<PAGE>
As filed with the Securities and Exchange Commission on April 15, 1997.
Registration No. 333- 02581
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 2 /X/
TO THE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
GLENBROOK LIFE VARIABLE LIFE SEPARATE ACCOUNT A
(Exact Name of Trust)
GLENBROOK LIFE AND ANNUITY COMPANY
(Name of Depositor)
3100 SANDERS ROAD
NORTHBROOK, IL 60062
(Complete Address of Depositor's Principal Executive Offices)
MICHAEL J. VELOTTA, ESQ.
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, IL 60062
(Name and Complete Address of Agent for Service)
Copy to:
STEPHEN E. ROTH, ESQ.
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
1275 PENNSYLVANIA, AVENUE, N.W.
WASHINGTON, D.C. 20004-2404
Securities being offered -- modified single premium variable life insurance
contracts.
------------------------
Pursuant to Rule 24f-2 under Investment Company Act of 1940, the
Registrant hereby states that pursuant to paragraph (b)(i), it filed its Rule
24F-2 Notice for the fiscal year ended December 31, 1996 on February 28, 1997.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK
APPROPRIATE BOX)
immediately upon filing pursuant to paragraph (b) of Rule 485
- -------
X on May 1, 1997 pursuant to paragraph (b) of Rule 485
- -------
60 days after filing pursuant to paragraph (a) of rule 485
- -------
on (Date) pursuant to paragraph (a)(i) of Rule 485
- -------
75 days after filing pursuant to paragraph (a)(ii) of Rule 485
- ------- IF APPROPRIATE, CHECK THE FOLLOWING BOX:
this post-effective amendment designates a new effective date for a
- ------- previously filed post-effective amendment.
- --------------------------------------------------------------------------------
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<PAGE>
RECONCILIATION AND TIE BETWEEN FORM N-8B-2 AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------------- ----------------------------------------------------------------------------------------------------
<S> <C>
1. Cover Page
2. Cover Page; Additional Information about the Company
3. Not applicable
4. The Company; Distribution of the Contracts
5. The Variable Account -- General
6. The Variable Account -- General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Variable Account -- Funds; The Contract -- Application for a Contract; Contract
Benefits and Rights; Other Matters -- Voting Rights, Dividends
11. Summary; The Variable Account -- Funds
12. Summary; The Variable Account -- Funds
13. Summary; Deductions and Charges; Distribution of the Contracts; Federal Tax Matters
14. The Contract -- Application for a Contract, Premiums, Allocation of Premiums
15. Summary; The Contract -- Premiums, Allocation of Premiums
16. The Variable Account -- Funds; The Contract -- Allocation of Premiums
17. Summary; Contract Benefits and Rights -- Amount Payable on Surrender of the Contract, Partial
Withdrawals, Cancellation and Exchange Rights
18. The Variable Account; The Contract -- Allocation of Premiums; Deductions and Charges; Federal Tax
Matters
19. Other Matters -- Statements to Contract Owners
20. Not applicable
21. Contract Benefits and Rights -- Contract Loans; Contract Benefits and Rights -- Suspension of
Valuation, Payments and Transfers
22. Not applicable
23. Safekeeping of Variable Account's Assets; Additional Information about the Company
24. Contract Benefits and Rights -- Transfer of Account Value; Other Matters
25. The Company
26. Not applicable
27. The Company; Additional Information about the Company
28. Executive Officers and Directors of the Company
29. The Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. The Company; Distribution of the Contracts
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Contracts
39. The Company; Distribution of the Contracts
40. Not applicable
41. The Company; Distribution of the Contracts
42. Not applicable
43. Not applicable
44. The Contract -- Allocation of Premiums, Accumulation Unit Value; Contract Benefits and Rights --
Account Value; Deductions and Charges
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------------- ----------------------------------------------------------------------------------------------------
<S> <C>
45. Not applicable
46. Contract Benefits and Rights -- Account Value, Amount Payable on Surrender of the Contract, Partial
Withdrawals; Deductions and Charges
47. Not applicable
48. Cover Page; The Company
49. Not applicable
50. The Variable Account -- General
51. Summary; The Company; The Contract; Contract Benefits and Rights; Other Matters; Federal Tax
Matters
52. The Variable Account -- Funds, Investment Adviser
53. Summary; Federal Tax Matters
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
</TABLE>
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE CONTRACTS
3100 SANDERS ROAD
NORTHBROOK, IL 60062
TELEPHONE (800) 755-5275
------------------------
This prospectus describes the "Glenbrook Provider Variable Life," a modified
single premium variable life insurance contract ("Contract") offered by
Glenbrook Life and Annuity Company (the "Company") for prospective insured
persons age 0-85. The Contract lets the Contract Owner pay a significant single
premium and subject to restrictions, additional premiums.
The Contracts are modified endowment contracts for federal income tax purposes,
except in certain cases described under "Federal Tax Matters," page 23. A LOAN,
DISTRIBUTION OR OTHER AMOUNT RECEIVED FROM A MODIFIED ENDOWMENT CONTRACT DURING
THE LIFE OF THE INSURED WILL BE TAXED TO THE EXTENT OF ANY ACCUMULATED INCOME IN
THE CONTRACT. ANY AMOUNTS THAT ARE TAXABLE WITHDRAWALS WILL BE SUBJECT TO A 10%
PENALTY, WITH CERTAIN EXCEPTIONS.
The minimum initial premium the Company will accept is $10,000. Premiums are
allocated to Glenbrook Life Variable Life Separate Account A ("Variable
Account"). The Variable Account will invest in shares of one or more managed
investment companies ("Funds") each of which will have multiple investment
Portfolios. All of the Funds which are described in this prospectus may not be
available with your Contract. Presently, the Variable Account will invest in
shares of the following Funds:
-Dean Witter Variable Investment Series ("Dean Witter Fund")
-Dreyfus Variable Investment Fund and The Dreyfus Socially Responsible
Growth Fund, Inc. (collectively the "Dreyfus Funds")
-Fidelity Variable Insurance Products Fund (VIP) and Fidelity Variable
Insurance Products Fund II (VIP II) (collectively the "Fidelity Funds")
-MFS-Registered Trademark- Variable Insurance Trust ("MFS Fund")
-American Century Variable Portfolios, Inc. ("American Century Funds")
The DEAN WITTER FUND has four available Portfolios: (1) VIS Dividend Growth (2)
VIS European Growth (3) VIS Quality Income Plus and (4) VIS Utilities; the
DREYFUS FUNDS have four available Portfolios: (1) VIF Growth and Income (2) VIF
Money Market (3) The Dreyfus Socially Responsible Growth Fund, Inc. and (4) VIF
Small Company Stock; the FIDELITY FUNDS have three available Portfolios: (1) VIP
II Contrafund (2) VIP Growth and (3) VIP High Income; the MFS FUND has two
available Portfolios: (1) MFS Emerging Growth Series and (2) MFS Limited
Maturity Series; and the American Century Funds have two available Portfolios:
(1) American Century VP Balanced and (2) American Century VP International.
There is no guaranteed minimum Account Value for a Contract. The Account Value
of a Contract will vary up or down to reflect the investment experience of the
Portfolios to which premiums have been allocated. The Contract Owner bears the
investment risk for all amounts so allocated. The Contract continues in effect
while the Cash Surrender Value is sufficient to pay the monthly charges under
the Contract ("Monthly Deduction Amount").
The Contracts provide for an Initial Death Benefit shown on the Contract Data
page. The death benefit ("Death Benefit") payable under a Contract may be
greater than the Initial Death Benefit but so long as the Contract continues in
effect, if no withdrawals are made, will never be less than the Initial Death
Benefit. The Account Value will, and under certain circumstances the Death
Benefit of the Contract may, increase or decrease based on the investment
experience of the Portfolios to which premiums have been allocated. At the death
of the Insured, we will pay a Death Benefit to the beneficiary.
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE VARIABLE LIFE INSURANCE AS A REPLACEMENT
FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A VARIABLE LIFE INSURANCE
CONTRACT.
<PAGE>
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE ELIGIBLE FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS. 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.
THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY, ANY BANK,
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
The Contracts may not be available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
<PAGE>
3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY......................................... 4
SPECIAL TERMS................................... 6
THE COMPANY..................................... 7
THE VARIABLE ACCOUNT............................ 7
General....................................... 7
Funds......................................... 8
THE CONTRACT.................................... 10
Application for a Contract.................... 10
Premiums...................................... 10
Allocation of Premiums........................ 11
Accumulation Unit Values...................... 11
DEDUCTIONS AND CHARGES.......................... 12
Monthly Deductions............................ 12
Cost of Insurance Charge.................... 12
Tax Expense Charge.......................... 12
Administrative Expense Charge............... 13
Other Deductions.............................. 13
Mortality and Expense Risk Charge........... 13
Annual Maintenance Fee...................... 13
Taxes Charged Against the Variable
Account.................................... 13
Charges Against the Funds................... 13
Withdrawal Charge........................... 14
Due and Unpaid Premium Tax Charge........... 14
CONTRACT BENEFITS AND RIGHTS.................... 15
Death Benefit................................. 15
Accelerated Death Benefit..................... 15
Account Value................................. 15
Transfer of Account Value..................... 16
Dollar Cost Averaging......................... 16
Automatic Portfolio Rebalancing............... 16
Contract Loans................................ 16
Amount Payable on Surrender of the Contract... 17
Partial Withdrawals........................... 17
Maturity...................................... 17
Lapse and Reinstatement....................... 17
Cancellation and Exchange Rights.............. 18
<CAPTION>
PAGE
<S> <C>
Confinement Waiver Benefit.................... 18
Suspension of Valuation, Payments and
Transfers.................................... 18
Last Survivor Contracts....................... 19
OTHER MATTERS................................... 19
Voting Rights................................. 19
Statements to Contract Owners................. 19
Limit on Right to Contest..................... 20
Misstatement as to Age and Sex................ 20
Payment Options............................... 20
Beneficiary................................... 20
Assignment.................................... 20
Dividends..................................... 20
EXECUTIVE OFFICERS AND DIRECTORS OF THE
COMPANY........................................ 21
DISTRIBUTION OF THE CONTRACTS................... 22
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS.... 22
FEDERAL TAX MATTERS............................. 22
Introduction.................................. 22
Taxation of the Company and the Variable
Account...................................... 22
Taxation of Contract Benefits................. 23
Modified Endowment Contracts.................. 23
Diversification Requirements.................. 24
Ownership Treatment........................... 24
Policy Loan Interest.......................... 24
ADDITIONAL INFORMATION ABOUT THE COMPANY........ 24
LEGAL PROCEEDINGS............................... 25
LEGAL MATTERS................................... 25
REGISTRATION STATEMENT.......................... 25
EXPERTS......................................... 25
FINANCIAL INFORMATION........................... 25
INDEPENDENT AUDITORS' REPORT.................... F-1
FINANCIAL STATEMENTS............................ F-2
APPENDIX A...................................... A-1
</TABLE>
<PAGE>
4
SUMMARY
NOTE: A GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS APPEARS AT PAGE 6,
IMMEDIATELY FOLLOWING THIS SUMMARY.
THE CONTRACT
The Contracts are life insurance contracts with death benefits, cash values, and
other traditional life insurance features. The Contracts are "variable." Unlike
the fixed benefits of ordinary whole life insurance, the Account Value will
increase or decrease based on the investment experience of the investment
Portfolios of the Funds to which premiums have been allocated. Similarly, the
Death Benefit may increase or decrease under some circumstances, but so long as
the Contract remains in effect it will not decrease below the Initial Death
Benefit if no withdrawals are made. The Contracts are credited with units
("Accumulation Units") to calculate cash values. The Contract Owner may transfer
the Account Value among the Variable Account's underlying investment Portfolios.
The Contracts can be issued on a single life or "last survivor" basis. For a
discussion of how last survivor Contracts operate differently from single life
Contracts, see "Last Survivor Contracts," page 19.
In some states, the Contracts may be issued in the form of a group Contract. In
those states, certificates will be issued evidencing a purchaser's rights under
the group Contract. In certain states, certificates are issued under group
Contracts issued to the Financial Services Group Insurance Trust, an Illinois
Trust. The terms "Contract" and "Contract Owner", as used in this Prospectus,
refer to and include such a certificate and certificate owner, respectively.
THE VARIABLE ACCOUNT AND THE FUNDS
The Glenbrook Life Variable Life Separate Account A ("Variable Account") funds
the variable life insurance Contracts offered by this prospectus. The Variable
Account is a unit investment trust registered as such under the Investment
Company Act of 1940. It consists of multiple sub-accounts ("Variable
Sub-Accounts"), each investing in a corresponding Fund Portfolio.
Applicants should read the prospectuses for the Funds in connection with the
purchase of a Contract. The investment objectives of the Fund Portfolios are
briefly summarized below under "Funds," page 8. Presently, the Variable Account
invests in shares of the following Funds:
- Dean Witter Variable Investment Series ("Dean
Witter Fund")
- Dreyfus Variable Investment Fund and The
Dreyfus Socially Responsible Growth Fund, Inc. (collectively the "Dreyfus
Funds")
- Fidelity Variable Insurance Products Fund and
Fidelity Variable Insurance Products Fund II (collectively the "Fidelity
Funds")
- MFS-Registered Trademark- Variable Insurance Trust ("MFS Fund")
- American Century Variable Portfolios, Inc.
("American Century Funds")
The DEAN WITTER FUND has four available Portfolios: (1) VIS Dividend Growth (2)
VIS European Growth (3) VIS Quality Income Plus and (4) VIS Utilities; the
DREYFUS FUNDS have four available Portfolios: (1) VIF Growth and Income (2) VIF
Money Market (3) The Dreyfus Socially Responsible Growth Fund, Inc. and (4) VIF
Small Company Stock; the FIDELITY FUNDS have three available Portfolios: (1) VIP
II Contrafund (2) VIP Growth and (3) VIP High Income; the MFS FUND has two
available Portfolios: (1) MFS Emerging Growth Series and (2) MFS Limited
Maturity Series; and the American Century Funds have two available Portfolios:
(1) American Century VP Balanced and (2) American Century VP International.
The assets of each Portfolio are accounted for separately from the other
Portfolios and each has distinct investment objectives and policies which are
described in the accompanying prospectuses for the Funds.
PREMIUMS
The Contract requires the Contract Owner to pay an initial premium of at least
$10,000. Additional premium payments may be made at any time, subject to the
following conditions:
- only one payment is allowed in any Contract Year;
- the minimum payment is $500;
- the attained age of the insured must be less than
age 86; and
- absent submission of new evidence of insurability
of the insured, the maximum additional payment permitted in a Contract
Year is the "Guaranteed Additional Payment." The Guaranteed Additional
Payment is the lesser of $5,000 or a percentage of the initial payment (5%
for attained ages 40-70, and 0% for attained ages 20-39 and 71-80).
Additional premium payments may require an increase in the Specified Amount in
order for the Contract to meet the definition of a life insurance contract under
the Internal Revenue Code. The Company reserves the right to obtain satisfactory
evidence of insurabilty before accepting any
<PAGE>
5
additional premium payments requiring an increase in Specified Amount. However,
we reserve the right to reject an additional premium payment for any reason.
Additional Premiums may also be paid at any time and in any amount necessary to
avoid termination of the Contract.
DEDUCTIONS AND CHARGES
On each Monthly Activity Date, the Company will deduct a Monthly Deduction
Amount from the Account Value. The Monthly Deduction Amount will be made pro
rata respecting each Variable Sub-Account to which Account Value is allocated.
The Monthly Deduction Amount includes a cost of insurance charge, tax expense
charge and an administrative expense charge. The monthly cost of insurance
charge is to cover the Company's anticipated mortality costs. In addition, the
Company will deduct monthly from the Account Value a tax expense charge equal to
an annual rate of 0.40% for the first ten Contract Years. This charge
compensates the Company for premium taxes imposed by various states and local
jurisdictions and for federal taxes resulting from the application of Section
848 of the Code. The charge includes a premium tax deduction of 0.25% and a
federal tax deduction of 0.15%. The premium tax deduction represents an average
premium tax of 2.5% of premiums over ten years. The Company will deduct from the
Account Value a monthly administrative charge equal to an annual rate of 0.25%.
This charge compensates the Company for administrative expenses incurred in the
administration of the Variable Account and the Contracts. The Company will also
deduct from the Variable Account a daily charge equal to an annual rate of 0.90%
for the mortality risks and expense risks the Company assumes in relation to the
Contracts. If the Cash Surrender Value is not sufficient to cover a Monthly
Deduction Amount due on any Monthly Activity Date, the Contract may lapse. See
"Deductions and Charges -- Monthly Deductions," page 12, and "Contract Benefits
and Rights -- Lapse and Reinstatement," page 17.
An Annual Maintenance Fee of $35 will be deducted on each Contract Anniversary
from all Variable Sub-Accounts to which Account Value is allocated, in
proportion to the amounts so allocated. This fee will be waived if total
premiums paid are $50,000 or more. This fee will help reimburse the Company for
administrative and maintenance costs of the Contracts. See "Deductions and
Charges -- Other Deductions -- Annual Maintenance Fee," page 13.
Applicants should review the prospectuses for the Funds which accompany this
prospectus for a description of the charges and expenses borne by the Funds in
connection with their operations.
Withdrawals in excess of the Free Withdrawal Amount will be subject to a
withdrawal charge as set forth below:
<TABLE>
<CAPTION>
PERCENTAGE OF
INITIAL
PREMIUM
CONTRACT YEAR WITHDRAWN
- ------------------------------------------- -------------
<S> <C>
1.......................................... 7.75%
2.......................................... 7.75%
3.......................................... 7.75%
4.......................................... 7.25%
5.......................................... 6.25%
6.......................................... 5.25%
7.......................................... 4.25%
8.......................................... 3.25%
9.......................................... 2.25%
10+........................................ 0.00%
</TABLE>
The Withdrawal Charge is imposed to cover a portion of the sales expense
incurred by the Company in distributing the Contracts. This expense includes
agents' commissions, advertising and the printing of prospectuses. See
"Deductions and Charges -- Other Deductions -- Withdrawal Charge," page 14. No
withdrawal charge will be imposed on any withdrawal to the extent that aggregate
withdrawal charges and the federal tax portion of the tax expense charge imposed
would otherwise exceed 9% of total premiums paid prior to the Withdrawal. See
"Deductions and Charges," page 12 and "Withdrawal Charge," page 14.
During the first nine Contract Years, an additional premium tax charge will be
imposed on full or partial withdrawals. This charge ranges from a maximum of
2.25% in the first Contract Year, decreasing .25% in each of the next nine
Contract Years, with no charge thereafter. See "Deductions and Charges -- Other
Deductions -- Due and Unpaid -- Premium Tax Charge," page 14.
For a discussion of the tax consequences of a full or a partial withdrawal, see
"Federal Tax Matters," page 23.
DEATH BENEFIT
At the death of the Insured while the Contract is in force, we will pay the
Death Benefit (less any Indebtedness and certain due and unpaid Monthly
Deduction Amounts) to the beneficiary. The Death Benefit determined on the date
of the Insured's death is the greater of (1) the Specified Amount, or (2) the
Account Value multiplied by the death benefit ratio as found in the Contract.
See "Contract Benefits and Rights -- Death Benefit," page 15.
ACCOUNT VALUE
The Account Value of the Contract will increase or decrease to reflect (1) the
investment experience of the Fund Portfolios underlying the Variable Sub-Account
to which
<PAGE>
6
Account Value is allocated, and (2) deductions for the mortality and expense
risk charge, the Monthly Deduction Amount, and the Annual Maintenance Fee. There
is no minimum guaranteed Account Value and the Contract Owner bears the risk of
the investment in the Fund Portfolios. See "Contract Benefits and Rights --
Account Value," page 15.
