As filed with the Securities and Exchange Commission on March 20, 1998.
Registration Nos. 333-1043
811-7543
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 9 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15 [X]
Variable Account A
(Exact name of Registrant)
Keyport Life Insurance Company
(Name of Depositor)
125 High Street, Boston Massachusetts 02110
(Address of Depositor's Principal Executive Offices (Zip Code)
Depositor's Telephone Number, including Area Code: 617-526-1400
Bernard R. Beckerlegge, Esq.
Senior Vice President and General Counsel
Keyport Life Insurance Company
125 High Street, Boston, Massachusetts 02110
(Name and Address of Agent for Service)
copy to:
Joan E. Boros, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on [date] pursuant to paragraph (b) of Rule 485
(X) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) on [date] pursuant to paragraph (a) of Rule 485
Title of Securities Being Registered: Variable Portion of the Contracts
Funded Through the Separate Account.
No filing fee is due because an indefinite amount of securities is deemed
to have been registered in reliance on Section 24(f) of the Investment
Company Act of 1940.
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Exhibit Index on Page ____
CONTENTS OF REGISTRATION STATEMENT
The Facing Sheet
The Contents Page
Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
Items 24 - 32
The Signatures
Exhibits
VARIABLE ACCOUNT A
KEYPORT LIFE INSURANCE COMPANY
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-4
N-4 Item Caption in Prospectus
1. . . . . . . . . .Cover Page
2. . . . . . . . . .Glossary of Special Terms
3. . . . . . . . . .Summary of Expenses
4. . . . . . . . . .Performance Information
5. . . . . . . . . .Keyport and the Variable Account
Eligible Funds
6. . . . . . . . . .Deductions
7. . . . . . . . . .Allocations of Purchase Payments
Transfer of Variable Account Value
Substitution of Eligible Funds and Other Variable
Account Changes
Modification of the Certificate
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Certificate Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Benefits
Suspension of Payments
Inquiries by Certificate Owners
8. . . . . . . . . .Annuity Provisions
9. . . . . . . . . .Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Annuity Options
10. . . . . . . . . .Purchase Payments and Applications
Variable Account Value
Valuation Periods
Net Investment Factor
Sales of the Certificates
11. . . . . . . . . .Partial Withdrawals and Surrender
Option A: Income For a Fixed Number of Years
Right to Revoke
12. . . . . . . . . .Tax Status
13. . . . . . . . . .Legal Proceedings
14. . . . . . . . . .Table of Contents - Statement of Additional
Information
Caption in Statement of Additional Information
15. . . . . . . . . .Cover Page
16. . . . . . . . . .Table of Contents
17. . . . . . . . . .Keyport Life Insurance Company
18. . . . . . . . . .Experts
19. . . . . . . . . .Not applicable
20. . . . . . . . . .Principal Underwriter
21. . . . . . . . . .Investment Performance
22. . . . . . . . . .Variable Annuity Benefits
23. . . . . . . . . .Financial Statements
This Amendment No. 9 to the Registration Statement on Form N-4 which
initially became effective on October 18, 1996 (the "Registration
Statement") is being filed pursuant to Rule 485(a) under the Securities Act
of 1933, as amended, to supplement the Registration Statement with a
separate prospectus and statement of additional information ("SAI"), and
related exhibits, describing a particular form of the Group and Individual
Flexible Premium Deferred Annuity Contract. This Amendment relates only to
the prospectus, SAI and exhibits included in this Amendment and does not
otherwise delete, amend, or supersede any information contained in Post-
Effective Amendment Nos. 3 and 8 to the Registration Statement.
PART A
Distributed by:
Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712
[Keyport Logo]
Issued by:
Keyport Life Insurance Company
125 High Street, Boston, MA 02110-2712
Service Hotline 800-367-3653 Keyline 800-367-3654
Keyport Logo is a registered service mark of Keyport Life Insurance
Company.
K.A.VAP 6/98
Yes. I would like to receive the Keyport Advisor Vision Variable Annuity
Statement of Additional Information.
Yes. I would like to receive the Statement of Additional Information for
the Eligible Funds of:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund, Inc.
Liberty Variable Investment Trust
MFS Variable Insurance Trust
SteinRoe Variable Investment Trust
Name
Address
City
State
Zip
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 6719 BOSTON, MA
POSTAGE WILL BE PAID BY ADDRESSEE
KEYPORT LIFE INSURANCE CO.
125 HIGH STREET
BOSTON, MA 02110-9773
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
[SHIP LOGO]
June 1, 1998 Prospectus for
Keyport Advisor Vision
Variable Annuity
Including Eligible Fund Prospectuses for
AIM VARIABLE INSURANCE FUNDS, INC.
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
LIBERTY VARIABLE INVESTMENT TRUST
MFS VARIABLE INSURANCE TRUST
STEINROE VARIABLE INVESTMENT TRUST
NOT May lose value
FDIC No bank guarantee
INSURED
GROUP AND INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
Variable Account A
OF
KEYPORT LIFE INSURANCE COMPANY
This Prospectus offers Group and Individual Variable Annuity Contracts (the
"Contracts") and the related Certificates (the "Certificates") that are
designed to fund benefits under certain group arrangements including those
that qualify for special tax treatment under the Internal Revenue Code of
1986 (the "Code"). As required by certain states, the Certificates may be
offered as individual contracts. Unless otherwise noted or the context so
requires all references to the Certificates include the Contracts and the
individual Contracts. The Certificates are offered on a flexible payment
basis.
The variable annuity Contract (form number DVA(1)) and the Certificates
described in this prospectus provide for accumulation of Certificate Values
on a variable basis, and also on a fixed basis, and payments of periodic
annuity payments on either a variable or fixed basis. The Certificates are
designed for use by individuals for retirement planning purposes.
This prospectus generally describes only the variable features of the
Certificate (for a summary of the fixed features, see Appendix A on Page
27). If the Certificate Owner elects to have Certificate Values accumulated
on a variable basis, Purchase Payments will be allocated to a segregated
investment account of Keyport Life Insurance Company ("Keyport"),
designated Variable Account A ("Variable Account").
The Variable Account invests in shares of the following Eligible Funds at
their net asset value: AIM Variable Insurance Funds, Inc. ("AIM Insurance
Funds")--AIM V.I. Capital Appreciation Fund ("AIM Capital Appreciation");
AIM V.I. Growth Fund ("AIM Growth") and AIM V.I. International Equity Fund
("AIM International Equity"); Alliance Variable Products Series Fund, Inc.
("Alliance Series Fund")--Global Bond Portfolio ("Alliance Global Bond");
Alliance Growth and Income Portfolio ("Alliance Growth and Income");
Premier Growth Portfolio ("Alliance Premier Growth") and Real Estate
Investment Portfolio ("Alliance Real Estate"); Liberty Variable Investment
Trust ("Liberty Trust") (formerly named Keyport Variable Investment Trust)-
- -Colonial Growth and Income Fund, Variable Series ("Colonial Growth and
Income"); Colonial High Yield Securities Fund, Variable Series ("Colonial
High Yield Securities"); Colonial Small Cap Value Fund, Variable Series
("Colonial Small Cap Value"); Colonial Strategic Income Fund, Variable
Series ("Colonial Strategic Income"); Colonial U.S. Stock Fund, Variable
Series ("Colonial U.S. Stock"); Liberty All-Star Equity Fund, Variable
Series ("Liberty All-Star Equity"); and Stein Roe Global Utilities Fund,
Variable Series ("Stein Roe Global Utilities"); MFS Variable Insurance
Trust ("MFS Trust")--MFS Bond Series ("MFS Bond"); MFS Emerging Growth
Series ("MFS Emerging Growth") and MFS Research Series ("MFS Research");
and SteinRoe Variable Investment Trust ("SteinRoe Trust")--Stein Roe
Balanced Fund, Variable Series ("Stein Roe Balanced"); Stein Roe Growth
Stock Fund, Variable Series ("Stein Roe Growth Stock"); Stein Roe Money
Market Fund, Variable Series ("Stein Roe Money Market"); and Stein Roe
Special Venture Fund, Variable Series ("Stein Roe Special Venture").
The Variable Account may offer other forms of the Contracts and
Certificates with features, and fees and charges which vary from the
Certificates, and provide for investment in other Sub-accounts which may
invest in different or additional mutual funds. Other Contracts and
Certificates will be described in separate prospectuses and statements of
additional information. The agent selling the Contracts and Certificates
has information concerning the eligibility for and the availability of the
other forms of the Contracts and Certificates.
A Statement of Additional Information dated the same as this prospectus has
been filed with the Securities and Exchange Commission and is herein
incorporated by reference. It is available, at no charge, by writing
Keyport at 125 High Street, Boston, MA 02110, by calling (800) 437-4466, or
by returning the postcard on the back cover of this prospectus. A table of
contents for the Statement of Additional Information is on Page 26.
The Certificates may be sold by or through banks or other depository
institutions. The Contract and Certificates: are not insured by the FDIC;
are not a deposit or other obligation of, or guaranteed by, the depository
institution; and are subject to investment risks, including the possible
loss of principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH THE INFORMATION A PROSPECTIVE INVESTOR SHOULD
KNOW BEFORE INVESTING. THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE
REFERENCE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE OR
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS
AUTHORIZED BY KEYPORT TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THIS OFFERING, AND IF GIVEN OR MADE, SUCH UNAUTHORIZED
INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON.
The date of this prospectus is June 1, 1998
TABLE OF CONTENTS
Page
Glossary of Special Terms 3
Summary of Expenses 4
Synopsis 7
Performance Information 8
Keyport and the Variable Account 9
Year 2000 Matters
Purchase Payments and Applications 10
Investments of the Variable Account 10
Allocations of Purchase Payments 10
Eligible Funds 11
Transfer of Variable Account Value 13
Substitution of Eligible Funds and Other Variable Account Changes 14
Deductions 14
Deductions for Mortality and Expense Risk Charge 15
Deductions for Daily Administrative Charge 15
Deductions for Transfers of Variable Account Value 16
Deductions for Premium Taxes 17
Deductions for Income Taxes 17
Total Variable Account Expenses 17
Other Services 17
The Certificates 18
Variable Account Value 18
Valuation Periods 19
Net Investment Factor 19
Modification of the Certificate 19
Right to Revoke 19
Death Provisions for Non-Qualified Certificates 19
Death Provisions for Qualified Certificates 21
Certificate Ownership 21
Assignment 21
Partial Withdrawals and Surrender 21
Annuity Provisions 22
Annuity Benefits 22
Income Date and Annuity Option 22
Change in Income Date and Annuity Option 22
Annuity Options 22
Variable Annuity Payment Values 23
Proof of Age, Sex, and Survival of Annuitant 23
Suspension of Payments 24
Tax Status 24
Introduction 24
Recent Developments
Taxation of Annuities in General 24
Qualified Plans 25
Tax-Sheltered Annuities 26
Individual Retirement Annuities 26
Corporate Pension and Profit-Sharing Plans 26
Deferred Compensation Plans with Respect to
Service for State and Local Governments 26
Variable Account Voting Privileges 26
Sales of the Certificates 27
Legal Proceedings 27
Inquiries by Certificate Owners 27
Table of Contents--Statement of Additional Information 27
Appendix A--The Fixed Account (also known as the Modified
Guaranteed Annuity Account) 28
Appendix B--Telephone Instructions 31
GLOSSARY OF SPECIAL TERMS
Accumulation Unit: An accounting unit of measure used to calculate Variable
Account Value.
Annuitant: The Annuitant is the natural person to whom any annuity payments
will be made starting on the Income Date. The Annuitant may not be over age
90 on the Certificate Date (age 75 for Qualified Certificates and age 90
for Roth IRA Qualified Certificates).
Certificate Anniversary: The same month and day as the Certificate Date in
each subsequent year of the Certificate.
Certificate Date: The effective date of the Certificate; it is shown on the
Certificate Schedule.
Certificate Owner: The person (or persons in the case of joint ownership)
who possesses all the ownership rights under the Certificate. The primary
Certificate Owner may not be over age 90 on the Certificate Date (age 75
for Qualified Certificates, age 90 for Roth IRA Qualified Certificates and
age 90 for a joint Owner).
Certificate Value: The sum of the Variable Account Value and the Fixed
Account Value.
Certificate Withdrawal Value: The Certificate Value increased or decreased
by a limited Market Value Adjustment less any premium taxes.
Certificate Year: Any period of 12 months commencing with the Certificate
Date and each Certificate Anniversary thereafter shall be a Certificate
Year.
Covered Person: The person(s) identified on the Certificate Schedule whose
death may result in an Adjustment of Certificate Value or a waiver of any
Market Value Adjustment.
Designated Beneficiary: The person who may be entitled to receive benefits
following the death of the Annuitant, Certificate Owner, or joint
Certificate Owner. The Designated Beneficiary will be the first person
among the following who is alive on the date of death: primary Certificate
Owner; joint Certificate Owner; primary beneficiary; contingent
beneficiary; and if none of the above is alive, the primary Certificate
Owner's estate. If the primary Certificate Owner and joint Certificate
Owner are both alive, they will be the Designated Beneficiary together.
Eligible Funds: The mutual funds that are eligible investments for the
Variable Account under the Certificates.
Fixed Account: Part of Keyport's general account to which Purchase Payments
may be allocated or Certificate Values may be transferred.
Fixed Account Value: The value of all Fixed Account amounts accumulated
under the Certificate prior to the Income Date.
Guarantee Period Anniversary: An anniversary of a Guarantee Period's Start
Date.
Guarantee Period Month: The first Guarantee Period Month is the monthly
period which begins on the Start Date. Subsequent Guarantee Period Months
begin on the same day in the ensuing months.
Guarantee Period Year: The first Guarantee Period Year is the annual period
which begins on the Start Date. Subsequent Guarantee Period Years begin on
each Guaranteed Period Anniversary.
In Force: The status of the Certificate before the Income Date so long as
it is not totally surrendered, the Certificate Value under a Certificate
does not go to zero, and there has not been a death of the Annuitant or any
Certificate Owner that will cause the Certificate to end within at most
five years of the date of death.
Income Date: The date on which annuity payments are to begin.
Non-Qualified Certificate: Any Certificate that is not issued under a
Qualified Plan.
Office: Keyport's executive office, which is 125 High Street, Boston,
Massachusetts 02110.
Qualified Certificate: Certificates issued under Qualified Plans.
Qualified Plan: A retirement plan established pursuant to the provisions of
Sections 401, 403(b), 408(b) or 408A of the Internal Revenue Code. Keyport
treats Section 457 plans as Qualified Plans.
Start Date: The date an amount is first allocated to a Guarantee Period.
Variable Account: A separate investment account of Keyport into which
Purchase Payments under the Certificates may be allocated. The Variable
Account is divided into Sub-Accounts ("Sub-Account") that correspond to the
Eligible Funds in which they invest.
Variable Account Value: The value of all Variable Account amounts
accumulated under the Certificate prior to the Income Date.
Written Request: A request written on a form satisfactory to Keyport,
signed by the Certificate Owner and a disinterested witness, and filed at
Keyport's Office.
SUMMARY OF EXPENSES
The expense summary format below, including the examples, was adopted by
the Securities and Exchange Commission to assist the owner of a variable
annuity certificate in understanding the transaction and operating expenses
the owner will directly or indirectly bear under a certificate. The values
reflect expenses of the Variable Account as well as the Eligible Funds
under the Certificates. The expenses shown for the Eligible Funds and the
examples should not be considered a representation of future expenses.
Certificate Owner Transaction Expenses
Sales Load Imposed on Purchases: 0%
Maximum Contingent Deferred Sales Charge
(as a percentage of Purchase Payments): 0%
Maximum Total Certificate Owner Transaction Expenses1
(as a percentage of Purchase Payments): 0%
Annual Certificate Maintenance Charge $0
Variable Account Annual Expenses
(as a percentage of average net assets)
Mortality and Expense Risk Charge: 1.25%
Administrative Charge: .15%
Total Variable Account Annual Expenses: 1.40%
AIM Insurance Funds, Alliance Series Fund, Liberty Trust,
MFS Trust, and SteinRoe Trust Annual Expenses2
(as a percentage of average net assets)
Total Fund
Operating
Expenses After
Management Other Any Expense
Fund Fees Expenses Reimbursements3
AIM Capital Appreciation .64% .09% .73%
AIM Growth .65% .13% .78%
AIM International Equity .75% .21% .96%
Alliance Global Bond .44% .50% .94%(1.15%)3
Alliance Growth and Income .63% .19% .82%
Alliance Premier Growth .72% .23% .95%(1.23%)3
Alliance Real Estate .00% .95% .95%(6.00%)3
Colonial Growth and Income .65% .14% .79%
Colonial High Yield Securities .60% .20% .80%
Colonial Small Cap Value .80 .20 1.00%
Colonial Strategic Income .65% .15% .80%(.86%)3
Colonial U.S. Stock .80% .15% .95%
Liberty All-Star Equity .80% .13% .93%
Stein Roe Global Utilities .65% .16% .81%
MFS Bond .60% .40% 1.00%(9.45%)3
MFS Emerging Growth .75% .25% 1.00%(1.16%)3
MFS Research .75% .25% 1.00%(1.48%)3
Stein Roe Balanced .60% .07% .67%
Stein Roe Growth Stock .65% .08% .73%
Stein Roe Money Market .50% .15% .65%
Stein Roe Special Venture .65% .10% .75%
THE ABOVE EXPENSES FOR THE ELIGIBLE FUNDS WERE PROVIDED BY THE FUNDS.
KEYPORT HAS NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
Example #1 -- Assuming surrender of the Certificate at the end of the
periods shown.4
A $1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
AIM Capital Appreciation
AIM Growth
AIM International Equity
Alliance Global Bond
Alliance Growth and Income
Alliance Premier Growth
Alliance Real Estate
Colonial Growth and Income
Colonial High Yield Securities
Colonial Small Cap Value
Colonial Strategic Income
Colonial U.S. Stock
Liberty All-Star Equity
Stein Roe Global Utilities
MFS Bond
MFS Emerging Growth
MFS Research
Stein Roe Balanced
Stein Roe Growth Stock
Stein Roe Money Market
Stein Roe Special Venture
Example #2 -- Assuming annuitization of the Certificate at the end of the
periods shown.4
A $1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
AIM Capital Appreciation
AIM Growth
AIM International Equity
Alliance Global Bond
Alliance Growth and Income
Alliance Premier Growth
Alliance Real Estate
Colonial Growth and Income
Colonial High Yield Securities
Colonial Small Cap Value
Colonial Strategic Income
Colonial U.S. Stock
Liberty All-Star Equity
Stein Roe Global Utilities
MFS Bond
MFS Emerging Growth
MFS Research
Stein Roe Balanced
Stein Roe Growth Stock
Stein Roe Money Market
Stein Roe Special Venture
Example #3 -- Assuming the Certificate stays in force through the periods
shown.
A $1,000 investment in each Sub-Account listed would be subject to the same
expenses shown in Example #2, assuming 5% annual return on assets.
1Keyport reserves the right to impose a transfer fee after prior notice to
Certificate Owners, but currently does not impose any charge. Premium taxes
are not shown. Keyport deducts the amount of premium taxes, if any, when
paid unless Keyport elects to defer such deduction.
2All Trust and Fund expenses are for 1996 with the exception of those for
Colonial High Yield Securities and Colonial Small Cap Value, which are
estimated since Colonial High Yield Securities and Colonial Small Cap Value
commenced operations in June, 1998. The AIM Insurance Funds, Alliance
Series Fund, Liberty Trust (Colonial Strategic Income only), MFS Trust, and
SteinRoe Trust expenses reflect such Fund's or Trust's adviser's agreement
to reimburse expenses above certain limits (see footnote 3).
3The AIM Insurance Funds' Adviser may from time to time waive or reduce its
fees. Fee waivers or reductions, other than those contained in the AIM
Insurance Funds' advisory agreement, may be modified or terminated at any
time.
Expense information shown for Alliance Series Fund has been restated to
reflect current fees and is net of voluntary expense reimbursements. The
Alliance Series Fund Adviser has agreed to continue such reimbursements for
the foreseeable future. Each percentage shown in the parentheses is what
the total expenses would be in the absence of expense reimbursement: for
Alliance Global Bond--1.15%; for Alliance Premier Growth--1.23% and for
Alliance Real Estate--6.00%.
