTION>
TOTAL MONTHLY DEDUCTION
SURRENDER CHARGES SALES CHARGE FOR THE POLICY YEAR
------------------------------- COMPONENT OF ----------------------------
ADMINISTRATIVE SURRENDER COST OF
POLICY CUMULATIVE SALES CHARGE CHARGE CHARGE AS % OF INSURANCE ADMINISTRATIVE
YEAR PREMIUMS COMPONENT COMPONENT CUM. PREM. CHARGES CHARGES
- ------ ---------- ------------ -------------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 850.00 $91.20 $ 364.80 10.73% $ 145.00 $96.00
2 $ 1,700.00 $90.40 $ 361.60 5.32% $ 157.00 $96.00
3 $ 2,550.00 $90.00 $ 360.00 3.53% $ 168.00 $96.00
5 $ 4,250.00 $92.80 $ 371.20 2.18% $ 190.00 $ 0
10 $ 8,500.00 $59.40 $ 237.60 0.70% $ 250.00 $ 0
</TABLE>
* Hypothetical results shown above are illustrative only and are based on the
Hypothetical Gross Annual Investment Rate of Return shown above. This
Hypothetical Gross Annual Investment Rate of Return should not be deemed to be
a representation of past or future investment results. Actual investment
results may be more or less than those shown. No representations can be made
that the hypothetical rates assumed can be achieved for any one year or
sustained over any period of time.
MISCELLANEOUS
- --------------------------------------------------------------------------------
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote the
shares of the Investment Options at regular and special meetings of the
shareholders of the Investment Options in accordance with instructions from
Policy Owners (or the Policy beneficiaries, as the case may be) having a voting
interest in Fund UL II. The Company will vote shares for which no instructions
have been given or shares which are not otherwise attributable to Policy Owners
in the same proportion as it votes shares for which it has received
instructions. If the 1940 Act or any rule promulgated thereunder should be
amended, however, or if the Company's present interpretation should change and,
as a result, the Company determines it is permitted to vote the shares of the
Investment Options in its own right, it may elect to do so.
The voting interests of the Policy Owner (or the Beneficiary) in the Investment
Options will be determined as follows: Policy Owners may cast one vote for each
$100 of Cash Value of the Policy allocated to the Investment Option, the assets
of which are invested in the particular Investment Option on the record date for
the shareholder meeting for that Fund. Fractional votes are counted.
22
<PAGE> 31
If, however, a Policy Owner has taken a loan secured by the Policy, amounts
transferred from the Investment Option(s) to the Loan Account in connection with
the loan will not be considered in determining the voting interests of the
Policy Owner.
Policy Owners should review the prospectuses for the Investment Options to
determine matters on which shareholders may vote and the definition of a
majority vote required on some matters.
DISREGARDING VOTING INSTRUCTIONS
When permitted by state insurance regulatory authorities, the Company may
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the investment objective or policies of Fund UL
II or one of the Investment Options, or to approve or disapprove an investment
advisory Policy of one of the Investment Options. In addition, the Company may
disregard voting instructions in favor of changes in the investment policies or
the investment adviser of any of the Investment Options which are initiated by a
Policy Owner if the Company reasonably disapproves of such changes. A change
would be disapproved only if the proposed change is contrary to state law or
prohibited by state regulatory authorities, or if the Company determines that
the change would have an adverse effect on its general account in that the
proposed investment policy for an Investment Option may result in overly
speculative or unsound investments. In the event that the Company does disregard
voting instructions, a summary of that action and the reasons for such action
will be included in the next annual report to Policy Owners.
SUSPENSION OF VALUATION
The Company reserves the right to suspend or postpone the date of any payment of
any benefit or values for any Valuation Period (1) when the New York Stock
Exchange ("Exchange") is closed; (2) when trading on the Exchange is restricted;
(3) when an emergency exists as determined by the SEC so that disposal of the
securities held in the Investment Options is not reasonably practicable or it is
not reasonably practicable to determine the value of the Investment Option's net
assets; or (4) during any other period when the SEC, by order, so permits for
the protection of security holders.
DIVIDENDS
No dividends will be paid under the Policy.
DISTRIBUTION
The Company intends to sell the Policies in all jurisdictions where it is
licensed to do business and where the Policy is approved. The Policies will be
sold by life insurance sales representatives who are registered representatives
of the Company or certain other registered broker-dealers. The maximum
commission payable by the Company for distribution would be no greater than 50%
of the actual premium paid in the first twelve months. Any sales representative
or employee will have been qualified to sell variable life insurance Policies
under applicable federal and state laws. Each broker/dealer is registered with
the Securities and Exchange Commission under the Securities Exchange Act of 1934
and all are members of the National Association of Securities Dealers, Inc.
Tower Square Securities, Inc. ("Tower Square"), an indirect wholly owned
subsidiary of Travelers Group, Inc., serves as principal underwriter of the
Policies described herein.
LEGAL PROCEEDINGS AND OPINION
There are no pending material legal proceedings affecting the Policy, Fund UL II
or any of the Investment Options.
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the variable universal life insurance Policy described in this
Prospectus and the organization of the Company, its authority to issue the
Policy under Connecticut law and the validity of the forms of
23
<PAGE> 32
the Policy under Connecticut law have been passed on by General Counsel of the
Company.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., independent accountants, 100 Pearl Street, Hartford,
Connecticut, are the independent auditors for Fund UL II. The services provided
to Fund UL II include primarily the audit of Fund UL II's financial statements.
The financial statements of Fund UL II for the year ended December 31, 1996 have
been audited by Coopers & Lybrand L.L.P., as indicated in their report thereon
and are included herein in reliance upon the authority of said firm as experts
in accounting and auditing.
The financial statements of The Travelers Life and Annuity Company as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, have been included herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. This Prospectus does
not contain all information set forth in the Registration Statement, its
amendments and exhibits, to which reference is made for further information
concerning Fund UL II, the Investment Options, the Company and the Policy.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
GENERAL
The following is a general discussion of the federal income tax considerations
relating to the Policies. This discussion is based upon the Company's
understanding of the federal income tax laws as they are currently interpreted
by the Internal Revenue Service ("IRS"). These laws are complex, and tax results
may vary among individuals. A person contemplating the purchase of or the
exercise of elections under a Policy should seek competent tax advice.
IT SHOULD BE UNDERSTOOD THAT THIS IS NOT AN EXHAUSTIVE DISCUSSION OF ALL TAX
QUESTIONS THAT MIGHT ARISE UNDER THE POLICIES. NO ATTEMPT HAS BEEN MADE TO
ADDRESS ANY FEDERAL ESTATE TAX OR STATE AND LOCAL TAX CONSIDERATIONS WHICH MAY
ARISE IN CONNECTION WITH A POLICY. FOR COMPLETE INFORMATION, A QUALIFIED TAX
ADVISOR SHOULD BE CONSULTED.
THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF ANY POLICY AND THE FOLLOWING
TAX DISCUSSION IS BASED ON THE COMPANY'S UNDERSTANDING OF FEDERAL INCOME TAX
LAWS AS THEY ARE CURRENTLY INTERPRETED. THE COMPANY CANNOT GUARANTEE THAT THOSE
LAWS OR INTERPRETATIONS WILL REMAIN UNCHANGED.
TAX STATUS OF THE POLICY
- --------------------------------------------------------------------------------
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance contract
for federal tax purposes. Guidance as to how Section 7702 is to be applied,
however, is limited. Although the Secretary of the Treasury (the "Treasury") is
authorized to prescribe regulations implementing Section 7702, and while
proposed regulations and other limited, interim guidance has been issued, final
regulations have not been adopted. If a Policy were determined not to be a life
insurance contract for purposes of Section 7702, such Policy would not provide
the tax advantages normally provided by a life insurance policy.
24
<PAGE> 33
With respect to a Policy issued on the basis of a standard rate class, the
Company believes (largely in reliance on IRS Notice 88-128 and the proposed
regulations under Section 7702) that such a Policy should meet the Section 7702
definition of a life insurance contract. There is less guidance on the
application of the rules with respect to a Policy that is issued on a
substandard basis (i.e., a premium class involving higher than standard
mortality risk). Thus, it is not clear whether such a Policy would satisfy
Section 7702, particularly if the Policy Owner pays the full amount of premiums
permitted under the Policy.
The Company reserves the right to make changes in the Policy if such changes are
deemed necessary to attempt to assure its qualification as a life insurance
contract for tax purposes.
DIVERSIFICATION
Section 817(h) of the Code provides that separate account investments (or the
investments of a mutual fund, the shares of which are owned by separate accounts
of insurance companies) underlying the Policy must be "adequately diversified"
in accordance with Treasury regulations in order for the Policy to qualify as
life insurance. The Treasury Department has issued regulations prescribing the
diversification requirements in connection with variable contracts. The Separate
Account through the Investment Options, intends to comply with these
requirements. Although the Company does not control the Investment Options, it
intends to monitor the investments of the Investment Options to ensure
compliance with the diversification requirements prescribed by the Treasury
Department.
INVESTOR CONTROL
In certain circumstances, owners of variable life insurance contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contract. In those circumstances, income
and gains from the separate account assets would be includable in the variable
contract owner's gross income each year. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
has also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the Policy Owner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Investment Options without being treated as owners of
the underlying assets." As of the date of this prospectus, no such guidance has
been issued.
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it determined that
the policy owners received the desired tax benefits because they were not owners
of separate account assets. For example, a Policy Owner of this Policy has
additional flexibility in allocating payments and cash values. These differences
could result in the Policy Owner being treated as the owner of the assets of the
Separate Account. In addition, the Company does not know what standard will be
set forth in the regulations or rulings which the Treasury is expected to issue,
nor does the Company know if such guidance will be issued. The Company therefore
reserves the right to modify the Policy as necessary to attempt to prevent the
Policy Owner from being considered the owner of a pro rata share of the assets
of the Separate Account.
The remaining tax discussion assumes that the Policy qualifies as a life
insurance contract for federal income tax purposes.
25
<PAGE> 34
TAX TREATMENT OF POLICY BENEFITS
- --------------------------------------------------------------------------------
IN GENERAL
The Company believes that the proceeds and cash value increases of a Policy
should be treated in a manner consistent with a fixed-benefit life insurance
policy for federal income tax purposes. Thus, the Death Benefit under the Policy
should be excludable from the gross income of the Beneficiary.
In addition, the Policy Owner will generally not be deemed to be in constructive
receipt of the Cash Value, including increments thereof, until there is a
distribution. The tax consequences of distribution from, and loans taken from or
secured by, a Policy depend on whether the Policy is classified as a "Modified
Endowment Contract." However, whether a Policy is or is not a Modified Endowment
Contract, upon a complete surrender or lapse of a Policy or when benefits are
paid at a Policy's maturity date, if the amount received plus the amount of
indebtedness exceeds the total investment in the Policy, the excess will
generally be treated as ordinary income subject to tax.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's Death Benefit Option, a Policy loan, a partial withdrawal, a surrender,
a change in ownership, or an assignment of the Policy may have federal income
tax consequences. In addition, federal, state and local transfer, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary. Therefore, it is important to check
with a tax adviser prior to the purchase of a policy.
MODIFIED ENDOWMENT CONTRACTS
In light of Policy premium requirements, a Policy will, in almost all cases, be
a modified endowment contract. (See, however, the discussion below on a Policy
issued in exchange for another life insurance contract.)
Loans and partial withdrawals from, as well as collateral assignments of,
Policies that are modified endowment contracts will be treated as distributions
to the Policy Owner for tax purposes. All pre-death distributions (including
loans, partial withdrawals and collateral assignments) from these Policies will
be included in gross income on an income-first basis to the extent of any income
in the Policy (the cash value less the Policy Owner's investment in the Policy)
immediately before the distribution.
The law also imposes a 10% penalty tax on pre-death distributions (including
loans, collateral assignments, partial withdrawals and complete surrenders) from
modified endowment contracts to the extent they are included in income, unless a
specific exception to the penalty applies. The penalty does not apply to amounts
which are distributed on or after the date on which the taxpayer attains age
59 1/2, because the taxpayer is disabled, or as substantially equal periodic
payments over the taxpayer's life (or life expectancy) or over the joint lives
(or joint life expectancies) of the taxpayer and his or her beneficiary.
Furthermore, if the loan interest is capitalized by adding the amount due to the
balance of the loan, the amount of the capitalized interest will be treated as
an additional distribution subject to income tax as well as the 10% penalty tax,
if applicable, to the extent of income in the Policy.
EXCHANGES
Any Policy issued in exchange for a modified endowment contract will be subject
to the tax treatment accorded to modified endowment contracts. However, the
Company believes that any Policy received in exchange for a life insurance
contract that is not a modified endowment contract will generally not be treated
as a modified endowment contract if the face amount of the Policy is greater
than or equal to the death benefit of the policy being exchanged. The payment of
any premiums at the time of or after the exchange may, however, cause the Policy
to become a modified endowment contract. A prospective purchaser should consult
a qualified tax advisor before authorizing the exchange of his or her current
life insurance contract for a Policy.
26
<PAGE> 35
POLICIES WHICH ARE NOT MODIFIED ENDOWMENT CONTRACTS
Unlike loans from modified endowment contracts, a loan from a Policy that is not
a modified endowment contract will be considered indebtedness of the owner and
no part of a loan will constitute income to the owner. However, the treatment of
loans taken on earnings after the tenth Policy Year, or of loans taken to
acquire a Travelers long-term care policy is unclear; such loans might be
considered a withdrawal instead of indebtedness for federal tax purposes.