CONTRACT LOANS
A Contract Owner may obtain one or both of two types of cash loans from the
Company. Both types of loans are secured by the Contract. The maximum amount
available for such loans is 90% of the Contract's Cash Value, less the amount of
all loans existing on the date of the loan request (including loan interest to
the next Contract Anniversary), less any Annual Maintenance Fee due on or before
the next Contract Anniversary, and less any due and unpaid Monthly Deduction
Amounts. See "Contract Benefits and Rights -- Contract Loans," page 16.
LAPSE
Under certain circumstances a Contract may terminate if the Cash Surrender Value
on any Monthly Activity Date is less than the required Monthly Deduction Amount.
The Company will give written notice to the Contract Owner and a 61 day grace
period during which additional amounts may be paid to continue the Contract. See
"Contract Benefits and Rights -- Contract Loans," page 16 and "Lapse and
Reinstatement," page 17.
CANCELLATION AND EXCHANGE RIGHTS
A Contract Owner has a limited right to return his or her Contract for
cancellation. If the Contract Owner returns the Contract for cancellation, by
mail or hand delivery, to the agent who sold the Contract, within 10 days after
delivery of the Contract to the Contract Owner (in some states, this free-look
period is longer), the Company will return to the Contract Owner within 7 days
thereafter the premiums paid for the Contract adjusted to reflect any investment
gain or loss resulting from allocation to the Variable Account prior to the date
of cancellation, unless state law requires a return of premium without such
adjustments. In those states where the Company is required to return the
premiums paid upon a free-look of the Contract and where it has been approved by
the state, the Company reserves the right to allocate all premium payments made
prior to the expiration of the free-look period to the money market sub-account
of the Variable Account.
In addition, once the Contract is in effect it may be exchanged during the first
24 months after its issuance for a permanent life insurance contract on the life
of the Insured without submitting proof of insurability. See "Contract Benefits
and Rights -- Cancellation and Exchange Rights," page 18.
TAX CONSEQUENCES
The current Federal tax law generally excludes all death benefit payments from
the gross income of the Contract beneficiary. The Contracts generally will be
treated as modified endowment contracts. This status does not affect the
Contracts' classification as life insurance, nor does it affect the exclusion of
death benefit payments from gross income. However, loans, distributions or other
amounts received under a modified endowment contract are taxed to the extent of
accumulated income in the Contract (generally, the excess of Account Value over
premiums paid) and may be subject to a 10% penalty tax. See "Federal Tax
Matters," page 23.
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The aggregate value under a Contract of the Variable Sub-Accounts
and the Loan Account.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Variable Sub-Account.
AGE: The Insured's age at the Insured's last birthday.
CASH VALUE: The Account Value less any applicable withdrawal charges and due and
unpaid Premium Tax Charges.
CASH SURRENDER VALUE: The Cash Value less all Indebtedness and the Annual
Maintenance Fee, if applicable.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY: The same day and month as the Contract Date for each
subsequent year the Contract remains in force.
CONTRACT DATE: The date on or as of which coverage under a Contract becomes
effective and the date from which Contract Anniversaries, Contract Years and
Contract months are determined.
CONTRACT OWNER: The person having rights to benefits under the Contract during
the lifetime of the Insured; the Contract Owner may or may not be the Insured.
CONTRACT YEARS: Annual periods computed from the Contract Date.
<PAGE>
7
DEATH BENEFIT: The greater of (1) the Specified Amount or (2) the Account Value
on the date of death multiplied by the death benefit ratio as specified in the
Contract.
FREE WITHDRAWAL AMOUNT: The amount of a surrender or partial withdrawal that is
not subject to a Withdrawal Charge. This amount in any Contract Year is 15% of
total premiums paid.
INITIAL DEATH BENEFIT: The Initial Death Benefit under a Contract is shown on
the Contract Data page.
FUNDS: The registered management investment companies in which assets of the
Variable Account may be invested.
INDEBTEDNESS: All Contract loans, if any, and accrued loan interest.
INSURED: The person whose life is insured under a Contract.
LOAN ACCOUNT: An account in the Company's General Account, established for any
amounts transferred from the Variable Sub-Accounts for requested loans. The Loan
Account credits a fixed rate of interest that is not based on the investment
experience of the Variable Account.
MONTHLY ACTIVITY DATE: The day of each month on which the Monthly Deduction
Amount is deducted from the Account Value of the Contract. Monthly Activity
Dates occur on the same day of the month as the Contract Date. If there is no
date equal to the Monthly Activity Date in a particular month, the Monthly
Activity Date will be the last day of that month.
MONTHLY DEDUCTION AMOUNT: A deduction on each Monthly Activity Date for the cost
of insurance charge, a tax expense charge and an administrative expense charge.
SPECIFIED AMOUNT: The minimum death benefit under a Contract, equal to the
Initial Death Benefit on the Contract Date. Thereafter it may change in
accordance with the terms of the partial withdrawal and the subsequent premium
provisions of the Contract.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Variable Account is determined at the close of regular trading on
the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of regular trading on the New
York Stock Exchange on successive Valuation Days.
VARIABLE ACCOUNT: Glenbrook Life Variable Life Separate Account A, an account
established by the Company to separate the assets funding the Contracts from
other assets of the Company.
VARIABLE SUB-ACCOUNT: The subdivisions of the Variable Account used to allocate
a Contract Owner's Account Value, less Indebtedness, among the Portfolios of the
Funds.
THE COMPANY
The Company is the issuer of the Contract. The Company is a stock life insurance
company which was organized under the laws of the State of Illinois in 1992. The
Company was originally organized under the laws of the State of Indiana in 1965.
From 1965 to 1983 the Company was known as "United Standard Life Assurance
Company" and from 1983 to 1992 the Company was known as "William Penn Life
Assurance Company of America." As of the date of this prospectus, the Company is
licensed to operate in the District of Columbia and all states except New York.
The Company intends to market the Contract in those jurisdictions in which it is
licensed to operate. The Company's home office is located at 3100 Sanders Road,
Northbrook, Illinois 60062.
The Company is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate
Insurance Company ("Allstate"), a stock property-liability insurance company
incorporated under the laws of Illinois. All of the outstanding capital stock of
Allstate is owned by The Allstate Corporation ("Corporation"). On June 30, 1995,
Sears, Roebuck and Co. ("Sears") distributed its 80.3% ownership in the
Corporation to Sears common shareholders through a tax-free dividend.
THE VARIABLE ACCOUNT
GENERAL
Glenbrook Life Variable Life Separate Account A ("Variable Account") is a
separate account of the Company established on January 15, 1996 pursuant to the
insurance laws of the State of Illinois. The Variable Account is organized as a
unit investment trust and registered as such with the Securities and Exchange
Commission under the Investment Company Act of 1940. The Variable Account meets
the definition of "separate account" under federal securities law. Under
Illinois law, the assets of the Variable Account are held exclusively for the
benefit of Contract Owners and persons entitled to payments under the Contracts.
The assets of the Variable Account are not chargeable with liabilities arising
out of any other business which the Company may conduct.
<PAGE>
8
FUNDS
The Variable Account will invest in shares of one or more Funds. The Funds are
registered with the Securities and Exchange Commission as open-end, series,
management investment companies. Registration of the Funds does not involve
supervision of their management, investment practices or policies by the
Securities and Exchange Commission. The Funds' Portfolios are designed to
provide investment vehicles for variable insurance contracts of various
insurance companies, in addition to the Variable Account. The Funds available
for investment by the Variable Account are listed below.
I. DEAN WITTER FUND
- VIS DIVIDEND GROWTH PORTFOLIO -- seeks to provide
reasonable current income and long-term growth of income and capital by
investing primarily in common stock of companies with a record of paying
dividends and the potential for increasing dividends.
- VIS EUROPEAN GROWTH PORTFOLIO -- seeks to
maximize the capital appreciation on its investments by investing primarily in
securities issued by issuers located in Europe.
- VIS QUALITY INCOME PLUS PORTFOLIO -- seeks, as its
primary objective, to earn a high level of current income and, as a
secondary objective, capital appreciation, but only when consistent with
its primary objective, by investing primarily in debt securities issued by
the U.S. Government, its agencies and instrumentalities, including zero
coupon securities, and in fixed-income securities rated A or higher by
Moody' s Investors Service, Inc. (Moody's) or Standard & Poor's
Corporation (Standard & Poor's) or non-rated securities of comparable
quality, and by writing covered call and put options against such
securities.
- VIS UTILITIES PORTFOLIO -- seeks to provide current
income and long-term growth of income and capital by investing primarily
in equity and fixed-income securities of companies engaged in the public
utilities industry.
Dean Witter InterCapital Inc. ("InterCapital"), Two World Trade Center, New
York, New York 10048, is the Fund's Investment Manager. InterCapital is a
wholly-owned subsidiary of Dean Witter, Discover & Co. Morgan Grenfell
Investment Services Limited, 20 Finsbury Circus, London, England, is the
Sub-Advisor of the European Growth Portfolio of the Fund.
II. DREYFUS FUNDS
- VIF GROWTH & INCOME PORTFOLIO -- seeks to
provide long-term capital growth, current income and growth of income,
consistent with reasonable investment risk.
- VIF MONEY MARKET PORTFOLIO -- seeks to provide as
high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity.
- THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC. -- seeks to provide capital growth. Current income is a
secondary goal. Invests principally in common stocks, or securities
convertible into common stock, of companies which, in the opinion of the
Fund's management, not only meet traditional investment standards, but
also show evidence that they conduct their business in a manner that
contributes to the enhancement of the quality of life in America.
- VIF SMALL COMPANY STOCK PORTFOLIO -- seeks to
provide investment results that are greater than the total return
performance of publicly-traded common stocks in the aggregate, as
represented by the Russell 2500 Index. Invests primarily in a portfolio of
equity securities of small - to medium-sized domestic issuers, while
attempting to maintain volatility and diversification similar to that of
the Russell 2500 Index.
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166, was formed
in 1947 and serves as the Fund's investment manager. The Dreyfus Corporation is
a wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-owned
subsidiary of Mellon Bank Corporation.
NCM Capital Management Group, Inc., 105 West Main Street, Durham, North Carolina
27701, serves as sub-investment advisor to the Dreyfus Socially Responsible
Growth Fund, Inc.
As of the date of this prospectus, the Dreyfus Socially Responsible Growth Fund,
Inc. is not available for investment by the Variable Account. Please consult
your sales representative for future availability.
III. FIDELITY FUNDS
- VIP II CONTRAFUND -- seeks capital appreciation
by investing in companies that Fidelity Management & Research Company
("FMR") believes to be undervalued due to an overly pessimistic appraisal
by the public.
<PAGE>
9
- VIP GROWTH -- seeks capital appreciation by
investing primarily in common stocks. The fund may also pursue capital
appreciation through the purchase of bonds and preferred stocks.
- VIP HIGH INCOME -- seeks high current income by
investing primarily in all types of income-producing debt securities,
preferred stocks, and convertible securities.
Fidelity Management & Research Company, 82 Devonshire Street, Boston,
Massachusetts, is the Investment Manager of the Funds.
IV. MFS FUND
- MFS EMERGING GROWTH SERIES -- seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the Portfolio's investment objective
of long-term growth of capital.
- MFS LIMITED MATURITY SERIES -- the primary
investment objective is to provide as high a level of current income as is
believed to be consistent with prudent investment risk. The Portfolio's
secondary objective is to protect shareholders' capital.
MFS manages each Series pursuant to an Investment Advisory Agreement with the
Trust on behalf of each Portfolio. MFS provides the Series with overall
investment advisory and administrative services, as well as general office
facilities.
V. AMERICAN CENTURY FUNDS
- AMERICAN CENTURY VP BALANCED -- the investment
objective of American Century VP Balanced is capital growth and current
income. It will seek to achieve its investment objective by maintaining
approximately 60% of the assets of American Century VP Balanced in common
stocks that are considered by management to have better-than-average
prospects for appreciation and the remaining assets in bonds and other
fixed income securities.
- AMERICAN CENTURY VP INTERNATIONAL -- the
investment objective of American Century VP International is Capital Growth. It
will seek to achieve its investment objective by investing primarily in an
internationally diversified portfolio of common stocks that are considered
by management to have prospects for appreciation. The fund will invest
primarily in securities of issuers located in developed markets.
American Century Investment Management, Inc. serves as the investment manager of
American Century Variable Portfolios, Inc. Its principal place of business is
American Century Tower, 4500 Main Street, Kansas City, Missouri 64111.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
An investment in the Dreyfus VIF Money Market Portfolio is neither insured nor
guaranteed by the U.S. Government. There can be no assurance that the Money
Market Portfolio will be able to maintain a stable net asset value of $1.00 per
share.
All dividends and capital gains distributions from the Portfolios are
automatically reinvested in shares of the distributing Portfolio at their net
asset value.
There is no assurance that the Portfolios will attain their respective stated
objectives. Additional information concerning the investment objectives and
policies of the Portfolios can be found in the current prospectuses for the
Funds accompanying this prospectus.
You will find more complete information about the Portfolios, including the
risks associated with each Portfolio, in the accompanying prospectuses. You
should read the prospectuses for the Funds in conjunction with this prospectus.
THE FUND PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS TO A PARTICULAR VARIABLE
SUB-ACCOUNT.
It is conceivable that in the future it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
a Fund simultaneously. Although neither the Company nor any such Fund currently
foresees any such disadvantages either to variable life insurance or variable
annuity contract owners, each Fund's Board of Directors intends to monitor
events in order to identify any material conflicts between variable life and
variable annuity contract owners and to determine what action, if any, should be
taken in response thereto. If the Board of Directors were to conclude that
separate funds should be established for variable life and variable annuity
separate accounts, the Company will bear the attendant expenses.
All investment income of and other distributions to each Variable Sub-Account
arising from the corresponding Portfolio are reinvested in shares of that
Portfolio at net asset value. The income and both realized and unrealized gains
or losses on the assets of each Variable Sub-Account are therefore separate and
are credited to or charged against the Variable Sub-Account without regard to
income, gains or losses from any other Variable Sub-Account or from any other
business of the Company. The Company will purchase shares in the Funds in
connection with premiums allocated to the corresponding Variable
<PAGE>
10
Sub-Account in accordance with Contract Owners' directions and will redeem
shares in the Funds to meet Contract obligations or make adjustments in
reserves, if any. TheFunds are required to redeem Fund shares at net asset value
and to make payment within seven days.
The Company reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, or substitutions for the Fund
shares underlying the Variable Sub-Accounts. If shares of any of the Funds
should no longer be available for investment, or if, in the judgment of the
Company's management, further investment in shares of any Fund should become
inappropriate in view of the purposes of the Contracts, the Company may
substitute shares of another Fund for shares already purchased, or to be
purchased in the future, under the Contracts. No substitution of securities will
take place without notice to Contract Owners and without prior approval of the
Securities and Exchange Commission to the extent required by the Investment
Company Act of 1940 ("1940 Act"). The Company reserves the right to establish
additional Variable Sub-accounts of the Variable Account, each of which would
invest in shares of another Fund. Subject to Contract Owner approval, the
Company also reserves the right to end the registration under the 1940 Act of
the Variable Account or any other separate accounts of which it is the depositor
or to operate the Variable Account as a management company under the 1940 Act.
Each Fund is subject to certain investment restrictions and policies which may
not be changed without the approval of a majority of the shareholders of the
Fund. See the accompanying prospectuses for the Funds for further information.
THE CONTRACT
APPLICATION FOR A CONTRACT
Individuals wishing to purchase a Contract must submit an application to the
Company. A Contract will be issued only on the lives of Insureds age 0-85 who
supply evidence of insurability satisfactory to the Company. Acceptance is
subject to the Company's underwriting rules and the Company reserves the right
to reject an application for any lawful reason. If a Contract is not issued, the
premium will be returned to you . No change in the terms or conditions of a
Contract will be made without the consent of the Contract Owner.
Once the Company has received the initial premium and underwriting has been
approved, the Contract will be issued on the date the Company has received the
final requirement for issue. In the case of simplified underwriting, the
Contract will be issued or coverage denied within 3 business days of receipt of
premium. The Insured will be covered under the Contract, however, as of the
Contract Date. Since the Contract Date will generally be the date the Company
receives the initial premium, coverage under a Contract may begin before it is
actually issued. In addition to determining when coverage begins, the Contract
Date determines Monthly Activity Dates, Contract months, and Contract Years.
If the initial premium is over the limits established from time to time by the
Company ($1,000,000 as of the date of this Prospectus), the initial payment will
not be accepted with the application. In other cases where we receive the
initial payment with the application, we will provide fixed conditional
insurance during underwriting according to the terms of a conditional receipt.
The fixed conditional insurance will be the insurance applied for, up to a
maximum that varies by age.
PREMIUMS
The Contract is designed to permit an initial premium payment and, subject to
certain conditions, additional premium payments. The initial premium payment
purchases a Death Benefit initially equal to the Contract's Specified Amount.
The minimum initial payment is $10,000.
Under current underwriting rules, which are subject to change, proposed Insureds
are eligible for simplified underwriting without a medical examination if their
application responses and initial premium payment meet simplified underwriting
standards. Customary underwriting standards will apply to all other proposed
Insureds. The maximum initial premium currently permitted on a simplified
underwriting basis varies with the issue age of the insured according to the
following table:
<TABLE>
<CAPTION>
SIMPLIFIED UNDERWRITING
ISSUE AGE MAXIMUM INITIAL PREMIUM
- -------------------- ------------------------
<S> <C>
0-34................ Not available
35-44............... $ 15,000
45-54............... $ 30,000
55-64............... $ 50,000
65-80............... $ 100,000
Over age 80......... Not available
</TABLE>
Additional premium payments may be made at any time, subject to the following
conditions:
- only one additional premium payment may be
made in any Contract Year;
- each additional premium payment must be at least
$500;
<PAGE>
11
- the attained age of the Insured must be less than
age 86; and
- absent submission of new evidence of insurability
of the insured, the maximum additional payment permitted in a Contract
Year is the "Guaranteed Additional Payment."
- the Guaranteed Additional Payment is the lesser
of $5,000 or a percentage of the initial payment (5% for attained ages
40-70, and 0% for attained ages 20-39 and 71-85).
Additional premium payments may require an increase in Specified Amount in order
for the Contract to remain within the definition of a life insurance contract
under Section 7702 of the Code. The Company reserves the right to obtain
satisfactory evidence of insurability upon any additional premium payments
requiring an increase in Specified Amount. However, we reserve the right to
reject any additional premium payment for any reason.
Unless you request otherwise in writing, any additional premium payment received
while a Contract loan exists will be applied: first, as a repayment of
Indebtedness, and second, as an additional premium payment, subject to the
conditions described above.
Additional premiums may be paid at any time and in any amount necessary to avoid
termination of the Contract without evidence of insurability.