Liberty Trust's manager has agreed until 4/30/98 to reimburse all expenses,
including management fees, in excess of the following percentage of the
average annual net assets of each Fund, so long as such reimbursement would
not result in the Fund's inability to qualify as a regulated investment
company under the Internal Revenue Code: 1.00% for Colonial Growth &
Income, Liberty All-Star Equity, Colonial Small Cap Value, Stein Roe Global
Utilities and Colonial U.S. Stock; and .80% for Colonial High Yield
Securities and Colonial Strategic Income. For Colonial Strategic Income,
the total .80% shown in the table is after expense reimbursement and the
.86% shown in the parentheses is what the total for 1996 would be in the
absence of expense reimbursement.
MFS Trust's Adviser has agreed to bear, subject to reimbursement, expenses
for each of the three Eligible Funds shown such that each Fund's total
operating expenses shall not exceed, on an annualized basis, 1.25% of the
average daily net assets of the Fund from January 1, 1997 through December
31, 1998, and 1.50% of the average daily net assets of the Fund from
January 1, 1999 through December 31, 2004; provided however, that this
obligation may be terminated or revised at any time. Each percentage shown
in the parentheses is what the total expenses would be in the absence of
expense reimbursement: for MFS Bond--9.45%; MFS Emerging Growth--1.16%; and
for MFS Research--1.48%.
SteinRoe Trust's adviser has voluntarily agreed until 4/30/98 to reimburse
all expenses, including management fees, in excess of the following
percentage of the average annual net assets of each Fund, so long as such
reimbursement would not result in the Fund's inability to qualify as a
regulated investment company under the Internal Revenue Code: .80% for
Stein Roe Special Venture and Stein Roe Growth Stock; .65% for Stein Roe
Money Market; and .75% for Stein Roe Balanced.
4The annuity is designed for retirement planning purposes. Surrenders prior
to the Income Date are not consistent with the long-term purposes of the
Certificate and the applicable tax laws.
The examples should not be considered a representation of past or future
expenses and charges of the Sub-Accounts. Actual expenses may be greater or
less than those shown. Similarly, the assumed 5% annual rate of return is
not an estimate or a guarantee of future investment performance. See
"Deductions" in this prospectus, "Management" in the prospectus for AIM
Insurance Funds, "Management of the Fund" in the prospectus for the
Alliance Series Fund, "Trust Management Organizations" and "Expenses of the
Funds" in the prospectus for Liberty Trust, "Management of the Series" and
"Expenses" in the prospectus for MFS Trust, and "How the Funds are Managed"
in the prospectus for SteinRoe Trust.
SYNOPSIS
The following Synopsis should be read in conjunction with the detailed
information in this prospectus and the Statement of Additional Information.
Please refer to the Glossary of Special Terms for the meaning of certain
defined terms. Variations from the information appearing in this prospectus
due to individual state requirements are described in supplements which are
attached to this prospectus, or in endorsements to the Certificates, as
appropriate.
The Certificate allows Certificate Owners to allocate Purchase Payments to
the Variable Account and also to the Fixed Account. The Variable Account is
a separate investment account maintained by Keyport. The Fixed Account is
part of Keyport's "general account", which consists of all Keyport's assets
except the Variable Account and the assets of other separate investment
accounts maintained by Keyport. Certificate Owners may allocate payments
to, and receive annuity payments from the Variable Account and/or the Fixed
Account. If the Certificate Owner allocates payments to the Variable
Account, the accumulation values and annuity payments will fluctuate
according to the investment experience of the Sub-Accounts chosen. If the
Certificate Owner allocates payments to the Fixed Account, the accumulation
values will increase at guaranteed interest rates and annuity payments will
be of a fixed amount. Fixed Account Values are subject to a limited market
value adjustment. (See Appendix A on Page 27 for more information on the
Fixed Account.) If the Certificate Owner allocates payments to both
Accounts, then the accumulation values and annuity payments will be
variable in part and fixed in part.
The Certificate permits Purchase Payments to be made on a flexible Purchase
Payment basis. The minimum initial payment is $25,000. The minimum amount
for each subsequent payment is $1,000 or such lesser amount as Keyport may
permit from time to time (currently $250). (See "Purchase Payments and
Applications" on Page 9.)
There are no deductions made from Purchase Payments for sales charges at
the time of purchase.
Keyport deducts a Mortality and Expense Risk Charge, which is equal on an
annual basis to 1.25% of the average daily net asset values in the Variable
Account attributable to the Certificates. (See "Deductions for Mortality
and Expense Risk Charge" on Page 14.) Keyport also deducts a daily
administrative charge which is equal on an annual basis to .15% of the same
values. (See "Deductions for Daily Admininstrative Charge" on Page 14.)
Keyport reserves the right to deduct a charge of $25 for each transfer in
excess of 12 per Certificate Year but currently does not do so. (See
"Recent Developments" on Page 24.)
Premium taxes will be charged against the Certificate Value. Currently such
premium taxes range from 0% to 5.0%. (See "Deductions for Premium Taxes" on
Page 15.)
There are no federal income taxes on increases in the value of a
Certificate until a distribution occurs, in the form of a lump sum payment,
annuity payments, or the making of a gift or assignment of the Certificate.
A federal penalty tax (currently 10%) may also apply. (See "Tax Status" on
Page 22.)
The Certificate allows the Certificate Owner to revoke the Certificate
generally within 10 days of delivery (see "Right to Revoke" on Page 18).
For most states, Keyport will refund the Certificate Value as of the date
the returned Certificate is received by Keyport, plus any administrative
charges previously deducted. The Certificate Owner thus will bear the
investment risk during the revocation period. In other states, Keyport will
return Purchase Payments.
PERFORMANCE INFORMATION
The Variable Account may from time to time advertise certain performance
information concerning its various Sub-Accounts.
Certain of the Eligible Funds have been available for Keyport and/or non-
Keyport variable annuity contracts for periods prior to the commencement of
the offering of the Certificates described in this prospectus. Any
performance information for such periods will be based on the historical
results of the Eligible Funds being applied to the Certificate for the
specified time periods.
Performance information is not intended to indicate either past performance
under an actual Certificate or future performance.
The Sub-Accounts may advertise total return information for various periods
of time. Total return performance information is based on the overall
percentage change in value of a hypothetical investment in the specific Sub-
Account over a given period of time.
Average annual total return information shows the average percentage change
in the value of an investment in the Sub-Account from the beginning date of
the measuring period to the end of that period. This standardized version
of average annual total return reflects all historical investment results,
less all charges and deductions applied against the Sub-Account and a
Certificate. Average total return does not take into account any premium
taxes and would be lower if these taxes were included.
In order to calculate average annual total return, Keyport divides the
change in value of a Sub-Account under a Certificate surrendered on a
particular date by a hypothetical $1,000 investment in the Sub-Account made
by the Certificate Owner at the beginning of the period illustrated. The
resulting total rate for the period is then annualized to obtain the
average annual percentage change during the period. Annualization assumes
that the application of a single rate of return each year during the period
will produce the ending value, taking into account the effect of
compounding.
The Sub-Accounts may present additional total return information computed
on a different basis.
First, the Sub-Accounts may present total return information computed on
the same basis as described above. This presentation assumes that the
investment in the Certificate continues, consistent with the long-term
investment and retirement objectives of the Certificate. The total return
percentage will thus be higher under this method than the standard method
described above.
Second, the Sub-Accounts may present total return information calculated by
dividing the change in a Sub-Account's Accumulation Unit value over a
specified time period by the Accumulation Unit value of that Sub-Account at
the beginning of the period. This computation results in a 12-month change
rate or, for longer periods, a total rate for the period which Keyport
annualizes in order to obtain the average annual percentage change in the
Accumulation Unit value for that period. The change percentages do not take
into account the premium tax charges. The percentages would be lower if
these charges were included.
The Stein Roe Money Market Sub-Account is a money market Sub-Account that
also may advertise yield and effective yield information. The yield of the
Sub-Account refers to the income generated by an investment in the Sub-
Account over a specifically identified 7-day period. This income is
annualized by assuming that the amount of income generated by the
investment during that week is generated each week over a 52-week period
and is shown as a percentage. The yield reflects the deduction of all
charges assessed against the Sub-Account and a Certificate but does not
take into account premium tax charges. The yield would be lower if these
charges were included.
The effective yield of the Stein Roe Money Market Sub-Account is calculated
in a similar manner but, when annualizing such yield, income earned by the
Sub-Account is assumed to be reinvested. This compounding effect causes
effective yield to be higher than yield.
KEYPORT AND THE VARIABLE ACCOUNT
Keyport Life Insurance Company was incorporated in Rhode Island in 1957 as
a stock life insurance company. Its executive and administrative offices
are at 125 High Street, Boston, Massachusetts 02110. Its home office is at
695 George Washington Highway, Lincoln, Rhode Island 02865.
Keyport writes individual and group annuity contracts on a non-
participating basis. Keyport is licensed to do business in all states
except New York and is also licensed in the District of Columbia and the
Virgin Islands. Keyport has been rated A+ (Superior) by A.M. Best and
Company, independent analysts of the insurance industry. Keyport has been
rated A+ each year since 1976, the first year Keyport was subject to Best's
alphabetic rating system. Standard & Poor's ("S & P") has rated Keyport AA
for excellent financial security, Moody's has rated Keyport A1 for good
financial strength and Duff & Phelps has rated Keyport AA- for very high
claims paying ability. The Best's A+ rating is in the highest rating
category, which also includes A++. S & P and Duff & Phelps have one rating
category above AA and Moody's has two rating categories above A. Within the
S & P AA category, only AA+ is higher. The Moody's "1" modifier signifies
that Keyport is in the higher end of the A category while the Duff & Phelps
"-" modifier signifies that Keyport is at the lower end of the AA category.
These ratings merely reflect the opinion of the rating company as to the
relative financial strength of Keyport and Keyport's ability to meet its
contractual obligations to its policyholders. Even though assets in the
Variable Account are held separately from Keyport's other assets, ratings
of Keyport may still be relevant to Certificate Owners since not all of
Keyport's contractual obligations relate to payments based on those
segregated assets (e.g., see "Death Provisions" for Keyport's obligation
after certain deaths to increase the Certificate Value if it is less than
Death Benefit Amount or otherwise enhance the death benefit with interest).
Keyport is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and membership in IMSA in
advertisements. Being a member means that Keyport has chosen to participate
in IMSA's Life Insurance Ethical Market Conduct Program.
Keyport is one of the Liberty Financial Companies. Keyport is ultimately
controlled by Liberty Mutual Insurance Company of Boston, Massachusetts, a
multi-line insurance company.
The Variable Account was established by Keyport pursuant to the provisions
of Rhode Island Law on January 30, 1996. The Variable Account meets the
definition of "separate account" under the federal securities laws. The
Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. Such
registration does not involve supervision of the management of the Variable
Account or Keyport by the Securities and Exchange Commission.
Obligations under the Certificates are the obligations of Keyport. Although
the assets of the Variable Account are the property of Keyport, these
assets are held separately from the other assets of Keyport and are not
chargeable with liabilities arising out of any other business Keyport may
conduct. Income, capital gains and/or capital losses, whether or not
realized, from assets allocated to the Variable Account are credited to or
charged against the Variable Account without regard to the income, capital
gains, and/or capital losses arising out of any other business Keyport may
conduct. Thus, Keyport does not guarantee the investment performance of the
Variable Account. The Variable Account Value and the amount of variable
annuity payments will vary with the investment performance of the
investments in the Variable Account.
YEAR 2000 MATTERS
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous
results by or at the year 2000. This potential problem has become known as
the "Year 2000 issue". The Year 2000 issue affects virtually all companies
and organizations.
Computer applications which are affected by the Year 2000 issue could
impact Keyport's business functions in various ways, ranging from a
complete inability to perform critical business functions to a loss of
productivity in varying degrees. Likewise, the failure of some computer
applications could have no impact on critical business functions.
Keyport is assessing and addressing the Year 2000 issue by implementing a
four-step plan. The first two steps involve inventorying all the computer
applications which support Keyport's business functions and prioritizing
computer applications which are affected by the Year 2000 issue based upon
the degree of impact each has on the functioning of Keyport's business
units. The first two steps of the plan are substantially complete.
The final two steps of the four-step plan involve remediation of affected
computer applications (i.e., repairing or replacing programs, including
those which interface with third-party computer applications that have
unremediated Year 2000 issues, and appropriate testing) and reinstallation
of computer applications. For computer applications which are "mission
critical" (i.e., their failure would result in the complete inability to
perform critical business functions), Keyport expects to complete the final
two steps of the plan by December 31, 1998. Remediation and reinstallation
of non-critical computer applications is scheduled to be completed by
December 31, 1999.
Keyport believes that the Year 2000 issue could have a material impact on
Keyport's operations if the four-step plan is not timely implemented.
However, based upon the progress that is being made, Keyport believes that
the timetable for implementing the plan will be met and that the Year 2000
issue will not pose significant operational problems for its computer
systems.
Keyport does not expect that the cost of addressing the Year 2000 issue
will be material to its financial condition or its results of operations.
PURCHASE PAYMENTS AND APPLICATIONS
The initial Purchase Payment is due on the Certificate Date. The minimum
initial Purchase Payment is $25,000. Additional Purchase Payments can be
made at the Certificate Owner's option. Each subsequent Purchase Payment
must be at least $1,000 or such lesser amount as Keyport may permit from
time to time (currently $250). Keyport may reject any Purchase Payment.
If the application for a Certificate is in good order and it calls for
amounts to be allocated to the Variable Account, Keyport will apply the
initial Purchase Payment to the Variable Account and credit the Certificate
with Accumulation Units within two business days of receipt. If the
application for a Certificate is not in good order, Keyport will attempt to
get it in good order within five business days. If it is not complete at
the end of this period, Keyport will inform the applicant of the reason for
the delay and that the Purchase Payment will be returned immediately unless
the applicant specifically consents to Keyport's keeping the Purchase
Payment until the application is complete. Once the application is
complete, the Purchase Payment will be applied within two business days of
its completion. Keyport has reserved the right to reject any application.
Keyport confirms, in writing, to the Certificate Owner the allocation of
all Purchase Payments and the re-allocation of values after any requested
transfer. Keyport must be notified immediately by the Certificate Owner of
any processing error.
Keyport will permit others to act on behalf of an applicant in certain
instances, including the following two examples. First, Keyport will accept
an application for a Certificate that contains a signature signed under a
power of attorney if a copy of that power of attorney is submitted with the
application. Second, Keyport will issue a Certificate that is replacing an
existing life insurance or annuity policy that was issued by Keyport or an
affiliated company without having previously received a signed application
from the applicant. Certain dealers or other authorized persons such as
employers and Qualified Plan fiduciaries will inform Keyport of an
applicant's answers to the questions in the application by telephone or by
order ticket and cause the initial Purchase Payment to be paid to Keyport.
If the information is in good order, Keyport will issue the Certificate
with a copy of an application completed with that information. The
Certificate will be delivered to the Certificate Owner with a letter from
Keyport that will give the Certificate Owner an opportunity to respond to
Keyport if any of the application information is incorrect. Alternatively,
Keyport's letter may request the Certificate Owner to confirm the
correctness of the information by signing either a copy of the application
or a Certificate delivery receipt that ratifies the application in all
respects (in either case, a copy of the signed document would be returned
to Keyport for its permanent records). All purchases are confirmed, in
writing, to the applicant by Keyport. Keyport's liability under a
Certificate extends only to amounts so confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
Allocations of Purchase Payments
Purchase Payments applied to the Variable Account will be invested in one
or more of the Eligible Fund Sub-Accounts designated as permissible
investments in accordance with the selection made by the Certificate Owner
in the application. Any selection must specify the percentage of the
Purchase Payment that is allocated to each Sub-Account or must specify the
asset allocation model selected. (See "Other Services, The Programs".) The
percentage for each Sub-Account, if not zero, must be at least 5% and must
be a whole number. A Certificate Owner may change the allocation
percentages without fee, penalty or other charge. Allocation changes must
be made by Written Request unless the Certificate Owner has by Written
Request authorized Keyport to accept telephone allocation instructions from
the Certificate Owner or from a person acting for the Certificate Owner as
an attorney-in-fact under a power of attorney. By authorizing Keyport to
accept telephone changes, a Certificate Owner agrees to accept and be bound
by the conditions and procedures established by Keyport from time to time.
The current conditions and procedures are in Appendix B and Certificate
Owners authorizing telephone allocation instructions will be notified, in
advance, of any changes.
The Variable Account is segmented into Sub-Accounts. Each Sub-Account
contains the shares of one of the Eligible Funds and such shares are
purchased at net asset value. Eligible Funds and Sub-accounts may be added
or withdrawn as permitted by applicable law. The Sub-Accounts in the
Variable Account and the corresponding Eligible Funds currently are as
follows:
Eligible Funds of AIM Insurance Funds Sub-Accounts
AIM Capital Appreciation AIM Capital Appreciation
Sub-Account
AIM Growth AIM Growth Sub-Account
AIM International Equity AIM International Equity
Sub-Account
Eligible Funds of Alliance Series Fund Sub-Accounts
Alliance Global Bond Alliance Global Bond Sub-
Account
Alliance Growth and Income Alliance Growth and Income
Sub-Account
Alliance Premier Growth Alliance Premier Growth Sub-
Account
Alliance Real Estate Alliance Real Estate Sub-
Account
Eligible Funds of Liberty Trust Sub-Accounts
Colonial Growth and Income Colonial Growth and Income
Sub-Account
Colonial High Yield Securities Colonial High Yield
Securities Sub-Account
Colonial Small Cap Value Colonial Small Cap Value
Sub-Account
Colonial Strategic Income Colonial Strategic Income
Sub-Account
Colonial U.S. Stock Colonial U.S. Stock Sub-
Account
Liberty All-Star Equity Liberty All-Star Equity Sub-
Account
Stein Roe Global Utilities Stein Roe Global Utilities
Sub-Account
Eligible Funds of MFS Trust Sub-Accounts
MFS Bond MFS Bond Sub-Account
MFS Emerging Growth MFS Emerging Growth Sub-
Account
MFS Research MFS Research Sub-Account
Eligible Funds of SteinRoe Trust Sub-Accounts
Stein Roe Balanced Stein Roe Balanced Sub-
Account
Stein Roe Growth Stock Stein Roe Growth Stock Sub-
Account
Stein Roe Money Market Stein Roe Money Market Sub-
Account
Stein Roe Special Venture Stein Roe Special Venture
Sub-Account
Eligible Funds
The Eligible Funds which are the permissible investments of the Variable
Account are the separate funds listed above of AIM Insurance Funds,
Alliance Series Fund, Liberty Trust, MFS Trust and SteinRoe Trust, and any
other mutual funds with which Keyport and the Variable Account may enter
into a participation agreement for the purpose of making such mutual funds
available as Eligible Funds under certain Certificates.
AIM Advisors Inc. ("AIM") serves as the investment adviser to each of the
Eligible Funds of the AIM Insurance Funds. AIM was organized in 1976, and,
together with its subsidiaries, manages or advises 46 investment portfolios
(including the Funds).
Alliance Capital Management L.P. is the investment adviser for each of the
Eligible Funds of Alliance Series Fund. AIGAM International Limited serves
as sub-adviser for Alliance Global.
Liberty Advisory Services Corp. ("LASC")(formerly named Keyport Advisory
Services Corp.), a subsidiary of Keyport, is the manager for Liberty Trust
and its Eligible Funds. Colonial Management Associates, Inc. ("Colonial"),
an affiliate of Keyport, serves as sub-adviser for the Eligible Funds
(except for Stein Roe Global Utilities and Liberty All-Star Equity).
Colonial has provided investment advisory services since 1931. Liberty
Asset Management Company, an affiliate of Keyport, serves as sub-adviser
for Liberty All-Star Equity and the current portfolio managers are J.P.
Morgan Investment Management Inc., Oppenheimer Capital, Wilke/Thompson
Capital Management Inc., Westwood Management Corp. and Palley-Needelman
Asset Management, Inc.
Massachusetts Financial Services Company ("MFS") is the investment adviser
for the Eligible Funds of MFS Trust. MFS is America's oldest mutual fund
organization. MFS and its predecessor organizations have a history of money
management dating from 1924 and the founding of the first mutual fund in
the United States, Massachusetts Investors Trust.
Stein Roe & Farnham Incorporated ("Stein Roe") is the investment adviser
for each Eligible Fund of SteinRoe Trust and sub-adviser for Stein Roe
Global Utilities. In 1986, Stein Roe was organized and succeeded to the
business of Stein Roe & Farnham, a partnership. Stein Roe is an affiliate
of Keyport. Stein Roe and its predecessor have provided investment advisory
and administrative services since 1932.