Pre-death distributions from a Policy that is not a modified endowment contract
will generally not be included in gross income to the extent that the amount
received does not exceed the Policy Owner's investment in the Policy. (An
exception to this general rule may occur in the case of a decrease or change
that reduces the benefits provided under a Policy in the first 15 years after
the Policy is issued and that results in a cash distribution to the Policy
Owner. Such a cash distribution may be taxed in whole or in part as ordinary
income to the extent of any gain in the Policy.) Further, the 10% penalty tax on
pre-death distributions does not apply to Policies that are not modified
endowment contracts.
Certain changes to Policies that are not modified endowment contracts may cause
such Policies to be treated as modified endowment contracts. A Policy Owner
should therefore consult a tax advisor before effecting any change to a Policy
that is not a modified endowment contract.
TREATMENT OF LOAN INTEREST
If there is any borrowing against the Policy, the interest paid on loans may not
be tax deductible.
AGGREGATION OF MODIFIED ENDOWMENT CONTRACTS
In the case of a pre-death distribution (including a loan, partial withdrawal,
collateral assignment or complete surrender) from a Policy that is treated as a
modified endowment contract, a special aggregation requirement may apply for
purposes of determining the amount of the income on the Policy. Specifically, if
the Company or any of its affiliates issues to the same Policy Owner more than
one modified endowment contract within a calendar year, then for purposes of
measuring the income on the Policy with respect to a distribution from any of
those Policies, the income on the Policy for all those Policies will be
aggregated and attributed to that distribution.
THE COMPANY'S INCOME TAXES
The Company is taxed as a life insurance company under federal income tax law.
Presently, the Company does not expect to incur any income tax or the earnings
or the realized capital gains attributable to Fund UL II. However, the Company
may assess a charge against the Investment Options for federal income taxes
attributable to those accounts in the event that the Company incurs income or
capital gains or other tax liability attributable to Fund UL II under future tax
law.
27
<PAGE> 36
MANAGEMENT
- --------------------------------------------------------------------------------
DIRECTORS OF THE TRAVELERS LIFE AND ANNUITY COMPANY
The following are the Directors and Executive Officers of The Travelers Life and
Annuity Company. Unless otherwise indicated, the principal business address for
all individuals is the Company's Home Office at One Tower Square, Hartford,
Connecticut 06183. References to Travelers Group Inc. include, prior to December
31, 1993, Primerica Corporation or its predecessors.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DIRECTOR
NAME AND POSITION SINCE PRINCIPAL BUSINESS
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
Jay S. Benet............ 1996 Senior Vice President since February 1994 and Vice
Director President (1990-1994) of The Travelers Life and Annuity
Company; Partner (1986-1990) of Coopers & Lybrand.
- -------------------------------------------------------------------------------------------------
Ian R. Stuart........... 1996 Senior Vice President since November, 1996, Chief
Director Financial Officer; Chief Accounting Officer and
Controller since March 1996, Vice President (1991-1996)
of The Travelers Life and Annuity Company.
- -------------------------------------------------------------------------------------------------
Katherine M. Sullivan... 1996 Senior Vice President and General Counsel since May 1996
Director of The Travelers Life and Annuity Company; Senior Vice
President and General Counsel (1994-1996) Connecticut
Mutual; Special Counsel & Chief of Staff (1988-1994)
Aetna Life & Casualty.
- -------------------------------------------------------------------------------------------------
George C. Kokulis....... 1996 Senior Vice President since September 1995, Vice
Director President (1993-1995) of The Travelers Life and Annuity
Company.
- -------------------------------------------------------------------------------------------------
Michael A. Carpenter.... 1995 Chairman since June 1996 and President and Chief
Director Executive Officer since June 1995 of The Travelers Life
and Annuity Company; Executive Vice President of
Travelers Group Inc. since January 1995; Chairman,
President and Chief Executive Officer (1989-1994), Kidder
Peabody Group Inc.
- -------------------------------------------------------------------------------------------------
Robert I. Lipp.......... 1992 Chairman, President and Chief Executive Officer since
Director April 1996 of Travelers/Aetna Property Casualty Corp.;
Chief Executive Officer and Director since December 1993
of The Travelers Insurance Group Inc.; Vice Chairman and
Director of Travelers Group Inc. since 1991; Chairman and
Chief Executive Officer of Commercial Credit Company
(1991-1993); Executive Vice President (1986-1991),
Primerica Corporation.
- -------------------------------------------------------------------------------------------------
Marc P. Weill........... 1994 Senior Vice President-Investments since 1993 and Chief
Director Investment Officer since 1995 of The Travelers Insurance
Group Inc.; Senior Vice President and Chief Investment
Officer of Travelers Group Inc. since 1992; Vice
President (1990-1992), Primerica Corporation; Vice
President (1989-1990), Smith Barney Inc.
- -------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 37
SENIOR OFFICERS OF THE TRAVELERS LIFE AND ANNUITY COMPANY
The following are the Senior Officers of The Travelers Life and Annuity Company,
other than the Directors listed above, as of the date of this Prospectus. Unless
otherwise indicated, the principal business address for all individuals listed
is One Tower Square, Hartford, Connecticut 06183.
<TABLE>
<CAPTION>
NAME POSITION WITH INSURANCE COMPANY
- ---------------------------------------------------------------------------------------------
<S> <C>
Stuart Baritz Senior Vice President
Barry Jacobson Senior Vice President
Russell H. Johnson Senior Vice President
Warren H. May Senior Vice President
Elizabeth C. Georgakopoulos Senior Vice President
Christine M. Modie Senior Vice President
David A. Tyson Senior Vice President
F. Denney Voss Senior Vice President
</TABLE>
Information relating to the management of the underlying funds is contained in
the applicable prospectuses.
ILLUSTRATIONS
- --------------------------------------------------------------------------------
The following pages are intended to illustrate how the Account Value, Cash
Surrender Value and Death Benefit can change over time for Policies issued to a
45 year old male and a 45 year old female. The difference between the Account
Value and the Cash Surrender Value in these illustrations represents the
Surrender Charge that would be incurred upon a full surrender of the Policy.
For both male and female age 45, there are two pages of values. One page
illustrates the assumption that the maximum Guaranteed Cost of Insurance Rates,
the monthly administrative charge, mortality and expense risk charge, and
administrative expense charge allowable under the Policy are charged in all
years. The other page illustrates the assumption that the current scale of Cost
of Insurance Rates and other charges are charged in all years. The Cost of
Insurance Rates charged vary by age, sex and underwriting classification, and
the monthly administrative charge varies by age, amount of insurance and
smoker/non-smoker classification for current charges. The illustrations reflect
a deduction of 5% from each annual premium for premium tax (2.5%) and front end
sales charge (2.5%).