ALLOCATION OF PREMIUMS
Upon completion of underwriting, the Company will either issue a Contract, or
deny coverage and return all premiums. If a Contract is issued, the initial
premium payment, plus an amount equal to the interest that would have been
earned had the initial premium been invested in the Money Market Sub-Account
since the date of receipt of the premium, will be allocated on the date the
Contract is issued according to the initial premium allocation instructions
specified on the application. In the future, the Company may allocate the
initial premium (and the interest that would have been earned had the initial
premium been invested in the Money Market Sub-Account since its receipt) to the
Money Market Sub-Account during the free look period in those states where state
law requires premiums to be returned upon exercise of the free-look right.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Variable Sub-Account will vary to reflect
the investment experience of the corresponding Fund Portfolio and will be
determined on each Valuation Day by multiplying the Accumulation Unit Value of
the particular Variable Sub-Account on the preceding Valuation Day by a "Net
Investment Factor" for that Sub-Account for the Valuation Period then ended. The
Net Investment Factor for each Variable Sub-Account is determined by first
dividing (A) the net asset value per share of the corresponding Fund Portfolio
at the end of the current Valuation Period (plus the per share dividends or
capital gains by that Fund Portfolio if the ex-dividend date occurs in the
Valuation Period then ended), by (B) the net asset value per share of the
corresponding Fund Portfolio at the end of the immediately preceding Valuation
Period; and then subtracting from the result an amount equal to the daily
deductions for mortality and expense risk charges imposed during the Valuation
Period. Applicants should refer to the prospectuses for the Funds which
accompany this prospectus for a description of how the assets of each Fund are
valued since such determination has a direct bearing on the Accumulation Unit
Value of the corresponding Sub-Account and therefore the Account Value of a
Contract. See "Contract Benefits and Rights -- Account Value," page 15.
All valuations in connection with a Contract, e.g., with respect to determining
Account Value and Cash Surrender Value and in connection with Contract loans, or
calculation of Death Benefits, or with respect to determining the number of
Accumulation Units to be credited to a Contract with each premium, other than
the initial premium and additional premiums requiring underwriting, will be made
on the date the request or payment is received in good order by the Company at
its Home Office if such date is a Valuation Day; otherwise such determination
will be made on the next succeeding date which is a Valuation Day.
SPECIALIZED USES OF THE CONTRACT: Because the Contract provides for an
accumulation of cash value as well as a death benefit, the Contract can be used
for various individual and business financial planning purposes. Purchasing the
Contract in part for such purposes entails certain risks. For example, if the
investment performance of Sub-Accounts to which Account Value is allocated is
poorer than expected or if sufficient premiums are not paid, the Contract may
lapse or may not accumulate sufficient Account Value to fund the purpose for
which the Contract was purchased. Withdrawals and Contract loans may
significantly affect current and future Account Value, Cash Surrender Value, or
Death Benefit proceeds. Depending upon Sub-Account investment performance and
the amount of a Contract loan, the loan may cause a Contract to lapse. Because
the Contract is designed to provide benefits on a long-term basis, before
purchasing a Contract for a specialized purpose a purchaser should consider
whether the long-term nature of the Contract is
<PAGE>
12
consistent with the purpose for which it is being considered. Using a Contract
for a specialized purpose may have tax consequences. (See "Federal Tax Matters,"
Page 23.)
DEDUCTIONS AND CHARGES
MONTHLY DEDUCTIONS
On each Monthly Activity Date including the Contract Date, the Company will
deduct from the Account Value attributable to the Variable Account an amount
("Monthly Deduction Amount") to cover charges and expenses incurred in
connection with a Contract. Each Monthly Deduction Amount will be deducted pro
rata from each Variable Sub-Account attributable to the Contract such that the
proportion of Account Value of the Contract attributable to each Sub-Account
remains the same before and after the deduction. The Monthly Deduction Amount
will vary from month to month. If the Cash Surrender Value is not sufficient to
cover a Monthly Deduction Amount due on any Monthly Activity Date, the Contract
may lapse. See "Contract Benefits and Rights -- Lapse and Reinstatement," page
17. The following is a summary of the monthly deductions and charges which
constitute the Monthly Deduction Amount:
COST OF INSURANCE CHARGE: The cost of insurance charge covers the Company's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the 10th Contract Year. The current cost of
insurance charge will not exceed the guaranteed cost of insurance charge. This
charge is the maximum annual cost of insurance per $1,000 as indicated in the
Contract; multiplied by the difference between the Death Benefit and the Account
Value (both as determined on the Monthly Activity Date); divided by $1,000; and
divided by 12. For standard risks, the guaranteed cost of insurance rate is
based on the 1980 Commissioners Standard Ordinary Mortality Table, age last
birthday. (Unisex rates may be required in some states). A table of guaranteed
cost of insurance charges per $1,000 will be included in each Contract; however,
the Company reserves the right to use rates less than those shown in the table.
Substandard risks will be charged at a higher cost of insurance rate that will
not exceed rates based on a multiple of the 1980 Commissioners Standard Ordinary
Mortality Table, age last birthday. The multiple will be based on the Insured's
substandard rating.
The cost of insurance charge rates are applied to the difference between the
Death Benefit determined on the Monthly Activity Date and the Account Value on
that same date prior to assessing the Monthly Deduction Amount, because the
difference is the amount for which the Company is at risk should the Death
Benefit be then payable. The Death Benefit as computed on a given date is the
greater of (1) the Specified Amount on that date, and (2) the Account Value on
that date multiplied by the applicable Death Benefit ratio. (For an explanation
of the Death Benefit, see "Contract Benefits and Rights" on page 15.)
EXAMPLE:
<TABLE>
<S> <C> <C>
Specified Amount = $ 100,000
Account Value on the Monthly
Activity Date = $ 30,000
Insured's attained age = 45
Death Benefit ratio for age 45 = 2.15
</TABLE>
On the Monthly Activity Date in this example, the Death Benefit as then computed
would be $100,000, because the Specified Amount ($100,000) is greater than the
Account Value multiplied by the applicable Death Benefit ratio ($30,000 x 2.15 =
$64,500). Since the Account Value on that date is $30,000, the cost of insurance
charges per $1,000 are applied to the difference ($100,000 - $30,000 = $70,000).
Assume that the Account Value in the above example was $50,000. The Death
Benefit would then be $107,500 (2.15 x $50,000), since this is greater than the
Specified Amount ($100,000). The cost of insurance rates in that case would be
applied to ($107,500 - $50,000) = $57,500.
Because the Account Value and, as a result, the amount for which the Company is
at risk under a Contract may vary from month to month, the cost of insurance
charge may also vary on each Monthly Activity Date. However, once a risk rating
class has been assigned to an Insured when the Contract is issued, that rating
class will not change if additional premium payments or partial withdrawals
increase or decrease the Specified Amount.
TAX EXPENSE CHARGE: The Company will deduct monthly from the Account Value a tax
expense charge equal to an annual rate of 0.40% for the first ten Contract
Years. This charge compensates the Company for premium taxes imposed by various
states and local jurisdictions and for federal taxes related to the receipt of
premiums under the Contract and that results from the application of section 848
of the Code. The charge includes a premium tax deduction of 0.25% and a federal
tax deduction of 0.15%. The 0.25% premium tax deduction over ten Contract Years
approximates the Company's average expenses for state and local premium taxes
(2.5%). Premium taxes vary, ranging from zero to 3.5%. The premium tax deduction
will be imposed regardless of a contract owner's state of residence and,
therefore, is made whether or not any
<PAGE>
13
premium tax applies. The deduction may be higher or lower than the premium tax
imposed. However, the Company does not expect to make a profit from this
deduction. The 0.15% federal tax deduction helps reimburse the Company for
approximate expenses incurred for federal taxes resulting from the application
of Section 848 of the Code.
ADMINISTRATIVE EXPENSE CHARGE: The Company will deduct monthly from the Account
Value an administrative expense charge equal to an annual rate of 0.25%. This
charge compensates the Company for administrative expenses incurred in the
administration of the Variable Account and the Contracts.
All monthly deductions are taken by canceling Accumulation Units of the Variable
Account under your Contract.
OTHER DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGE: The Company will deduct from the Variable
Account a daily charge equivalent to an annual rate of 0.90% for the mortality
risks and expense risks the Company assumes in relation to the Contracts. The
mortality risk assumed includes the risk that the cost of insurance charges
specified in the Contract will be insufficient to meet claims. The Company also
assumes a risk that the Death Benefit will exceed the amount on which the cost
of insurance charges were based on the Monthly Activity Date preceding the death
of an Insured. The expense risk assumed is that expenses incurred in issuing and
administering the Contracts will exceed the administrative charges set in the
Contract.
ANNUAL MAINTENANCE FEE: If the aggregate premiums paid on a Contract are less
than $50,000, the Company will deduct from the Account Value an Annual
Maintenance Fee of $35 on each Contract Anniversary. This fee will help
reimburse the Company for administrative and maintenance costs of the Contracts.
TAXES CHARGED AGAINST THE VARIABLE ACCOUNT: Currently, no charge is made to the
Variable Account for federal income taxes that may be attributable to the
operations of the Variable Account (as opposed to the federal tax related to the
receipt of premiums under the Contract). The Company may, however, make such a
charge in the future. Charges for other taxes, if any, attributable to the
Variable Account or this class of Contracts may also be made.
CHARGES AGAINST THE FUNDS: The Variable Account purchases shares of the Funds at
net asset value. The net asset value of the Fund shares reflects investment
advisory fees and administrative expenses already deducted from the assets of
the Funds. Fund investment management fees are a percentage of the average daily
value of the net assets of the Portfolios:
FUND EXPENSES
(AS A PERCENTAGE OF FUND ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
- ------------------------- --------------- ------------ ------------
<S> <C> <C> <C>
VIS Dividend Growth...... 0.56%(1) 0.01% 0.57%
VIS European Growth...... 1.00% 0.11% 1.11%
VIS Utilities............ 0.65%(2) 0.02% 0.67%
VIS Quality Income
Plus.................... 0.50%(3) 0.03% 0.53%
VIP Growth............... 0.61% 0.08% 0.69%%(4)
VIP High Income.......... 0.59% 0.12% 0.71%
VIP II Contrafund........ 0.61% 0.13% 0.74%(4)
Dreyfus Socially
Responsible Growth...... 0.72% 0.24% 0.96%(5)
VIF Small Company
Stock................... 0.56% 0.19% 0.75%(5)
VIF Growth & Income...... 0.75% 0.08% 0.83%
VIF Money Market......... 0.50% 0.12% 0.62%
MFS Emerging Growth
Series(6)............... 0.75% 0.25% 1.00%
MFS Limited Maturity
Series(6)............... 0.55% 0.45% 1.00%
VP International......... 1.50% 0.00% 1.50%
VP Balanced.............. 1.00% 0.00% 1.00%
</TABLE>
- ------------
(1) The management fee is 0.625% for net assets of up to $500
million. For net assets which exceed $500 million, but do not exceed $1
billion, the management fee is 0.50% and for net assets that exceed $1
billion, the management fee is 0.475%.
(2) This percentage is applicable to Portfolio net assets of up to $500
million. For net assets which exceed $500 million, the management fee is
0.55%.
(3) This percentage is applicable to Portfolio net assets of up to $500
million. For net assets which exceed $500 million, the management fee is
0.45%.
(4) A portion of the brokerage commissions that certain funds pay was
used to reduce fund's expenses. In addition, certain funds have entered
into arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, the total operating
expenses presented in the table would have been .67% for Growth Portfolio
and .71% for Contrafund Portfolio.
(5) From time to time, The Dreyfus Corporation and, with respect to
Dreyfus Socially Responsible Growth, NCM Capital Management Group, Inc., in
their sole discretion may waive all or part of their fees and/or
voluntarily assume certain expenses. As of the date of this prospectus,
certain fees are being waived or expenses being
<PAGE>
14
assumed on a voluntary basis. Without such waivers or reimbursement, the
Management Fees, Other Expenses and Total Fund Annual Expenses that would
have been incurred for the fiscal year ended December 31, 1996 would
be--Dreyfus Socially Responsible Growth: 0.75%, 0.24% and 0.99%,
respectively; VIP Small Company Stock: 0.75%, 0.19% and 0.94%,
respectively. There is no guarantee that any fee waiver or expense
reimbursement will continue in the future.
(6) The Adviser has agreed to bear expenses for each Series, subject
to reimbursement by each Series, such that each Series' "Other Expenses"
shall not exceed the following percentages of the average daily net assets
of the Series during the current fiscal year: 0.45% for the Limited
Maturity Series and 0.25% for the Emerging Growth Series. See "Information
Concerning Shares of Each Series--Expenses." Otherwise, "Other Expenses"
and "Total Operating Expenses" for each Series would be: 0.41% and 1.16%
for Emerging Growth and 7.00% and 7.55% for Limited Maturity respectively.
WITHDRAWAL CHARGE: Upon surrender of the Contract and partial withdrawals in
excess of the Free Withdrawal Amount, a Withdrawal Charge may be assessed. The
Free Withdrawal Amount in any Contract Year is 15% of total premiums paid. Any
Free Withdrawal Amount not taken in a Contract Year may not be carried forward
to increase the Free Withdrawal Amount in any subsequent year. Withdrawals in
excess of the Free Withdrawal Amount will be subject to a withdrawal charge as
set forth in the table below:
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL
CONTRACT YEAR PREMIUM WITHDRAWN
- ------------------- ---------------------------
<S> <C>
1.................. 7.75%
2.................. 7.75%
3.................. 7.75%
4.................. 7.25%
5.................. 6.25%
6.................. 5.25%
7.................. 4.25%
8.................. 3.25%
9.................. 2.25%
10+................ 0.00%
</TABLE>
After the ninth Contract Year, no Withdrawal Charges will be imposed. In
addition, no Withdrawal Charge will be imposed on any withdrawal to the extent
that aggregate Withdrawal Charges and the federal tax portion of the tax expense
charge imposed would otherwise exceed 9% of total premiums paid prior to the
withdrawal. The Withdrawal Charge may be waived under certain circumstances if
the Insured is confined to a qualified long-term care facility or hospital. See
"Contract Benefits and Rights -- Confinement Waiver Benefit", page 18.
The Withdrawal Charge is imposed to cover a portion of the sales expense
incurred by the Company in distributing the Contracts. This expense includes
agents' commissions, advertising and the printing of prospectuses.
DUE AND UNPAID PREMIUM TAX CHARGE: During the first nine Contract Years, a
charge for due and unpaid premium tax will be imposed on full or partial
withdrawals in excess of the Free Withdrawal Amount. This charge is shown below,
as a percent of the Account Value withdrawn:
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL
YEAR PREMIUM WITHDRAWN
- ------------------- ---------------------------
<S> <C>
1.................. 2.25%
2.................. 2.00%
3.................. 1.75%
4.................. 1.50%
5.................. 1.25%
6.................. 1.00%
7.................. 0.75%
8.................. 0.50%
9.................. 0.25%
10+................ 0.00%
</TABLE>
After the ninth Contract Year, no due and unpaid premium tax charge will be
imposed. The percentages indicated above are guaranteed not to increase.
<PAGE>
15
CONTRACT BENEFITS AND RIGHTS
DEATH BENEFIT
The Contracts provide for the payment of Death Benefit Proceeds to the named
beneficiary when the Insured under the Contract dies. The Proceeds payable to
the beneficiary equal the Death Benefit less any Indebtedness and less any due
and unpaid Monthly Deduction Amounts occurring during a Grace Period (if
applicable). The Death Benefit equals the greater of (1) the Specified Amount or
(2) the Account Value multiplied by the Death Benefit Ratio. The ratios vary
according to the attained age of the Insured and are specified in the Contract.
Therefore, an increase in Account Value due to favorable investment experience
may increase the Death Benefit above the Specified Amount; and a decrease in
Account Value due to unfavorable investment experience may decrease the Death
Benefit (but not below the Specified Amount).
EXAMPLES:
<TABLE>
<CAPTION>
A B
---------- ----------
<S> <C> <C>
Specified Amount: $ 100,000 $ 100,000
Insured's Age: 45 45
Account Value on Date of Death: $ 48,000 $ 34,000
Death Benefit Ratio 2.15 2.15
</TABLE>
In Example A, the Death Benefit equals $103,200, i.e., the greater of $100,000
(the Specified Amount) and $103,200 (the Account Value at the Date of Death of
$48,000, multiplied by the Death Benefit Ratio of 2.15). This amount, less any
Indebtedness and due and unpaid Monthly Deduction Amounts, constitutes the
Proceeds which we would pay to the beneficiary.
In Example B, the Death Benefit is $100,000, i.e., the greater of $100,000 (the
Specified Amount) or $73,100 (the Account Value of $34,000 multiplied by the
Death Benefit Ratio of 2.15).
All or part of the Proceeds may be paid in cash or applied under an Income Plan.
See "Other Matters -- Payment Options," page 20.
ACCELERATED DEATH BENEFIT
If the Insured becomes terminally ill, the Contract Owner may request an
accelerated Death Benefit in an amount up to the lesser of (1) 50% of the
Specified Amount on the day we receive the request, and (2) $250,000 for all
policies issued by the Company which cover the Insured. "Terminally ill" means
an illness or physical condition of the Insured that, notwithstanding
appropriate medical care, will result in a life expectancy of 12 months or less.
If the Insured is terminally ill as the result of an illness, the accelerated
Death Benefit is not available unless the illness occurred at least 30 days
after the Issue Date. If the Insured is terminally ill as the result of an
accident, the accelerated Death Benefit is available if the accident occurred
after the Issue Date.
We will pay benefits due under the accelerated Death Benefit provision upon
receipt of a written request from the Contract Owner and due proof that the
Insured has been diagnosed as terminally ill. The Company also reserves the
right to require supporting documentation of the diagnosis and to require (at
the Company's expense) an examination of the Insured by a physician of the
Company's choice to confirm the diagnosis. The amount of the payment will be the
amount requested by the Contract Owner, reduced by the sum of (1) a 12 month
interest discount to reflect the early payment; (2) an administrative fee (not
to exceed $250); and (3) a pro rata amount of any outstanding Contract loan and
accrued loan interest. After the payment has been made, the Specified Amount,
the Account Value and any outstanding Contract loan will be reduced on a prorata
basis.
Only one request for an accelerated Death Benefit per Insured is allowed. The
accelerated Death Benefit may not be available in all states.
ACCOUNT VALUE
The Account Value of a Contract will be computed on each Valuation Day. On the
Contract Date, the Account Value is equal to the initial premium less the
Monthly Deduction Amount for the first month. Thereafter, the Account Value will
vary to reflect the investment experience of the Funds, the value of the Loan
Account and the Monthly Deduction Amounts. There is no minimum guaranteed
Account Value.
The Account Value of a particular Contract is related to the net asset value of
the Funds to which premiums on the Contract have been allocated. The Account
Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Contract in each Variable Sub-Account as of
the Valuation Day by the then Accumulation Unit Value of that Sub-Account and
then summing the result for all the Sub-Accounts credited to the Contract and
the value of the Loan Account. See "The Contract -- Accumulation Unit Values,"
page 11.
<PAGE>
16
TRANSFER OF ACCOUNT VALUE
While the Contract remains in force and subject to the Company's transfer rules
then in effect, the Contract Owner may request that part or all of the Account
Value of a particular Variable Sub-Account be transferred to other Variable
Sub-Accounts. The Company reserves the right to impose a $10 charge on each such
transfer in excess of 12 per Contract Year. However, there are no charges on
transfers at the present time. The minimum amount that can be transferred is
shown on the Contract Data page (currently, there is no minimum).
Telephone transfer requests will be accepted by the Company if received at
1(800)526-4827 by 4:00 p.m., Eastern Time. Telephone transfer requests received
at any other telephone number or after 4:00 p.m., Eastern Time will not be
accepted by the Company. Telephone transfer requests received before 4:00 p.m.,
Eastern Time are effected at the next computed value. Transfers by telephone may
be made by the Contract Owner's agent of record or attorney-in-fact pursuant to
a power of attorney. Telephone transfers may not be permitted in some states.