The investment objectives of the Eligible Funds are briefly described
below. More detailed information, including investor considerations related
to the risks of investing in a particular Eligible Fund, may be found in
the current prospectus for that Fund. An investor should read that
prospectus carefully before selecting a fund for investing. The prospectus
is available, at no charge, from a salesperson or by writing Keyport at the
address shown on Page 1 or by calling (800) 437-4466.
Eligible Funds of AIM Insurance
Funds and Variable Account
Sub-Accounts Investment Objective
AIM Capital Appreciation Capital appreciation through
(AIM Capital Appreciation investments in common stocks,
Sub-Account) with emphasis on medium-sized
and smaller emerging growth
companies.
AIM Growth Growth of capital through
(AIM Growth Sub-Account) investments primarily in
common stocks of leading U.S.
companies considered by AIM
to have strong earnings
momentum.
AIM International Equity Long-term growth of capital
(AIM International Equity by investing in international
Sub-Account) equity securities, the issuers
of which are considered by AIM
to have strong earnings
momentum.
Eligible Funds of Alliance Series
Fund and Variable Account
Sub-Accounts Investment Objective
Alliance Global Bond A high level of return from a
(Alliance Global Bond combination of current income and
Sub-Account) capital appreciation by investing
in a globally diversified portfolio
of high quality debt securities
denominated in the U.S. Dollar and
a range of foreign currencies.
Alliance Growth and Income Balance the objectives of
(Alliance Growth and Income reasonable current income and
Sub-Account) reasonable opportunities for
appreciation through investments
primarily in dividend-paying
common stocks of good quality.
Alliance Premier Growth Growth of capital rather than
(Alliance Premier Growth current income.
Sub-Account)
Alliance Real Estate Total return on its assets through
(Alliance Real Estate Sub- long-term growth of capital and
Account) income principally through
investing in a portfolio of equity
securities of issuers that are
primarily engaged in or related to
the real estate industry.
Eligible Funds of Liberty Trust
and Variable Account
Sub-Accounts Investment Objective
Colonial Growth and Income Primarily income and long-term
(Colonial Growth and Income capital growth and, secondarily,
Sub- Account)(formerly named preservation of capital.
Colonial-Keyport Growth and
Income Fund)
Colonial High Yield Securities High current income and total
(Colonial High Yield Securities return by investing primarily
Sub-Account) in lower rated corporate debt
securities.
Colonial Small Cap Value Long-term growth by investing
(Colonial Small Cap Value in smaller capitalization
Sub-Account) equity securities.
Colonial Strategic Income A high level of current income, as
(Colonial Strategic Income is consistent with prudent risk and
Sub-Account)(formerly named maximizing total return, by
Colonial-Keyport Strategic diversifying investments primarily
Income Fund) in U.S. and foreign government and
high yield, high risk corporate
debt securities.
Colonial U.S. Stock Long-term capital growth by
(Colonial U.S. Stock Sub-Account) investing primarily in large
(formerly named Colonial-Keyport capitalization equity securities.
U.S. Stock Fund)
Liberty All-Star Equity Total investment return, comprised
(Liberty All-Star Equity Sub-Account) of long-term capital appreciation
and current income, through
investment primarily in a
diversified portfolio of equity
securities.
Stein Roe Global Utilities Current income and long-term growth
(Stein Roe Global Utilities of capital and income.
Sub-Account)(formerly named
Colonial-Keyport Utilities Fund)
Eligible Funds of MFS Trust
and Variable Account
Sub-Accounts Investment Objective
MFS Bond High level of current income
(MFS Bond Sub-Account) as is believed consistent
with prudent investment risk
and secondarily to protect
shareholders' capital.
MFS Emerging Growth Long-term growth of capital.
(MFS Emerging Growth Sub-Account)
MFS Research Long-term growth of capital and
(MFS Research Sub-Account) future income.
Eligible Funds of SteinRoe Trust
and Variable Account
Sub-Accounts Investment Objective
Stein Roe Balanced High total investment return
(Stein Roe Balanced through investment in a changing
Sub-Account) (formerly named SteinRoe mix of securities.
Managed Assets Fund)
Stein Roe Growth Stock Long-term growth of capital through
(Stein Roe Growth Stock investment primarily in common
Sub-Account)(formerly named SteinRoe stocks.
Managed Growth Stock Fund)
Stein Roe Money Market High current income from short-term
(Stein Roe Money Market money market instruments while
Sub-Account)(formerly named SteinRoe emphasizing preservation of capital
Cash Income Fund) and maintaining excellent
liquidity.
Stein Roe Special Venture Capital growth by investing
(Stein Roe Special Venture primarily in common stocks,
Sub-Account)(formerly named SteinRoe convertible securities, and other
Capital Appreciation Fund) securities selected for prospective
capital growth.
There is no assurance that the Eligible Funds will achieve their stated
objectives.
All the Eligible Funds are funding vehicles for variable annuity contracts
and variable life insurance policies offered by separate accounts of
Keyport and of insurance companies affiliated and unaffiliated with
Keyport. The risks involved in this "mixed and shared funding" are
disclosed in the Eligible Fund prospectuses under the following captions:
AIM Insurance Funds--"Purchase and Redemption of Shares"; Alliance Series
Fund--"Introduction to the Fund"; Liberty Trust--"The Trust"; MFS Trust--
"Investment Concept of the Trust"; and SteinRoe Trust--"The Trust".
Transfer of Variable Account Value
Certificate Owners may transfer Variable Account Value from one Sub-Account
to another Sub-Account and/or to the Fixed Account. See "Recent
Developments".
The Certificate allows Keyport to charge a transfer fee and to limit the
number of transfers that can be made in a specified time period.
Certificate Owners should be aware that transfer limitations may prevent a
Certificate Owner from making a transfer on the date he or she wants to,
with the result that the Certificate Owner's future Certificate Value may
be lower than it would have been had the transfer been made on the desired
date.
Currently, Keyport has no limit on the number or frequency of transfers,
and it is not charging a transfer fee of $25 for each transfer in excess of
12 per Certificate Year. For transfers under different Certificates that
are being requested under powers of attorney with a common attorney-in-fact
or that are, in Keyport's determination, based on the recommendation of a
common investment adviser or broker/dealer, there is a transfer limitation
of one transfer every 30 days or such other period as Keyport may permit.
Keyport is also limiting each transfer to a maximum of $500,000 or such
greater amount as Keyport may permit. All transfers requested for a
Certificate on the same day will be treated as a single transfer and the
total combined transfer amount will be subject to the $500,000 limitation.
If the $500,000 limitation is exceeded, no amount of the transfer will be
executed by Keyport.
In applying the $500,000 limitation, Keyport may treat as one transfer all
transfers requested by a Certificate Owner for multiple Certificates he or
she owns. If the $500,000 limitation is exceeded for multiple transfers
requested on the same day that are treated as a single transfer, no amount
of the transfer will be executed by Keyport.
In applying the $500,000 limitation to transfers requested by a common
attorney-in-fact or investment adviser, Keyport will treat as one transfer
all transfers requested under different Certificates that are being
requested under powers of attorney with a common attorney-in-fact or that
are, in Keyport's determination, based on the recommendation of a common
investment adviser or broker/dealer. If the $500,000 limitation is exceeded
for multiple transfers requested on the same day that are treated as a
single transfer, no amount of the transfer will be executed by Keyport. If
a transfer is executed under one Certificate and, within the next 30 days,
a transfer request for another Certificate is determined by Keyport to be
related to the executed transfer under this paragraph's rules, the transfer
request will not be executed by Keyport. In order for it to be executed, it
would need to be requested again after the 30 day period has expired and
it, along with any other transfer requests that are collectively treated as
a single transfer, would need to total less than $500,000.
Keyport's interest in applying these limitations is to protect the
interests of both Certificate Owners who are not engaging in significant
transfer activity and Certificate Owners who are engaging in such activity.
Keyport has determined that the actions of Certificate Owners engaging in
significant transfer activity among Sub-Accounts may cause an adverse
affect on the performance of the Eligible Fund for the Sub-Account
involved. The movement of Sub-Account values from one Sub-Account to
another may prevent the appropriate Eligible Fund from taking advantage of
investment opportunities because it must maintain a liquid position in
order to handle redemptions. Such movement may also cause a substantial
increase in Fund transaction costs which must be indirectly borne by
Certificate Owners.
Certificate Owners will be notified, in advance, of the imposition of any
transfer fee or of a change in the limitation on the number of transfers.
The fee will not exceed $25.
Transfers must be made by Written Request unless the Certificate Owner has
by Written Request authorized Keyport to accept telephone transfer requests
from the Certificate Owner or from a person acting for the Certificate
Owner as an attorney-in-fact under a power of attorney. By authorizing
Keyport to accept telephone transfer instructions, a Certificate Owner
agrees to accept and be bound by the conditions and procedures established
by Keyport from time to time. The current conditions and procedures are in
Appendix B and Certificate Owners authorizing telephone transfers will be
notified, in advance, of any changes. Written transfer requests may be made
by a person acting for the Certificate Owner as an attorney-in-fact under a
power of attorney.
Transfer requests received by Keyport before the close of trading on the
New York Stock Exchange (currently 4:00 PM Eastern Time) will be initiated
at the close of business that day. Any requests received later will be
initiated at the close of the next business day. Each request from a
Certificate Owner to transfer value will be executed by both redeeming and
acquiring Accumulation Units on the day Keyport initiates the transfer.
If 100% of any Sub-Account's value is transferred and the allocation
formula for Purchase Payments includes that Sub-Account, then the
allocation formula for future Purchase Payments will automatically change
unless the Certificate Owner instructs otherwise. For example, if the
allocation formula is 50% to Sub-Account A and 50% to Sub-Account B and all
of Sub-Account A's value is transferred to Sub-Account B, the allocation
formula will change to 100% to Sub-Account B unless the Certificate Owner
instructs otherwise.
Substitution of Eligible Funds and Other Variable Account Changes
If the shares of any of the Eligible Funds should no longer be available
for investment by the Variable Account or if in the judgment of Keyport's
management further investment in such fund shares should become
inappropriate in view of the purpose of the Certificate, Keyport may add or
substitute shares of another Eligible Fund or of another mutual fund for
Eligible Fund shares already purchased under the Certificate. No
substitution of Fund shares in any Sub-Account may take place without prior
approval of the Securities and Exchange Commission and notice to
Certificate Owners, to the extent required by the Investment Company Act of
1940.
Keyport has also reserved the right, subject to compliance with the law as
currently applicable or subsequently changed: (a) to operate the Variable
Account in any form permitted under the Investment Company Act of 1940 or
in any other form permitted by law; (b) to take any action necessary to
comply with or obtain and continue any exemptions from the Investment
Company Act of 1940 or to comply with any other applicable law; (c) to
transfer any assets in any Sub-Account to another Sub-Account, or to one or
more separate investment accounts, or to Keyport's general account; or to
add, combine or remove Sub-Accounts in the Variable Account; and (d) to
change the way Keyport assesses charges, so long as the aggregate amount is
not increased beyond that currently charged to the Variable Account and the
Eligible Funds in connection with the Certificates.
DEDUCTIONS
Deductions for Mortality and Expense Risk Charge
Although variable annuity payments made to Annuitants will vary in
accordance with the investment performance of the investments of the
Variable Account, they will not be affected by the mortality experience
(death rate) of persons receiving such payments or of the general
population. Keyport guarantees the Death Benefits described below (see
"Death Benefits"). Keyport assumes an expense risk that the asset-based
Administrative Charge will be insufficient to cover the anticipated portion
of Keyport's administrative expenses.
To compensate it for assuming mortality and expense risks, for each
Valuation Period Keyport deducts from each Sub-Account a Mortality and
Expense Risk Charge equal on an annual basis to 1.25% of the average daily
net asset value of the Sub-Account. The charge is deducted during both the
accumulation and annuity periods (i.e., both before and after the Income
Date). Less than the full charge will be deducted from Sub-Account values
attributable to Certificates issued to employees of Keyport and other
persons specified in "Sales of the Certificates".
Deductions for Daily Administrative Charge
Keyport also deducts from each Sub-Account each Valuation Period an
Administrative Charge equal on an annual basis to 0.15% of the average
daily net asset value of the Sub-Account. This charge compensates Keyport
for a portion of the administrative expenses relating to the Certificate.
Deductions for Transfers of Variable Account Value
The Certificate allows Keyport to charge a transfer fee. Currently no fee
is being charged. Certificate Owners will be notified, in advance, of the
imposition of any fee. The fee will not exceed $25.
Deductions for Premium Taxes
Keyport deducts the amount of any premium taxes levied by any state or
governmental entity when paid unless Keyport elects to defer such
deduction. It is not possible to describe precisely the amount of premium
tax payable on any transaction involving the Certificate offered hereby.
Such premium taxes depend, among other things, on the type of Certificate
(Qualified or Non-Qualified), on the state of residence of the Certificate
Owner, the state of residence of the Annuitant, the status of Keyport
within such states, and the insurance tax laws of such states. Currently
such premium taxes range from 0% to 5.0% of either total Purchase Payments
or Certificate Value.
Deductions for Income Taxes
Keyport will deduct from any amount payable under the Certificate any
income taxes that a governmental authority requires Keyport to withhold
with respect to that amount. See "Income Tax Withholding" and "Tax-
Sheltered Annuities".
Total Variable Account Expenses
Total Variable Account expenses in relation to the Certificate will be the
Mortality and Expense Risk Charge and the Daily Administrative Charge.
The value of the assets in the Variable Account will reflect the value of
Eligible Fund shares and therefore the deductions from and expenses paid
out of the assets of the Eligible Funds. These deductions and expenses are
described in the Eligible Fund prospectuses.
OTHER SERVICES
The Programs. Keyport offers several investment related programs which are
available only prior to the Income Date: Asset Allocation; Dollar Cost
Averaging; Systematic Investment; and Systematic Withdrawal Programs. A
Rebalancing Program is available prior to and after the Income Date. Under
each Program that utilizes transfers, the related transfers between and
among Sub-Accounts and the Fixed Account are not counted as one of the
twelve free transfers. Each of the Programs has its own requirements, as
discussed below. Keyport reserves the right to terminate any Program.
If the Certificate Owner has submitted the required telephone authorization
form, certain changes may be made by telephone. For those Programs
involving transfers, Owners may change instructions by telephone with
regard to which Sub-Accounts or the Fixed Account Certificate Value may be
transferred. The current conditions and procedures are described in
Appendix B.
Dollar Cost Averaging Program. Keyport offers a Dollar Cost Averaging
Program that Certificate Owners may participate in by Written Request. The
program periodically transfers Accumulation Units from the Stein Roe Money
Market Sub-Account or the One-Year Guarantee Period of the Fixed Account to
other Sub-Accounts selected by the Certificate Owner. The program allows a
Certificate Owner to invest in Variable Sub-Accounts over time rather than
having to invest in those Sub-Accounts all at once. The program is
available for initial and subsequent Purchase Payments and for Certificate
Value transferred into the Stein Roe Money Market Sub-Account or the One-
Year Guarantee Period. Under the program, Keyport makes automatic transfers
on a periodic basis out of the Stein Roe Money Market Sub-Account or the
One-Year Guarantee Period into one or more of the other available Sub-
Accounts (Keyport reserves the right to limit the number of Sub-Accounts
the Certificate Owner may choose but there are currently no limits).
The Certificate Owner by Written Request must specify the Stein Roe Money
Market Sub-Account or the One Year Guarantee Period from which the
transfers are to be made, the monthly amount to be transferred (minimum
$100) and the Sub-Account(s) to which the transfers are to be made. The
first transfer will occur at the close of the Valuation Period that
includes the 30th day after the receipt of the Certificate Owner's Written
Request. Each succeeding transfer will occur one month later (e.g., if the
30th day after the receipt date is April 8, the second transfer will occur
at the close of the Valuation Period that includes May 8). When the
remaining value is less than the monthly transfer amount, that remaining
value will be transferred and the program will end. Before this final
transfer, the Certificate Owner may extend the program by allocating
additional Purchase Payments to the Stein Roe Money Market Sub-Account or
the One Year Guarantee Period or by transferring Certificate Value to the
Stein Roe Money Market Sub-Account or the One Year Guarantee Period. The
Certificate Owner may, by Written Request or by telephone, change the
monthly amount to be transferred, change the Sub-Account(s) to which the
transfers are to be made, or end the program. The program will
automatically end if the Income Date occurs. Keyport reserves the right to
end the program at any time by sending the Certificate Owner a notice one
month in advance.
Written or telephone instructions must be received by Keyport by the end
(currently 4:00 PM Eastern Time) of the business day preceding the next
scheduled transfer in order to be in effect for that transfer. Telephone
instructions are subject to the conditions and procedures established by
Keyport from time to time. The current conditions and procedures appear in
Appendix B, and Certificate Owners in a dollar cost averaging program will
be notified, in advance, of any changes.
Asset Allocation Program. Certificate Owners may select from five asset
allocation model portfolios separately developed by Ibbotson Associates and
Standard & Poor's (Model A -- Capital Preservation, Model B -- Income and
Growth, Model C -- Moderate Growth, Model D -- Growth, and Model E --
Aggressive Growth). If a Certificate Owner elects one of the models,
initial and subsequent Purchase Payments will automatically be allocated
among the Sub-Accounts in the model. Only one model may be used in a
Certificate at a time. Certificate Owners may use a questionnaire and
scoring system to determine the model which corresponds to their risk
tolerance and time horizons.
Periodically Ibbotson Associates and Standard & Poor's will review the
models and may determine that a reconfiguration of the Sub-Accounts and
percentage allocations among those Sub-Accounts is appropriate. Certificate
Owners will receive notification prior to any reconfiguration.
The Fixed Account is not available in any asset allocation model. A
Certificate Owner may allocate initial or subsequent Purchase Payments, or
Certificate Value, between an asset allocation model and the Fixed Account.
Rebalancing Program. In accordance with the Certificate Owner's election of
the relative Purchase Payment percentage allocations, Keyport will
automatically rebalance the Certificate Value of each Sub-Account either
monthly, quarterly, semi-annually, or annually. On the last day of the
period selected, Keyport will automatically rebalance the Certificate Value
in each of the Sub-Accounts to match the current Purchase Payment
percentage allocations. The Program may be terminated at any time and the
percentages may be altered by Written Request. The requested change must be
received at the Office ten (10) days prior to the end of the period
selected. Certificate Value allocated to the Fixed Account is not subject
to automatic rebalancing. After the Income Date, automatic rebalancing
applies only to variable annuity payments and Keyport will rebalance the
number of Annuity Units in each Sub-Account (Annuity Units are used to
calculate the amount of each Sub-Account annuity payment; see "Variable
Annuity Benefits" in the Statement of Additional Information).
Systematic Investment Program. Purchase Payments under Non-Qualified
Certificates may be made by monthly deductions from the bank account or
payroll of any Certificate Owner who has completed and returned to Keyport
a Systematic Investment Program application and authorization form. The
application and authorization form may be obtained from Keyport or from the
sales representative. Each Systematic Investment Program Purchase Payment
is subject to a current minimum of $50.
Systematic Withdrawal Program. To the extent permitted by law, Keyport will
make monthly, quarterly, semi-annually or annual distributions of a
predetermined dollar amount to the Certificate Owner that has enrolled in
the Systematic Withdrawal Program. Under the Program, all distributions
will be made directly to the Certificate Owner and will be treated for
federal tax purposes as any other withdrawal or distribution of Certificate
Value. (See "Tax Status".) The Certificate Owner may specify the amount of
each partial withdrawal, subject to a minimum of $100. Systematic
withdrawals may be made from the Sub-Accounts and the one, three, five, and
seven year Guarantee Periods of the Fixed Account.
Unless the Certificate Owner specifies the Sub-Account or Sub-Accounts or
the Fixed Account from which withdrawals of Certificate Value shall be made
or if the amount in a specified Sub-Account is less than the predetermined
amount, Keyport will make withdrawals under the Program from the Sub-
Accounts and the Fixed Account in amounts proportionate to the amounts in
the Sub-Accounts and the Fixed Account. All withdrawals under the Program
will be effected by canceling the number of Accumulation Units equal in
value to the amount to be distributed to the Certificate Owner.
The Program may be combined with all other Programs except the Systematic
Investment Program.
THE CERTIFICATES
Variable Account Value
The Variable Account Value for a Certificate is the sum of the value of
each Sub-Account to which values are allocated under a Certificate. The
value of each Sub-Account is determined at any time by multiplying the
number of Accumulation Units attributable to that Sub-Account by the
Accumulation Unit value for that Sub-Account at the time of determination.
The Accumulation Unit value is an accounting unit of measure used to
determine the change in an Accumulation Unit's value from Valuation Period
to Valuation Period.