The values shown in these illustrations vary according to assumptions used for
charges, and gross rates of investment returns. For the first fifteen Policy
Years, the current and guaranteed charges consist of 0.80% for mortality and
expense risks, 0.10% for administrative expenses, and 0.67% for Investment
Option expenses and thereafter 0.45% for mortality and expense risks, 0.00% for
administrative expenses, and 0.67% for Investment Option expenses.
The charge for Investment Option expenses reflected in the illustrations assumes
that Cash Value is allocated equally among all Investment Options and that no
Policy Loans are outstanding, and is an average of the investment advisory fees
and other expenses charged by each of the Investment Options during 1996.
After deduction of these amounts, the illustrated gross annual investment rates
of return of 0%, 6%, and 12% correspond to approximate net annual rates of
- -1.71%, 4.29%, and 10.29%, respectively on a current and guaranteed basis during
the first fifteen Policy Years, and to approximate net annual rates of -1.26%,
4.74%, and 10.74%, respectively on a current and guaranteed basis thereafter.
The actual charges under a Policy for expenses of the Investment Options will
depend on the actual allocation of Cash Value and may be higher or lower than
those illustrated.
The charge for Investment Option expenses for all illustrations is an average of
the investment advisory fees and other expenses charged by all of the Investment
Options. The Investment
29
<PAGE> 38
Option expenses for some of the Investment Options reflect an expense
reimbursement agreement currently in effect. For the year ended December 31,
1996, these reimbursement agreements affected the total operating expenses of
the Investment Options as follows:
1. The Company has agreed to reimburse Capital Appreciation Fund (CAF),
Cash Income Trust (CIT), Managed Assets Trust (MAT), the U.S. Government
Securities Portfolio (USGSP) and the Utilities Portfolio, for the amount
by which each fund's aggregate annual expenses, including investment
advisory fees, but excluding brokerage commissions, interest charges and
taxes, exceed 1.25%. The expense reimbursement agreement did not affect
the operating expenses of CIT, CAF, MAT, USGSP or Utilities Portfolio
during 1996.
2. The Company has agreed to reimburse Travelers Zero Coupon Bond Portfolio
1998, 2000 and 2005 for the amount by which each Fund's aggregate annual
expenses, including investment advisory fees but excluding brokerage
commissions, interest charges and taxes, exceed .15%. In the absence of
the reimbursement agreement with the Company, the operating expenses in
1996 would have been 2.82%, 2.49% and 2.17%, respectively.
3. The administrator and investment adviser for the Dreyfus Stock Index
Fund have agreed to reimburse the Fund for expenses in excess of 0.40%.
4. No reimbursement arrangements were in effect for the Templeton Stock,
Bond and Asset Allocation Funds during 1996.
5. FMR or the Fidelity funds have entered into varying arrangements with
third parties who either paid or reduced a portion of the fund's
expenses. Without this reduction, Total Underlying Fund Expenses would
have been: Equity Income Portfolio, 0.58%, Growth Portfolio, 0.69%; and
Asset Manager Portfolio, 0.74%. No reimbursement arrangement affected
the High Income Portfolio.
6. During the fiscal year ended October 31, 1996, there were no fees waived
or expenses reimbursed for the Smith Barney Income and Growth Portfolio,
Alliance Growth Portfolio, Smith Barney High Income Portfolio, or the
MFS Total Return Portfolio.
Although these reimbursement arrangements are expected to continue in subsequent
years, the effect of discontinuance could be higher expenses charged to Policy
Owners.
As stated above, the examples illustrate values that would result based upon
hypothetical uniform gross investment rates of return of 0%, 6% and 12%. The
values would be different from those shown if the gross rates averaged 0%, 6%,
and 12% over a period of years, but fluctuated above and below those averages.
The illustrations also assume that premiums are paid as indicated, no Policy
loans are made, no increases or decreases to the Stated Amount are requested, no
partial surrenders are made, and no charges for transfers between funds are
incurred.
The illustrations do not reflect any charges for federal income taxes against
Fund UL II, since the Company is not currently deducting such charges from Fund
UL II. However, such charges may be made in the future, and in that event, the
gross annual investment rates of return would have to exceed 0%, 6% and 12% by
an amount sufficient to cover the tax charges in order to produce the Death
Benefits, Account Values and Cash Surrender Values illustrated.
Upon request, the Company will provide a comparable illustration based upon the
proposed Insured's age, sex, underwriting classification, the specified
insurance benefits, and the premium requested. The hypothetical gross annual
investment return assumed in such an illustration will not exceed 12%.
30
<PAGE> 39
MARKETLIFE
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
LEVEL DEATH BENEFIT OPTION
ILLUSTRATED WITH CURRENT CHARGES**
<TABLE>
<S> <C>
Female, Issue Age 45 Face Amount $150,000
Preferred, Non-Smoker Annual Premium $1,595.63
</TABLE>
<TABLE>
<CAPTION>
TOTAL
PREMIUMS DEATH BENEFIT CASH VALUE CASH SURRENDER VALUE
WITH 5% ---------------------------------- ---------------------------------- ---------------------
YEAR INTEREST 0% 6% 12% 0% 6% 12% 0% 6%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,675 150,000 150,000 150,000 1,004 1,079 1,155 0 0
2 3,435 150,000 150,000 150,000 1,978 2,192 2,415 890 1,091
3 5,282 150,000 150,000 150,000 2,915 3,332 3,785 1,879 2,271
4 7,221 150,000 150,000 150,000 3,956 4,645 5,425 2,964 3,612
5 9,258 150,000 150,000 150,000 4,956 5,992 7,212 4,012 4,986
6 11,396 150,000 150,000 150,000 5,914 7,374 9,163 5,021 6,393
7 13,641 150,000 150,000 150,000 6,834 8,795 11,296 5,993 7,886
8 15,999 150,000 150,000 150,000 7,716 10,256 13,632 6,931 9,455
9 18,474 150,000 150,000 150,000 8,559 11,760 16,192 7,864 11,065
10 21,073 150,000 150,000 150,000 9,360 13,303 18,998 8,773 12,716
15 36,153 150,000 150,000 150,000 12,557 21,511 37,606 12,557 21,511
20 55,399 150,000 150,000 150,000 14,572 31,211 69,011 14,572 31,211
<CAPTION>
YEAR 12%
<S> <C>
- ------------------------
<S> <C>
1 9
2 1,301
3 2,697
4 4,345
5 6,133
6 8,146
7 10,387
8 12,831
9 15,497
10 18,411
15 37,606
20 69,011
</TABLE>
These hypothetical rates of return are illustrative only and should not be
considered a representation of past or future investment results. Actual
investment results may be more or less than those shown and will depend on a
number of factors. The Account Values and Cash Surrender Values will be
different from those shown if the actual rates of return averaged 0%, 6% or 12%
over a period of years but fluctuated above or below the average for individual
contract years. No representation can be made that these rates of return can be
achieved for any one year or sustained period of time.