The policy of the Company and its agents and affiliates is that they will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. The Company will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine; otherwise, the Company
may be liable for any losses due to unauthorized or fraudulent instructions. The
procedures the Company follows for transactions initiated by telephone include
requirements that callers on behalf of a Contract Owner identify themselves and
the Contract Owner by name and social security number or other identifying
information. All transfer instructions by telephone are tape recorded.
As a result of a transfer, the number of Accumulation Units credited to the
Variable Sub-Account from which the transfer is made will be reduced by the
number obtained by dividing the amount transferred by the Accumulation Unit
Value of the Sub-Account from which the transfer is made on the Valuation Date
the Company receives the transfer request. The number of Accumulation Units
credited to the Sub-Account to which the transfer is made will be increased by
the number obtained by dividing the amount transferred by the Accumulation Unit
Value of that Sub-Account on the Valuation Day the Company receives the transfer
request.
DOLLAR COST AVERAGING
Transfers may be made automatically through Dollar Cost Averaging while the
Contract is in force. Dollar Cost Averaging permits the Owner to transfer a
specified amount every month (or some other frequency as may be determined by
the Company) from the Money Market Sub-Account to any other Variable
Sub-Account. The theory of Dollar Cost Averaging is that, if purchases of equal
dollar amounts are made at fluctuating prices, the aggregate average cost per
unit will be less than the average of the unit prices on the same purchase
dates. However, participation in the Dollar Cost Averaging program does not
assure you of a greater profit from your purchases under the program; nor will
it prevent or alleviate losses in a declining market.
AUTOMATIC PORTFOLIO REBALANCING
Transfers may be made automatically through Automatic Portfolio Rebalancing
while the Contract is in force. By electing Automatic Portfolio Rebalancing, the
Account Value in the Variable Sub-Accounts will be rebalanced to the desired
allocation on a quarterly basis, determined from the first date that you decide
to rebalance. Each quarter, Account Value will be transferred among Variable
Sub-Accounts to achieve the desired allocation.
The desired allocation will be the allocation initially selected, unless
subsequently changed. You may change the allocation at any time by giving us
written notice. The new allocation will be effective with the first rebalancing
that occurs after we receive the written request. We are not responsible for
rebalancing that occurs prior to receipt of the written request.
CONTRACT LOANS
While the Contract is in force, a Contract Owner may obtain, without the consent
of the beneficiary (provided the designation of beneficiary is not irrevocable),
one or both of two types of cash loans from the Company. These types are
Preferred Loans (described below) and non-Preferred Loans. Both types of loans
are secured by the Contract. The maximum amount available for a loan is 90% of
the Contract's Cash Value, less the amount of all Contract loans existing on the
date of the loan (including loan interest to the next Contract Anniversary),
less any due and unpaid Monthly Deduction Amounts, and less any Annual
Maintenance Fee due on or before the next Contract Anniversary.
The loan amount will be transferred pro rata from each Variable Sub-Account
attributable to the Contract (unless the Contract Owner specifies otherwise) to
the Loan Account. The amounts allocated to the Loan Account will be credited
with interest at the loan credited rate set forth in the Contract. Loans will
bear interest at rates determined by the Company from time to time, but which
will not
<PAGE>
17
exceed the maximum rate indicated in the Contract (currently, 8% per year). The
amount of the Loan Account that equals the difference between the Account Value
and the total of all premiums paid under the Contract net of any premiums
returned due to partial withdrawals, as determined on each Contract Anniversary,
is considered a "Preferred Loan." Preferred Loans bear interest at a rate not to
exceed the Preferred Loan rate set forth in the Contract. The difference between
the value of the Loan Account and the Indebtedness will be transferred on a
pro-rata basis from the Variable Sub-Accounts to the Loan Account on each
Contract Anniversary. If the aggregate outstanding loan(s) and loan interest
secured by the Contract exceeds the Cash Value of the Contract, the Company will
give written notice to the Contract Owner that unless the Company receives an
additional payment within 61 days to reduce the aggregate outstanding loan(s)
secured by the Contract, the Contract may lapse.
All or any part of any loan secured by a Contract may be repaid while the
Contract is still in effect. When loan repayments or interest payments are made,
the repayment will be allocated among the Variable Sub-Accounts in the same
percentage as subsequent payments are allocated (unless the Contract Owner
requests a different allocation), and an amount equal to the payment will be
deducted from the Loan Account. Any outstanding loan at the end of a Grace
Period must be repaid before the Contract will be reinstated. See "Contract
Benefits and Rights -- Lapse and Reinstatement," page 17.
A loan, whether or not repaid, will have a permanent effect on the Account Value
because the investment results of each Variable Sub-Account will apply only to
the amount remaining in that Sub-Account. The longer a loan is outstanding, the
greater the effect is likely to be. The effect could be favorable or
unfavorable. If the Variable Sub-Accounts earn more than the annual interest
rate for amounts held in the Loan Account, a Contract Owner's Account Value will
not increase as rapidly as it would have had no loan been made. If the Variable
Sub-Accounts earn less than that rate, the Contract Owner's Account Value will
be greater than it would have been had no loan been made. Also, if not repaid,
the aggregate outstanding loan(s) will reduce the Death Benefit Proceeds and
Cash Surrender Value otherwise payable.
AMOUNT PAYABLE ON SURRENDER OF THE CONTRACT
While the Contract is in force, a Contract Owner may elect, without the consent
of the beneficiary (provided the designation of beneficiary is not irrevocable),
to fully surrender the Contract. Upon surrender, the Contract Owner will receive
the Cash Surrender Value determined as of the day the Company receives the
Contract Owner's written request or the date requested by the Contract Owner,
whichever is later. The Cash Surrender Value equals the Cash Value less the
Annual Maintenance Fee and any Indebtedness. The Company will pay the Cash
Surrender Value of the Contract within seven days of receipt by the Company of
the written request or on the effective surrender date requested by the Contract
Owner, whichever is later.
The Contract will terminate on the date of receipt of the written request, or
the date the Contract Owner requests the surrender to be effective, whichever is
later. For a discussion of the tax consequences of surrendering the Contract,
see "Federal Tax Matters," page 23.
The Contract Owner may elect to apply the surrender proceeds to an Income Plan
(see "Other Matters -- Payment Options," page 20).
PARTIAL WITHDRAWALS
While the Contract is in force, a Contract Owner may elect, by written request,
to make partial withdrawals of at least $50 from the Cash Surrender Value. The
Cash Surrender Value, after the partial withdrawal, must at least equal $2,000;
otherwise, the request will be treated as a request for full surrender. The
partial withdrawal will be deducted pro rata from each Variable Sub-Account,
unless the Contract Owner instructs otherwise. The Specified Amount after the
partial withdrawal will be the greater of:
- the Specified Amount prior to the partial
withdrawal reduced proportionately to the reduction in Account Value; or
- the minimum Specified Amount necessary in
order to meet the definition of a life insurance contract under section 7702 of
the Code.
Partial withdrawals in excess of the Free Withdrawal Amount may be subject to a
Withdrawal Charge and any due and unpaid premium tax charges. See "Deductions
and Charges -- Other Deductions -- Withdrawal Charge" and "Premium Tax Charge."
For a discussion of the tax consequences of partial withdrawals, see "Federal
Tax Matters," page 23.
MATURITY
The Contracts have no maturity date.
LAPSE AND REINSTATEMENT
The Contract will remain in force until the Cash Surrender Value is insufficient
to cover a Monthly Deduction Amount due on a Monthly Activity Date. The Company
<PAGE>
18
will give written notice to the Contract Owner that if an amount shown in the
notice (which will be sufficient to cover the Monthly Deduction Amount(s) due)
is not paid within 61 days ("Grace Period"), there is a danger of lapse.
The Contract will continue through the Grace Period, but if no payment is
forthcoming, it will terminate at the end of the Grace Period. If the Insured
dies during the Grace Period, the Proceeds payable under the Contract will be
reduced by the Monthly Deduction Amount(s) due and unpaid. See "Contract
Benefits and Rights -- Death Benefit," page 15.
If the Contract lapses, the Contract Owner may apply for reinstatement of the
Contract by payment of the reinstatement premium (and any applicable charges)
required under the Contract. A request for reinstatement must be made within
five years of the date the Contract entered a Grace Period. If a loan was
outstanding at the time of lapse, the Company will require repayment of the loan
before permitting reinstatement. In addition, the Company reserves the right to
require evidence of insurability satisfactory to the Company. The reinstatement
premium is equal to an amount sufficient to (1) cover all Monthly Deduction
Amounts and Annual Maintenance Fee due and unpaid during the Grace Period, and
(2) keep the Contract in force for three months after the date of reinstatement.
The Specified Amount upon reinstatement cannot exceed the Specified Amount of
the Contract at its lapse. The Account Value on the reinstatement date will
reflect the Account Value at the time of termination of the Contract plus the
premiums paid at the time of reinstatement. Withdrawal charges and due and
unpaid premium tax charges, Cost of Insurance, and Tax Expense Charges will
continue to be based on the original Contract Date.
CANCELLATION AND EXCHANGE RIGHTS
A Contract Owner has a limited right to return a Contract for cancellation. If
the Contract is returned for cancellation by mail or personal delivery to the
Company or to the agent who sold the Contract within 10 days after delivery of
the Contract to the Contract Owner (a longer free-look period is provided in
certain states), the Company will return to the Contract Owner within 7 days the
sum of (1) the Account Value on the date the returned Contract is received by
the Company or its agent; and (2) any deductions under the Contract or by the
Funds for taxes, charges or fees. Some states may require the Company to return
the premiums paid for the returned Contract.
Once the Contract is in effect, it may be exchanged during the first 24 months
after its issuance for a non-variable permanent life insurance contract offered
by the Company on the life of the Insured. The Company reserves the right to
make available a permanent life insurance contract offered by the Company's
account or any affiliated company without evidence of insurability. The amount
at risk to the Company (i.e., the difference between the Death Benefit and the
Account Value) under the new contract will be equal to or less than the amount
at risk to the Company under the exchanged Contract on the date of exchange.
Premiums under the new Contract will be based on the same risk classification as
the exchanged Contract. The exchange is subject to adjustments in premiums and
Account Value to reflect any variance between the exchanged Contract and the new
contract. The Company reserves the right to make such a contract available that
is offered by the Company's parent or by any affiliate of the Company.
CONFINEMENT WAIVER BENEFIT
Under the terms of an amendatory endorsement to the Contract, the Company will
waive any Withdrawal Charges on Partial Withdrawals and surrenders of the
Contract requested while the Insured is confined to a qualified long-term care
facility or hospital for a period of more than 90 consecutive days beginning 30
days or more after the Issue Date, or within 90 days after the Insured is
discharged from such confinement. The confinement must have been prescribed by a
licensed medical doctor or a licensed doctor of osteopathy, operating within the
scope of his or her license, and must be medically necessary. The prescribing
doctor may not be the Insured, the Contract Owner, or any spouse, child, parent,
grandchild, grandparent, sibling or in-law of the Contract Owner. "Medically
necessary" means appropriate and consistent with the diagnosis and which could
not have been omitted without adversely affecting the Insured's condition. The
confinement waiver benefit may not be available in all states.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS
The Company will suspend all procedures requiring valuation of the Variable
Account (including transfers, surrenders and loans) on any day the New York
Stock Exchange is closed or trading is restricted due to an existing emergency
as defined by the Securities and Exchange Commission, or on any day the
Commission has ordered that the right of surrender of the Contracts be suspended
for the protection of Contract Owners, until such condition has ended.
<PAGE>
19
LAST SURVIVOR CONTRACTS
The Contracts are offered on a single life and "last survivor" basis. Contracts
sold on a last survivor basis operate in a manner almost identical to the single
life version. The most important difference is that the last survivor version
involves two Insureds and the Proceeds are paid only on the death of the last
surviving Insured. The other significant differences between the last survivor
and single life versions are listed below:
1. Last survivor Contracts are offered for prospective
insured persons age 18-85.
2. The cost of insurance charges under the last survivor
Contracts are determined in a manner that reflects the anticipated mortality
of the two Insureds and the fact that the Death Benefit is not payable until
the death of the second Insured. See the last survivor illustrations in
"Appendix A," page A-1.
3. To qualify for simplified underwriting under a last
survivor Contract, both Insureds must meet the simplified underwriting
standards.
4. For a last survivor Contract to be reinstated, both
Insureds must be alive on the date of reinstatement.
5. The Contract provisions regarding misstatement of
age or sex, suicide and incontestability apply to either Insured.
6. Additional tax disclosures applicable to last survivor
Contracts are provided in "Federal Tax Matters," page 23.
7. The Accelerated Death Benefit provision is only
available upon terminal illness of the last survivor.
8. The Confinement Waiver Benefit is available upon
confinement of either insured.
OTHER MATTERS
VOTING RIGHTS
In accordance with its view of presently applicable law, the Company will vote
the shares of the Funds at regular and special meetings of the shareholders of
the Funds in accordance with instructions from Contract Owners (or the assignee
of the Contract, as the case may be) having a voting interest in the Variable
Account. The number of shares of a Fund Portfolio held in a Variable Account
which are attributable to each Contract Owner is determined by dividing the
Contract Owner's interest in that Variable Sub-Account by the per share net
asset value of the corresponding Fund Portfolio. The Company will vote shares
for which no instructions have been given and shares which are not attributable
to Contract Owners (i.e., shares owned by the Company) in the same proportion as
it votes shares for which it has received instructions. If the Investment
Company Act of 1940 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 Funds
in its own right, it may elect to do so.
The voting interests of the Contract Owner (or the assignee) in the Funds will
be determined as follows: Contract Owners are entitled to give voting
instructions to the Company with respect to Fund Portfolio shares attributable
to them as described above, determined on the record date for the shareholder
meeting for that Fund. Therefore, if a Contract Owner has taken a loan secured
by the Contract, amounts transferred from the Sub-Account(s) to the Loan Account
in connection with the loan (see "Contract Benefits and Rights -- Contract
Loans," page 16) will not be considered in determining the voting interests of
the Contract Owner. Contract Owners should review the prospectuses for the Funds
which accompany this prospectus to determine matters on which Fund shareholders
may vote.
The Company may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Funds or to approve or disapprove an investment advisory
contract for the Funds.
In addition, the Company itself may disregard voting instructions in favor of
changes initiated by Contract Owners in the investment objectives or the
investment adviser of the Funds 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. If the Company does
disregard voting instructions, a summary of that action and the reasons for such
action will be included in the next periodic report to Contract Owners.
STATEMENTS TO CONTRACT OWNERS
The Company will maintain all records relating to the Variable Account and the
Variable Sub-Accounts. At least once each Contract Year, the Company will send
to each Contract Owner a statement showing the Coverage Amount and the Account
Value of the Contract (indicating the number of Accumulation Units credited to
the Contract in each Variable Sub-Account and the corresponding Accumulation
Unit Value), and any outstanding loan secured by the Contract as of the date of
the statement. The
<PAGE>
20
statement will also show premium paid, and Monthly Deduction Amounts under the
Contract since the last statement, and any other information required by any
applicable law or regulation.
LIMIT ON RIGHT TO CONTEST
The Company may not contest the validity of the Contract after it has been in
effect during the Insured's lifetime for two years from the Contract Date. If
the Contract is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Specified Amount for which evidence of
insurability was obtained is contestable for 2 years from its effective date. In
addition, if the Insured dies by suicide while sane or self destruction while
insane in the two-year period after the Contract Date, or such period as
specified in state law, the benefit payable will be limited to the premiums paid
less any Indebtedness and partial withdrawals. If the Insured dies by suicide
while sane or self-destruction while insane in the two-year period following an
increase in the Specified Amount, the benefit payable with respect to the
increase will be limited to the additional premium paid for such increase, less
any Indebtedness and partial withdrawals.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit will
be appropriately adjusted as specified in the Contract.
PAYMENT OPTIONS
The surrender proceeds or Death Benefit Proceeds under the Contracts may be paid
in a lump sum or may be applied to one of the Company's Income Plans. If the
amount to be applied to an Income Plan is less than $3,000 or if it would result
in an initial income payment of less than $20, the Company may require that the
frequency of income payments be decreased such that the income payments are
greater than $20 each, or it may elect to pay the amount in a lump sum. No
surrender or partial withdrawals are permitted after payments under an Income
Plan commence.
We will pay interest on the Proceeds from the date of the Insured's death to the
date payment is made or a payment option is elected. At such times, the Proceeds
are not subject to the investment experience of the Variable Account.
The Income Plans are fixed annuities payable from the Company's general account.
They do not reflect the investment experience of the Variable Account. Fixed
annuity payments are determined by multiplying the amount applied to the annuity
by a rate to be determined by the Company which is no less than the rate
specified in the fixed payment annuity tables in the Contract. The annuity
payment will remain level for the duration of the annuity. The Company may
require proof of age and gender of the payee (and joint payee, if applicable)
before payments begin. The Company may also require proof that such person(s)
are living before it makes each payment.
The following options are available under the Contracts (the Company may offer
other payment options):
INCOME PLAN 1 -- LIFE INCOME WITH GUARANTEED PAYMENTS
The Company will make payments for as long as the payee lives. If the payee
dies before the selected number of guaranteed payments have been made, the
Company will continue to pay the remainder of the guaranteed payments.
INCOME PLAN 2 -- JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS
The Company will make payments for as long as either the payee or Joint
payee, named at the time of Income Plan selection, is living. If both the
payee and the Joint payee die before the selected number of guaranteed
payments have been made, the Company will continue to pay the remainder of
the guaranteed payments.
The Company will make any other arrangements for income payments as may be
agreed on.
BENEFICIARY
The applicant names the beneficiary in the application for the Contract. The
Contract Owner may change the beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to the Company. If no beneficiary is
living when the Insured dies, the Proceeds will be paid to the Contract Owner if
living; otherwise to the Contract Owner's estate.
ASSIGNMENT*
Unless required by state law, the Contract may not be assigned as collateral for
a loan or other obligation.
DIVIDENDS
No dividends will be paid under the Contracts.
*Most or all states permit collateral assignments. Very few states actually
require that contracts in that state allow for a collateral assignment.
<PAGE>
21
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
The directors and executive officers of the Company are listed below, together
with information as to their ages, dates of election and principal business
occupations during the last five years (if other than their present business
occupations).
LOUIS G. LOWER, II, 51, Chief Executive Officer and Chairman of the Board
(1995)*
Also Director (1986-Present) and Senior Vice President (1995-Present) of
Allstate Insurance Company; Director (1991-Present) of Allstate Life Financial
Services, Inc.; Director (1986-Present) and President (1990-Present) Allstate
Life Insurance Company; Director (1983-Present) and Chairman of the Board
(1990-Present) of Allstate Life Insurance Company of New York; Director
(1990-Present), Chairman of the Board of Directors and Chief Executive Officer
(1995-Present), Chairman of the Board of Directors and President (1990-1995) of
Glenbrook Life Insurance Company; Director and Chairman of the Board
(1995-Present) of Laughlin Group Holdings, Inc.; Director and Chairman of the
Board of Directors and Chief Executive Officer (1989-Present) Lincoln Benefit
Life Company; Director (1986-Present), Chairman of the Board of Directors and
Chief Executive Officer (1995-Present) of Northbrook Life Insurance Company; and
Chairman of the Board of Directors and Chief Executive Officer (1995-Present)
Surety Life Insurance Company.