Each Purchase Payment that is made results in additional Accumulation Units
being credited to the Certificate and the appropriate Sub-Account
thereunder. The number of additional units for any Sub-Account will equal
the amount allocated to that Sub-Account divided by the Accumulation Unit
value for that Sub-Account at the time of investment.
Valuation Periods
The Variable Account is valued each Valuation Period using the net asset
value of the Eligible Fund shares. A Valuation Period is the period
commencing at the close of trading on the New York Stock Exchange on each
Valuation Date and ending at the close of trading for the next succeeding
Valuation Date. A Valuation Date is each day that the New York Stock
Exchange is open for business. The New York Stock Exchange is currently
closed on weekends, New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Net Investment Factor
Variable Account Value will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect value, Keyport utilizes an Accumulation Unit value.
Each Sub-Account has its own Accumulation Units and value per Unit. The
Unit value applicable during any Valuation Period is determined at the end
of that period.
When Keyport first purchased Eligible Fund shares on behalf of the Variable
Account, Keyport valued each Accumulation Unit at a specified dollar
amount. The Unit value for each Sub-Account in any Valuation Period
thereafter is determined by multiplying the value for the prior period by a
net investment factor. This factor may be greater or less than 1.0;
therefore, the Accumulation Unit may increase or decrease from Valuation
Period to Valuation Period. Keyport calculates a net investment factor for
each Sub-Account by dividing (a) by (b) and then subtracting (c) (i.e.,
(a/b) - c), where:
(a) is equal to:
(i) the net asset value per share of the Eligible Fund at the end of the
Valuation Period; plus
(ii) the per share amount of any distribution made by the Eligible Fund if
the "ex-dividend" date occurs during that same Valuation Period.
(b) is the net asset value per share of the Eligible Fund at the end of the
prior Valuation Period.
(c) is equal to:
(i) the Valuation Period equivalent of the Mortality and Expense Risk
Charge; plus
(ii) the Valuation Period equivalent of the daily Administrative Charge;
plus
(iii) a charge factor, if any, for any tax provision established by Keyport
as a result of the operations of that Sub-Account.
For Certificates issued to employees of Keyport and other persons specified
in "Sales of the Certificates", Unit values with .35% in (c)(i) above.
Modification of the Certificate
Only Keyport's President or Secretary may agree to alter the Certificate or
waive any of its terms. Any changes must be made in writing and with the
Certificate Owner's consent, except as may be required by applicable law.
Right to Revoke
The Certificate Owner may return the Certificate within 10 days after he or
she receives it by delivering or mailing it to Keyport's Office. The return
of the Certificate by mail will be effective when the postmark is affixed
to a properly addressed and postage-prepaid envelope. The returned
Certificate will be treated as if Keyport never issued it and Keyport will
refund either the Certificate Value or Purchase Payments, as required by
state law.
For Certificates delivered in California to a Certificate Owner age 60 or
older, the Certificate Owner may return the Certificate to Keyport's Office
or to the agent from whom the Certificate was purchased. If the Certificate
is received at Keyport's Office or by the agent within 30 days after the
Certificate Owner receives the Certificate, Keyport will refund the
Certificate Value.
DEATH PROVISIONS FOR NON-QUALIFIED CERTIFICATES
Death of Primary Owner, Joint Owner or Certain Non-Owner Annuitant. These
provisions apply if, before the Income Date while the Certificate is In
Force, the primary Certificate Owner or any Joint Certificate Owner dies
(whether or not the decedent is also the Annuitant) or the Annuitant dies
under a Certificate with a non-natural Certificate Owner such as a trust.
The Designated Beneficiary will control the Certificate after such a death.
If the decedent's surviving spouse (if any) is the sole Designated
Beneficiary, the surviving spouse will automatically become the new sole
primary Certificate Owner as of the decedent's date of death. And, if the
Annuitant is the decedent, the new Annuitant will be any living contingent
annuitant, otherwise the surviving spouse. The Certificate may continue
until another death occurs (i.e., until the death of the Annuitant, primary
Certificate Owner or joint Certificate Owner). Except for this paragraph,
all of "Death Provisions" will apply to that subsequent death.
In all other cases, the Certificate may continue up to five years from the
date of death. During this period, the Designated Beneficiary may exercise
all ownership rights, including the right to make transfers or partial
surrenders or the right to totally surrender the Certificate for its
Surrender Value. If the Certificate is still in effect at the end of the
five-year period, Keyport will automatically end it then by paying the
Certificate Value to the Designated Beneficiary. If the Designated
Beneficiary is not then alive, Keyport will pay any person(s) named by the
Designated Beneficiary in a Written Request; otherwise the Designated
Beneficiary's estate.
The Covered Person under this paragraph shall be the decedent if he or she
is the first to die of the primary Certificate Owner, Joint Certificate
Owner, Annuitant, or, if there is a non-natural Certificate Owner such as a
trust, the Annuitant shall be the Covered Person. If the Covered Person
dies, the Certificate Value will be increased, as provided below, if it is
less than the Death Benefit Amount ("DBA"). The DBA is:
The DBA at issue is the initial Purchase Payment. Thereafter, the DBA is
calculated for each Valuation period by adding any additional Purchase
Payments, and deducting any partial withdrawals. This resulting amount is
the "net Purchase Payment death benefit". The Certificate Value for each
Certificate Anniversary (the "Anniversary Value") before the 81st birthday
of the Covered Person is determined. Each Anniversary Value is increased by
any Purchase Payments made after that anniversary. This resultant value is
then decreased by an amount calculated at the time of any partial
withdrawal made after that anniversary. The amount is calculated by taking
the amount of any partial withdrawal, and dividing by the Certificate Value
immediately preceding the partial withdrawal, and then multiplying by the
Anniversary Value immediately preceding the withdrawal. The greatest
Anniversary Value, as so adjusted, (the "greatest Anniversary Value") is
the DBA unless the net Purchase Payment death benefit is higher. The net
Purchase Payment death benefit will be the DBA if such amount is higher
than the greatest Anniversary Value.
When Keyport receives due proof of the Covered Person's death, Keyport will
compare, as of the date of death, the Certificate Value to the DBA. If the
Certificate Value was less than the DBA, Keyport will increase the current
Certificate Value by the amount of the difference. Note that while the
amount of the difference is determined as of the date of death, that amount
is not added to the Certificate Value until Keyport receives due proof of
death. The amount to be credited will be allocated to the Variable Account
and/or the Fixed Account based on the Purchase Payment allocation selection
that is in effect when Keyport receives due proof of death. Whether or not
the Certificate Value is increased because of this minimum death provision,
the Designated Beneficiary may, by the later of the 90th day after the
Covered Person's death and the 60th day after Keyport is notified of the
death, surrender the Certificate for the Certificate Withdrawal Value. If
the Certificate is not surrendered, it will continue for the time period
specified above.
Payment of Benefits. Instead of receiving a lump sum, the Certificate Owner
or any Designated Beneficiary may direct by Written Request that Keyport
pay any benefit of $5,000 or more under an annuity payment option that
meets the following: (a) the first payment to the Designated Beneficiary
must be made no later than one year after the date of death; (b) payments
must be made over the life of the Designated Beneficiary or over a period
not extending beyond that person's life expectancy; and (c) any payment
option that provides for payments to continue after the death of the
Designated Beneficiary will not allow the successor payee to extend the
period of time over which the remaining payments are to be made.
Death of Certain Non-Certificate Owner Annuitant. These provisions apply
if, before the Income Date while the Certificate is In Force, (a) the
Annuitant dies, (b) the Annuitant is not a Certificate Owner, and (c) the
Certificate Owner is a natural person. The Certificate will continue after
the Annuitant's death. The new Annuitant will be any living contingent
annuitant, otherwise the primary Certificate Owner. If the Annuitant is the
first to die of the Certificate's primary Certificate Owner, Joint
Certificate Owner and Annuitant, then the Annuitant is the Covered Person
and the Certificate Value will be increased, as provided below, if it is
less than the Death Benefit Amount ("DBA"), as defined above. When Keyport
receives due proof of the Annuitant's death, Keyport will compare, as of
the date of death, the Certificate Value to the DBA. If the Certificate
Value was less than the DBA, Keyport will increase the current Certificate
Value by the amount of the difference. Note that while the amount of the
difference is determined as of the date of death, that amount is not added
to the Certificate Value until Keyport receives due proof of death. The
amount to be credited will be allocated to the Variable Account and/or the
Fixed Account based on the Purchase Payment allocation selection that is in
effect when Keyport receives due proof of death. Whether or not the
Certificate Value is increased because of this minimum death provision, the
Certificate Owner may surrender the Certificate within 90 days of the date
of the Annuitant's death for the Certificate Withdrawal Value.
DEATH PROVISIONS FOR QUALIFIED CERTIFICATES
Death of Annuitant. If the Annuitant dies before the Income Date while the
Certificate is In Force, the Designated Beneficiary will control the
Certificate after such a death. The Certificate Value will be increased, as
provided below, if it is less than the Death Benefit Amount ("DBA") as
defined above. When Keyport receives due proof of the Annuitant's death,
Keyport will compare, as of the date of death, the Certificate Value to the
DBA. If the Certificate Value was less than the DBA, Keyport will increase
the current Certificate Value by the amount of the difference. Note that
while the amount of the difference is determined as of the date of death,
that amount is not added to the Certificate Value until Keyport receives
due proof of death. The amount to be credited will be allocated to the
Variable Account and/or the Fixed Account based on the Purchase Payment
allocation selection that is in effect when Keyport receives due proof of
death. Whether or not the Certificate Value is increased because of this
minimum death provision, the Designated Beneficiary may, by the later of
the 90th day after the Annuitant's death and the 60th day after Keyport is
notified of the death, surrender the Certificate for the Certificate
Withdrawal Value.
If the Certificate is not surrendered, it may continue for the time period
permitted by the Internal Revenue Code provisions applicable to the
particular Qualified Plan. During this period, the Designated Beneficiary
may exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to totally surrender the Certificate for
its Certificate Withdrawal Value. If the Certificate is still in effect at
the end of the period, Keyport will automatically end it then by paying the
Certificate Withdrawal Value to the Designated Beneficiary. If the
Designated Beneficiary is not alive then, Keyport will pay any person(s)
named by the Designated Beneficiary in a Written Request; otherwise the
Designated Beneficiary's estate.
Payment of Benefits. Instead of receiving a lump sum, the Certificate Owner
or any Designated Beneficiary may direct by Written Request that Keyport
pay any benefit of $5,000 or more under an annuity payment option that
meets the following: (a) the first payment to the Designated Beneficiary
must be made no later than one year after the date of death; (b) payments
must be made over the life of the Designated Beneficiary or over a period
not extending beyond that person's life expectancy; and (c) any payment
option that provides for payments to continue after the death of the
Designated Beneficiary will not allow the successor payee to extend the
period of time over which the remaining payments are to be made.
CERTIFICATE OWNERSHIP
The Certificate Owner shall be the person designated in the application.
The Certificate Owner may exercise all the rights of the Certificate. Joint
Certificate Owners are permitted but not contingent Certificate Owners.
The Certificate Owner may by Written Request change the Certificate Owner,
primary beneficiary, contingent beneficiary or contingent annuitant. An
irrevocably-named person may be changed only with the written consent of
such person.
Because a change of Certificate Owner by means of a gift (i.e., a transfer
without full and adequate consideration) may be a taxable event, a
Certificate Owner should consult a competent tax adviser as to the tax
consequences resulting from such a transfer.
Any Qualified Certificate may have limitations on transfer of ownership. A
Certificate Owner should consult the Plan Administrator and a competent tax
adviser as to the tax consequences resulting from such a transfer.
ASSIGNMENT
The Certificate Owner may assign the Certificate at any time. A copy of any
assignment must be filed with Keyport. The Certificate Owner's rights and
those of any revocably-named person will be subject to the assignment. Any
Qualified Certificate may have limitations on assignability.
Because an assignment may be a taxable event, a Certificate Owner should
consult a competent tax adviser as to the tax consequences resulting from
any such assignment.
PARTIAL WITHDRAWALS AND SURRENDER
The Certificate Owner may make partial withdrawals from the Certificate.
Keyport must receive a Written Request and the minimum amount to be
withdrawn must be at least $300 or such lesser amount as Keyport may permit
in conjunction with a Systematic Withdrawal Program. If the Certificate
Value after a partial withdrawal would be below $2,500, Keyport will treat
the request as a withdrawal of only the excess amount over $2,500. Unless
the request specifies otherwise, the total amount withdrawn will be
deducted from all Sub-Accounts of the Variable Account in the ratio that
the value in each Sub-Account bears to the total Variable Account Value. If
there is no value, or insufficient value, in the Variable Account, then the
amount surrendered, or the insufficient portion, will be deducted from the
Fixed Account in the ratio that each Guarantee Period's value bears to the
total Fixed Account Value.
The Certificate Owner may totally surrender the Certificate by making a
Written Request. Surrendering the Certificate will end it. Upon surrender,
the Certificate Owner will receive the Certificate Withdrawal Value.
Keyport will pay the amount of any surrender within seven days of receipt
of such request. Alternatively, the Certificate Owner may purchase for
himself or herself an annuity option with any surrender benefit of at least
$5,000. Keyport's consent is needed to choose an option if the Certificate
Owner is not a natural person.
Annuity options based on life contingencies cannot be surrendered after
annuity payments have begun. Option A, which is not based on life
contingencies, may be surrendered if a variable payout has been selected.
Because of the potential tax consequences of a full or partial surrender, a
Certificate Owner should consult a competent tax adviser regarding a
surrender.
ANNUITY PROVISIONS
Annuity Benefits
If the Annuitant is alive on the Income Date and the Certificate is In
Force, payments will begin under the annuity option or options the
Certificate Owner has chosen. The amount of the payments will be determined
by applying the Certificate Value increased or decreased by a limited
Market Value Adjustment of Fixed Account Value described in Appendix A
(less any premium taxes not previously deducted) on the Income Date in
accordance with the option selected.
Income Date and Annuity Option
The Certificate Owner may select an Income Date and an Annuity Option at
the time of application. If the Certificate Owner does not select an
Annuity Option, Option B will automatically be designated. If the
Certificate Owner does not select an Income Date for the Annuitant, the
Income Date will automatically be the earlier of (i) the later of the
Annuitant's 90th birthday and the 10th Certificate Anniversary and (ii) any
maximum date permitted under state law.
Change in Income Date and Annuity Option
The Certificate Owner may choose or change an Annuity Option or the Income
Date by making a Written Request to Keyport at least 30 days prior to the
Income Date. However, any Income Date must be: (a) for fixed annuity
options, not earlier than the first Certificate Anniversary; and (b) not
later than the earlier of (i) the later of the Annuitant's 90th birthday
and the 10th Certificate Anniversary and (ii) any maximum date permitted
under state law.
Annuity Options
The Annuity Options are:
Option A: Income for a Fixed Number of Years;
Option B: Life Income with 10 Years of Payments Guaranteed; and
Option C: Joint and Last Survivor Income.
Other options may be arranged by mutual consent. Each option is available
in two forms - as a variable annuity for use with the Variable Account and
as a fixed annuity for use with Keyport's general account Fixed Account.
Variable annuity payments will fluctuate while fixed annuity payments will
not. The dollar amount of each fixed annuity payment will be determined by
deducting from the Certificate Value increased or decreased by a limited
Market Value Adjustment described in Appendix A, any premium taxes not
previously deducted and then dividing the remainder by $1,000 and
multiplying the result by the greater of: (a) the applicable factor shown
in the appropriate table in the Certificate; or (b) the factor currently
offered by Keyport at the time annuity payments begin. This current factor
may be based on the sex of the payee unless to do so would be prohibited by
law.
If no Annuity Option is selected, Option B will automatically be applied.
Unless the Certificate Owner chooses otherwise, Variable Account Value
(less any applicable premium taxes not previously deducted) will be applied
to a variable annuity option and Fixed Account Value increased or decreased
by a limited Market Value Adjustment described in Appendix A less any
premium taxes not previously deducted will be applied to a fixed annuity
option. Whether variable or fixed, the same Certificate Value applied to
each option will produce a different initial annuity payment as well as
different subsequent payments.
The payee is the person who will receive the sum payable under an annuity
option. Any annuity option that provides for payments to continue after the
death of the payee will not allow the successor payee to extend the period
of time over which the remaining payments are to be made.
If the amount available to apply under any variable or fixed option is less
than $5,000, Keyport has reserved the right to pay such amount in one sum
to the payee in lieu of the payment otherwise provided for.
Annuity payments will be made monthly unless quarterly, semi-annual or
annual payments are chosen by Written Request. However, if any payment
provided for would be or becomes less than $100, Keyport has the right to
reduce the frequency of payments to such an interval as will result in each
payment being at least $100.
Option A: Income For a Fixed Number of Years. Keyport will pay an annuity
for a chosen number of years, not fewer than 5 nor over 50 (a period of
years over 30 may be chosen only if it does not exceed the difference
between age 100 and the Annuitant's age on the date of the first payment).
Option A is referred to as Preferred Income Plan (PIP). At any time while
variable annuity payments are being made, the payee may elect to receive
the following amount: the present value of the remaining payments, commuted
at the interest rate used to create the annuity factor for this option
(this interest rate is 6% per year (5% per year for Oregon and Texas
Certificates), unless 3% per year is chosen by Written Request at the time
the option is selected). Instead of receiving a lump sum, the payee may
elect another payment option and the amount applied to the option will not
be reduced by the charge defined in (b) above. If, at the death of the
payee, Option A payments have been made for fewer than the chosen number of
years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity, this
interest rate is 6% per year (5% per year for Oregon and Texas
Certificates), unless 3% per year had been chosen by the payee at the time
the option was selected.
The Mortality and Expense Risk Charge is deducted during the Option A
payment period if a variable payout has been selected, but Keyport has no
mortality risk during this period.
Keyport has available a "level monthly" payment option that can be chosen
for variable payments under Option A. Under this option, the monthly
payment amount changes every twelve months instead of every month as would
be the case under the standard monthly payment frequency. The "level
monthly" option converts an annual payment amount into twelve equal monthly
payments as follows. Each annual payment will be determined as described
below in "Variable Annuity Payment Values". Each annual payment will then
be placed in Keyport's general account, from which it will be paid out in
twelve equal monthly payments. The sum of the twelve monthly payments will
exceed the annual payment amount because of an interest rate factor used by
Keyport that will vary from year to year. If the payments are commuted, (1)
the commutation method described above for calculating the present value of
remaining payments applies to any remaining annual payments and (2) any
unpaid monthly payments out of the current twelve will be commuted at the
interest rate that was used to determine those twelve current monthly
payments.
See "Annuity Payments" on Page 23 for the manner in which Option A may be
taxed.
Option B: Life Income with 10 Years of Payments Guaranteed. Keyport will
pay an annuity during the lifetime of the payee. If, at the death of the
payee, payments have been made for fewer than 10 years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity, this
interest rate is 6% per year (5% per year for Oregon and Texas
Certificates), unless 3% per year was chosen by Payee's Written Request.
The amount of the annuity payments will depend on the age of the payee on
the Income Date and it may also depend on the payee's sex.
Option C: Joint and Last Survivor Income. Keyport will pay an annuity for
as long as either the payee or a designated second natural person is alive.
The amount of the annuity payments will depend on the age of both persons
on the Income Date and it may also depend on each person's sex. IT IS
POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF BOTH
PAYEES DIE AFTER THE RECEIPT OF THE FIRST PAYMENT OR TO RECEIVE ONLY TWO
ANNUITY PAYMENTS IF BOTH PAYEES DIE AFTER RECEIPT OF THE SECOND PAYMENT AND
SO ON.
Variable Annuity Payment Values
The amount of the first variable annuity payment is determined by Keyport
using an annuity purchase rate that is based on an assumed annual
investment return of 6% per year (5% per year for Oregon and Texas
Certificates), unless 3% is chosen by Written Request. Subsequent variable
annuity payments will fluctuate in amount and reflect whether the actual
investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed
investment return. The total dollar amount of each variable annuity payment
will be equal to the sum of all Sub-Account payments. Currently, a payee
may instruct Keyport to change the Sub-Account(s) used to determine the
amount of the variable annuity payments unlimited times every 12 months.
Proof of Age, Sex, and Survival of Annuitant
Keyport may require proof of age, sex or survival of any payee upon whose
age, sex or survival payments depend. If the age or sex has been misstated,
Keyport will compute the amount payable based on the correct age and sex.
If income payments have begun, any underpayments Keyport may have made will
be paid in full with the next annuity payment. Any overpayments, unless
repaid in one sum, will be deducted from future annuity payments until
Keyport is repaid in full.