** Current cost of insurance charges, mortality and expense risk charge, monthly
administrative charge and administrative expense charge.
31
<PAGE> 40
MARKETLIFE
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
LEVEL DEATH BENEFIT OPTION
ILLUSTRATED WITH GUARANTEED CHARGES**
<TABLE>
<S> <C>
Female, Issue Age 45 Face Amount $150,000
Preferred, Non-Smoker Annual Premium $1,595.63
</TABLE>
<TABLE>
<CAPTION>
TOTAL
PREMIUMS DEATH BENEFIT CASH VALUE CASH SURRENDER VALUE
WITH 5% ---------------------------------- ---------------------------------- ---------------------
YEAR INTEREST 0% 6% 12% 0% 6% 12% 0% 6%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,675 150,000 150,000 150,000 521 581 641 0 0
2 3,435 150,000 150,000 150,000 1,000 1,152 1,312 0 114
3 5,282 150,000 150,000 150,000 1,434 1,711 2,016 487 747
4 7,221 150,000 150,000 150,000 2,251 2,697 3,208 1,361 1,781
5 9,258 150,000 150,000 150,000 3,012 3,683 4,482 2,185 2,816
6 11,396 150,000 150,000 150,000 3,715 4,668 5,843 2,954 3,849
7 13,641 150,000 150,000 150,000 4,357 5,647 7,299 3,665 4,878
8 15,999 150,000 150,000 150,000 4,933 6,613 8,852 4,315 5,894
9 18,474 150,000 150,000 150,000 5,437 7,562 10,510 4,895 6,892
10 21,073 150,000 150,000 150,000 5,869 8,490 12,284 5,409 7,903
15 36,153 150,000 150,000 150,000 6,984 12,828 23,479 6,984 12,828
20 55,399 150,000 150,000 150,000 5,810 16,222 40,903 5,810 16,222
<CAPTION>
YEAR 12%
<S> <C>
- ---------------------------------
<S> <C>
1 0
2 264
3 1,034
4 2,261
5 3,567
6 4,954
7 6,431
8 8,051
9 9,815
10 11,697
15 23,479
20 40,903
</TABLE>
These hypothetical rates of return are illustrative only and should not be
considered a representation of past or future investment results. Actual
investment results may be more or less than those shown and will depend on a
number of factors. The Account Values and Cash Surrender Values will be
different from those shown if the actual rates of return averaged 0%, 6% or 12%
over a period of years but fluctuated above or below the average for individual
contract years. No representation can be made that these rates of return can be
achieved for any one year or sustained period of time.
** Guaranteed cost of insurance charges, mortality and expense risk charge,
monthly administrative charge and administrative expense charge.
32
<PAGE> 41
MARKETLIFE
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
LEVEL DEATH BENEFIT OPTION
ILLUSTRATED WITH CURRENT CHARGES**
<TABLE>
<S> <C>
Male, Issue Age 45 Face Amount $150,000
Preferred, Non-Smoker Annual Premium $1,968.75
</TABLE>
<TABLE>
<CAPTION>
TOTAL
PREMIUMS DEATH BENEFIT CASH VALUE CASH SURRENDER VALUE
WITH 5% ---------------------------------- ---------------------------------- ---------------------
YEAR INTEREST 0% 6% 12% 0% 6% 12% 0% 6%
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,067 150,000 150,000 150,000 1,270 1,364 1,458 117 205
2 4,238 150,000 150,000 150,000 2,495 2,762 3,041 1,376 1,627
3 6,517 150,000 150,000 150,000 3,676 4,198 4,766 2,594 3,085
4 8,910 150,000 150,000 150,000 4,955 5,819 6,797 3,903 4,715
5 11,423 150,000 150,000 150,000 6,177 7,476 9,005 5,160 6,381
6 14,061 150,000 150,000 150,000 7,351 9,177 11,416 6,371 8,088
7 16,831 150,000 150,000 150,000 8,473 10,924 14,052 7,534 9,903
8 19,740 150,000 150,000 150,000 9,550 12,722 16,942 8,655 11,809
9 22,794 150,000 150,000 150,000 10,578 14,571 20,111 9,771 13,764
10 26,001 150,000 150,000 150,000 11,542 16,460 23,576 10,843 15,761
15 44,607 150,000 150,000 150,000 15,460 26,633 46,779 15,460 26,633
20 68,354 150,000 150,000 150,000 17,125 38,001 85,775 17,125 38,001
<CAPTION>
YEAR 12%
- ------------------------------------------
<S> <C>
1 294
2 1,890
3 3,619
4 5,635
5 7,818
6 10,287
7 13,031
8 16,029
9 19,304
10 22,877
15 46,779
20 85,775
</TABLE>
These hypothetical rates of return are illustrative only and should not be
considered a representation of past or future investment results. Actual
investment results may be more or less than those shown and will depend on a
number of factors. The Account Values and Cash Surrender Values will be
different from those shown if the actual rates of return averaged 0%, 6% or 12%
over a period of years but fluctuated above or below the average for individual
contract years. No representation can be made that these rates of return can be
achieved for any one year or sustained period of time.
** Current cost of insurance charges, mortality and expense risk charge, monthly
administrative charge and administrative expense charge.