PETER H. HECKMAN, 51, President, Chief Operating Officer and Director (1996)*
Also Director and Vice President (1988-Present) of Allstate Life Insurance
Company; Director (1990-1996), Vice President (1989-Present), Allstate Life
Insurance Company of New York; Director (1991-1993) of Allstate Life Financial
Services, Inc.; Director (1990-Present), President and Chief Operating Officer
(1996-Present), and Vice President (1990-1996), Glenbrook Life Insurance
Company; Director (1995-Present) and Vice Chairman of the Board (1996-Present)
Laughlin Group Holdings, Inc.; Director (1990-Present) and Vice Chairman of the
Board (1996-Present) Lincoln Benefit Life Company; Director (1988-Present)
President and Chief Operating Officer (1996-Present), and was Vice President
(1989-1996), Northbrook Life Insurance Company; and Director (1995-Present) and
Vice Chairman of the Board (1996-Present) Surety Life Insurance Company.
MICHAEL J. VELOTTA, 50, Vice President, Secretary, General Counsel, and Director
(1992)*
Also Director and Secretary (1993-Present) of Allstate Life Financial Services,
Inc.; Director (1992-Present) Vice President, Secretary and General Counsel
(1993-Present) Allstate Life Insurance Company; Director (1992-Present) Vice
President, Secretary and General Counsel (1993-Present) Allstate Life Insurance
Company of New York; Director (1992-Present) Vice President, Secretary and
General Counsel (1993-Present) Glenbrook Life Insurance Company; Director and
Secretary (1995-Present) Laughlin Group Holdings, Inc.; Director (1992-Present)
and Assistant Secretary (1995-Present) Lincoln Benefit Life Company; Director
(1992-Present) Vice President, Secretary and General Counsel (1993-Present)
Northbrook Life Insurance Company; and Director and Assistant Secretary
(1995-Present) Surety Life Insurance Company.
JOHN R. HUNTER, 41, Director (1996)*
Also Assistant Vice President (1990-Present) Allstate Life Insurance Company;
Assistant Vice President (1996-Present) Allstate Life Insurance Company of New
York; Director (1996-Present) Glenbrook Life Insurance Company; and Director
(1994-Present) and Assistant Vice President (1990-Present) Northbrook Life
Insurance Company.
G. CRAIG WHITEHEAD, 50, Senior Vice President and Director (1995)*
Also Assistant Vice President (1991-Present) Allstate Life Insurance Company;
Director (1994-Present) Assistant Vice President (1991-Present) Glenbrook Life
Insurance Company; Assistant Vice President (1992-Present) Secretary (1995)
Glenbrook Life and Annuity Company; Director (1995-Present) Laughlin Group
Holdings, Inc.
MARLA G. FRIEDMAN, 43, Vice President (1996)*
Also Director (1991-Present) and Vice President (1988-Present) Allstate Life
Insurance Company; Director (1993-1996) Allstate Life Financial Services, Inc.;
Assistant Vice President (1996-Present) Allstate Life Insurance Company of New
York; Director (1991-1996), President and Chief Operating Officer (1995-1996)
and Vice President (1990-1995) and (1996-Present) Glenbrook Life Insurance
Company; Director and Vice Chairman of the Board (1995-1996) Laughlin Group
Holdings, Inc.; and Director (1989-1996), President and Chief Operating Officer
(1995-1996) and Vice President (1996-Present) Northbrook Life Insurance Company.
KEVIN R. SLAWIN, 39, Vice President (1996)*
Also Assistant Vice President and Assistant Treasurer (1995-1996) Allstate
Insurance Company; Director (1996-Present) and Assistant Treasurer (1995-1996)
Allstate Life Financial Services, Inc.; Director and Vice President
(1996-Present) and Assistant Treasurer (1995-1996) Allstate Life Insurance
Company; Director and Vice President (1996-Present) and Assistant Treasurer
(1995-1996) Allstate Life Insurance Company of New York; Director and Vice
President (1996-Present)
<PAGE>
22
and Assistant Treasurer (1995-1996) Glenbrook Life Insurance Company; Director
(1996-Present) and Assistant Treasurer (1995-1996) Laughlin Group Holdings,
Inc.; Director (1996-Present) Lincoln Benefit Life Company; Director and Vice
President (1996-Present) and Assistant Treasurer (1995-1996) Northbrook Life
Insurance Company; Director (1996-Present) Surety Life Insurance Company; and
Assistant Treasurer and Director (1994-1995) Sears Roebuck and Co.; and
Treasurer and First Vice President (1986-1994) Sears Mortgage Corporation.
CASEY J. SYLLA, 53, Chief Investment Officer (1995)*
Also Director (1995-Present ) Senior Vice President and Chief Investment Officer
(1995-Present) Allstate Insurance Company; Director (1995-Present) Chief
Investment Officer (1995-Present) Allstate Life Insurance Company; Chief
Investment Officer (1995-Present) Allstate Life Insurance Company of New York;
Chief Investment Officer (1995-Present) Glenbrook Life Insurance Company; and
Director and Chief Investment Officer (1995-Present) Northbrook Life Insurance
Company. Prior to 1995 he was Senior Vice President and Executive
Officer-Investments (1992-1995) of Northwestern Mutual Life Insurance Company.
JAMES P. ZILS, 46, Treasurer (1995)*
Also Vice President and Treasurer (1995-Present) Allstate Insurance Company;
Treasurer (1995-Present) Allstate Life Financial Services, Inc.; Treasurer
(1995-Present) Allstate Life Insurance Company; Treasurer (1995-Present)
Allstate Life Insurance Company of New York; Treasurer (1995-Present) Glenbrook
Life Insurance Company; Treasurer (1995-Present) Laughlin Group Holdings, Inc.;
and Treasurer (1995-Present) Northbrook Life Insurance Company. From 1993 to
1995, he was Vice President of Allstate Life Insurance Company. Prior to 1993,
he held various management positions.
* Date elected to current office.
DISTRIBUTION OF THE CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business. The Contracts will be sold by life insurance sales
representatives who represent the Company and who are registered representatives
of Allstate Life Financial Services, Inc. ("ALFS") or certain other registered
broker-dealers. Any sales representative or employee will have been qualified to
sell variable life insurance contracts 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.
ALFS, the principal underwriter for the Contracts, was incorporated on March 25,
1988 under the laws of the State of Illinois. Its principal business offices are
located 3100 Sanders Road, Northbrook, Illinois. ALFS' officers and employees
are covered by a brokers' blanket bond in the amount of $5,000,000. The maximum
sales commission payable to Company agents, independent registered insurance
brokers, and other registered broker-dealers is 7.25% of initial and subsequent
premiums. From time to time, the Company may pay or permit other promotional
incentives, in cash or credit or other compensation.
SAFEKEEPING OF THE VARIABLE
ACCOUNT'S ASSETS
The assets of the Variable Account are held by the Company. The assets of the
Variable Account are kept physically segregated and held separate and apart from
the General Account of the Company. The Company maintains records of all
purchases and redemptions of shares of the Funds.
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. THE
COMPANY MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT. Federal, state, local and other tax
consequences of ownership or purchase of a life insurance contract depend upon
the individual circumstances of each person. If you are concerned about any tax
consequences with regard to your individual circumstances, you should consult a
qualified tax advisor.
TAXATION OF THE COMPANY AND THE VARIABLE ACCOUNT
The Company is taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code. Since the Variable Account is not an entity separate
from the Company and its operations form a part of the Company, it will not be
taxed separately as a "Regulated Investment Company" under Subchapter M of the
Code. Investment income and realized capital gains are automatically applied to
increase reserves under the Contracts. Under existing federal income tax law,
the Company believes that the Variable Account investment income and realized
<PAGE>
23
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Variable Account, and therefore the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the Company
being taxed on income or gains attributable to the Variable Account, then the
Company may impose a charge against the Variable Account (with respect to some
or all Contracts) in order to set aside provisions to pay such taxes.
TAXATION OF CONTRACT BENEFITS
In order to qualify as a life insurance contract for federal income tax
purposes, the Contract must meet the definition of a life insurance contract set
forth in Section 7702 of the Code. Section 7702 limits the amount of premiums
that may be invested in a contract that is treated as life insurance. The manner
in which Section 7702 should be applied to certain features of the Contract
offered in this prospectus is not directly addressed in Section 7702.
Nevertheless, the Company believes that the Contract will meet the Section 7702
definition of a life insurance contract. This means that:
- the death benefit should be fully excludable from
the gross income of the beneficiary under Section 101(a)(1) of the Code;
and
- the Contract Owner should not be considered in
constructive receipt of the Cash Value of the Contract, including any
increases, until actual cancellation of the Contract.
In addition, in the absence of final regulations or other pertinent
interpretations of Section 7702, there is necessarily some uncertainty as to
whether a substandard risk Contract will meet the statutory life insurance
contract definition. If a Contract were determined not to be a life insurance
contract for purposes of Section 7702, such Contract would not provide most of
the tax advantages normally provided by a life insurance contract. The Company
reserves the right to amend the Contracts to comply with any future changes in
the Code, any regulations or rulings under the Code and any other requirements
imposed by the Internal Revenue Service.
If you own and are the Insured under the Contract, the Death Benefit will be
included in your gross estate for federal estate tax purposes if the proceeds
are payable to your estate. If the beneficiary is other than your estate but you
retained incidents of ownership in the Contract, the Death Benefit will also be
included in your gross estate. Examples of incidents of ownership include, but
are not limited to, the right to change beneficiaries, to assign the Contract or
revoke an assignment, to pledge the Contract or to obtain a policy loan. If you
own and are the Insured under the Contract and you transfer all incidents of
ownership in the Contract, the Death Benefit will be included in your gross
estate if you die within three years from the date of the ownership transfer.
State and local estate and inheritance tax consequences may also apply. In
addition, certain transfers of the Contract or Death Benefit, either during life
or at death, to individuals (or trusts for the benefit of such individuals) two
or more generations below that of the transferor may be subject to the federal
generation skipping transfer tax.
In addition, the Contract may be used in various arrangements, including
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, retiree medical benefit plans, and
others. The tax consequences of such plans may vary depending on the particular
facts and circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Contract in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax advisor regarding the tax attributes of the particular
arrangement.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premiums cannot be paid at a rate more rapidly than that allowed
by the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
Contract (which is equal to 100% of the "Guideline Single Premium" as defined in
Section 7702 of the Code) does not meet the specified computational rules for
the "seven-pay test" under Section 7702A(c). Therefore, the Contract will
generally be treated as a modified endowment contract for federal income tax
purposes. However, an exchange of a life insurance contract that is not a
modified endowment contract will not cause the new contract to be a modified
endowment contract if no additional premiums are paid. An exchange under Section
1035 of the Code of a life insurance contract that is a modified endowment
contract for a new life insurance contract will always cause the new contract to
be a modified endowment contract. A contract that is classified as a modified
endowment contract is
<PAGE>
24
generally eligible for the beneficial tax treatment accorded to life insurance.
Accordingly, the death benefit is excluded from income and increments in value
are not subject to current taxation. If a person receives any amount as a policy
loan from a modified endowment contract, or assigns or pledges any part of the
value of the contract, such amount is treated as a distribution. Unlike other
life insurance contracts, distributions received before the insured's death are
treated first as income (to the extent of gain) and then as recovered investment
in the contract. Any amounts that are taxable withdrawals will be subject to a
10% additional tax, with certain exceptions: (1) distributions made on or after
the date on which the taxpayer attains age 59 1/2; (2) distributions
attributable to the taxpayer's becoming disabled (within the meaning of Section
72(m)(7) of the Code); or (3) any distribution that is part of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the taxpayer or the joint lives (or joint
life expectancies) of such taxpayer and his or her beneficiary.
All modified endowment contracts that are issued within any calendar year to the
same Contract Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
DIVERSIFICATION REQUIREMENTS
For a Contract to be treated as a variable life insurance contract for federal
tax purposes, the investments in the Variable Account must be "adequately
diversified" in accordance with the standards provided in the Treasury
regulations. If the investments in the Variable Account are not adequately
diversified, then the Contract will not be treated as a variable life insurance
contract for federal income tax purposes and the Owner will be taxed on the
excess of the Contract Value over the investment in the Contract. Although the
Company does not have control over the Fund Portfolios or their investments, the
Company expects the Fund Portfolios to meet the diversification requirements.
OWNERSHIP TREATMENT
In connection with the issuance of the regulations on the adequate
diversification standards, the Department of the Treasury announced that the
regulations do not provide guidance concerning the extent to which contract
owners may direct their investments among sub-accounts of a Variable Account.
The Internal Revenue Service has previously stated in published rulings that a
variable contract owner will be considered the owner of separate account assets
if the owner possesses incidents of ownership in those assets such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, the Treasury Department announced that
guidance would be issued in the future regarding the extent that owners could
direct their investments among sub-accounts without being treated as owners of
the underlying assets of the Variable Account. As of the date of this
prospectus, no such guidance has been issued.
The ownership rights under this contract are similar to, but different in
certain respects from, those described by the Internal Revenue Service in
rulings in which it was determined that contract owners were not owners of
separate account assets. For example, the Owner of this Contract has the choice
of more investment options to which to allocate premiums and contract values,
and may be able to transfer among investment options more frequently than in
such rulings. These differences could result in the Contract Owner being treated
as the owner of the Variable Account. In those circumstances, income and gain
from the Variable Account assets would be includible in the Contract Owner's
gross income. In addition, the Company does not know what standards will be set
forth in the regulations or rulings which the Treasury Department has stated it
expects to issue. It is possible that Treasury Department's position, when
announced, may adversely affect the tax treatment of existing contracts. The
Company, therefore, reserves the right to modify the Contract as necessary to
attempt to prevent the Contract Owner from being considered the federal tax
owner of the assets of the Variable Account. However, the Company makes no
guarantee that such modification to the Contract will be successful.
POLICY LOAN INTEREST
Interest paid on loans against a Contract is generally not deductible.
ADDITIONAL INFORMATION ABOUT THE COMPANY
The Company also acts as the sponsor for three other of its separate accounts
that are registered investment companies: Glenbrook Life and Annuity Company
Variable Annuity Account, Glenbrook Life and Annuity Company Separate Account A,
and Glenbrook Life Multi-Manager Variable Account. The officers and employees of
the Company are covered by a fidelity bond in the amount of $5,000,000. No
person beneficially owns more than 5% of the outstanding voting stock of The
Allstate Corporation,
<PAGE>
25
of which the Company is an indirect wholly-owned subsidiary.
LEGAL PROCEEDINGS
From time to time the Company is involved in pending and threatened litigation
in the normal course of its business in which claims for monetary damages are
asserted. Management, after consultation with legal counsel, does not anticipate
the ultimate liability arising from such pending or threatened litigation to
have a material effect on the financial condition of the Company or the Variable
Account.
LEGAL MATTERS
Sutherland, Asbill & Brennan, L.L.P., of Washington, D.C., has provided advice
on certain legal matters relating to the federal securities laws applicable to
the issue and sale of the Contracts. All matters of Illinois law pertaining to
the Contracts, including the validity of the Contracts and the Company's right
to issue such Contracts under Illinois insurance law, have been passed upon by
Michael J. Velotta, General Counsel of the Company.
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 all of which reference is made for further
information concerning the Variable Account, the Funds, the Company, and the
Contracts.
EXPERTS
The financial statements and financial statement schedule of the Company
included in this Prospectus have been audited by Deloitte & Touche LLP, Two
Prudential Plaza, 180 North Stetson Avenue, Chicago, IL 60601-6779, independent
auditors, as stated in their report appearing herein, and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The hypothetical Contract illustrations included in this Prospectus have been
approved by Diana Montigney, FSA, and are included in reliance upon her opinion
as to their reasonableness.
FINANCIAL INFORMATION
Financial statements for the Variable Account are not included herein because,
as of the date of this Prospectus, sales of the Contracts had not commenced and
the Variable Account therefore had no assets. The financial statements for the
Company appearing immediately below should be considered as bearing only on the
ability of the Company to fulfill its obligations under the Contracts. They do
not relate to the investment performance of the Variable Account.
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
GLENBROOK LIFE AND ANNUITY COMPANY:
We have audited the accompanying Statements of Financial Position of Glenbrook
Life and Annuity Company (the "Company") as of December 31, 1996 and 1995, and
the related Statements of Operations, Shareholder's Equity and Cash Flows for
each of the three years in the period ended December 31, 1996. Our audits also
included Schedule IV -- Reinsurance. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Glenbrook Life and Annuity Company as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996 in conformity
with generally accepted accounting principles. Also, in our opinion, Schedule IV
- -- Reinsurance, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information set
forth therein.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 21, 1997
F-1
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
($ IN THOUSANDS) ------------ ------------
<S> <C> <C>
ASSETS
Investments
Fixed income securities, at fair value (amortized cost $46,925 and $44,112)............... $ 49,389 $ 48,815
Short-term................................................................................ 1,287 2,102
------------ ------------
Total investments......................................................................... 50,676 50,917
Reinsurance recoverable from Allstate Life Insurance Company................................ 2,060,419 1,340,925
Cash........................................................................................ -- 264
Net receivable from affiliates.............................................................. 19,206 --
Other assets................................................................................ 2,049 2,021
Separate Accounts........................................................................... 272,420 15,578
------------ ------------
Total assets.......................................................................... $ 2,404,770 $ 1,409,705
------------ ------------
------------ ------------
LIABILITIES
Contractholder funds........................................................................ $ 2,060,419 $ 1,340,925
Income taxes payable........................................................................ 653 1,637
Deferred income taxes....................................................................... 1,528 1,828
Net payable to affiliates................................................................... -- 255
Separate Accounts........................................................................... 260,290 5,048
------------ ------------
Total liabilities..................................................................... 2,322,890 1,349,693
------------ ------------
SHAREHOLDER'S EQUITY
Common stock, $500 par value, 4,200 shares authorized, issued, and outstanding.............. 2,100 2,100
Additional capital paid-in.................................................................. 69,641 49,641
Unrealized net capital gains................................................................ 2,790 3,357
Retained income............................................................................. 7,349 4,914
------------ ------------
Total shareholder's equity............................................................ 81,880 60,012
------------ ------------
Total liabilities and shareholder's equity............................................ $ 2,404,770 $ 1,409,705
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
F-2
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
($ IN THOUSANDS) --------- --------- ---------
<S> <C> <C> <C>
REVENUES
Net investment income................................................................... $ 3,774 $ 3,996 $ 2,017
Realized capital gains and losses....................................................... -- 459 --
--------- --------- ---------
INCOME BEFORE INCOME TAX EXPENSE........................................................ 3,774 4,455 2,017
INCOME TAX EXPENSE...................................................................... 1,339 1,576 723
--------- --------- ---------
NET INCOME.............................................................................. $ 2,435 $ 2,879 $ 1,294
--------- --------- ---------
--------- --------- ---------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
($ IN THOUSANDS) --------- --------- ---------
<S> <C> <C> <C>
COMMON STOCK........................................................................ $ 2,100 $ 2,100 $ 2,100
--------- --------- ---------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of year.......................................................... 49,641 49,641 9,641
Capital contributions............................................................... 20,000 -- 40,000
--------- --------- ---------
Balance, end of year................................................................ 69,641 49,641 49,641
--------- --------- ---------
UNREALIZED NET CAPITAL GAINS
Balance, beginning of year.......................................................... 3,357 (1,118) 693
Net (decrease) increase............................................................. (567) 4,475 (1,811)
--------- --------- ---------
Balance, end of year................................................................ 2,790 3,357 (1,118)
--------- --------- ---------
RETAINED INCOME
Balance, beginning of year.......................................................... 4,914 2,035 741
Net income.......................................................................... 2,435 2,879 1,294
--------- --------- ---------
Balance, end of year................................................................ 7,349 4,914 2,035
--------- --------- ---------
Total shareholder's equity...................................................... $ 81,880 $ 60,012 $ 52,658
--------- --------- ---------
--------- --------- ---------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
($ IN THOUSANDS) --------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income......................................................................... $ 2,435 $ 2,879 $ 1,294
Adjustments to reconcile net income to net cash provided by operating activities
Change in deferred income taxes.................................................. 4 (39) 71
Realized capital gains and losses................................................ -- (459) --
Changes in other operating assets and liabilities................................ (510) 1,217 (251)
--------- --------- ---------
Net cash provided by operating activities...................................... 1,929 3,598 1,114
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
Proceeds from sales.............................................................. -- 7,836 --
Investment collections........................................................... 2,891 1,568 649
Investment purchases............................................................. (5,667) (1,491) (42,729)
Participation in Separate Accounts................................................. (232) (10,069) --
Change in short-term investments, net.............................................. 815 (1,178) 667
--------- --------- ---------
Net cash used in investing activities.......................................... (2,193) (3,334) (41,413)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution............................................................... -- -- 40,000
--------- --------- ---------
Net cash provided by financing activities...................................... -- -- 40,000
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH.................................................... (264) 264 (299)
CASH AT BEGINNING OF YEAR.......................................................... 264 -- 299
--------- --------- ---------
CASH AT END OF YEAR................................................................ $ -- $ 264 $ --
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Noncash financing activity:
Capital contribution receivable from Allstate Life Insurance Company............. $ 20,000 $ -- $ --
--------- --------- ---------
--------- --------- ---------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
1. GENERAL
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Glenbrook Life and
Annuity Company (the "Company"), a wholly owned subsidiary of Allstate Life
Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"). On June 30, 1995, Sears, Roebuck and Co. ("Sears") distributed
its 80.3% ownership in the Corporation to Sears common shareholders through a
tax-free dividend (the "Distribution"). These financial statements have been
prepared in conformity with generally accepted accounting principles.