SUSPENSION OF PAYMENTS
Keyport reserves the right to postpone surrender payments from the Fixed
Account for up to six months. Keyport reserves the right to suspend or
postpone any type of payment from the Variable Account for any period when:
(a) the New York Stock Exchange is closed other than customary weekend or
holiday closings; (b) trading on the Exchange is restricted; (c) an
emergency exists as a result of which it is not reasonably practicable to
dispose of securities held in the Variable Account or determine their
value; or (d) the Securities and Exchange Commission permits delay for the
protection of security holders. The applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the
conditions described in (b) and (c) exist.
TAX STATUS
Introduction
The Certificate is designed for use by individuals in retirement plans
which may or may not be Qualified Plans under the provisions of the
Internal Revenue Code (the "Code"). The ultimate effect of federal income
taxes on the Certificate Value, on annuity payments, and on the economic
benefit to the Certificate Owner, Annuitant or Designated Beneficiary
depends on the type of retirement plan for which the Certificate is
purchased and upon the tax and employment status of the individual
concerned. The discussion contained herein is general in nature and is not
intended as tax advice. Each person concerned should consult a competent
tax adviser. No attempt is made to consider any applicable state or other
tax laws. Moreover, the discussion herein is based upon Keyport's
understanding of current federal income tax laws as they are currently
interpreted. No representation is made regarding the likelihood of
continuation of those current federal income tax laws or of the current
interpretations by the Internal Revenue Service.
Recent Developments
The President has proposed and Congress will be considering certain changes
to the Code that would have significant adverse tax consequences for
exchanges of variable annuities and transfers between sub-accounts, and the
calculation of the taxable portion of a full surrender or partial
withdrawals. It is impossible to predict whether any of the proposed
changes to the Code will be enacted or in what form.
Taxation of Annuities in General
Section 72 of the Code governs taxation of annuities in general. There are
no income taxes on increases in the value of a Certificate until a
distribution occurs, in the form of a full surrender, a partial surrender,
an assignment or gift of the Certificate, or annuity payments.
Surrenders, Assignments and Gifts. A Certificate Owner who fully surrenders
his or her Certificate is taxed on the portion of the payment that exceeds
his or her cost basis in the Certificate. For Non-Qualified Certificates,
the cost basis is generally the amount of the Purchase Payments made for
the Certificate and the taxable portion of the surrender payment is taxed
as ordinary income. For Qualified Certificates, the cost basis is generally
zero and the taxable portion of the surrender payment is generally taxed as
ordinary income subject to special 5-year income averaging. A Designated
Beneficiary receiving a lump sum surrender benefit after the death of the
Annuitant or Certificate Owner is taxed on the portion of the amount that
exceeds the Certificate Owner's cost basis in the Certificate. If the
Designated Beneficiary elects to receive annuity payments within 60 days of
the decedent's death, different tax rules apply. See "Annuity Payments"
below. For Non-Qualified Certificates, the tax treatment applicable to
Designated Beneficiaries may be contrasted with the income-tax-free
treatment applicable to persons inheriting and then selling mutual fund
shares with a date-of-death value in excess of their basis.
Partial withdrawals received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Certificate
Value exceeds Purchase Payments. Then, to the extent the Certificate Value
does not exceed Purchase Payments, such withdrawals are treated as a non-
taxable return of principal to the Certificate Owner. For partial
withdrawals under a Qualified Certificate, payments are treated first as a
non-taxable return of principal up to the cost basis and then a taxable
return of income. Since the cost basis of Qualified Certificates is
generally zero, partial surrender amounts will generally be fully taxed as
ordinary income.
A Certificate Owner who assigns or pledges a Non-Qualified Certificate is
treated as if he or she had received the amount assigned or pledged and
thus is subject to taxation under the rules applicable to partial
withdrawals or surrenders. A Certificate Owner who gives away the
Certificate (i.e., transfers it without full and adequate consideration) to
anyone other than his or her spouse is treated for income tax purposes as
if he or she had fully surrendered the Certificate.
A special computational rule applies if Keyport issues to the Certificate
Owner, during any calendar year, (a) two or more Certificates or (b) one or
more Certificates and one or more of Keyport's other annuity contracts.
Under this rule, the amount of any distribution includable in the
Certificate Owner's gross income is to be determined under Section 72(e) of
the Code by treating all the Keyport contracts as one contract. Keyport
believes that this means the amount of any distribution under one
Certificate will be includable in gross income to the extent that at the
time of distribution the sum of the values for all the Certificates or
contracts exceeds the sum of the cost bases for all the contracts.
Annuity Payments. The non-taxable portion of each variable annuity payment
is determined by dividing the cost basis of the Certificate by the total
number of expected payments while the non-taxable portion of each fixed
annuity payment is determined by an "exclusion ratio" formula which
establishes the ratio that the cost basis of the Certificate bears to the
total expected value of annuity payments for the term of the annuity. The
remaining portion of each payment is taxable. Such taxable portion is taxed
at ordinary income rates. For Qualified Certificates, the cost basis is
generally zero. With annuity payments based on life contingencies, the
payments will become fully taxable once the payee lives longer than the
life expectancy used to calculate the non-taxable portion of the prior
payments. Because variable annuity payments can increase over time and
because certain payment options provide for a lump sum right of
commutation, it is possible that the IRS could determine that variable
annuity payments should not be taxed as described above but instead should
be taxed as if they were received under an agreement to pay interest. This
determination would result in a higher amount (up to 100%) of certain
payments being taxable.
With respect to the "level monthly" payment option available under Annuity
Option A, pursuant to which each annual payment is placed in Keyport's
general account and paid out with interest in twelve equal monthly
payments, it is possible the IRS could determine that receipt of the first
monthly payout of each annual payment is constructive receipt of the entire
annual payment. Thus, the total taxable amount for each annual payment
would be accelerated to the time of the first monthly payout and reported
in the tax year in which the first monthly payout is received.
Penalty Tax. Payments received by Certificate Owners, Annuitants, and
Designated Beneficiaries under Certificates may be subject to both ordinary
income taxes and a penalty tax equal to 10% of the amount received that is
includable in income. The penalty tax is not imposed on amounts received:
(a) after the taxpayer attains age 59-1/2; (b) in a series of substantially
equal payments made for life or life expectancy; (c) after the death of the
Certificate Owner (or, where the Certificate Owner is not a human being,
after the death of the Annuitant); (d) if the taxpayer becomes totally and
permanently disabled; or (e) under a Non-Qualified Certificate's annuity
payment option that provides for a series of substantially equal payments,
provided only one Purchase Payment is made to the Certificate, the
Certificate is not issued as a result of a Section 1035 exchange, and the
first annuity payment begins in the first Certificate Year.
Income Tax Withholding. Keyport is required to withhold federal income
taxes on taxable amounts paid under Certificates unless the recipient
elects not to have withholding apply. Keyport will notify recipients of
their right to elect not to have withholding apply. See "Tax-Sheltered
Annuities" (TSAs) for an alternative type of withholding that may apply to
distributions from TSAs that are eligible for rollover to another TSA or an
individual retirement annuity or account (IRA).
Section 1035 Exchanges. A Non-Qualified Certificate may be purchased with
proceeds from the surrender of an existing annuity contract. Such a
transaction may qualify as a tax-free exchange pursuant to Section 1035 of
the Code. It is Keyport's understanding that in such an event: (a) the new
Certificate will be subject to the distribution-at-death rules described in
"Death Provisions for Non-Qualified Certificates"; (b) Purchase Payments
made between August 14, 1982 and January 18, 1985 and the income allocable
to them will, following an exchange, no longer be covered by a
"grandfathered" exception to the penalty tax for a distribution of income
that is allocable to an investment made over ten years prior to the
distribution; and (c) Purchase Payments made before August 14, 1982 and the
income allocable to them will, following an exchange, continue to receive
the following "grandfathered" tax treatment under prior law: (i) the
penalty tax does not apply to any distribution; (ii) partial withdrawals
are treated first as a non-taxable return of principal and then a taxable
return of income; and (iii) assignments are not treated as surrenders
subject to taxation. Keyport's understanding of the above is principally
based on legislative reports prepared by the Staff of the Congressional
Joint Committee on Taxation. See "Recent Developments".
Diversification Standards. The U.S. Secretary of the Treasury has issued
regulations that set standards for diversification of the investments
underlying variable annuity contracts (other than pension plan contracts).
The Eligible Funds are designed to be managed to meet the diversification
requirements for the Certificate as those requirements may change from time
to time. If the diversification requirements are not satisfied, the
Certificate would not be treated as an annuity contract. As a consequence
to the Certificate Owner, income earned on a Certificate would be taxable
to the Certificate Owner in the year in which diversification requirements
were not satisfied, including previously non-taxable income earned in prior
years. As a further consequence, Keyport would be subjected to federal
income taxes on assets in the Variable Account.
The Secretary of the Treasury announced in September 1986 that he expects
to issue regulations which will prescribe the circumstances in which a
Certificate Owner's control of the investments of a segregated asset
account may cause the Certificate Owner, rather than the insurance company,
to be treated as the owner of the assets of the account. The regulations
could impose requirements that are not reflected in the Certificate.
Keyport, however, has reserved certain rights to alter the Certificate and
investment alternatives so as to comply with such regulations. Since the
regulations have not been issued, there can be no assurance as to the
content of such regulations or even whether application of the regulations
will be prospective. For these reasons, Certificate Owners are urged to
consult with their own tax advisers.
Qualified Plans
The Certificate is designed for use with several types of Qualified Plans.
The tax rules applicable to participants in such Qualified Plans vary
according to the type of plan and the terms and conditions of the plan
itself. Therefore, no attempt is made herein to provide more than general
information about the use of the Certificate with the various types of
Qualified Plans. Participants under such Qualified Plans as well as
Certificate Owners, Annuitants, and Designated Beneficiaries are cautioned
that the rights of any person to any benefits under such Qualified Plans
may be subject to the terms and conditions of the plans themselves
regardless of the terms and conditions of the Certificate issued in
connection therewith. Following are brief descriptions of the various types
of Qualified Plans and of the use of the Certificate in connection
therewith. Purchasers of the Certificate should seek competent advice
concerning the terms and conditions of the particular Qualified Plan and
use of the Certificate with that Plan.
Tax-Sheltered Annuities
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts
and, subject to certain contribution limitations, exclude the amount of
Purchase Payments from gross income for tax purposes. However, such
Purchase Payments may be subject to Social Security (FICA) taxes. This type
of annuity contract is commonly referred to as a "Tax-Sheltered Annuity"
(TSA).
Section 403(b)(11) of the Code contains distribution restrictions.
Specifically, benefits may be paid, through surrender of the Certificate or
otherwise, only (a) when the employee attains age 59-1/2, separates from
service, dies or becomes totally and permanently disabled (within the
meaning of Section 72(m)(7) of the Code) or (b) in the case of hardship. A
hardship distribution must be of employee contributions only and not of any
income attributable to such contributions. Section 403(b)(11) does not
apply to distributions attributable to assets held as of December 31, 1988.
Thus, it appears that the law's restrictions would apply only to
distributions attributable to contributions made after 1988, to earnings on
those contributions, and to earnings on amounts held as of 12/31/88. The
Internal Revenue Service has indicated that the distribution restrictions
of Section 403(b)(11) are not applicable when TSA funds are being
transferred tax-free directly to another TSA issuer, provided the
transferred funds continue to be subject to the Section 403(b)(11)
distribution restrictions.
Keyport will notify a Certificate Owner who has requested a distribution
from a Certificate if all or part of such distribution is eligible for
rollover to another TSA or to an individual retirement annuity or account
(IRA). Any amount eligible for rollover treatment will be subject to
mandatory federal income tax withholding at a 20% rate if the Certificate
Owner receives the amount rather than directing Keyport by Written Request
to transfer the amount as a direct rollover to another TSA or IRA.
Individual Retirement Annuities
Sections 408(b) and 408A of the Code permit eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" and "Roth IRA", respectively. These individual
retirement annuities are subject to limitations on the amount which may be
contributed, the persons who may be eligible, and on the time when
distributions may commence. In addition, distributions from certain types
of Qualified Plans may be placed on a tax-deferred basis into a Section
408(b) Individual Retirement Annuity.
Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. Such retirement
plans may permit the purchase of the Certificate to provide benefits under
the plans.
Deferred Compensation Plans With Respect to Service for State and Local
Governments
Section 457 of the Code, while not actually providing for a Qualified Plan
as that term is normally used, provides for certain deferred compensation
plans that enjoy special income tax treatment with respect to service for
tax-exempt organizations, state governments, local governments, and
agencies and instrumentalities of such governments. The Certificate can be
used with such plans. Under such plans, a participant may specify the form
of investment in which his or her participation will be made. However, all
such investments are owned by and subject to the claims of general
creditors of the sponsoring employer.
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with its view of present applicable law, Keyport will vote
the shares of the Eligible Funds held in the Variable Account at regular
and special meetings of the shareholders of the Eligible Funds in
accordance with instructions received from persons having the voting
interest in the Variable Account. Keyport will vote shares for which it has
not received instructions in the same proportion as it votes shares for
which it has received instructions.
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended or if the present interpretation thereof should change,
and as a result Keyport determines that it is permitted to vote the shares
of the Eligible Funds in its own right, it may elect to do so.
The person having the voting interest under a Certificate prior to the
Income Date shall be the Certificate Owner. The number of shares held in
each Sub-Account which are attributable to each Certificate Owner is
determined by dividing the Certificate Owner's Variable Account Value in
each Sub-Account by the net asset value of the applicable share of the
Eligible Fund. The person having the voting interest after the Income Date
under an annuity payment option shall be the payee. The number of shares
held in the Variable Account which are attributable to each payee is
determined by dividing the reserve for the annuity payments by the net
asset value of one share. During the annuity payment period, the votes
attributable to a payee decrease as the reserves underlying the payments
decrease.
The number of shares in which a person has a voting interest will be
determined as of the date coincident with the date established by the
respective Eligible Fund for determining shareholders eligible to vote at
the meeting of the Fund and voting instructions will be solicited by
written communication prior to such meeting in accordance with the
procedures established by the Eligible Fund.
Each person having the voting interest in the Variable Account will receive
periodic reports relating to the Eligible Fund(s) in which he or she has an
interest, proxy material and a form with which to give such voting
instructions with respect to the proportion of the Eligible Fund shares
held in the Variable Account corresponding to his or her interest in the
Variable Account.
SALES OF THE CERTIFICATES
Keyport Financial Services Corp. ("KFSC") serves as the Principal
Underwriter for the Certificate described in this prospectus. The
Certificate will be sold by salespersons who represent Keyport Life
Insurance Company KFSC's corporate parent as variable annuity agents and
who are registered representatives of broker/dealers who have entered into
distribution agreements with KFSC. KFSC is registered under the Securities
Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. It is located at 125 High Street, Boston,
Massachusetts 02110.
Certificates may be sold with lower or no dealer compensation (1) to a
person who is an officer, director, or employee of Keyport or an affiliate
of Keyport or (2) to any Qualified Plan established for such a person. Such
Certificates may be different from the Certificates sold to others in that
(1) they are not subject to the deduction for the asset-based
Administrative charge and (2) they have a Mortality and Expense Risk Charge
of 0.35% per year.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the
Principal Underwriter are a party. Keyport is engaged in various kinds of
routine litigation which in its judgment is not of material importance in
relation to the total capital and surplus of Keyport.
INQUIRIES BY CERTIFICATE OWNERS
Certificate Owners with questions about their Certificates may write
Keyport Life Insurance Company, Client Service Department, 125 High Street,
Boston, MA 02110, or call (800) 367-3653.
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION
Page
Keyport Life Insurance Company 2
Variable Annuity Benefits 2
Variable Annuity Payment Values 2
Re-Allocating Sub-Account Payments 3
Custodian 4
Principal Underwriter 4
Experts 4
Investment Performance 4
Yields for Stein Roe Money Market Sub-Account 5
Financial Statements 6
Keyport Life Insurance Company 7
Variable Account A
APPENDIX A
THE FIXED ACCOUNT (ALSO KNOWN AS THE MODIFIED GUARANTEED ANNUITY ACCOUNT)
Introduction
This Appendix describes the Fixed Account option available under the
Certificate.
FIXED ACCOUNT VALUES PROVIDED BY THE CERTIFICATE ARE SUBJECT TO A MARKET
VALUE ADJUSTMENT, THE OPERATION OF WHICH MAY RESULT IN UPWARD OR DOWNWARD
ADJUSTMENTS IN AMOUNTS TRANSFERRED AND AMOUNTS PAID (INCLUDING WITHDRAWALS,
SURRENDERS, DEATH BENEFITS, AND AMOUNTS APPLIED TO PURCHASE ANNUITY
PAYMENTS) TO A CERTIFICATE OWNER OR OTHER PAYEE. IN NO EVENT WILL THE
DOWNWARD MARKET VALUE ADJUSTMENT ELIMINATE INTEREST AT THE RATE OF 3% PER
YEAR APPLIED TO THE AMOUNT ALLOCATED TO A GUARANTEED PERIOD. PAYMENTS MADE
FROM FIXED ACCOUNT VALUES AT THE END OF THEIR GUARANTEE PERIOD ARE NOT
SUBJECT TO THE MARKET VALUE ADJUSTMENT.
Purchase Payments allocated to the Fixed Account option become part of
Keyport's general account. Because of applicable exemptive and exclusionary
provisions, interests in the Fixed Account options have not been registered
under the Securities Act of 1933 ("1933 Act"), nor is the general account
an investment company under the Investment Company Act. Accordingly,
neither the general account, the Fixed Account option, nor any interest
therein, is subject to regulation under the 1933 Act or the Investment
Company Act. Keyport understands that the Securities and Exchange
Commission has not reviewed the disclosure in the prospectus relating to
the general account and the Fixed Account option.
Investments in the Fixed Account and Capital Protection Plus
Purchase Payments will be allocated to the Fixed Account in accordance with
the selection made by the Certificate Owner in the application. Any
selection must specify that percentage of the Purchase Payment that is to
be allocated to each Guarantee Period of the Fixed Account. The percentage,
if not zero, must be at least 5%. The Certificate Owner may change the
allocation percentages without fee, penalty or other charge. Allocation
changes must be made by Written Request unless the Certificate Owner has by
Written Request authorized Keyport to accept telephone allocation
instructions from the Certificate Owner. By authorizing Keyport to accept
telephone changes, a Certificate Owner agrees to accept and be bound by the
conditions and procedures established by Keyport from time to time. The
current conditions and procedures are in Appendix B and Certificate Owners
authorizing telephone allocation instructions will be notified, in advance,
of any changes.
Keyport currently offers Guarantee Periods of 1, 3, 5, and 7 years. Keyport
may change at any time the number of Guarantee Periods it offers under
newly-issued and in-force Certificates, as well as the length of those
Guarantee Periods. If Keyport stops offering a particular Guarantee Period,
existing Fixed Account Value in such Guarantee Period would not be affected
until the end of the Period (at that time, a Period of the same length
would not be a transfer option). Each Guarantee Period currently offered is
available for initial and subsequent Purchase Payments and for transfers of
Certificate Value.
Keyport offers a Capital Protection Plus program that a Certificate Owner
may request. Under this program, Keyport will allocate part of the Purchase
Payment to the Guarantee Period selected by the Certificate Owner so that
such part, based on that Guarantee Period's interest rate in effect on the
date of allocation, will equal at the end of the Guarantee Period the total
Purchase Payment. The rest of the Purchase Payment will be allocated to the
Sub-Account(s) of the Variable Account based on the Certificate Owner's
allocation. If any part of the Fixed Account Value is surrendered or
transferred before the end of the Guarantee Period, the Value at the end of
that Period will not equal the original Purchase Payment amount.
For an example of Capital Protection Plus, assume Keyport receives a
Purchase Payment of $10,000 when the interest rate for the 7-year Guarantee
Period is 6.75% per year. Keyport will allocate $6,331 to that Guarantee
Period because $6,331 will increase at that interest rate to $10,000 after
7 years. The remaining $3,669 of the payment will be allocated to the Sub-
Account(s) selected by the Certificate Owner.
Fixed Account Value
The Fixed Account Value at any time is equal to:
(a) all Purchase Payments allocated to the Fixed Account plus the interest
subsequently credited on those payments; plus
(b) any Variable Account Value transferred to the Fixed Account plus the
interest subsequently credited on the transferred value; less
(c) any prior partial withdrawals from the Fixed Account, including any
charges therefor; less
(d) any Fixed Account Value transferred to the Variable Account.