33
<PAGE> 42
MARKETLIFE
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
LEVEL DEATH BENEFIT OPTION
ILLUSTRATED WITH GUARANTEED CHARGES**
<TABLE>
<S> <C>
Male, Issue Age 45 Face Amount $150,000
Preferred, Non-Smoker Annual Premium $1,968.75
</TABLE>
<TABLE>
<CAPTION>
TOTAL
PREMIUMS DEATH BENEFIT CASH VALUE CASH SURRENDER VALUE
WITH 5% ---------------------------------- ---------------------------------- ---------------------
YEAR INTEREST 0% 6% 12% 0% 6% 12% 0% 6%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,067 150,000 150,000 150,000 716 791 868 0 0
2 4,238 150,000 150,000 150,000 1,367 1,563 1,770 316 500
3 6,517 150,000 150,000 150,000 1,951 2,311 2,708 973 1,311
4 8,910 150,000 150,000 150,000 2,893 3,474 4,139 1,965 2,511
5 11,423 150,000 150,000 150,000 3,756 4,623 5,653 2,884 3,699
6 14,061 150,000 150,000 150,000 4,533 5,750 7,255 3,723 4,867
7 16,831 150,000 150,000 150,000 5,212 6,843 8,942 4,469 6,002
8 19,740 150,000 150,000 150,000 5,785 7,890 10,715 5,115 7,094
9 22,794 150,000 150,000 150,000 6,240 8,877 12,572 5,650 8,128
10 26,001 150,000 150,000 150,000 6,565 9,790 14,515 6,063 9,095
15 44,607 150,000 150,000 150,000 5,962 12,797 25,695 5,962 12,797
20 68,354 150,000 150,000 150,000 169 11,409 40,606 169 11,409
<CAPTION>
YEAR 12%
<S> <C>
- ---------------------------------------------------
<S> <C>
1 0
2 695
3 1,685
4 3,136
5 4,667
6 6,281
7 7,975
8 9,802
9 11,765
10 13,816
15 25,695
20 40,606
</TABLE>
These hypothetical rates of return are illustrative only and should not be
considered a representation of past or future investment results. Actual
investment results may be more or less than those shown and will depend on a
number of factors. The Account Values and Cash Surrender Values will be
different from those shown if the actual rates of return averaged 0%, 6% or 12%
over a period of years but fluctuated above or below the average for individual
contract years. No representation can be made that these rates of return can be
achieved for any one year or sustained period of time.
** Guaranteed cost of insurance charges, mortality and expense risk charge,
monthly administrative charge and administrative expense charge.
34
<PAGE> 43
APPENDIX A
ANNUAL MINIMUM PREMIUMS
(Per Thousand of Stated Amount)
<TABLE>
<CAPTION>
AGE MALE FEMALE
- --- ------ ------
<S> <C> <C>
0 2.80 2.42
1 2.69 2.47
2 2.59 2.48
3 2.58 2.47
4 2.58 2.47
5 2.58 2.47
6 2.58 2.47
7 2.60 2.49
8 2.62 2.52
9 2.66 2.56
10 2.72 2.62
11 2.80 2.68
12 2.89 2.76
13 3.01 2.84
14 3.13 2.94
15 3.25 3.04
16 3.38 3.16
17 3.51 3.28
18 3.62 3.40
19 3.72 3.47
20 3.81 3.53
21 3.90 3.60
22 3.98 3.67
23 4.05 3.73
24 4.08 3.71
25 4.13 3.76
26 4.30 3.93
27 4.45 4.09
28 4.61 4.26
29 4.76 4.41
30 4.92 4.60
31 5.12 4.80
32 5.32 5.02
33 5.52 5.22
34 5.74 5.46
35 5.98 5.71
36 6.33 6.01
37 6.66 6.31
38 7.01 6.64
39 7.34 6.97
40 7.69 7.34
41 8.17 7.75
42 8.66 8.18
43 9.14 8.62
44 9.63 9.11
45 10.11 9.59
46 10.79 10.13
47 11.47 10.70
<CAPTION>
AGE MALE FEMALE
- --- ------ ------
<S> <C> <C>
48 12.15 11.29
49 12.83 11.89
50 13.51 12.51
51 14.42 13.18
52 15.34 13.86
53 16.24 14.53
54 17.16 15.29
55 18.07 16.10
56 19.43 17.11
57 20.79 18.20
58 22.16 19.35
59 23.52 20.51
60 24.88 21.68
61 27.11 22.98
62 29.34 24.27
63 31.57 25.59
64 33.80 27.01
65 36.03 28.57
66 38.86 30.12
67 41.70 31.63
68 44.52 33.29
69 47.36 35.39
70 49.76 37.75
71 54.39 40.67
72 59.04 44.16
73 63.71 48.15
74 68.41 52.54
75 72.60 57.27
76 80.21 62.20
77 87.34 67.37
78 94.52 73.00
79 101.76 79.30
80 109.06 86.49
81 120.34 94.56
82 131.76 103.39
83 143.32 112.96
84 155.03 123.28
85 166.88 138.49
86 170.39 149.27
87 177.17 159.84
88 191.28 171.55
89 208.18 185.73
90 241.15 203.75
91 254.21 225.63
92 282.60 250.53
93 314.35 278.47
94 349.51 309.50
</TABLE>
APPENDIX A -- ANNUAL MINIMUM PREMIUMS
35
<PAGE> 44
APPENDIX B
PER THOUSAND OF STATED AMOUNT SURRENDER CHARGE
(First Year)
<TABLE>
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
0 2.04 1.84 1.63
1 2.04 1.84 1.63
2 2.04 1.84 1.63
3 2.04 1.84 1.63
4 2.04 1.84 1.63
5 2.19 1.97 1.75
6 2.19 1.97 1.75
7 2.21 1.99 1.77
8 2.23 2.01 1.78
9 2.26 2.03 1.81
10 2.39 2.15 1.91
11 2.46 2.21 1.97
12 2.54 2.29 2.03
13 2.65 2.39 2.12
14 2.75 2.48 2.20
15 2.76 2.48 2.21
16 2.77 2.49 2.22
17 2.79 2.51 2.23
18 2.82 2.54 2.26
19 2.90 2.61 2.32