To conform with the 1996 presentation, certain items in the prior years'
financial statements and notes have been reclassified.
NATURE OF OPERATIONS
The Company markets interest-sensitive life insurance and various annuity
products in the United States through banks and broker-dealers. Annuities
include deferred annuities, such as variable annuities and fixed rate flexible
premium annuities. The Company has entered into exclusive distribution
arrangements with management investment companies to market its variable annuity
contracts.
Annuity and life insurance contracts issued by the Company are subject to
discretionary withdrawal or surrender by the contractholder, subject to
applicable surrender charges. These contracts are reinsured with ALIC (see Note
3), which invests premiums and deposits to create cash flows that will fund
future benefits and expenses. In order to support competitive credited rates,
ALIC adheres to a basic philosophy of matching assets with related liabilities
to limit interest rate risk, while maintaining adequate liquidity and a prudent
and diversified level of credit risk.
The Company monitors economic and regulatory developments which have the
potential to impact its business. There continues to be proposed federal
legislation and regulation which would allow banks greater participation in
securities and insurance businesses, which could present an increased level of
competition for sales of the Company's annuity contracts. Furthermore, the
market for deferred annuities and interest-sensitive life insurance is enhanced
by the tax incentives available under current law. Any legislative changes which
lessen these incentives are likely to negatively impact the market for these
products.
The Company is authorized to sell life and annuity products in all states except
New York, as well as the District of Columbia. The top geographic locations for
statutory premiums earned are Florida, California, Pennsylvania, Michigan,
Oregon, Texas and Georgia for the year ended December 31, 1996. No other
jurisdiction accounted for more than 5% of statutory premiums. All premiums and
contract charges are ceded to ALIC under reinsurance agreements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. All fixed
income securities are carried at fair value and may be sold prior to their
contractual maturity ("available for sale"). The difference between amortized
cost and fair value, net of deferred income taxes, is reflected as a component
of shareholder's equity. Provisions are recognized for declines in the value of
fixed income securities that are other than temporary. Such writedowns are
included in realized capital gains and losses.
Short-term investments are carried at cost which approximates fair value.
Investment income consists primarily of interest, which is recognized on an
accrual basis. Interest income on mortgage-backed securities is determined on
the effective yield method, based on the estimated principal repayments. Accrual
of income is suspended for fixed income securities that are in default or when
the receipt of interest payments is in doubt. Realized capital gains and losses
are determined on a specific identification basis.
RECOGNITION OF PREMIUM REVENUE AND CONTRACT CHARGES
Revenues on interest-sensitive life insurance contracts are comprised of
contract charges and fees, and are recognized when assessed against the
policyholder account balance. Revenues on annuities, which are considered
investment contracts,
F-6
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
include contract charges and fees for contract administration and surrenders.
These revenues are recognized when levied against the contract balances.
REINSURANCE
The Company and ALIC entered into a reinsurance agreement effective on June 5,
1992. All business issued subsequent to that date is ceded to ALIC. Life
insurance in force prior to that date is ceded to non-affiliated reinsurers.
Contract charges and credited interest are ceded and shown net of such cessions
in the statements of operations. Under the reinsurance agreement with ALIC, all
premiums and deposits are transferred to ALIC. The amounts shown in the
Company's statements of operations relate to the investment of those assets of
the Company that are not transferred to ALIC under the reinsurance agreement.
Reinsurance recoverable and contractholder funds are reported separately in the
statements of financial position. The Company continues to have primary
liability as the direct insurer for risks reinsured.
INCOME TAXES
The income tax provision is calculated under the liability method. Deferred tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities and the enacted tax
regulations. Deferred income taxes also arise from unrealized capital gains or
losses on fixed income securities carried at fair value.
SEPARATE ACCOUNTS
During 1995, the Company began issuing flexible premium deferred variable
annuity contracts, the assets and liabilities of which are legally segregated
and shown in the accompanying statements of financial position as assets and
liabilities of the Separate Accounts (Glenbrook Life and Annuity Company
Variable Annuity Account and Glenbrook Life and Annuity Company Separate Account
A), unit investment trusts registered with the Securities and Exchange
Commission.
Assets of the Separate Accounts, including the Company's ownership interest
("Participation"), are invested in funds of management investment companies and
are carried at fair value. Unrealized gains and losses on the Company's
Participation, net of deferred income taxes, is shown as a component of
shareholder's equity. Investment income and realized capital gains and losses
arising from the Participation are included in the Company's statements of
operations. At December 31, 1996 and 1995, the Participation amounted to $12,130
and $10,530, respectively. The Company intends to liquidate its Participation
during 1997.
Investment income and realized capital gains and losses of the Separate
Accounts, other than the portion related to the Participation, accrue directly
to the contractholders and, therefore, are not included in the accompanying
statements of operations. Revenues to the Company from the Separate Accounts
consist of contract maintenance fees, administrative fees and mortality and
expense risk charges, which are ceded to ALIC.
CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of individual or group contracts
that include an investment component, including most annuities and
interest-sensitive life insurance. Payments received are recorded as
interest-bearing liabilities. Contractholder funds are equal to deposits
received and interest credited to the benefit of the contractholder less
withdrawals, mortality charges and administrative expenses. Credited interest
rates on contractholder funds ranged from 3.15% to 7.45% for those contracts
with fixed interest rates and from 4.25% to 7.90% for those with flexible rates
during 1996.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-7
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
3. RELATED PARTY TRANSACTIONS
REINSURANCE
Contract charges ceded to ALIC under reinsurance agreements were $4,254, $1,523
and $409 in 1996, 1995, and 1994, respectively. Credited interest, policy
benefits and expenses ceded to ALIC amounted to $113,703, $71,905, and $26,177
in 1996, 1995, and 1994, respectively. Investment income earned on the assets
which support contractholder funds is not included in the Company's financial
statements as those assets are owned and managed by ALIC under the terms of the
reinsurance agreements.
BUSINESS OPERATIONS
The Company utilizes services and business facilities owned or leased, and
operated by AIC in conducting its business activities. The Company reimburses
AIC for the operating expenses incurred by AIC on behalf of the Company. The
cost to the Company is determined by various allocation methods and is primarily
related to the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $759, $348 and $271 in 1996, 1995 and 1994, respectively. Of these costs,
the Company retains investment related expenses. All other costs are ceded to
ALIC under reinsurance agreements.
LAUGHLIN GROUP
Laughlin Group, Inc. ("Laughlin") is an indirect wholly owned subsidiary of
ALIC. Laughlin markets certain of the Company's flexible premium deferred
variable annuity contracts and flexible premium deferred fixed annuity
contracts. Sales commissions paid to Laughlin and ceded to ALIC were $8,623
during 1996 and $3,439 subsequent to the Laughlin acquisition in September 1995.
The Company had a receivable of $850 from Laughlin at December 31, 1996, which
is included in net receivable from affiliates in the statements of financial
position.
4. INVESTMENTS
FAIR VALUES
The amortized cost, gross unrealized gains and losses and fair value for fixed
income securities are as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------------- FAIR
COST GAINS (LOSSES) VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1996
- -------------------------------------------------------------------
U.S. government and agencies....................................... $ 24,265 $ 1,722 $ (3) $ 25,984
Corporate.......................................................... 6,970 96 (15) 7,051
Mortgage-backed securities......................................... 15,690 664 -- 16,354
----------- --------- --- ---------
Total............................................................ $ 46,925 $ 2,482 $ (18) $ 49,389
----------- --------- --- ---------
----------- --------- --- ---------
AT DECEMBER 31, 1995
- -------------------------------------------------------------------
U.S. government and agencies....................................... $ 24,722 $ 3,470 $ -- $ 28,192
Corporate.......................................................... 1,304 120 -- 1,424
Mortgage-backed securities......................................... 18,086 1,113 -- 19,199
----------- --------- --- ---------
Total............................................................ $ 44,112 $ 4,703 $ -- $ 48,815
----------- --------- --- ---------
----------- --------- --- ---------
</TABLE>
F-8
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
4. INVESTMENTS (CONTINUED)
SCHEDULED MATURITIES
The scheduled maturities for fixed income securities at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- ---------
<S> <C> <C>
Due in one year or less................................................................ $ -- $ --
Due after one year through five years.................................................. -- --
Due after five years through ten years................................................. 22,395 23,325
Due after ten years.................................................................... 8,840 9,710
----------- ---------
31,235 33,035
Mortgage-backed securities............................................................. 15,690 16,354
----------- ---------
Total................................................................................ $ 46,925 $ 49,389
----------- ---------
----------- ---------
</TABLE>
Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.
NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed income securities.......................................................... $ 3,478 $ 3,850 $ 1,984
Short-term....................................................................... 126 113 48
Participation in Separate Accounts............................................... 232 69 --
--------- --------- ---------
Investment income, before expense.............................................. 3,836 4,032 2,032
Investment expense............................................................. 62 36 15
--------- --------- ---------
Net investment income........................................................ $ 3,774 $ 3,996 $ 2,017
--------- --------- ---------
--------- --------- ---------
</TABLE>
PROCEEDS FROM SALES OF FIXED INCOME SECURITIES AND REALIZED CAPITAL GAINS
There were no sales of investments in 1996 or 1994. In 1995, proceeds from sales
of investments in fixed income securities were $7,836. These sales resulted in
gross realized gains of $459 and related income taxes of $161.
UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital gains and losses on fixed income securities and the
Company's participation in the Separate Accounts included in shareholder's
equity at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR UNREALIZED
COST VALUE NET GAINS
----------- --------- -----------
<S> <C> <C> <C>
Fixed income securities.................................................... $ 46,925 $ 49,389 $ 2,464
Participation in Separate Accounts......................................... 10,301 12,130 1,829
----------- --------- -----------
Total.................................................................... $ 57,226 $ 61,519 4,293
----------- ---------
----------- ---------
Deferred income taxes...................................................... (1,503)
-----------
Unrealized net capital gains............................................... $ 2,790
-----------
-----------
</TABLE>
F-9
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
4. INVESTMENTS (CONTINUED)
CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed income securities........................................................ $ (2,239) $ 6,423 $ (2,786)
Participation in Separate Accounts............................................. 1,368 461 --
Deferred income taxes.......................................................... 304 (2,409) 975
--------- --------- ---------
Change in unrealized net capital gains and losses.............................. $ (567) $ 4,475 $ (1,811)
--------- --------- ---------
--------- --------- ---------
</TABLE>
SECURITIES ON DEPOSIT
At December 31, 1996, fixed income securities with a carrying value of $9,105
were on deposit with regulatory authorities as required by law.
5. FINANCIAL INSTRUMENTS
In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments are not necessarily indicative of the amounts the Company
might pay or receive in actual market transactions. Potential taxes and other
transaction costs have not been considered in estimating fair value. The
disclosures that follow do not reflect the fair value of the Company as a whole
since a number of the Company's assets (including reinsurance recoverable) and
liabilities (including deferred income taxes) are not considered financial
instruments and are not carried at fair value. Other assets and liabilities
considered financial instruments, including accrued investment income and cash,
are generally of a short-term nature. It is assumed that their carrying value
approximates fair value.
FINANCIAL ASSETS
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------
1996 1995
---------------------- --------------------
CARRYING CARRYING FAIR
VALUE FAIR VALUE VALUE VALUE
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Fixed income securities.................................................. $ 49,389 $ 49,389 $ 48,815 $ 48,815
Short-term investments................................................... 1,287 1,287 2,102 2,102
Separate Accounts........................................................ 272,420 272,420 15,578 15,578
</TABLE>
Fair values for fixed income securities are based on quoted market prices.
Short-term investments are highly liquid investments with maturities of less
than one year whose carrying value approximates fair value. Assets of the
Separate Accounts are carried in the statements of financial position at fair
value.
FINANCIAL LIABILITIES
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------
1996 1995
-------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Contractholder funds on investment contracts................... $ 2,059,642 $ 1,949,329 $ 1,340,925 $ 1,282,248
Separate Accounts.............................................. 260,290 260,290 5,048 5,048
</TABLE>
The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Reserves on investment contracts with no
stated maturities (single premium and flexible premium deferred annuities) are
valued at the account balance less surrender charges. The fair value of
immediate annuities and annuities without life contingencies with fixed terms is
estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Separate
Account liabilities are carried at the fair value of the underlying assets.
F-10
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
6. INCOME TAXES
The Company will file a separate federal income tax return and is not a party to
any tax sharing agreements in the current tax year.
Prior to the Distribution, the Corporation and all of its domestic subsidiaries
including the Company (the "Allstate Group") joined with Sears and its domestic
business units (the "Sears Group") in the filing of a consolidated federal
income tax return (the "Sears Tax Group") and were parties to a federal income
tax allocation agreement (the "Tax Sharing Agreement"). Under the Tax Sharing
Agreement, the Company, through the Corporation, paid to or received from the
Sears Group the amount, if any, by which the Sears Tax Group's federal income
tax liability was affected by virtue of inclusion of the Company in the
consolidated federal income tax return. Effectively, this resulted in the
Company's annual income tax provision being computed as if the Company filed a
separate return, except that items such as net operating losses, capital losses
or similar items, which might not be recognized in a separate return, were
allocated according to the Tax Sharing Agreement.
The Allstate Group and Sears Group have entered into an agreement which governs
their respective rights and obligations with respect to federal income taxes for
all periods prior to the Distribution ("Consolidated Tax Years"). The agreement
provides that all Consolidated Tax Years will continue to be governed by the Tax
Sharing Agreement with respect to the Company's federal income tax liability.
The Company will be eligible for inclusion in the consolidated federal income
tax return of the Corporation and its subsidiaries in 1997.
The components of the deferred income tax liability at December 31, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Unrealized net capital gains on fixed income securities.................................... $ 1,503 $ 1,807
Difference in tax bases of investments..................................................... 25 21
--------- ---------
Total deferred liability................................................................. $ 1,528 $ 1,828
--------- ---------
--------- ---------
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current............................................................................ $ 1,335 $ 1,615 $ 652
Deferred........................................................................... 4 (39) 71
--------- --------- ---------
Total income tax expense......................................................... $ 1,339 $ 1,576 $ 723
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company paid income taxes of $2,597, $874 and $57 in 1996, 1995 and 1994,
respectively. The Company had income taxes payable of $653 and $1,637 at
December 31, 1996 and 1995, respectively.
7. STATUTORY FINANCIAL INFORMATION
The following tables reconcile net income and shareholder's equity as reported
herein in conformity with generally accepted accounting principles with
statutory net income and capital and surplus, determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities:
<TABLE>
<CAPTION>
NET INCOME
-------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Balance per generally accepted accounting principles............................. $ 2,435 $ 2,879 $ 1,294
Deferred income taxes.......................................................... 4 (39) 71
Unrealized gain on participation in Separate Accounts.......................... 1,368 -- --
Non-admitted assets and statutory reserves..................................... (50) (171) (80)
--------- --------- ---------
Balance per statutory accounting practices....................................... $ 3,757 $ 2,669 $ 1,285
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-11
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
7. STATUTORY FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
--------------------
AT DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Balance per generally accepted accounting principles.................................... $ 81,880 $ 60,012
Deferred income taxes................................................................. 1,528 1,828
Unrealized gain/loss on fixed income securities....................................... (2,464) (4,703)
Non-admitted assets and statutory reserves............................................ (3,751) (1,419)
Other................................................................................. (1,499) (1,413)
--------- ---------
Balance per statutory accounting practices.............................................. $ 75,694 $ 54,305
--------- ---------
--------- ---------
</TABLE>
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting principles and practices prescribed or permitted by the Illinois
Department of Insurance. Prescribed statutory accounting practices include a
variety of publications of the National Association of Insurance Commissioners,
as well as state laws, regulations, and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a material effect on statutory surplus or risk-based
capital.
DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. The payment
of shareholder dividends by insurance companies without the prior approval of
the state insurance regulator is limited to formula amounts based on net income
and capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 1997 without prior approval of the Illinois Department of Insurance is
$7,359.
F-12
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
SCHEDULE IV -- REINSURANCE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS NET
AMOUNT CEDED AMOUNT
--------- --------- ---------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------------
Life insurance in force.............................................................. $ 2,436 $ 2,436 $ --
--------- --------- ---------
--------- --------- ---------
Premiums and contract charges:
Life and annuities................................................................. $ 4,254 $ 4,254 $ --
--------- --------- ---------
--------- --------- ---------
<CAPTION>
GROSS NET
AMOUNT CEDED AMOUNT
--------- --------- ---------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------------
Life insurance in force.............................................................. $ 1,250 $ 1,250 $ --
--------- --------- ---------
--------- --------- ---------
Premiums and contract charges:
Life and annuities................................................................. $ 6,571 $ 6,571 $ --
--------- --------- ---------
--------- --------- ---------
<CAPTION>
GROSS NET
AMOUNT CEDED AMOUNT
--------- --------- ---------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
- -------------------------------------------------------------------------------------
Life insurance in force.............................................................. $ 1,250 $ 1,250 $ --
--------- --------- ---------
--------- --------- ---------
Premiums and contract charges:
Life and annuities................................................................. $ 409 $ 409 $ --
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-13
<PAGE>
APPENDIX A
ILLUSTRATIONS OF ACCOUNT VALUES, CASH SURRENDER VALUES,
DEATH BENEFITS, AND ACCUMULATED PREMIUMS
The tables in Appendix A illustrate the way the Contracts operate. They show how
the Death Benefit, Account Value and Cash Surrender Value could vary over an
extended period of time assuming hypothetical gross rates of return (I.E.,
investment income and capital gains and losses, realized or unrealized) for the
Variable Account equal to annual rates of 0%, 6%, and 12%. The tables are based
on an initial premium of $10,000 and also show the initial Death Benefit based
on that premium. The insureds are assumed to be in the standard underwriting
class. Values are first given based on current Contract charges and then based
on guaranteed Contract charges. (See "Deductions and Charges.") These tables may
assist in the comparison of Death Benefits, Account Values and Cash Surrender
Values for the Contracts with those under other variable life insurance
contracts that may be issued by other companies.