Interest Credits
Keyport will credit interest daily (based on an annual compound interest
rate) to Purchase Payments allocated to the Fixed Account at rates declared
by Keyport for Guarantee Periods of one or more years from the month and
day of allocation. Any rate set by Keyport will be at least 3% per year.
Keyport's method of crediting interest means that Fixed Account Value might
be subject to different rates for each Guarantee Period the Certificate
Owner has selected in the Fixed Account. For purposes of this section,
Variable Account Value transferred to the Fixed Account and Fixed Account
Value renewed for another Guarantee Period shall be treated as a Purchase
Payment allocation.
Application of Market Value Adjustment
Any surrender, withdrawal, transfer, or application to an Annuity Option of
Fixed Account Value from a Guarantee Period of three years or more is
subject to a limited Market Value Adjustment, unless: (1) the effective
date of the transaction is at the end of the Guarantee Period; or (2) the
effective date of a surrender is within 90 days of the date of death of the
first Covered Person to die.
If a Market Value Adjustment applies to either a surrender or the
application to an Annuity Option, then any negative Market Value Adjustment
amount will be deducted from the Certificate Value and any positive Market
Value Adjustment amount will be added to the Certificate Value. If a Market
Value Adjustment applies to either a partial withdrawal or a transfer, then
any negative Market Value Adjustment amount will be deducted from the
partial withdrawal or transfer amount after the withdrawal or transfer
amount has been deducted from the Fixed Account Value, and any positive
Market Value Adjustment amount will be added to the applicable amount after
it has been deducted from the Fixed Account Value.
No Market Value Adjustment is ever applicable to Guarantee Periods of fewer
than three years.
Effect of Market Value Adjustment
A Market Value Adjustment reflects the change in prevailing current
interest rates since the beginning of a Guarantee Period. The Market Value
Adjustment may be positive or negative, but any negative Adjustment may be
limited in amount (see Market Value Adjustment Factor below).
Generally, if the Treasury Rate for the Guarantee Period is lower than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the limited
Market Value Adjustment will result in a reduction of the amount being
surrendered, withdrawn, transferred, or applied to an Annuity Option.
Similarly, if the Treasury Rate for the Guarantee Period is higher than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the Market Value
Adjustment will result in an increase in the amount being surrendered,
withdrawn, transferred, or applied to an Annuity Option.
The Market Value Adjustment will be applied before the deduction of any
applicable surrender charges or applicable taxes.
Market Value Adjustment Factor
The Market Value Adjustment is computed by multiplying the amount being
surrendered, withdrawn, transferred, or applied to a Payment Option, by the
Market Value Adjustment Factor. The Market Value Adjustment Factor is
calculated as the larger of Formula (1) or (2):
(1) (1+a)/(1+b)(n/12)-1
where:
"a" is the Treasury Rate for the number of Guarantee Period Years in the
Guarantee Period;
"b" is the Treasury Rate for a period equal to the time remaining (rounded
up to the next whole number of Guarantee Period Years) to the expiration of
the Guarantee Period; and
"n" is the number of complete Guarantee Period Months remaining before the
expiration of the Guarantee Period.
(2) (1.03)/(1+i)(y+d/#)-1
where:
"i" is the Guaranteed Interest Rate for the Guarantee Period;
"y" is the number of complete Guarantee Period Years that have elapsed in Your
Guarantee Period;
"d" is the number of days since the last Guarantee Period Anniversary or,
if "y" is zero, the number of days since the start of the Guarantee Period;
and
"#" is the number of days in the current Guarantee Period Year (i.e., the
sum of "d" and the number of days until the next Guarantee Period
Anniversary).
In Formulas (1) and (2), all references to Guarantee Period, Guarantee
Period Anniversary, Guarantee Period Month, and Guarantee Period Year
relate to the Guarantee Period from which is being taken the amount being
surrendered, withdrawn, transferred, or applied to an Annuity Option.
As stated above, the Formula (2) amount will apply only if it is greater
than the Formula (1) amount. This will occur only when the Formula (1)
amount is negative and the Formula (2) amount is a smaller negative number.
Formula (2) thus ensures that a full (normal) negative Market Value
Adjustment of Formula (1) will not apply to the extent it would decrease
the Guarantee Period's Fixed Account Value (before the deduction of any
applicable surrender charges or any applicable taxes) below the following
amount:
(a) the amount allocated to the Guarantee Period; less
(b) any prior systematic or partial withdrawal amounts; less
(c) any prior amounts transferred to the Variable Account or to another
Guarantee Period in the Fixed Account; plus
(d) interest on the above items (a) through (c) credited annually at a
rate of 3% per year.
Treasury Rates
The Treasury Rate for a Guarantee Period is the interest rate in the
Treasury Constant Maturity Series, as published by the Federal Reserve
Board, for a maturity equal to the number of years specified in "a" and "b"
in Formula (1) above. Weekly Series are published at the beginning of the
following week. To determine "a", Keyport uses the weekly Series first
published on or after the most recent Determination Date which occurs on or
before the Start Date for the Guarantee Period, except that if the Start
Date is the same as the Determination Date or the date of publication, or
any date in between, Keyport instead uses the weekly Series first published
after the prior Determination Date. To determine "b", Keyport uses the
Weekly Series first published on or after the most recent Determination
Date which occurs on or before the date on which the Market Value
Adjustment Factor is calculated, except that if the calculation date is the
same as the Determination Date or the date of publication, or any date in
between, Keyport instead uses the weekly Series first published after the
prior Determination Date. The Determination Dates are the last business day
prior to the first and fifteenth of each calendar month.
If the number of years specified in "a" or "b" is not equal to a maturity
in the Treasury Constant Maturity Series, the Treasury Rate will be
determined by straight line interpolation between the interest rates of the
next highest and next lowest maturities.
If the Treasury Constant Maturity Series becomes unavailable, Keyport will
adopt a comparable constant maturity index or, if such a comparable index
also is not available, Keyport will replicate calculation of the Treasury
Constant Maturity Series Index based on U.S. Treasury Security coupon
rates.
End of A Guarantee Period
Keyport will notify a Certificate Owner in writing at least 30 days prior
to the end of a Guarantee Period. At the end of the Guarantee Period,
Keyport will automatically transfer the Guarantee Period's Fixed Account
Value to the Money Market Sub-Account of the Variable Account unless
Keyport previously received a Certificate Owner's Written Request of: (1)
election of a new Guarantee Period from among those being offered by
Keyport at that time; or (2) instructions to transfer the ending Guarantee
Period's Fixed Account Value to one or more Sub-accounts of the Variable
Account. A new Guarantee Period cannot be longer than the number of years
remaining until the Income Date.
Transfers of Fixed Account Value
The Certificate Owner may transfer Fixed Account Value from one Guarantee
Period to another or to one or more Sub-Accounts of the Variable Account
subject to any applicable Market Value Adjustment. If the Fixed Account
Value represents multiple Guarantee Periods, the transfer request must
specify from which values the transfer is to be made.
The Certificate allows Keyport to limit the number of transfers that can be
made in a specified time period. Currently, Keyport is limiting Variable
Account and Fixed Account transfers to generally unlimited transfers per
calendar year with a $500,000 per transfer dollar limit. See "Transfer of
Variable Account Value". Transfers from the Fixed Account to the Variable
Account are limited to 50% of the Fixed Account Value at the beginning of
the Certificate Year. This limitation will be waived if a Systematic
Withdrawal Program is in effect. These limitations will not apply to any
transfer made at the end of a Guarantee Period. Certificate Owners will be
notified, in advance, of a change in the limitation on the number of
transfers.
Transfer requests must be by Written Request unless the Certificate Owner
has authorized Keyport by Written Request to accept telephone transfer
instructions from the Certificate Owner or from a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney. By
authorizing Keyport to accept telephone transfer instructions, a
Certificate Owner agrees to accept and be bound by the conditions and
procedures established by Keyport from time to time. The current conditions
and procedures are in Appendix B and Certificate Owners authorizing
telephone transfers will be notified, in advance, of any changes. Written
transfer requests may be made by a person acting for the Certificate Owner
as an attorney-in-fact under a power of attorney.
Transfer requests received by Keyport before the close of trading on the
New York Stock Exchange (currently 4:00 PM Eastern Time) will be executed
at the close of business that day. Any requests received later will be
executed at the close of the next business day.
The amount of the transfer will be deducted from the specified values in
the manner stated in the next section below.
If 100% of a Guarantee Period's value is transferred and the current
allocation for Purchase Payments includes that Guarantee Period, then the
allocation formula for future Purchase Payments will automatically change
unless the Certificate Owner instructs otherwise. For example, if the
allocation formula is 50% to the one-year Guarantee Period and 50% to Sub-
Account A and all Fixed Account Value is transferred to Sub-Account A, the
allocation formula will change to 100% to Sub-Account A.
APPENDIX B
TELEPHONE INSTRUCTIONS
Telephone Transfers of Certificate Values
1. If there are Joint Certificate Owners, both must authorize Keyport to
accept telephone instructions but either Certificate Owner may give Keyport
telephone instructions.
2. All callers will be required to identify themselves. Keyport reserves
the right to refuse to act upon any telephone instructions in cases where
the caller has not sufficiently identified himself/herself to Keyport's
satisfaction.
3. Neither Keyport nor any person acting on its behalf shall be subject to
any claim, loss, liability, cost or expense if it or such person acted in
good faith upon a telephone instruction, including one that is unauthorized
or fraudulent; however, Keyport will employ reasonable procedures to
confirm that a telephone instruction is genuine and, if Keyport does not,
Keyport may be liable for losses due to an unauthorized or fraudulent
instruction. The Certificate Owner thus bears the risk that an unauthorized
or fraudulent instruction that is executed may cause the Certificate Value
to be lower than it would be had no instruction been executed.
4. All conversations will be recorded with disclosure at the time of the
call.
5. The application for the Certificate may allow a Certificate Owner to
create a power of attorney by authorizing another person to give telephone
instructions. Unless prohibited by state law, such power will be treated as
durable in nature and shall not be affected by the subsequent incapacity,
disability or incompetency of the Certificate Owner. Either Keyport or the
authorized person may cease to honor the power by sending written notice to
the Certificate Owner at the Certificate Owner's last known address.
Neither Keyport nor any person acting on its behalf shall be subject to
liability for any act executed in good faith reliance upon a power of
attorney.
6. Telephone authorization shall continue in force until (a) Keyport
receives the Certificate Owner's written revocation, (b) Keyport
discontinues the privilege, or (c) Keyport receives written evidence that
the Certificate Owner has entered into a market timing or asset allocation
agreement with an investment adviser or with a broker/dealer.
7. Telephone transfer instructions received by Keyport at 800-367-3653
before the close of trading on the New York Stock Exchange (currently 4:00
P.M. Eastern Time) will be initiated that day based on the unit value
prices calculated at the close of that day. Instructions received after the
close of trading on the NYSE will be initiated the following business day.
8. Once instructions are accepted by Keyport, they may not be canceled.
9. All transfers must be made in accordance with the terms of the
Certificate and current prospectus. If the transfer instructions are not in
good order, Keyport will not execute the transfer and will notify the
caller within 48 hours.
10. If 100% of any Sub-Account's value is transferred and the allocation
formula for Purchase Payments includes that Sub-Account, then the
allocation formula for future Purchase Payments will change accordingly
unless Keyport receives telephone instructions to the contrary. For
example, if the allocation formula is 50% to Sub-Account A and 50% to Sub-
Account B and all of Sub-Account A's value is transferred to Sub-Account B,
the allocation formula will change to 100% to Sub-Account B unless Keyport
is instructed otherwise.
Telephone Changes to Purchase Payment Allocation Percentages
Numbers 1-6 above are applicable.
PART B
STATEMENT OF ADDITIONAL INFORMATION
GROUP AND INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT A
OF
KEYPORT LIFE INSURANCE COMPANY ("Keyport")
This Statement of Additional Information is not a prospectus but it relates
to, and should be read in conjunction with, the Keyport Advisor Vision
variable annuity prospectus dated June 1, 1998. This SAI is incorporated by
reference into the prospectus. The prospectus is available, at no charge,
by writing Keyport at 125 High Street, Boston, MA 02110 or by calling (800)
437-4466.
TABLE OF CONTENTS
Page
Keyport Life Insurance Company.........................................2
Variable Annuity Benefits..............................................2
Variable Annuity Payment Values......................................2
Re-Allocating Sub-Account Payments...................................4
Custodian..............................................................4
Principal Underwriter..................................................4
Experts................................................................4
Investment Performance.................................................5
Yields for Stein Roe Money Market Sub-Account........................6
Financial Statements...................................................7
Keyport Life Insurance Company.......................................9
Variable Account A...................................................31
The date of this statement of additional information is June 1, 1998.
KAV1998.SAI
KEYPORT LIFE INSURANCE COMPANY
Liberty Mutual Insurance Company ("Liberty Mutual"), a multi-line insurance
company, is the ultimate corporate parent of Keyport. Liberty Mutual
ultimately controls Keyport through the following intervening holding
company subsidiaries: Liberty Mutual Equity Corporation, LFC Holdings
Inc., Liberty Financial Companies, Inc. ("LFC") and SteinRoe Services, Inc.
Liberty Mutual, as of December 31, 1997, owned, indirectly, approximately
83% of the combined voting power of the outstanding stock of LFC (with the
balance being publicly held). For additional information about Keyport, see
page 8 of the prospectus.
VARIABLE ANNUITY BENEFITS
Variable Annuity Payment Values
For each variable payment option, the total dollar amount of each periodic
payment will be equal to the sum of all Sub-Account payments.
The first payment for each Sub-Account will be determined by deducting any
applicable state premium taxes and then dividing the remaining value of
that Sub-Account by $1,000 and multiplying the result by the greater of:
(a) the applicable factor from the Certificate's annuity table for the
particular payment option; or (b) the factor currently offered by Keyport
at the time annuity payments begin. This current factor may be based on the
sex of the payee unless to do so would be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number
of Annuity Units remains fixed for the annuity payment period. Each Sub-
Account payment after the first one will be determined by multiplying (a)
by (b), where: (a) is the number of Sub-Account Annuity Units; and (b) is
the Sub-Account Annuity Unit value for the Valuation Period that includes
the date of the particular payment.
Variable annuity payments will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect annuity payments, Keyport uses an Annuity Unit value.
Each Sub-Account has its own Annuity Units and value per Unit. The Annuity
Unit value applicable during any Valuation Period is determined at the end
of such period.
When Keyport first purchased Eligible Fund shares on behalf of the Variable
Account, Keyport valued each Annuity Unit for each Sub-Account at a
specified dollar amount. The Unit value for each Sub-Account in any
Valuation Period thereafter is determined by multiplying the value for the
prior period by a net investment factor. This factor may be greater or
less than 1.0; therefore, the Annuity Unit may increase or decrease from
Valuation Period to Valuation Period. For each assumed annual investment
rate (AIR), Keyport calculates a net investment factor for each Sub-Account
by dividing (a) by (b), where:
(a) is equal to the net investment factor as defined in the
prospectus; and
(b) is the assumed investment factor for the current Valuation
Period. The assumed investment factor adjusts for the interest
assumed in determining the first variable annuity payment. Such
factor for any Valuation Period shall be the accumulated value,
at the end of such period, of $1.00 deposited at the beginning of
such period at the assumed annual investment rate (AIR). The AIR
for Annuity Units based on the Certificate's annuity tables is 6%
per year (5% per year for Oregon and Texas Certificates). An AIR
of 3% per year is also currently available upon Written Request.
With a particular AIR, payments after the first one will increase or
decrease from month to month based on whether the actual annualized
investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed AIR
percentage. If a given amount of Sub-Account value is applied to a
particular payment option, the initial payment will be smaller if a 3% AIR
is selected instead of a 6% AIR but, all other things being equal, the
subsequent 3% AIR payments have the potential for increasing in amount by a
larger percentage and for decreasing in amount by a smaller percentage.
For example, consider what would happen if the actual annualized investment
return (see the first sentence of this paragraph) is 9%, 6%, 3%, or 0%
between the time of the first and second payments. With an actual 9%
return, the 3% AIR and 6% AIR payments would both increase in amount but
the 3% AIR payment would increase by a larger percentage. With an actual
6% return, the 3% AIR payment would increase in amount while the 6% AIR
payment would stay the same. With an actual return of 3%, the 3% AIR
payment would stay the same while the 6% AIR payment would decrease in
amount. Finally, with an actual return of 0%, the 3% AIR and 6% AIR
payments would both decrease in amount but the 3% AIR payment would
decrease by a smaller percentage. Note that the changes in payment amounts
described above are on a percentage basis and thus do not illustrate when,
if ever, the 3% AIR payment amount might become larger than the 6% AIR
payment amount. Note though that if Option A (Income for a Fixed Number of
Years) is selected and payments continue for the entire period, the 3% AIR
payment amount will start out being smaller than the 6% AIR payment amount
but eventually the 3% AIR payment amount will become larger than the 6% AIR
payment amount.
Re-Allocating Sub-Account Payments
The number of Annuity Units for each Sub-Account under any variable annuity
option will remain fixed during the entire annuity payment period unless
the payee makes a written request for a change. Currently, a payee can
instruct Keyport to change the Sub-Account(s) used to determine the amount
of the variable annuity payments unlimited times every 12 months. The
payee's request must specify the percentage of the annuity payment that is
to be based on the investment performance of each Sub-Account. The
percentage for each Sub-Account, if not zero, must be at least 5% and must
be a whole number. At the end of the Valuation Period during which Keyport
receives the request, Keyport will: (a) value the Annuity Units for each
Sub-Account to create a total annuity value; (b) apply the new percentages
the payee has selected to this total value; and (c) recompute the number of
Annuity Units for each Sub-Account. This new number of units will remain
fixed for the remainder of the payment period unless the payee requests
another change.
CUSTODIAN
The custodian of the assets of the Variable Account is State Street Bank
and Trust Company, a state chartered trust company. Its principal office is
at 225 Franklin Street, Boston, Massachusetts.
PRINCIPAL UNDERWRITER
The Contract and Certificates, which are offered continuously, are
distributed by Keyport Financial Services Corp. ("KFSC"), a wholly-owned
subsidiary of Keyport.
EXPERTS
The consolidated financial statements of Keyport Life Insurance Company at
December 31, 1997 and for each of the years in the two-year period then
ended, and the financial statements of Keyport Life Insurance Company-
Variable Account A as of December 31, 1997 and for the two-year period then
ended appearing in this Statement of Additional Information have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, and are included in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Keyport Life Insurance Company and
subsidiaries as of December 31, 1995 and for the year ended December 31,
1995 have been included herein in reliance on the report of KPMG Peat
Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the December 31, 1995 financial statements
refers to a change in accounting to adopt Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities.
INVESTMENT PERFORMANCE
The Variable Account may from time to time quote performance information
concerning its various Sub-Accounts. A Sub-Account's performance may also
be compared to the performance of sub-accounts used with variable annuities
offered by other insurance companies. This comparative information may be
expressed as a ranking prepared by Financial Planning Resources, Inc. of
Miami, FL (The VARDS Report), Lipper Analytical Services, Inc., or by
Morningstar, Inc. of Chicago, IL (Morningstar's Variable Annuity
Performance Report), which are independent services that compare the
performance of variable annuity sub-accounts. The rankings are done on the
basis of changes in accumulation unit values over time and do not take into
account any charges (such as sales charges or administrative charges) that
are deducted directly from Certificate values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926 on
capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term
performance of capital markets in order to illustrate general long-term
risk versus reward investment scenarios. Capital markets tracked by
Ibbotson Associates include common stocks, small company stocks, long-term
corporate bonds, long-term government bonds, U.S. Treasury Bills, and the
U.S. inflation rate. Historical total returns are determined by Ibbotson
Associates for: Common Stocks, represented by the Standard and Poor's
Composite Stock Price Index (an unmanaged weighted index of 90 stocks prior
to March 1957 and 500 stocks thereafter of industrial, transportation,
utility and financial companies widely regarded by investors as
representative of the stock market); Small Company Stocks, represented by
the fifth capitalization quintile (i.e., the ninth and tenth deciles) of
stocks on the New York Stock Exchange for 1926-1981 and by the performance
of the Dimensional Fund Advisors Small Company 9/10 (for ninth and tenth
deciles) Fund thereafter; Long Term Corporate Bonds, represented beginning
in 1969 by the Salomon Brothers Long-Term High-Grade Corporate Bond Index,
which is an unmanaged index of nearly all Aaa and Aa rated bonds,
represented for 1946-1968 by backdating the Salomon Brothers Index using
Salomon Brothers' monthly yield data with a methodology similar to that
used by Salomon Brothers in computing its Index, and represented for 1925-
1945 through the use of the Standard and Poor's monthly High-Grade
Corporate Composite yield data, assuming a 4% coupon and a 20-year
maturity; Long-Term Government Bonds, measured each year using a portfolio
containing one U.S. government bond with a term of approximately twenty
years and a reasonably current coupon; U.S. Treasury Bills, measured by
rolling over each month a one-bill portfolio containing, at the beginning
of each month, the shortest-term bill having not less than one month to
maturity; Inflation, measured by the Consumer Price Index for all Urban
Consumers, not seasonably adjusted, since January, 1978 and by the Consumer
Price Index before then. The stock capital markets may be contrasted with
the corporate bond and U.S. government securities capital markets. Unlike
an investment in stock, an investment in a bond that is held to maturity
provides a fixed rate of return. Bonds have a senior priority to common
stocks in the event the issuer is liquidated and interest on bonds is
generally paid by the issuer before it makes any distributions to common
stock owners. Bonds rated in the two highest rating categories are
considered high quality and present minimal risk of default. An additional
advantage of investing in U.S. government bonds and Treasury bills is that
they are backed by the full faith and credit of the U.S. government and
thus have virtually no risk of default. Although government securities
fluctuate in price, they are highly liquid.