20 2.86 2.57 2.29
21 2.93 2.64 2.34
22 2.99 2.69 2.39
23 3.04 2.74 2.43
24 3.06 2.75 2.45
25 3.08 2.77 2.46
26 3.14 2.83 2.51
27 3.25 2.93 2.60
28 3.37 3.03 2.70
29 3.47 3.12 2.78
30 3.49 3.14 2.79
31 3.64 3.28 2.91
32 3.78 3.40 3.02
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
33 3.92 3.53 3.14
34 4.08 3.67 3.26
35 4.19 3.77 3.35
36 4.43 3.99 3.54
37 4.66 4.19 3.73
38 4.91 4.42 3.93
39 5.14 4.63 4.11
40 5.69 5.12 4.55
41 6.05 5.45 4.84
42 6.41 5.77 5.13
43 6.76 6.08 5.41
44 7.13 6.42 5.70
45 7.18 6.46 5.74
46 7.66 6.89 6.13
47 8.14 7.33 6.51
48 8.63 7.77 6.90
49 9.11 8.20 7.29
50 10.00 9.00 8.00
51 10.67 9.60 8.54
52 11.35 10.22 9.06
53 12.02 10.82 9.62
54 12.70 11.43 10.16
55 13.01 11.71 10.41
56 13.99 12.69 11.19
57 14.97 13.47 11.98
58 15.96 14.36 12.77
59 16.93 15.24 13.54
60 17.91 16.12 14.33
61 19.52 17.57 15.82
62 21.12 19.01 16.90
63 22.73 20.46 18.18
64 24.34 21.91 19.47
65+ 25.40 22.85 20.32
</TABLE>
APPENDIX B -- PER THOUSAND OF STATED AMOUNT SURRENDER CHARGE
36
<PAGE> 45
APPENDIX B(1)
PER THOUSAND OF STATED AMOUNT SURRENDER CHARGE
Sales Charge Component*
(First Year)
<TABLE>
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
0 0.41 0.37 0.33
1 0.41 0.37 0.33
2 0.41 0.37 0.33
3 0.41 0.37 0.33
4 0.41 0.37 0.33
5 0.44 0.39 0.35
6 0.44 0.39 0.35
7 0.44 0.40 0.35
8 0.45 0.40 0.36
9 0.45 0.41 0.36
10 0.48 0.43 0.38
11 0.49 0.44 0.39
12 0.51 0.46 0.41
13 0.53 0.48 0.42
14 0.55 0.50 0.44
15 0.55 0.50 0.44
16 0.55 0.50 0.44
17 0.56 0.50 0.45
18 0.56 0.51 0.45
19 0.58 0.52 0.46
20 0.57 0.51 0.46
21 0.59 0.53 0.47
22 0.60 0.54 0.48
23 0.61 0.55 0.49
24 0.61 0.55 0.49
25 0.62 0.54 0.48
26 0.63 0.57 0.50
27 0.65 0.59 0.52
28 0.67 0.61 0.54
29 0.69 0.62 0.56
30 0.70 0.63 0.56
31 0.73 0.66 0.58
32 0.76 0.68 0.60
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
33 0.78 0.71 0.63
34 0.82 0.73 0.65
35 0.84 0.75 0.67
36 0.89 0.80 0.71
37 0.93 0.84 0.75
38 0.98 0.88 0.79
39 1.03 0.93 0.82
40 1.14 1.02 0.91
41 1.21 1.09 0.97
42 1.28 1.15 1.03
43 1.35 1.22 1.08
44 1.43 1.28 1.14
45 1.44 1.29 1.15
46 1.53 1.38 1.23
47 1.63 1.47 1.30
48 1.73 1.55 1.38
49 1.82 1.64 1.46
50 2.00 1.80 1.60
51 2.13 1.92 1.71
52 2.27 2.04 1.82
53 2.40 2.16 1.92
54 2.54 2.29 2.03
55 2.60 2.34 2.08
56 2.80 2.52 2.24
57 2.99 2.69 2.40
58 3.19 2.87 2.55
59 3.39 3.05 2.71
60 3.58 3.22 2.87
61 3.90 3.51 3.12
62 4.22 3.80 3.38
63 4.55 4.09 3.64
64 4.87 4.38 3.89
65+ 5.08 4.57 4.06
</TABLE>
*This is the sales charge portion of the Per Thousand of Stated Amount Surrender
Charge. It equals 20% of the charge shown in Appendix B. It decreases 10% each
year over the 10 year period.
APPENDIX B(1) -- PER THOUSAND OF STATED AMOUNT SURRENDER CHARGE -- SALES CHARGE
COMPONENT
37
<PAGE> 46
APPENDIX B(2)
PER THOUSAND OF STATED AMOUNT SURRENDER CHARGE
Administrative Charge Component*
(First Year)
<TABLE>
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
0 1.63 1.47 1.30
1 1.63 1.47 1.30
2 1.63 1.47 1.30
3 1.63 1.47 1.30
4 1.63 1.47 1.30
5 1.75 1.58 1.40
6 1.75 1.58 1.40
7 1.77 1.59 1.42
8 1.78 1.61 1.42
9 1.81 1.62 1.45
10 1.91 1.72 1.53
11 1.97 1.77 1.58
12 2.03 1.83 1.62
13 2.12 1.91 1.70
14 2.20 1.98 1.76
15 2.21 1.98 1.77
16 2.22 1.99 1.78
17 2.23 2.01 1.78
18 2.26 2.03 1.81
19 2.32 2.09 1.86
20 2.29 2.06 1.83
21 2.34 2.11 1.87
22 2.39 2.15 1.91
23 2.43 2.19 1.94
24 2.45 2.20 1.96
25 2.46 2.17 1.93
26 2.51 2.26 2.01
27 2.60 2.34 2.08
28 2.70 2.42 2.16
29 2.78 2.50 2.22
30 2.79 2.51 2.23
31 2.91 2.62 2.33
32 3.02 2.72 2.42
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
33 3.14 2.82 2.51
34 3.26 2.94 2.61
35 3.35 3.02 2.68
36 3.54 3.19 2.83
37 3.73 3.35 2.98
38 3.93 3.54 3.14
39 4.11 3.70 3.29
40 4.55 4.10 3.64
41 4.84 4.36 3.87
42 5.13 4.62 4.10
43 5.41 4.86 4.33
44 5.70 5.14 4.56
45 5.74 5.17 4.59
46 6.13 5.51 4.90
47 6.51 5.86 5.21
48 6.90 6.22 5.52
49 7.29 6.56 5.83
50 8.00 7.20 6.40
51 8.54 7.68 6.83
52 9.08 8.18 7.26
53 9.62 8.66 7.70
54 10.16 9.14 8.13
55 10.41 9.37 8.33
56 11.19 10.07 8.95
57 11.98 10.78 9.58
58 12.77 11.49 10.22
59 13.54 12.19 10.83
60 14.33 12.90 11.46
61 15.62 14.06 12.50
62 16.90 15.21 13.52
63 18.18 16.37 14.54
64 19.47 17.53 15.58
65+ 20.32 18.29 16.26
</TABLE>
*This is the administrative portion of the Per Thousand of Stated Amount
Surrender Charge. It equals 80% of the charge shown in Appendix B.