Death Benefits, Account Values and Cash Surrender Values for a Contract would be
different from the amounts shown if the actual gross rates of return averaged
0%, 6% or 12%, but varied above and below that average for the period, if the
initial premium were paid in another amount, or additional payments were made.
They would also be different depending on the allocation of Account Value among
the Variable Account's Variable Sub-Accounts, or if the actual gross rate of
return for all Variable Sub-Accounts averaged 0%, 6% or 12%, but varied above or
below that average for individual Variable Sub-Accounts. They would also differ
if any Contract loan or partial withdrawal were made during the period of time
illustrated, or if the insured were in another risk class.
The Death Benefits, Account Values and Cash Surrender Values shown in the tables
reflect the fact that: a Monthly Deduction Amount (consisting of a cost of
insurance charge, tax expense charge, and an administrative expense charge) is
deducted from Account Value each Monthly Activity Date and that an Annual
Maintenance Fee of $35 is deducted on each Contract Anniversary from all
Variable Sub-Accounts to which Account Value is allocated. The values in the
tables also reflect a deduction from the Variable Account of a daily charge
equal to an annual rate of 0.90% for the mortality and expense risk charge. The
Cash Surrender Value shown in the tables reflect the fact that a Withdrawal
Charge is imposed on withdrawals in excess of the Free Withdrawal Amount. (See
"Deductions and Charges.") The amounts shown in the table are based on an
average of the investment advisory fees and operating expenses incurred by the
Portfolios, at an annual rate of .85% of the average daily net assets of the
Portfolios. (See "Charges and Expenses.")
Taking account of the average investment advisory fee and operating expenses of
the Portfolios, the gross annual rates of return of 0%, 6% and 12% correspond to
net investment experience at constant annual rates of: (-.85%, 5.15%, and
11.15%,) respectively.
The hypothetical rates of return shown in the tables do not reflect any tax
charges attributable to the Variable Account since no such charges are currently
made. If any such charges are imposed in the future, the gross annual rate of
return would have to exceed the rates shown by an amount sufficient to cover the
tax charges, in order to produce the Account Values, Cash Surrender Values, and
Death Benefits illustrated.
The second column of each table shows the amount that would accumulate if the
initial premium of $10,000 were invested to earn interest, after taxes, of 5%
per year, compounded annually.
Glenbrook Life will furnish upon request a personalized illustration reflecting
the proposed insured's age, sex, and underwriting classification. Where
applicable, Glenbrook Life will also furnish upon request an illustration for a
Contract that is not affected by the sex of the insured.
A-1
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $39,998
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,838 9,988 39,998 10,762 9,912 39,998
2 11,025 11,749 10,921 39,998 11,587 10,758 39,998
3 11,576 12,740 11,933 39,998 12,483 11,676 39,998
4 12,155 13,817 13,074 39,998 13,457 12,713 39,998
5 12,763 14,989 14,351 39,998 14,515 13,878 39,998
6 13,401 16,262 15,731 39,998 15,667 15,136 39,998
7 14,071 17,647 17,222 39,998 16,920 16,495 39,998
8 14,775 19,153 18,834 39,998 18,286 17,967 39,998
9 15,513 20,790 20,577 39,998 19,775 19,563 39,998
10 16,289 22,570 22,570 39,998 21,402 21,402 39,998
11 17,103 24,629 24,629 39,998 23,276 23,276 39,998
12 17,959 26,878 26,878 39,998 25,342 25,342 39,998
13 18,856 29,337 29,337 41,658 27,623 27,623 39,998
14 19,799 32,027 32,027 44,197 30,144 30,144 41,599
15 20,789 34,971 34,971 46,862 32,914 32,914 44,105
16 21,829 38,198 38,198 49,657 35,949 35,949 46,733
17 22,920 41,721 41,721 53,403 39,262 39,262 50,256
18 24,066 45,569 45,569 57,417 42,881 42,881 54,030
19 25,270 49,771 49,771 61,715 46,833 46,833 58,073
20 26,533 54,361 54,361 66,320 51,150 51,150 62,403
25 33,864 84,510 84,510 98,032 79,411 79,411 92,117
35 55,160 206,520 206,520 216,846 193,809 193,809 203,499
</TABLE>
- ------------
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-2
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $39,998
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,251 9,401 39,998 10,174 9,324 39,998
2 11,025 10,509 9,681 39,998 10,343 9,514 39,998
3 11,576 10,775 9,968 39,998 10,507 9,699 39,998
4 12,155 11,048 10,305 39,998 10,664 9,920 39,998
5 12,763 11,330 10,692 39,998 10,813 10,176 39,998
6 13,401 11,619 11,087 39,998 10,952 10,421 39,998
7 14,071 11,916 11,491 39,998 11,079 10,654 39,998
8 14,775 12,222 11,903 39,998 11,190 10,871 39,998
9 15,513 12,537 12,324 39,998 11,283 11,070 39,998
10 16,289 12,861 12,861 39,998 11,354 11,354 39,998
11 17,103 13,260 13,260 39,998 11,447 11,447 39,998
12 17,959 13,673 13,673 39,998 11,515 11,515 39,998
13 18,856 14,099 14,099 39,998 11,556 11,556 39,998
14 19,799 14,541 14,541 39,998 11,565 11,565 39,998
15 20,789 14,997 14,997 39,998 11,539 11,539 39,998
16 21,829 15,468 15,468 39,998 11,471 11,471 39,998
17 22,920 15,956 15,956 39,998 11,353 11,353 39,998
18 24,066 16,459 16,459 39,998 11,176 11,176 39,998
19 25,270 16,980 16,980 39,998 10,929 10,929 39,998
20 26,533 17,519 17,519 39,998 10,602 10,602 39,998
25 33,864 20,496 20,496 39,998 7,263 7,263 39,998
35 55,160 28,163 28,163 39,998 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-3
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $39,998
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.85% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,664 8,814 39,998 9,587 8,737 39,998
2 11,025 9,338 8,510 39,998 9,169 8,340 39,998
3 11,576 9,023 8,215 39,998 8,747 7,940 39,998
4 12,155 8,716 7,972 39,998 8,319 7,575 39,998
5 12,763 8,419 7,781 39,998 7,883 7,246 39,998
6 13,401 8,131 7,599 39,998 7,438 6,906 39,998
7 14,071 7,851 7,426 39,998 6,979 6,554 39,998
8 14,775 7,580 7,261 39,998 6,505 6,186 39,998
9 15,513 7,317 7,104 39,998 6,012 5,799 39,998
10 16,289 7,062 7,062 39,998 5,496 5,496 39,998
11 17,103 6,849 6,849 39,998 4,975 4,975 39,998
12 17,959 6,641 6,641 39,998 4,424 4,424 39,998
13 18,856 6,439 6,439 39,998 3,839 3,839 39,998
14 19,799 6,241 6,241 39,998 3,217 3,217 39,998
15 20,789 6,049 6,049 39,998 2,552 2,552 39,998
16 21,829 5,861 5,861 39,998 1,839 1,839 39,998
17 22,920 5,679 5,679 39,998 1,068 1,068 39,998
18 24,066 5,500 5,500 39,998 230 230 39,998
19 25,270 5,327 5,327 39,998 * * *
20 26,533 5,157 5,157 39,998 * * *
25 33,864 4,373 4,373 39,998 * * *
35 55,160 3,074 3,074 39,998 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-4
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,138
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,838 9,988 33,138 10,733 9,883 33,138
2 11,025 11,749 10,921 33,138 11,531 10,702 33,138
3 11,576 12,740 11,933 33,138 12,401 11,593 33,138
4 12,155 13,817 13,074 33,138 13,350 12,607 33,138
5 12,763 14,989 14,351 33,138 14,389 13,751 33,138
6 13,401 16,262 15,731 33,138 15,524 14,993 33,138
7 14,071 17,647 17,222 33,138 16,766 16,341 33,138
8 14,775 19,153 18,834 33,138 18,124 17,805 33,138
9 15,513 20,790 20,577 33,138 19,609 19,396 33,138
10 16,289 22,570 22,570 33,138 21,238 21,238 33,138
11 17,103 24,629 24,629 33,138 23,123 23,123 33,138
12 17,959 26,896 26,896 33,138 25,212 25,212 33,138
13 18,856 29,414 29,414 34,708 27,537 27,537 33,138
14 19,799 32,177 32,177 37,647 30,117 30,117 35,237
15 20,789 35,201 35,201 40,833 32,945 32,945 38,217
16 21,829 38,509 38,509 44,285 36,039 36,039 41,445
17 22,920 42,138 42,138 47,616 39,434 39,434 44,560
18 24,066 46,121 46,121 51,194 43,159 43,159 47,906
19 25,270 50,497 50,497 55,041 47,251 47,251 51,504
20 26,533 55,310 55,310 59,182 51,753 51,753 55,376
25 33,864 87,252 87,252 91,614 81,626 81,626 85,708
35 55,160 212,454 212,454 223,077 196,690 196,690 206,525
</TABLE>
- ------------
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAYBE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-5
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,138
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,251 9,401 33,138 10,146 9,296 33,138
2 11,025 10,509 9,681 33,138 10,287 9,458 33,138
3 11,576 10,775 9,968 33,138 10,424 9,616 33,138
4 12,155 11,048 10,305 33,138 10,556 9,813 33,138
5 12,763 11,330 10,692 33,138 10,683 10,046 33,138
6 13,401 11,619 11,087 33,138 10,802 10,270 33,138
7 14,071 11,916 11,491 33,138 10,909 10,484 33,138
8 14,775 12,222 11,903 33,138 11,000 10,681 33,138
9 15,513 12,537 12,324 33,138 11,069 10,856 33,138
10 16,289 12,861 12,861 33,138 11,112 11,112 33,138
11 17,103 13,260 13,260 33,138 11,172 11,172 33,138
12 17,959 13,673 13,673 33,138 11,204 11,204 33,138
13 18,856 14,099 14,099 33,138 11,205 11,205 33,138
14 19,799 14,541 14,541 33,138 11,173 11,173 33,138
15 20,789 14,997 14,997 33,138 11,103 11,103 33,138
16 21,829 15,468 15,468 33,138 10,984 10,984 33,138
17 22,920 15,956 15,956 33,138 10,803 10,803 33,138
18 24,066 16,459 16,459 33,138 10,542 10,542 33,138
19 25,270 16,980 16,980 33,138 10,180 10,180 33,138
20 26,533 17,519 17,519 33,138 9,694 9,694 33,138
25 33,864 20,496 20,496 33,138 4,372 4,372 33,138
35 55,160 28,163 28,163 33,138 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-6
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,138
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.85% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,664 8,814 33,138 9,559 8,709 33,138
2 11,025 9,338 8,510 33,138 9,114 8,285 33,138
3 11,576 9,023 8,215 33,138 8,665 7,857 33,138
4 12,155 8,716 7,972 33,138 8,212 7,468 33,138
5 12,763 8,419 7,781 33,138 7,754 7,116 33,138
6 13,401 8,131 7,599 33,138 7,287 6,756 33,138
7 14,071 7,851 7,426 33,138 6,808 6,383 33,138
8 14,775 7,580 7,261 33,138 6,310 5,991 33,138
9 15,513 7,317 7,104 33,138 5,787 5,575 33,138
10 16,289 7,062 7,062 33,138 5,236 5,236 33,138
11 17,103 6,849 6,849 33,138 4,671 4,671 33,138
12 17,959 6,641 6,641 33,138 4,068 4,068 33,138
13 18,856 6,439 6,439 33,138 3,426 3,426 33,138
14 19,799 6,241 6,241 33,138 2,742 2,742 33,138
15 20,789 6,049 6,049 33,138 2,007 2,007 33,138
16 21,829 5,861 5,861 33,138 1,211 1,211 33,138
17 22,920 5,679 5,679 33,138 336 336 33,138
18 24,066 5,500 5,500 33,138 * * *
19 25,270 5,327 5,327 33,138 * * *
20 26,533 5,157 5,157 33,138 * * *
25 33,864 4,373 4,373 33,138 * * *
35 55,160 3,074 3,074 33,138 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-7
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,314
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,838 9,988 19,314 10,657 9,807 19,314
2 11,025 11,749 10,921 19,314 11,373 10,544 19,314
3 11,576 12,740 11,933 19,314 12,158 11,351 19,314
4 12,155 13,817 13,074 19,314 13,025 12,281 19,314
5 12,763 14,989 14,351 19,314 13,987 13,349 19,314
6 13,401 16,262 15,731 19,314 15,061 14,530 19,314
7 14,071 17,652 17,227 19,946 16,271 15,846 19,314
8 14,775 19,177 18,858 21,286 17,644 17,325 19,584
9 15,513 20,848 20,635 22,724 19,178 18,965 20,904
10 16,289 22,683 22,683 24,271 20,863 20,863 22,324
11 17,103 24,805 24,805 26,046 22,813 22,813 23,953
12 17,959 27,121 27,121 28,477 24,939 24,939 26,186
13 18,856 29,645 29,645 31,128 27,258 27,258 28,621
14 19,799 32,397 32,397 34,017 29,785 29,785 31,274
15 20,789 35,394 35,394 37,164 32,538 32,538 34,164
16 21,829 38,656 38,656 40,589 35,533 35,533 37,310
17 22,920 42,207 42,207 44,317 38,790 38,790 40,730
18 24,066 46,087 46,087 48,391 42,327 42,327 44,443
19 25,270 50,327 50,327 52,843 46,163 46,163 48,471
20 26,533 54,960 54,960 57,708 50,319 50,319 52,835
25 33,864 85,429 85,429 89,700 76,721 76,721 80,557
35 55,160 208,081 208,081 210,161 183,284 183,284 185,117
</TABLE>
- ------------
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-8
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,314
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,251 9,401 19,314 10,067 9,217 19,314
2 11,025 10,509 9,681 19,314 10,114 9,285 19,314
3 11,576 10,775 9,968 19,314 10,139 9,331 19,314
4 12,155 11,048 10,305 19,314 10,138 9,394 19,314
5 12,763 11,330 10,692 19,314 10,107 9,470 19,314
6 13,401 11,619 11,087 19,314 10,040 9,509 19,314
7 14,071 11,916 11,491 19,314 9,929 9,504 19,314
8 14,775 12,222 11,903 19,314 9,762 9,444 19,314
9 15,513 12,537 12,324 19,314 9,528 9,316 19,314
10 16,289 12,861 12,861 19,314 9,212 9,212 19,314
11 17,103 13,260 13,260 19,314 8,836 8,836 19,314
12 17,959 13,673 13,673 19,314 8,346 8,346 19,314
13 18,856 14,099 14,099 19,314 7,718 7,718 19,314
14 19,799 14,541 14,541 19,314 6,924 6,924 19,314
15 20,789 14,997 14,997 19,314 5,921 5,921 19,314
16 21,829 15,468 15,468 19,314 4,654 4,654 19,314
17 22,920 15,956 15,956 19,314 3,044 3,044 19,314
18 24,066 16,459 16,459 19,314 982 982 19,314
19 25,270 16,980 16,980 19,314 * * *
20 26,533 17,519 17,519 19,314 * * *
25 33,864 20,496 20,496 21,521 * * *
35 55,160 28,326 28,326 28,609 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-9
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,314
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.85% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,664 8,814 19,314 9,477 8,627 19,314
2 11,025 9,338 8,510 19,314 8,927 8,098 19,314
3 11,576 9,023 8,215 19,314 8,346 7,538 19,314
4 12,155 8,716 7,972 19,314 7,728 6,984 19,314
5 12,763 8,419 7,781 19,314 7,066 6,429 19,314
6 13,401 8,131 7,599 19,314 6,350 5,819 19,314
7 14,071 7,851 7,426 19,314 5,567 5,142 19,314
8 14,775 7,580 7,261 19,314 4,701 4,383 19,314
9 15,513 7,317 7,104 19,314 3,733 3,520 19,314
10 16,289 7,062 7,062 19,314 2,640 2,640 19,314
11 17,103 6,849 6,849 19,314 1,407 1,407 19,314
12 17,959 6,641 6,641 19,314 * * *
13 18,856 6,439 6,439 19,314 * * *
14 19,799 6,241 6,241 19,314 * * *
15 20,789 6,049 6,049 19,314 * * *
16 21,829 5,861 5,861 19,314 * * *
17 22,920 5,679 5,679 19,314 * * *
18 24,066 5,500 5,500 19,314 * * *
19 25,270 5,327 5,327 19,314 * * *
20 26,533 5,157 5,157 19,314 * * *
25 33,864 4,373 4,373 19,314 * * *
35 55,160 3,074 3,074 19,314 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-10
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $43,779
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,906 10,056 43,779 10,906 10,056 43,779
2 11,025 11,892 11,063 43,779 11,892 11,063 43,779
3 11,576 12,964 12,156 43,779 12,964 12,156 43,779
4 12,155 14,129 13,385 43,779 14,129 13,385 43,779
5 12,763 15,396 14,759 43,779 15,396 14,759 43,779
6 13,401 16,774 16,243 43,779 16,774 16,243 43,779
7 14,071 18,272 17,847 43,779 18,272 17,847 43,779
8 14,775 19,901 19,582 43,779 19,901 19,582 43,779
9 15,513 21,672 21,460 43,779 21,672 21,460 43,779
10 16,289 23,599 23,599 43,779 23,599 23,599 43,779
11 17,103 25,801 25,801 43,779 25,801 25,801 43,779
12 17,959 28,213 28,213 43,779 28,213 28,213 43,779
13 18,856 30,860 30,860 43,779 30,860 30,860 43,779
14 19,799 33,773 33,773 43,779 33,773 33,773 43,779
15 20,789 36,985 36,985 43,779 36,985 36,985 43,779
16 21,829 40,529 40,529 46,608 40,529 40,529 46,608
17 22,920 44,417 44,417 50,191 44,417 44,417 50,191
18 24,066 48,680 48,680 54,035 48,680 48,680 54,035
19 25,270 53,359 53,359 58,161 53,359 53,359 58,161
20 26,533 58,497 58,497 62,592 58,497 58,497 62,592
25 33,864 92,558 92,558 97,186 92,558 92,558 97,186
35 55,160 225,857 225,857 237,150 223,672 223,672 234,855
</TABLE>
- ------------
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-11
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $43,779
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,316 9,466 43,779 10,316 9,466 43,779
2 11,025 10,636 9,807 43,779 10,636 9,807 43,779
3 11,576 10,961 10,153 43,779 10,961 10,153 43,779
4 12,155 11,288 10,544 43,779 11,288 10,544 43,779
5 12,763 11,618 10,980 43,779 11,618 10,980 43,779
6 13,401 11,948 11,417 43,779 11,948 11,417 43,779
7 14,071 12,276 11,851 43,779 12,276 11,851 43,779
8 14,775 12,600 12,281 43,779 12,600 12,281 43,779
9 15,513 12,925 12,713 43,779 12,916 12,703 43,779
10 16,289 13,260 13,260 43,779 13,219 13,219 43,779
11 17,103 13,673 13,673 43,779 13,561 13,561 43,779
12 17,959 14,100 14,100 43,779 13,885 13,885 43,779
13 18,856 14,541 14,541 43,779 14,188 14,188 43,779
14 19,799 14,997 14,997 43,779 14,464 14,464 43,779
15 20,789 15,469 15,469 43,779 14,706 14,706 43,779
16 21,829 15,956 15,956 43,779 14,904 14,904 43,779
17 22,920 16,460 16,460 43,779 15,047 15,047 43,779
18 24,066 16,981 16,981 43,779 15,117 15,117 43,779
19 25,270 17,519 17,519 43,779 15,094 15,094 43,779
20 26,533 18,076 18,076 43,779 14,954 14,954 43,779
25 33,864 21,154 21,154 43,779 11,427 11,427 43,779
35 55,160 29,080 29,080 43,779 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-12
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $43,779
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.85% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,725 8,875 43,779 9,725 8,875 43,779
2 11,025 9,450 8,621 43,779 9,450 8,621 43,779
3 11,576 9,174 8,367 43,779 9,174 8,367 43,779
4 12,155 8,896 8,152 43,779 8,896 8,152 43,779