Yield for Stein Roe Money Market Sub-Account
Yield percentages for the Stein Roe Money Market Sub-Account are calculated
using the method prescribed by the Securities and Exchange Commission.
Yields reflect the deduction of the annual 1.40% asset-based Certificate
charges. Yields do not reflect premium tax charges. The yields would be
lower if these charges were included. The following are the standardized
formulas:
Yield equals: (A - B - 1) X 365
C 7
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = $0.00.
C = the Accumulation Unit value at the beginning of the 7-day
period.
The yield formula assumes that the weekly net income generated by an
investment in the Stein Roe Money Market Sub-Account will continue over an
entire year.
FINANCIAL STATEMENTS
The financial statements of Keyport Life Insurance Company and the Variable
Account are included in the statement of additional information. The
consolidated financial statements of Keyport Life Insurance Company are
provided as relevant to its ability to meet its financial obligations under
the Certificates and should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
Financial Statements
Keyport Life Insurance Company
Variable Account A
[to be filed by Amendment]
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements: (To Be Filed by Amendment)
Included in Part B:
Keyport Life Insurance Company:
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Income Statements for the years ended December 31,
1997, 1996 and 1995
Consolidated Statements of Stockholder's Equity for the years
ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Variable Account A:
Statements of Assets and Liabilities - December 31, 1997 and
1996
Statements of Operations and Changes in Net Assets for the years
ended December 31, 1997 and 1996
Notes to Financial Statements
(b) Exhibits:
* (1) Resolution of the Board of Directors establishing Variable
Account A
(2) Not applicable
* (3a) Principal Underwriter's Agreement
* (3b) Specimen Agreement between Principal Underwriter and Dealer
*** (3c) Manning & Napier Broker/Dealer's Agreement
* (4a) Form of Group Variable Annuity Contract of Keyport Life
Insurance Company
* (4b) Form of Variable Annuity Certificate of Keyport Life
Insurance Company
* (4c) Form of Tax-Sheltered Annuity Endorsement
* (4d) Form of Individual Retirement Annuity Endorsement
* (4e) Form of Corporate/Keogh 401(a) Plan Endorsement
*** (4f) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (M&N)
*** (4g) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (M&N)
**** (4h) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (KA)
**** (4i) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (KA)
++ (4j) Form of Individual Variable Annuity Contract of Keyport
Life Insurance Company
++ (4k) Specimen Individual Variable Annuity Contract of Keyport
Life Insurance Company(KA)
++ (4l) Specimen Group Exchange Program Endorsement (KA)
++ (4m) Specimen Individual Exchange Program Endorsement (KA)
(4n) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (KAV)
(4o) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (KAV)
(4p) Speicmen Individual Variable Annuity Contract of Keyport
Life Insurance Company (KAV)
* (5a) Form of Application for a Group Variable Annuity Contract
* (5b) Form of Application for a Group Variable Annuity Certificate
* (6a) Articles of Incorporation of Keyport Life Insurance Company
* (6b) By-Laws of Keyport Life Insurance Company
(7) Not applicable
** (8a) Form of Participation Agreement
*** (8b) Participation Agreement Among Manning & Napier Insurance
Fund, Inc., Manning & Napier Investor Services, Inc.,
Manning
& Napier Advisors, Inc., and Keyport Life Insurance Company
**** (8c) Participation Agreement Among MFS Variable Insurance Trust,
Keyport Life Insurance Company, and Massachusetts Financial
Services Corp.
**** (8d) Participation Agreement Among The Alger American Fund,
Keyport Life Insurance Company, and Fred Alger and Company,
Incorporated
**** (8e) Participation Agreement Among Alliance Variable Products
Series Fund, Inc., Alliance Fund Distributors, Inc.,
Alliance
Capital Management L.P., and Keyport Life Insurance Company
(8f) Participation Agreement By and Among AIM Variable Insurance
Funds, Inc., Keyport Life Insurance Company and Keyport
Financial Services Corp. (To be Filed by Amendment)
## (8g) Amended and Restated Particpation Agreement By and Among
Keyport Variable Investment Trust, Keyport Financial
Services
Corp., Keyport Life Insurance Company and Liberty Life
Assurance Company of Boston
(8h) Amended and Restated Particpation Agreement By and Among
SteinRoe Variable Investment Trust, Keyport Financial
Services Corp., Keyport Life Insurance Company and Liberty
Life Assurance Company of Boston (To be Filed by Amendment)
+ (9) Opinion and Consent of Counsel
(10) Consents of Independent Auditors (To be Filed by Amendment)
(11) Not applicable
(12) Not applicable
# (13) Schedule for Computations of Performance Quotations
++++ (15) Chart of Affiliations
+++ (16) Powers of Attorney
(27) Financial Data Schedule (To be Filed by Amendment)
* Incorporated by reference to Registration Statement (File No. 333-
1043)
filed on or about February 16, 1996.
** Incorporated by reference to Pre-Effective Amendment No. 1 to
Registration Statement (File No. 333-1043) filed on or about August
22,
1996.
*** Incorporated by reference to Pre-Effective Amendment No. 3 to
Registration Statement (File No. 333-1043) filed on or about October
15, 1996.
**** Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement (File No. 333-1043) filed on or about October
18, 1996.
+ Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement (File No. 333-1043) filed on or about May 1,
1997.
++ Incorporated by reference to Post-Effective Amendment No. 5 to the
Registration Statement (File No. 333-1043) filed on or about July 30,
1997.
+++ Incorporated by reference to Post-Effective Amendment No. 6 to
Registration Statement (File No. 333-1043) filed on or about November
14, 1997.
++++ Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (File No. 333-1043) filed on or about February
6, 1998.
# Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement (File No. 333-1043) filed on or about February
27, 1998.
## Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 of Variable Account J of Liberty
Life Assurance Company of Boston (Files No. 333-29811; 811-08269)
filed on or about July 17, 1997.
Item 25. Directors and Officers of the Depositor.
Name and Principal Positions and Offices
Business Address* with Depositor
Kenneth R. Leibler, President Director and Chairman of the Board
Liberty Financial Companies Inc.
Federal Reserve Plaza, 24th Floor
600 Atlantic Avenue
Boston, MA 02110
F. Remington Ballou Director
B. A. Ballou & Company, Inc.
800 Waterman Avenue
East Providence, RI 02914
Frederick Lippitt Director
The Providence Plan
740 Hospital Trust Building
15 Westminster Street
Providence, RI 02903
Mr. Robert C. Nyman Director
12 Cooke Street
Providence, RI 02906-2006
John W. Rosensteel President, Chief Executive Officer
and Director
Stephen B. Bonner Executive Vice President
Paul H. LeFevre, Jr. Executive Vice President
Bernard R. Beckerlegge Senior Vice President and General
Counsel
Bernhard M. Koch Senior Vice President and Chief
Financial Officer
Stewart R. Morrison Senior Vice President and Chief
Investment Officer
Francis E. Reinhart Senior Vice President and Chief
Information Officer
Mark R. Tully Senior Vice President and Chief
Sales Officer
Garth A. Bernard Vice President
Daniel C. Bryant Vice President and Assistant
Secretary
Clifford O. Calderwood Vice President
James P. Greaton Vice President and Corporate
Actuary
Jacob M. Herschler Vice President
Kenneth M. Hughes Vice President
James J. Klopper Vice President and Secretary
Leslie J. Laputz Vice President
Jeffrey J. Lobo Vice President - Risk Management
Suzanne E. Lyons Vice President - Human Resources
Jeffery J. Whitehead Vice President and Treasurer
Peter E. Berkeley Assistant Vice President
John G. Bonvouloir Assistant Vice President &
Assistant Treasurer
Judith A. Brookins Assistant Vice President
Paul R. Coady Assistant Vice President
Alan R. Downey Assistant Vice President
Kenneth M. LeClair Assistant Vice President
Gregory L. Lapsley Assistant Vice President
Scott E. Morin Assistant Vice President and
Controller
Michael J. Mulkern Assistant Vice President
Sean P. O'Brien Assistant Vice President
Robert J. Scheinerman Assistant Vice President
Edward M. Shea Assistant Vice President
Teresa M. Shumila Assistant Vice President
Daniel T. Smyth Assistant Vice President
Donald A. Truman Assistant Vice President and
Assistant Secretary
Ellen L. Wike Assistant Vice President
Daniel Yin Assistant Vice President
Frederick Lippitt Assistant Secretary
*125 High Street, Boston, Massachusetts 02110, unless noted otherwise.
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant.
The Depositor controls the Registrant, KMA Variable Account, Keyport
401 Variable Account, Keyport Variable Account I, and Keyport Variable
Account II, under the provisions of Rhode Island law governing the
establishment of these separate accounts of the Company.
The Depositor controls Keyport Financial Services Corp. (KFSC), a
Massachusetts corporation functioning as a broker/dealer of securities,
through 100% stock ownership. KFSC files separate financial statements.
The Depositor controls Liberty Advisory Services Corp. (LASC)
(formerly known as Keyport Advisory Services Corp.), a Massachusetts
corporation functioning as an investment adviser, through 100% stock
ownership. LASC files separate financial statements.
The Depositor controls Independence Life and Annuity Company
("Independence Life")(formerly Keyport America Life Insurance Company), a
Rhode Island corporation functioning as a life insurance company, through
100% stock ownership. Independence Life files separate financial
statements.
The Depositor controls American Benefit Life Insurance Company
("American Benefit"), a New York corporation functioning as a life
insurance company, through 100% stock ownership. American Benefit files
separate financial statements.
The chart for the affiliations of the Depositor is incorporated by
reference to Post-Effective Amendment No. 7 to Registration Statement (File
No. 333-1043) filed on or about February 6, 1998.
Item 27. Number of Contract Owners.
None.
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter
are covered persons under Directors and Officers/Errors and Omissions
liability insurance policies issued by ICI Mutual Insurance Company,
Federal Insurance Company, Firemen's Fund Insurance Company, CNA and
Lumberman's Mutual Casualty Company. Insofar as indemnification for
liability arising under the Securities Act of 1933 may be permitted to
directors and officers under such insurance policies, or otherwise, the
Depositor 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 Depositor of expenses incurred or paid by a director or officer in
the successful defense of any action, suit or proceeding) is asserted by
such director or officer in connection with the variable annuity contracts,
the Depositor 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.
Item 29. Principal Underwriters.
Keyport Financial Services Corp. is also principal underwriter of the
SteinRoe Variable Investment Trust and Liberty Variable Investment Trust,
which offer eligible funds for variable annuity and variable life insurance
contracts.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
John W. Rosensteel President, Director and Chairman of the
Board
James J. Klopper Director and Clerk
Francis E. Reinhart Director and Vice President,
Administration
Rogelio P. Japlit Treasurer
Paul T. Holman Assistant Clerk
Donald A. Truman Assistant Clerk
*125 High Street, Boston, Massachusetts 02110.
Item 30. Location of Accounts and Records.
Keyport Life Insurance Company, 125 High Street, Boston, Massachusetts
02110.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted;
(b) Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement of
Additional Information; and
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
Representation
Depositor represents that the fees and charges deducted under the
contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
the Depositor. Further, this representation applies to each form of the
contract described in a prospectus and statement of additional information
included in this registration statement.
SIGNATURES
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it has duly caused this
Registration Statement to be signed on its behalf, in the City of Boston
and Commonwealth of Massachusetts, on this 20th day of March, l998.
Variable Account A
(Registrant)
BY: Keyport Life Insurance Company
(Depositor)
BY: /s/ John W. Rosensteel*
John W. Rosensteel
President
*BY: /s/James J. Klopper March 20, 1998
James J. Klopper Date
Attorney-in-Fact
* James J. Klopper has signed this document on the indicated date on
behalf of Mr. Rosensteel pursuant to power of attorney duly executed by him
and included as part of Exhibit 16 in Post-Effective Amendment No. 6 to
Registration Statement on Form N-4 filed on or about November 14, 1997
(File No. 333-1043; 811-7543).
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/ Kenneth R. Leibler* /s/ John W. Rosensteel*
Kenneth R. Leibler John W. Rosensteel
Director and Chairman of the Board President
(Principal Executive Officer)
/s/ F. Remington Ballou* /s/ Bernhard M. Koch*
F. Remington Ballou Bernhard M. Koch
Director Senior Vice President
(Chief Financial Officer)
/s/ Frederick Lippitt*
Frederick Lippitt
Director
/s/ Robert C. Nyman*
Robert C. Nyman
Director
/s/ John W. Rosensteel*
John W. Rosensteel
Director
*BY: /s/ James J. Klopper March 20, 1998
James J. Klopper Date
Attorney-in-Fact
* James J. Klopper has signed this document on the indicated date on
behalf of each of the above Directors and Officers of the Depositor
pursuant to powers of attorney duly executed by such persons and included
as Exhibit 16 in Post Effective Amendment No. 6 to Registration Statement
on Form N-4 filed on or about November 14, 1997 (File No. 333-1043; 811-
7543).
EXHIBIT INDEX
Item Page
(4n) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (KAV)
(4o) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (KAV)
(4p) Speicmen Individual Variable Annuity Contract of Keyport
Life Insurance Company (KAV)
EXHIBIT (4n)
Keyport
Life Insurance Company
A Stock Company
This Group Contract, as issued to the Group Contract Owner by Us with any
riders or endorsements, alone makes up the agreement under which benefits
are paid. The Group Contract may be inspected at the office of the Group
Contract Owner. In consideration of any application for a Certificate and
the payment of purchase payments, We agree, subject to the terms and
conditions of the Group Contract, to provide the benefits described in the
Certificate to the Certificate Owner.
If a Certificate is In Force on the Income Date, We will begin making
income payments to the Annuitant. We will make such payments according to
the terms of the Certificate and Group Contract.
RIGHT TO EXAMINE CERTIFICATE: A Certificate Owner may return a Certificate
to Us or the agent through whom it was purchased within 10 days of receipt.
If so returned, We will treat the Certificate as though it were never
issued. Upon receipt We will promptly refund the Certificate Value as of
the date the returned Certificate is received by Us plus any charges We
may have previously deducted.
Read This Contract Carefully.
Read This Contract Carefully.
Signed: ________________________ ________________________
Secretary President
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating -- No Dividends
ANNUITY PAYMENTS AND OTHER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE
OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR
AMOUNT. THIS IS EXPLAINED FURTHER ON PAGES 11 AND 18.
Table of Contents
Page
Right to Examine Certificate..................................1
Definitions...................................................2
Contract Schedule.............................................3A
General Provisions............................................5
Variable Account Provisions...................................10
Transfers.....................................................13
Partial Withdrawals and Total Surrender.......................14
Death Provisions..............................................15
Annuity Provisions............................................16
Endorsements (if any) are before page.........................22
Definitions
Accumulation Period: The period prior to the Income Date during which
Purchase Payments may be made by a Certificate Owner.
Accumulation Unit: An accounting unit used to calculate a Certificate
Owner's interest in a Sub-account of the Variable Account during the
Accumulation Period.
Adjusted Certificate Value: The Certificate Value less any applicable
taxes relating to a Certificate and Certificate Maintenance Charge. This
amount is applied to the applicable Annuity Tables to determine Annuity
Payments.
Annuitant: The natural person on whose life Annuity Payments are based,
and to whom any Annuity Payments will be made starting on the Income Date.
Annuity Options: Options available for Annuity Payments.
Annuity Payments: The series of payments made to the Annuitant, starting
on the Income Date, under the Annuity Option selected.
Annuity Period: The period after the Income Date during which Annuity
Payments are made.
Annuity Unit: An accounting unit used to calculate Variable Annuity
Payments during the Annuity Period.
Beneficiary: The person(s) or entity(ies) who controls the Certificate if
any Certificate Owner dies before the Income Date.
(Definitions continue on page 4)
KEYPORT LIFE INSURANCE COMPANY
125 High Street, Boston, MA 02110
Contract Schedule
GROUP CONTRACT OWNER [Keyport Insurance Trust]
GROUP CONTRACT NUMBER [678999]
GROUP CONTRACT ISSUE DATE [1/30/96]
MINIMUM INITIAL PAYMENT $25,000
MINIMUM ADDITIONAL PAYMENT $250 ($50 for EFT payment)
Charges
Distribution Charge: None
Administrative Charge: [We deduct [0.000411%] of the assets in each
Variable Account Sub-Account on a daily basis (equivalent to an annual rate
of [0.15%]) to compensate Us for a portion of Our administrative costs.]
Mortality and Expense Risk Charge [We deduct [0.003863%] of the assets in
each Variable Account Sub-account on a daily basis (equivalent to an annual
rate of [1.40%]) for Our mortality and expense risks.]
Certificate Maintenance Charge [We charge [$36] to cover a portion of Our
ongoing Certificate maintenance expenses. The charge is incurred at the
beginning of the Certificate Year and is deducted on each Certificate
Anniversary and at the time of total surrender.]
Transfer Charge [Currently none, however, We reserve the right to charge
[$25] for a transfer if a Certificate Owner makes more than [12] transfers
per Certificate Year.]
Surrender Charge: None
Initial Purchase Payment Allocation
Currently, Certificate Owners can select [21] Sub-accounts and the Fixed
Account. We reserve the right to increase or decrease the number of
available Sub-accounts. The minimum a Certificate Owner may allocate to
any Sub-account or the Fixed Account is [5%] of any Purchase Payment. An
initial Purchase Payment may be invested as follows:
[AIM Capital Appreciation x%
AIM Growth x%
AIM International x%
Alliance Global Bond x%
Alliance Growth and Income x%
Alliance Premier Growth x%
Alliance Real Estate x%
Colonial Growth and Income x%
Colonial High Yield Securities x%
Colonial Small Cap Value x%
Colonial Strategic Income x%
Colonial U.S. Stock x%
Liberty All-Star x%
MFS Bond x%
MFS Emerging Growth x%
MFS Research x%
Stein Roe Balanced x%
Stein Roe Global Utilities x%
Stein Roe Growth Stock x%
Stein Roe Money Market x%
Stein Roe Special Venture x%
Fixed Account x%]
Transfer Guidelines
Number of Transfers and Transfer Charge: Currently, You are permitted
unlimited transfers per Contract Year during the Accumulation Period and
unlimited transfers during the Annuity Period. We reserve the right to
change, upon notice, the frequency of transfers You may make. We also
reserve the right to impose a charge for any transfer in excess of 12 per
Contract Year. The transfer charge is shown in the Charges section of the
Contract Schedule.
Minimum amount to be transferred: None.
Minimum amount which must remain in a Sub-account after transfer: None.
Partial Withdrawals
A Certificate Owner may make partial withdrawals during the Accumulation
Period without incurring a Surrender Charge[, as follows:
(1) In any Certificate Year a Certificate Owner may withdraw an
aggregate amount not to exceed, at the time of withdrawal:
(a) the Certificate Value, less
(b) the portion of the Purchase Payments not previously withdrawn by
that Certificate Owner; and
(2) In any Certificate Year after the first, a Certificate Owner may
also withdraw the positive difference, if any, between the amount
withdrawn pursuant to (1) above in any such subsequent year and
10% of the Certificate Value as of the preceding Certificate
Anniversary.
We will collect the Surrender Charge shown on the Schedule with respect to
partial withdrawals in excess of the amounts described in (1) and (2)
above].
Minimum withdrawal amount: $300, unless the withdrawal is made pursuant to
Our systematic withdrawal program, in which case the minimum withdrawal is
$100.