APPENDIX B(2) -- PER THOUSAND OF STATED AMOUNT SURRENDER CHARGE ADMINISTRATIVE
CHARGE
38
<PAGE> 47
APPENDIX C
CURRENT MONTHLY ADMINISTRATIVE CHARGE
(Per Thousand of Stated Amount)
Applicable for Three Years Following Issue or Increase
NON-SMOKERS
<TABLE>
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 0.08 0.00 0.00
21 0.08 0.00 0.00
22 0.08 0.00 0.00
23 0.08 0.00 0.00
24 0.08 0.00 0.00
25 0.08 0.00 0.00
26 0.08 0.00 0.00
27 0.08 0.00 0.00
28 0.08 0.00 0.00
29 0.08 0.00 0.00
30 0.08 0.00 0.00
31 0.08 0.00 0.00
32 0.08 0.00 0.00
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
33 0.08 0.00 0.00
34 0.08 0.00 0.00
35 0.08 0.00 0.00
36 0.08 0.00 0.00
37 0.08 0.00 0.00
38 0.08 0.00 0.00
39 0.08 0.00 0.00
40 0.08 0.00 0.00
41 0.08 0.00 0.00
42 0.08 0.00 0.00
43 0.08 0.00 0.00
44 0.08 0.00 0.00
45 0.08 0.00 0.00
46 0.08 0.00 0.00
47 0.09 0.00 0.00
48 0.09 0.00 0.00
49 0.10 0.00 0.00
50 0.10 0.00 0.00
51 0.11 0.00 0.00
52 0.11 0.00 0.00
53 0.12 0.00 0.00
54 0.12 0.00 0.00
55 0.12 0.00 0.00
56 0.13 0.00 0.00
57 0.13 0.00 0.00
58 0.14 0.00 0.00
59 0.14 0.00 0.00
60 0.15 0.00 0.00
61 0.15 0.00 0.00
62 0.15 0.00 0.00
63 0.15 0.00 0.00
64 0.15 0.00 0.00
65+ 0.15 0.00 0.00
</TABLE>
APPENDIX C -- CURRENT MONTHLY ADMINISTRATIVE CHARGE
39
<PAGE> 48
APPENDIX C (CONT'D)
CURRENT MONTHLY ADMINISTRATIVE CHARGE
(Per Thousand of Stated Amount)
Applicable for Three Years Following Issue or Increase
SMOKERS
<TABLE>
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
0 0.12 0.08 0.00
1 0.12 0.08 0.00
2 0.12 0.08 0.00
3 0.12 0.08 0.00
4 0.12 0.08 0.00
5 0.12 0.08 0.00
6 0.13 0.08 0.00
7 0.14 0.08 0.00
8 0.15 0.08 0.00
9 0.16 0.08 0.00
10 0.16 0.08 0.00
11 0.16 0.08 0.00
12 0.16 0.08 0.00
13 0.16 0.08 0.00
14 0.16 0.08 0.00
15 0.16 0.08 0.00
16 0.16 0.08 0.00
17 0.16 0.08 0.00
18 0.16 0.08 0.00
19 0.16 0.08 0.00
20 0.16 0.08 0.00
21 0.16 0.08 0.00
22 0.16 0.08 0.00
23 0.16 0.08 0.00
24 0.16 0.08 0.00
25 0.16 0.08 0.00
26 0.16 0.09 0.00
27 0.17 0.09 0.00
28 0.17 0.09 0.00
29 0.18 0.09 0.00
30 0.18 0.09 0.00
31 0.18 0.09 0.00
32 0.18 0.09 0.00
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
33 0.19 0.09 0.00
34 0.19 0.09 0.00
35 0.19 0.09 0.00
36 0.20 0.09 0.00
37 0.21 0.10 0.00
38 0.22 0.10 0.00
39 0.23 0.10 0.00
40 0.23 0.10 0.00
41 0.24 0.10 0.00
42 0.24 0.10 0.00
43 0.24 0.10 0.00
44 0.24 0.10 0.00
45 0.24 0.10 0.00
46 0.25 0.11 0.00
47 0.26 0.11 0.00
48 0.27 0.11 0.00
49 0.28 0.11 0.00
50 0.29 0.15 0.00
51 0.30 0.15 0.00
52 0.32 0.15 0.00
53 0.33 0.15 0.00
54 0.34 0.15 0.00
55 0.35 0.15 0.00
56 0.35 0.15 0.00
57 0.35 0.15 0.00
58 0.36 0.15 0.00
59 0.36 0.15 0.00
60 0.36 0.15 0.00
61 0.38 0.15 0.00
62 0.38 0.15 0.00
63 0.38 0.15 0.00
64 0.39 0.15 0.00
65+ 0.39 0.15 0.00
</TABLE>
40
<PAGE> 49
APPENDIX C(1)
GUARANTEED MONTHLY ADMINISTRATIVE CHARGE
(Per Thousand of Stated Amount)
Applicable for Three Years Following Issue or Increase
SMOKERS AND NON-SMOKERS
<TABLE>
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
0 0.16 0.08 0.00
1 0.16 0.08 0.00
2 0.16 0.08 0.00
3 0.16 0.08 0.00
4 0.16 0.08 0.00
5 0.16 0.08 0.00
6 0.16 0.08 0.00
7 0.16 0.08 0.00
8 0.16 0.08 0.00
9 0.16 0.08 0.00
10 0.16 0.08 0.00
11 0.16 0.08 0.00
12 0.16 0.08 0.00
13 0.16 0.08 0.00
14 0.16 0.08 0.00
15 0.16 0.08 0.00
16 0.16 0.08 0.00
17 0.16 0.08 0.00
18 0.16 0.08 0.00
19 0.16 0.08 0.00
20 0.16 0.08 0.00
21 0.16 0.08 0.00
22 0.16 0.08 0.00
23 0.16 0.08 0.00
24 0.16 0.08 0.00
25 0.16 0.08 0.00
26 0.16 0.09 0.00
27 0.17 0.09 0.00
28 0.17 0.09 0.00
29 0.18 0.09 0.00
30 0.18 0.09 0.00
31 0.18 0.09 0.00
32 0.18 0.09 0.00
<CAPTION>
STATED AMOUNT
------------------------------------------
ISSUE $50,000 $500,000 $1,000,000
AGE TO $499,999 TO $999,999 AND ABOVE
- ----- ----------- ----------- ----------
<S> <C> <C> <C>
33 0.19 0.09 0.00
34 0.19 0.09 0.00
35 0.19 0.09 0.00
36 0.20 0.09 0.00
37 0.21 0.10 0.00
38 0.22 0.10 0.00
39 0.23 0.10 0.00
40 0.23 0.10 0.00
41 0.24 0.10 0.00
42 0.24 0.10 0.00
43 0.24 0.10 0.00
44 0.24 0.10 0.00
45 0.24 0.10 0.00
46 0.25 0.11 0.00
47 0.26 0.11 0.00
48 0.27 0.11 0.00
49 0.28 0.11 0.00
50 0.29 0.15 0.00
51 0.30 0.15 0.00
52 0.32 0.15 0.00
53 0.33 0.15 0.00
54 0.34 0.15 0.00
55 0.35 0.15 0.00
56 0.35 0.15 0.00
57 0.35 0.15 0.00
58 0.36 0.15 0.00
59 0.36 0.15 0.00
60 0.36 0.15 0.00
61 0.38 0.15 0.00
62 0.38 0.15 0.00
63 0.38 0.15 0.00
64 0.39 0.15 0.00
65+ 0.39 0.15 0.00
</TABLE>
APPENDIX C(1) -- GUARANTEED MONTHLY ADMINISTRATIVE CHARGE
41
<PAGE> 50
MARKETLIFE
PROSPECTUS
INDIVIDUAL VARIABLE UNIVERSAL LIFE INSURANCE CONTRACTS
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
HARTFORD, CONNECTICUT
L-12539 May, 1997