5 12,763 8,614 7,976 43,779 8,614 7,976 43,779
6 13,401 8,326 7,795 43,779 8,326 7,795 43,779
7 14,071 8,040 7,615 43,779 8,029 7,604 43,779
8 14,775 7,764 7,445 43,779 7,720 7,402 43,779
9 15,513 7,495 7,282 43,779 7,395 7,183 43,779
10 16,289 7,235 7,235 43,779 7,049 7,049 43,779
11 17,103 7,017 7,017 43,779 6,704 6,704 43,779
12 17,959 6,805 6,805 43,779 6,325 6,325 43,779
13 18,856 6,599 6,599 43,779 5,907 5,907 43,779
14 19,799 6,397 6,397 43,779 5,442 5,442 43,779
15 20,789 6,201 6,201 43,779 4,923 4,923 43,779
16 21,829 6,010 6,010 43,779 4,337 4,337 43,779
17 22,920 5,823 5,823 43,779 3,667 3,667 43,779
18 24,066 5,641 5,641 43,779 2,891 2,891 43,779
19 25,270 5,464 5,464 43,779 1,982 1,982 43,779
20 26,533 5,291 5,291 43,779 910 910 43,779
25 33,864 4,490 4,490 43,779 * * *
35 55,160 3,166 3,166 43,779 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-13
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,688
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,902 10,052 27,688 10,902 10,052 27,688
2 11,025 11,873 11,044 27,688 11,873 11,044 27,688
3 11,576 12,919 12,112 27,688 12,919 12,112 27,688
4 12,155 14,047 13,304 27,688 14,047 13,304 27,688
5 12,763 15,266 14,628 27,688 15,266 14,628 27,688
6 13,401 16,584 16,053 27,688 16,584 16,053 27,688
7 14,071 18,012 17,587 27,688 18,012 17,587 27,688
8 14,775 19,565 19,247 27,688 19,565 19,247 27,688
9 15,513 21,260 21,047 27,688 21,260 21,047 27,688
10 16,289 23,120 23,120 27,688 23,120 23,120 27,688
11 17,103 25,280 25,280 27,688 25,280 25,280 27,688
12 17,959 27,693 27,693 29,077 27,693 27,693 29,077
13 18,856 30,341 30,341 31,858 30,341 30,341 31,858
14 19,799 33,236 33,236 34,897 33,236 33,236 34,897
15 20,789 36,397 36,397 38,216 36,397 36,397 38,216
16 21,829 39,845 39,845 41,838 39,845 39,845 41,838
17 22,920 43,604 43,604 45,784 43,604 43,604 45,784
18 24,066 47,696 47,696 50,080 47,696 47,696 50,080
19 25,270 52,143 52,143 54,750 52,143 52,143 54,750
20 26,533 56,970 56,970 59,819 56,970 56,970 59,819
25 33,864 88,561 88,561 92,989 87,744 87,744 92,131
35 55,160 215,853 215,853 218,012 210,524 210,524 212,630
</TABLE>
- ------------
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-14
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,688
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS ----------------------------------- -----------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,311 9,461 27,688 10,311 9,461 27,688
2 11,025 10,617 9,788 27,688 10,617 9,788 27,688
3 11,576 10,914 10,107 27,688 10,914 10,107 27,688
4 12,155 11,201 10,458 27,688 11,201 10,458 27,688
5 12,763 11,487 10,849 27,688 11,474 10,837 27,688
6 13,401 11,781 11,249 27,688 11,728 11,197 27,688
7 14,071 12,083 11,658 27,688 11,958 11,533 27,688
8 14,775 12,393 12,075 27,688 12,155 11,836 27,688
9 15,513 12,713 12,500 27,688 12,310 12,098 27,688
10 16,289 13,042 13,042 27,688 12,413 12,413 27,688
11 17,103 13,447 13,447 27,688 12,503 12,503 27,688
12 17,959 13,866 13,866 27,688 12,518 12,518 27,688
13 18,856 14,300 14,300 27,688 12,443 12,443 27,688
14 19,799 14,748 14,748 27,688 12,262 12,262 27,688
15 20,789 15,211 15,211 27,688 11,951 11,951 27,688
16 21,829 15,689 15,689 27,688 11,477 11,477 27,688
17 22,920 16,184 16,184 27,688 10,796 10,796 27,688
18 24,066 16,696 16,696 27,688 9,848 9,848 27,688
19 25,270 17,225 17,225 27,688 8,552 8,552 27,688
20 26,533 17,771 17,771 27,688 6,802 6,802 27,688
25 33,864 20,795 20,795 27,688 * * *
35 55,160 28,579 28,579 28,864 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAY BE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACT AVERAGES 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-15
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,688
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.85% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,720 8,870 27,688 9,720 8,870 27,688
2 11,025 9,431 8,602 27,688 9,431 8,602 27,688
3 11,576 9,127 8,320 27,688 9,127 8,320 27,688
4 12,155 8,818 8,074 27,688 8,806 8,062 27,688
5 12,763 8,517 7,880 27,688 8,463 7,825 27,688
6 13,401 8,226 7,695 27,688 8,091 7,560 27,688
7 14,071 7,944 7,519 27,688 7,683 7,258 27,688
8 14,775 7,670 7,351 27,688 7,227 6,908 27,688
9 15,513 7,404 7,191 27,688 6,711 6,498 27,688
10 16,289 7,146 7,146 27,688 6,118 6,118 27,688
11 17,103 6,931 6,931 27,688 5,453 5,453 27,688
12 17,959 6,721 6,721 27,688 4,670 4,670 27,688
13 18,856 6,517 6,517 27,688 3,745 3,745 27,688
14 19,799 6,317 6,317 27,688 2,651 2,651 27,688
15 20,789 6,123 6,123 27,688 1,351 1,351 27,688
16 21,829 5,934 5,934 27,688 * * *
17 22,920 5,749 5,749 27,688 * * *
18 24,066 5,569 5,569 27,688 * * *
19 25,270 5,394 5,394 27,688 * * *
20 26,533 5,223 5,223 27,688 * * *
25 33,864 4,430 4,430 27,688 * * *
35 55,160 3,119 3,119 27,688 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL RESULTS MAYBE MORE OR LESS THAN THOSE
SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT
WILL BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RETURN APPLICABLE TO
THE CONTRACTA VERAGES 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT, ACCOUNT
VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WILL ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THE RATES OF RETURN OF THE SEPARATE ACCOUNT.NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A-16
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $39,998
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.15% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,838 9,988 39,998 10,762 9,912 39,998
2 11,025 11,749 10,921 39,998 11,587 10,758 39,998
3 11,576 12,740 11,933 39,998 12,483 11,676 39,998
4 12,155 13,817 13,074 39,998 13,457 12,713 39,998
5 12,763 14,989 14,351 39,998 14,515 13,878 39,998
6 13,401 16,262 15,731 39,998 15,667 15,136 39,998
7 14,071 17,647 17,222 39,998 16,920 16,495 39,998
8 14,775 19,153 18,834 39,998 18,286 17,967 39,998
9 15,513 20,790 20,577 39,998 19,775 19,563 39,998
10 16,289 22,570 22,570 39,998 21,402 21,402 39,998
11 17,103 24,629 24,629 39,998 23,276 23,276 39,998
12 17,959 26,878 26,878 39,998 25,342 25,342 39,998
13 18,856 29,337 29,337 41,658 27,623 27,623 39,998
14 19,799 32,027 32,027 44,197 30,144 30,144 41,599
15 20,789 34,971 34,971 46,862 32,914 32,914 44,105
16 21,829 38,198 38,198 49,657 35,949 35,949 46,733
17 22,920 41,721 41,721 53,403 39,262 39,262 50,256
18 24,066 45,569 45,569 57,417 42,881 42,881 54,030
19 25,270 49,771 49,771 61,715 46,833 46,833 58,073
20 26,533 54,361 54,361 66,320 51,150 51,150 62,403
25 33,864 84,510 84,510 98,032 79,411 79,411 92,117
35 55,160 206,520 206,520 216,846 193,809 193,809 203,499
</TABLE>
- ------------
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULDNOTBE DEEMEDA REPRESENTATION OF PAST
OR FUTURE INVESTMENT RESULTS.ACTUAL RESULTSMAYBE MORE OR LESS THAN THOSE
SHOWN.THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUEFOR A CONTRACT
WILLBEDIFFERENTFROM THOSE SHOWN IF THE ACTUAL INVESTMENTRETURN APPLICABLETO THE
CONTRACTAVERAGES 12% OVERA PERIODOFYEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS.THE DEATH BENEFIT, ACCOUNT VALUE,
ANDCASHSURRENDER VALUE FOR ACONTRACTWILLALSOBE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THERATES OF RETURNOF THESEPARATE ACCOUNT.NO REPRESENTATION CAN BE MADE THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-4
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
JOINT LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,688
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.85% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES(1) GUARANTEED CHARGES(2)
PREMIUMS --------------------------------- ---------------------------------
ACCUMULATED AT CASH CASH
END OF 5% INTEREST PER ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
CONTRACT YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- --------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,720 8,870 27,688 9,720 8,870 27,688
2 11,025 9,431 8,602 27,688 9,431 8,602 27,688
3 11,576 9,127 8,320 27,688 9,127 8,320 27,688
4 12,155 8,818 8,074 27,688 8,806 8,062 27,688
5 12,763 8,517 7,880 27,688 8,463 7,825 27,688
6 13,401 8,226 7,695 27,688 8,091 7,560 27,688
7 14,071 7,944 7,519 27,688 7,683 7,258 27,688
8 14,775 7,670 7,351 27,688 7,227 6,908 27,688
9 15,513 7,404 7,191 27,688 6,711 6,498 27,688
10 16,289 7,146 7,146 27,688 6,118 6,118 27,688
11 17,103 6,931 6,931 27,688 5,453 5,453 27,688
12 17,959 6,721 6,721 27,688 4,670 4,670 27,688
13 18,856 6,517 6,517 27,688 3,745 3,745 27,688
14 19,799 6,317 6,317 27,688 2,651 2,651 27,688
15 20,789 6,123 6,123 27,688 1,351 1,351 27,688
16 21,829 5,934 5,934 27,688 * * *
17 22,920 5,749 5,749 27,688 * * *
18 24,066 5,569 5,569 27,688 * * *
19 25,270 5,394 5,394 27,688 * * *
20 26,533 5,223 5,223 27,688 * * *
25 33,864 4,430 4,430 27,688 * * *
35 55,160 3,119 3,119 27,688 * * *
</TABLE>
- ------------
* When the account value is $0 or less, the Death Benefit is only payable if
subsequent premiums are paid to keep the policy in force.
(1) Values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
(2) Values reflect investment results using guaranteed cost of insurance rates,
administrative fees, and Mortality and Expense Risk Rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULDNOTBE DEEMEDA REPRESENTATION OF PAST
OR FUTURE INVESTMENT RESULTS.ACTUAL RESULTSMAYBE MORE OR LESS THAN THOSE
SHOWN.THE DEATH BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUEFOR A CONTRACT
WILLBEDIFFERENTFROM THOSE SHOWN IF THE ACTUAL INVESTMENTRETURN APPLICABLETO THE
CONTRACTAVERAGES 0% OVERA PERIODOFYEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL CONTRACT YEARS.THE DEATH BENEFIT, ACCOUNT VALUE,
ANDCASHSURRENDER VALUE FOR ACONTRACTWILLALSOBE DIFFERENT FROM THOSE SHOWN,
DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE ACCOUNT AND
THERATES OF RETURNOF THESEPARATE ACCOUNT.NO REPRESENTATION CAN BE MADE THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
A-5
<PAGE>
PART II -- OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
REPRESENTATION AS TO FEES AND CHARGES
Glenbrook Life and Annuity Company (the "Company") represents that the fees
and charges deducted under the Modified Single Premium Variable Life Insurance
Contract hereby registered by this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the Company.
REPRESENTATION PURSUANT TO RULE 6E-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940 ("Investment Company Act").
RULE 484 UNDERTAKING
The By-Laws of Glenbrook Life and Annuity Company ("Glenbrook Life") which
are incorporated herein by reference as Exhibit 1(A)(6)(b), provide that it will
indemnify its officers and directors for certain damages and expenses that may
be incurred in the performance of their duty to Glenbrook Life. No
indemnification is provided, however, when such person is adjudged to be liable
for negligence or misconduct in the performance of his or her duty, unless
indemnification is deemed appropriate by the court upon application. Insofar as
indemnification for liability arising under the Securities Act of 1933 (the
"Act") may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Glenbrook
Life Variable Life Separate Account (the "Registrant") has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The Facing Sheet.
The Cross Reference Sheet pursuant to Rule 481.
The Prospectus consisting of 58 pages.
The Undertaking to File Reports.
Representation as to Fees and Charges.
Representations Pursuant to Rule 6e-3(T)
Rule 484 Undertaking
The Signatures
Written Consents of the following persons:
(a) Sutherland, Asbill & Brennan, L.L.P.
(b) Deloitte & Touche LLP
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of the Board of Directors of Glenbrook Life and Annuity
Company authorizing establishment of the Variable Life Separate Account.*
(2) Not Applicable.
(3) (a) Form of Underwriting Agreement**
(b) Form of Selling Agreement**
(c) See Exhibit 1.(3)(b)
(4) Not Applicable.
(5) (a) Specimen Contract.**
(1) Modified Single Premium Variable Life Insurance Contract**
(2) Last Survivor Modified Single Premium Variable Life Insurance
Contract**
(b) Riders**
(1) Amendatory Endorsement for Waiver of Charges (KLU100)**
(2) Amendatory Endorsement (KLU101)**
(3) Accelerated Death Benefit Rider (KLU105)**
(4) Amendatory Endorsement for Waiver of Charges (KLU106)**
(5) Accelerated Death Benefit Summary and Disclosure Statement
(KLU74)**
(6) Accelerated Death Benefit Summary and Disclosure Statement
(KLU80)**
(7) Accelerated Death Benefit Effect on Contract (KLU81)**
(8) Accelerated Death Benefit Rider (KLU99)**
(6) (a) Certificate of Incorporation of Glenbrook Life and Annuity
Company***
(b) By-laws of Glenbrook Life and Annuity Company***
II-2
<PAGE>
(7) Not Applicable.
(8) Participation Agreement**
(9) Not Applicable.
(10) Form of Application for Contract**
B. Not Applicable.
C. Not Applicable.
2. Opinion of General Counsel**
3. Not Applicable
(1) Not Applicable
(2) Not Applicable
4. Not Applicable
5. Financial Data Schedule****
6. Not Applicable
7. Powers of Attorney**,*****
8. Consents
(1) Sutherland, Asbill & Brennan,L.L.P.**
(2) Deloitte & Touche LLP
9. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(3)(iii)**
10. Actuarial Opinion and Consent**
* Previously filed and incorporated by reference in S-6 Registration
Statement No. 333-02581, dated April 17, 1996.
** Previously filed and incorporated by reference in S-6, Pre-Effective
Amendment No. 1, Registration Statement No. 333-02581, dated September 20,
1996
*** Previously filed and incorporated by reference with Depositors Form S-1
Registration Statement No. 333-07275 dated June 28, 1996.
**** Previously filed in Depositor's Form 10-K filed on March 31, 1997.
***** Power of Attorney for Keith A. Hauschildt filed herewith.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the "Act"),
the registrant, Glenbrook Life Variable Life Separate Account A, certifies
that it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Act and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested,
all in the Village of Northfield, and State of Illinois, on the 10th day of
April 1997.
GLENBROOK LIFE VARIABLE LIFE SEPARATE ACCOUNT A
(Registrant)
GLENBROOK LIFE AND ANNUITY COMPANY
(Depositor)
(SEAL)
Attest: /s/ BRENDA D. SNEED By: /s/ MICHAEL J. VELOTTA
--------------------------------- ------------------------------------
Brenda D. Sneed Michael J. Velotta
Assistant Secretary and Assistant Vice President, Secretary and
General Counsel General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated, on the 10th day of April 1997.
<TABLE>
<C> <S>
*/LOUIS G. LOWER, II
- -------------------------------------- Chairman of the Board of Directors and Chief
Louis G. Lower, II Executive Officer (Principal Executive Officer)
/s/ MICHAEL J. VELOTTA
- -------------------------------------- Vice President, Secretary, General Counsel and
Michael J. Velotta Director
*/PETER H. HECKMAN
- -------------------------------------- President, Chief Operating Officer and Director
Peter H. Heckman
*/JOHN R. HUNTER
- -------------------------------------- Director
John R. Hunter
*/MARLA G. FRIEDMAN
- -------------------------------------- Vice President
Marla G. Friedman
*/KEVIN R. SLAWIN
- -------------------------------------- Vice President
Kevin R. Slawin (Principal Financial Officer)
*/G. CRAIG WHITEHEAD
- -------------------------------------- Senior Vice President and Director
G. Craig Whitehead
*/JAMES P. ZILS
- -------------------------------------- Treasurer
James P. Zils
*/CASEY J. SYLLA
- -------------------------------------- Chief Investment Officer
Casey J. Sylla
**/KEITH A. HAUSCHILDT
- -------------------------------------- Assistant Vice President and Controller (Principal
Keith A. Hauschildt Accounting Officer)
</TABLE>
*/ By Michael J. Velotta, pursuant to Power of Attorney, previously filed.
**/ By Michael J. Velotta, pursuant to Power of Attorney, filed herewith.
II-4
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE
VARIABLE LIFE SEPARATE ACCOUNT A
Know all men by these presents that Keith A. Hauschildt, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution,
and his in any and all capacities, to sign any Form S-6 registration statements
and amendments thereto under the Federal Securities Laws for the Glenbrook Life
Variable Life Separate Account A and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-
fact, of his substitute or substitutes, may do or cause to be done by virtue
hereof.
March 20, 1997
- -----------------------
/s/ KEITH A. HAUSCHILDT
- ------------------------
Keith A. Hauschildt
Assistant Vice President and Controller
<PAGE>
EXHIBIT 8(2)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 2 to Registration
Statement No. 333-02581 of Glenbrook Life Variable Life Separate Account A of
Glenbrook Life and Annuity Company on Form S-6 of our report dated February
21, 1997 relating to the financial statements and financial statement
schedule of Glenbrook Life and Annuity Company, appearing in the Prospectus,
which is part of such Registration Statement, and to the reference to us
under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
Chicago, Illinois
April 15, 1997