Minimum Certificate Value which must remain after a partial withdrawal:
$2,500.
Death Benefits
Adjustment of Contract Value
When We receive due proof of death of the Contract Owner, any Joint
Contract Owner, or the Annuitant if the Contract Owner is a non-natural
Person, We will compare, as of the date of death, the Contract Value to the
Death Benefit amount defined in this Schedule. If the Contract Value is
less than the Death Benefit, We will increase the current Contract Value by
the amount of the difference. Any amount credited will be allocated to the
Variable Account and/or the Fixed Account based on the Purchase Payment
allocation that is in effect when We receive due proof of death.
Death Benefit Amount
Contract Anniversary Death Benefit
On the Contract Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Contract Date;
(b) Add to (a) any additional Purchase Payments paid since
the Contract Date and subtract from (a) any partial
withdrawals (including any associated surrender charge
incurred) made since the Contract Date;
(2) (a) Determine the Contract Value for each Contract
Anniversary (the "Anniversary Value") before the 81st
birthday of the Contract Owner or, if the Contract Owner
is a non-natural Person, the Annuitant;
(b) Increase each "Anniversary Value" by any Purchase
Payments made after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following amount
calculated at the time of each partial withdrawal made
after that Value's Anniversary: (i) the partial
withdrawal amount (including any associated surrender
charge incurred) divided by the Contract Value
immediately preceding the withdrawal, (ii) multiplied by
the "Anniversary Value" immediately preceding the
withdrawal;
(d) Select the highest "Anniversary Value" after the
adjustments in (b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).
If there is a change of Contract Owner, the new Contract Owner's age will
be used to determine the amount in (2) above.
The Variable Separate Account
Sub-accounts investing in shares of mutual funds
Variable Account A is a unit investment trust variable separate account,
organized in and
governed by the laws of the State of Rhode Island. Variable Account A is
divided into Sub-accounts. Each Sub-account listed below invests in shares
of the corresponding Portfolio of the Eligible Fund shown.
Eligible Funds of AIM Insurance
Funds and Variable Account
Sub-Accounts Investment Objective
AIM Capital Appreciation Capital appreciation through
(AIM Capital Appreciation investments in common stocks,
Sub-Account) with emphasis on medium-sized
and smaller emerging growth
companies.
AIM Growth Growth of capital through
(AIM Growth Sub-Account) investments primarily in
common stocks of leading U.S.
companies considered by AIM
to have strong earnings
momentum.
AIM International Equity Long-term growth of capital
(AIM International Equity by investing in international
Sub-Account) equity securities, the issuers
of which are considered by AIM
to have strong earnings
momentum.
Eligible Funds of Alliance Series
Fund and Variable Account
Sub-Accounts Investment Objective
Alliance Global Bond A high level of return from a
(Alliance Global Bond combination of current income and
Sub-Account) capital appreciation by investing
in a globally diversified portfolio
of high quality debt securities
denominated in the U.S. Dollar and
a range of foreign currencies.
Alliance Growth and Income Balance the objectives of
(Alliance Growth and Income reasonable current income and
Sub-Account) reasonable opportunities for
appreciation through investments
primarily in dividend-paying
common stocks of good quality.
Alliance Premier Growth Growth of capital rather than
(Alliance Premier Growth current income.
Sub-Account)
Alliance Real Estate Total return on its assets through
(Alliance Real Estate Sub- long-term growth of capital and
Account) income principally through
investing in a portfolio of equity
securities of issuers that are
primarily engaged in or related to
the real estate industry.
Eligible Funds of Liberty Trust
and Variable Account
Sub-Accounts Investment Objective
Colonial Growth and Income Primarily income and long-term
(Colonial Growth and Income capital growth and, secondarily,
Sub- Account)(formerly named preservation of capital.
Colonial-Keyport Growth and
Income Fund)
Colonial High Yield Securities High current income and total
(Colonial High Yield Securities return by investing primarily
Sub-Account) in lower rated corporate debt
securities.
Colonial Small Cap Value Long-term growth by investing
(Colonial Small Cap Value in smaller capitalization
Sub-Account) equity securities.
Colonial Strategic Income A high level of current income, as
(Colonial Strategic Income is consistent with prudent risk and
Sub-Account)(formerly named maximizing total return, by
Colonial-Keyport Strategic diversifying investments primarily
Income Fund) in U.S. and foreign government and
high yield, high risk corporate
debt securities.
Colonial U.S. Stock Long-term capital growth by
(Colonial U.S. Stock Sub-Account) investing primarily in large
(formerly named Colonial-Keyport capitalization equity securities.
U.S. Stock Fund)
Liberty All-Star Equity Total investment return, comprised
(Liberty All-Star Equity Sub-Account) of long-term capital appreciation
and current income, through
investment primarily in a
diversified portfolio of equity
securities.
Stein Roe Global Utilities Current income and long-term growth
(Stein Roe Global Utilities of capital and income.
Sub-Account)(formerly named
Colonial-Keyport Utilities Fund)
Eligible Funds of MFS Trust
and Variable Account
Sub-Accounts Investment Objective
MFS Bond High level of current income
(MFS Bond Sub-Account) as is believed consistent
with prudent investment risk
and secondarily to protect
shareholders' capital.
MFS Emerging Growth Long-term growth of capital.
(MFS Emerging Growth Sub-Account)
MFS Research Long-term growth of capital and
(MFS Research Sub-Account) future income.
Eligible Funds of SteinRoe Trust
and Variable Account
Sub-Accounts Investment Objective
Stein Roe Balanced High total investment return
(Stein Roe Balanced through investment in a changing
Sub-Account) (formerly named SteinRoe mix of securities.
Managed Assets Fund)
Stein Roe Growth Stock Long-term growth of capital through
(Stein Roe Growth Stock investment primarily in common
Sub-Account)(formerly named SteinRoe stocks.
Managed Growth Stock Fund)
Stein Roe Money Market High current income from short-term
(Stein Roe Money Market money market instruments while
Sub-Account)(formerly named SteinRoe emphasizing preservation of capital
Cash Income Fund) and maintaining excellent
liquidity.
Stein Roe Special Venture Capital growth by investing
(Stein Roe Special Venture primarily in common stocks,
Sub-Account)(formerly named SteinRoe convertible securities, and other
Capital Appreciation Fund) securities selected for prospective
capital growth.
Sub-accounts investing directly in securities: None.
The Fixed Account
The Fixed Account is part of Our General Account, which consists of all of
Our assets except the assets of the Variable Account and the assets of
other separate accounts that We maintain. Subject to applicable law, We
have sole discretion over investments of the assets of the Fixed Account.
If You allocate assets to the Fixed Account, Your accumulation values and
Income Payments will have guaranteed minimums.
Before the Income Date, Your interest in the Fixed Account is measured by
the Fixed Account Value. When Income Payments begin, the payee's interest
in the Fixed Account is measured by the amount of each periodic payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Contract is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with
Your selection on the Contract Date. You may change such selection by
Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus
the interest subsequently credited on those payments; plus
(2) any Variable Account Value transferred to the Fixed Account
plus the interest subsequently credited on the transferred
value; less
(3) any prior partial withdrawals from the Fixed Account; less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account
at rates declared by Us for Guarantee Periods of one or more years from the
month and day of allocation. The minimum Guaranteed Interest Rate is 3%
per year.
Definitions (continued)
Certificate: The document issued to a Certificate Owner to evidence a
Certificate Owner's participation under the Group Contract. The
Certificate summarizes the benefits and provisions of the Group Contract.
Certificate Anniversary: An anniversary of the Certificate Date.
Certificate Date: The date a Certificate is issued to a Certificate Owner.
The Certificate Date is shown on the Certificate Schedule.
Certificate Owner: The person who owns a Certificate under the Group
Contract. Any Joint Certificate Owners and the Certificate Owner own the
Certificate equally with rights of survivorship. All Owners must exercise
ownership rights and privileges together, including the signing of Written
Requests.
Certificate Value: The sum of the Certificate Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account during the
Accumulation Period.
Certificate Year: The first Certificate Year is the annual period which
begins on the Certificate Date. Subsequent Certificate Years begin on each
Certificate Anniversary.
Eligible Fund: An investment entity shown on the Certificate Schedule.
Fixed Account: The account We establish to support Fixed Allocations. The
Contract Schedule shows whether the Fixed Account is available under the
Certificates.
Fixed Account Value: The value of all Fixed Account amounts accumulated
under a Certificate prior to the Income Date.
Fixed Allocation: An amount allocated to the Fixed Account that is
credited with a Guaranteed Interest Rate for a specified Guarantee Period.
Fixed Annuity: An annuity with a series of payments made during the
Annuity Period which are guaranteed as to dollar amount by Us.
General Account: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate
accounts.
Group Contract Owner: The person or entity to which the Group Contract is
issued.
Guaranteed Interest Rate: The effective annual interest rate which We will
credit for a specified Guarantee Period.
Guarantee Period: The period of year(s) a rate of interest is guaranteed
to be credited within the Fixed Account.
Income Date: The date on which Annuity Payments begin. The Income Date is
shown on the Certificate Schedule.
In Force: The status of a Certificate before the Income Date so long as it
has not been totally surrendered and there has not been a death of a
Certificate Owner or Joint Certificate Owner that will cause the
Certificate to end within five years of the date of death.
Office: Our executive office shown on the Certificate Schedule.
Person: A human being, trust, corporation, or any other legally recognized
entity.
Portfolio: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
Purchase Payment: A payment made by or on behalf of a Certificate Owner
with respect to a Certificate.
Sub-account: Variable Account assets are divided into Sub-accounts.
Assets of each Sub-account will be invested in shares of a Portfolio of an
Eligible Fund, or directly in portfolio securities.
Valuation Date: Each day on which We and the New York Stock Exchange
("NYSE") are open for business, or any other day that the Securities and
Exchange Commission requires that mutual funds, unit investment trusts or
other investment portfolios be valued.
Valuation Period: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business on the
next succeeding Valuation Date.
Variable Account: Our Variable Account(s) shown on the Certificate
Schedule.
Variable Annuity: An annuity with payments which vary as to dollar amount
in relation to the investment performance of specified Sub-accounts of the
Variable Account.
We, Us, Our: Keyport Life Insurance Company.
Written Request: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
General Provisions
Purchase Payments
The initial Purchase Payment is due on the Certificate Date. It must be
paid at Our Office in United States currency. Coverage under a Certificate
does not take effect until We have accepted the initial Purchase Payment
during a Certificate Owner's lifetime. Each Purchase Payment after the
Certificate Date must be at least the amount shown on the Certificate
Schedule. Provided the Certificate Value under a Certificate does not go
to zero, a Certificate will stay in force until the Income Date even if a
Certificate Owner make no payments after the initial one. We reserve the
right to reject any subsequent Purchase Payment.
Allocation of Purchase Payments
An initial Purchase Payment is allocated to the Sub-accounts of the
Variable Account, and to the Fixed Account if available, in accordance with
the selections made by a Certificate Owner at the Certificate Date. Unless
otherwise changed by a Certificate Owner, subsequent Purchase Payments are
allocated in the same manner as the initial Purchase Payment. Allocation
of Purchase Payments is subject to the terms and conditions imposed by Us.
We reserve the right to allocate initial Purchase Payments to the Money
Market Sub-account until the expiration of the Right to Examine Certificate
period set forth on the first page of the Group Contract and the
Certificate.
The Contract
The Group Contract, including the application, if any, and any attached
rider or endorsement constitute the entire contract between the Group
Contract Owner and Us. All statements made by the Group Contract Owner,
any Certificate Owner or any Annuitant will be deemed representations and
not warranties. No such statement will be used in any contest unless it is
contained in the application signed by the Group Contract Owner or in a
written instrument signed by the Certificate Owner, a copy of which has
been furnished to the Certificate Owner, the Beneficiary or to the Group
Contract Owner.
Only Our President or Secretary may agree to change any of the terms of the
Group Contract. Any changes must be in writing. Any change to the terms
of a Certificate must be in writing and with Certificate Owner's consent,
unless provided otherwise by the Group Contract and the Certificate.
To assure that the Group Contract and the Certificate will maintain their
status as a variable annuity under the Internal Revenue Code, We reserve
the right to change the Group Contract and any Certificate issued
thereunder to comply with future changes in the Internal Revenue Code, any
regulations or rulings issued thereunder, and any requirements otherwise
imposed by the Internal Revenue Service. The Group Contract Owner and the
affected Certificate Owner will be sent a copy of any such amendment.
We reserve the right, subject to compliance with the law as currently
applicable or subsequently changed, to: (a) operate the Variable Account
in any form permitted under the Investment Company Act of 1940, as
amended, (the "1940 Act"), or in any other form permitted by law; (b) take
any action necessary to comply with or obtain and continue any exemptions
from the 1940 Act, or to comply with any other applicable law; (c) transfer
any assets in any Sub-account to another Sub-account, or to one or more
separate investment accounts, or the General Account; or to add, combine or
remove Sub-accounts in the Variable Account; and (d) change the way We
assess charges, so long as We do not increase the aggregate amount beyond
that currently charged to the Variable Account and the Eligible Funds in
connection with a Certificate. If the shares of any of the Eligible Funds
should become unavailable for investment by the Variable Account or if in
Our judgment further investment in such Portfolio shares should become
inappropriate in view of the purpose of the Certificate, We may add or
substitute shares of another mutual fund for the Portfolio shares already
purchased under the Certificate. No substitution of Portfolio shares in
any Sub-account may take place without prior approval of the Securities and
Exchange Commission and notice to the affected Certificate Owners, to the
extent required by the 1940 Act.
Certificate Owner
A Certificate Owner has all rights and may receive all benefits under a
Certificate. A Certificate Owner is the person designated as such on the
Certificate Date, unless changed. A Certificate Owner may exercise all
rights of a Certificate while it is In Force, subject to the rights of (a)
any assignee under an assignment filed with Us, and (b) any irrevocably
named Beneficiary.
Joint Certificate Owner
A Certificate can be owned by Joint Certificate Owners. Upon the death of
any Certificate Owner or Joint Certificate Owner, the surviving owner(s)
will be the primary Beneficiary(ies). Any other beneficiary designation
will be treated as a Contingent Beneficiary unless otherwise indicated in a
Written Request filed with Us.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by a Certificate Owner at the
Certificate Date, unless changed prior to the Income Date. Any change of
Annuitant is subject to Our underwriting rules then in effect. The
Annuitant may not be changed in a Certificate which is owned by a non-
natural person. A Certificate Owner may name a Contingent Annuitant. The
Contingent Annuitant becomes the Annuitant if the Annuitant dies while a
Certificate is In Force. If the Annuitant dies and no Contingent
Annuitant has been named, We will allow a Certificate Owner sixty days to
designate someone other than the Certificate Owner as Annuitant. The
Certificate Owner will be the Contingent Annuitant unless the Certificate
Owner names someone else. If the Certificate is owned by a non-natural
person, the death of the Annuitant will be treated as the death of the
Certificate Owner and a new Annuitant may not be designated.
Beneficiary
The Beneficiary is the person who controls the Certificate if any
Certificate Owner dies prior to the Income Date. If the Certificate is
owned by Joint Certificate Owners, upon the death of any Certificate Owner
or Joint Certificate Owner, the surviving owner(s) will become the primary
Beneficiary. Any other beneficiary designation will be treated as a
Contingent Beneficiary unless otherwise indicated in a Written Request
filed with Us. If a Certificate Owner names more than one Person as
Primary Beneficiary or as Contingent Beneficiary, and does not state
otherwise on an application or in a Written Request to Us, any non-
survivors will not receive a benefit. The survivors will receive equal
shares. Subject to the rights of any irrevocable Beneficiary(ies), a
Certificate Owner may change primary or contingent Beneficiary(ies). A
change must be made by Written Request and will be effective as of the date
the Written Request is signed. We will not be liable for any payment We
make or action We take before We receive the Written Request.
Group Contract Owner
The Group Contract Owner has title to the Group Contract. The Group
Contract and any amount accumulated under any Certificate are not subject
to the claims of the Group Contract Owner or any of its creditors. The
Group Contract Owner may transfer ownership of this Group Contract. Any
transfer of ownership terminates the interest of any existing Group
Contract Owner. It does not change the rights of any Certificate Owner.
Change of Certificate Owner, Beneficiary or Contingent Annuitant
While a Certificate is In Force, a Certificate Owner may by Written Request
change the primary Certificate Owner, Joint Certificate Owner, primary
Beneficiary, Contingent Beneficiary, Contingent Annuitant, or in certain
instances, the Annuitant. An irrevocably named Person may be changed only
with the written consent of such Person. The change will be effective,
following Our receipt of the Written Request, as of the date the Written
Request is signed. The change will not affect any payments We make or
actions We take prior to the time We receive the Written Request.
Assignment of the Certificate
A Certificate Owner may assign a Certificate at any time while it is In
Force. The assignment must be in writing and a copy must be filed at Our
Office. A Certificate Owner's rights and those of any revocably named
Person will be subject to the assignment. An assignment will not affect
any payments We make or actions We take before We receive the assignment.
We are not responsible for the validity of any assignment.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Annuity
Payments have begun, any underpayment(s) that have been made will be paid
in full with the next Annuity Payment. Any overpayment, unless repaid to
Us in one sum, will be deducted from future Annuity Payments otherwise due
until We are repaid in full.
Non-Participating
A Certificate does not participate in Our divisible surplus.
Evidence of Death, Age, Sex or Survival
If a Certificate provision relates to the death of a natural Person, We
will require proof of death before We will act under that provision. Proof
of death shall be: (a) a certified death certificate; or (b) a certified
decree of a court of competent jurisdiction as to the finding of death; or
(c) a written statement by a medical doctor who attended the deceased; or
(d) any other document constituting due proof of death under applicable
state law. If Our action under a Certificate provision is based on the
age, sex, or survival of any Person, We may require evidence of the
particular fact before We act under that provision.
Protection of Proceeds
No Beneficiary or payee may commute or assign any payments under a
Certificate before they are due. To the extent permitted by law, no
payments shall be subject to the debts of any Beneficiary or payee or to
any judicial process for payment of those debts.
Reports
We will send Certificate Owners a report that shows the Certificate Value
at least once each Certificate Year. We will send any other reports that
may be required by law.
Taxes
Any taxes paid to any governmental entity relating to a Certificate will be
deducted from the Purchase Payments or Certificate Value. We may, in Our
sole discretion, delay the deduction until a later date. By not deducting
tax payments at the time of Our payment, We do not waive any right We may
have to deduct amounts at a later date. We will, in Our sole discretion,
determine when taxes relate to a Certificate or to the operation of the
Variable Account. We reserve the right to establish a provision for
federal income taxes if We determine, in Our sole discretion, that We will
incur a tax as a result of the operation of the Variable Account. Such a
provision will be reflected in the Accumulation and Annuity Unit Values.
We will deduct for any income taxes incurred by Us as a result of the
operation of the Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient. We will deduct from any
payment under a Certificate any withholding taxes required by applicable
law.
Regulatory Requirements
All values payable under a Certificate will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Certificate is delivered.
Suspension or Deferral of Payments
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal
of the assets and securities of the Variable Account is not
reasonably practicable; or
(4) the Securities and Exchange Commission, by order or
pronouncement, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and
Exchange Commission govern as to whether the conditions described in (2)
and (3) above exist.
We reserve the right to delay payment of amounts allocated to the Fixed
Account for up to six months.
Variable Account Provisions
The Variable Account
The Variable Account(s) is designated on the Certificate Schedule and
consists of assets set aside by Us, which are kept separate from Our
general assets and all other variable account assets We maintain. We own
the assets of the Variable Account. Variable Account assets equal to
reserves and other contract liabilities will not be chargeable with
liabilities arising out of any other business We may conduct. We may
transfer to Our General Account assets which exceed the reserves and other
liabilities of the Variable Account. Income and realized and unrealized
gains or losses from assets in the Variable Account are credited to or
charged against the account without regard to other income, gains or losses
in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-
accounts which are available under the Certificate are shown on the
Certificate Schedule. The assets of the Sub-accounts of the unit
investment trust variable separate account are allocated to the Eligible
Fund(s) and the Portfolio(s), if applicable, within an Eligible Fund shown
on the Certificate Schedule. The assets of the Sub-accounts of the
investment company variable separate account, if applicable, are invested
in portfolios of securities designed to meet the objectives of the Sub-
Account shown on the Certificate Schedule. We may, from time to time, add
additional Sub-accounts, Eligible Funds or Portfolios to those shown on the
Certificate Schedule. A Certificate Owner may be permitted to transfer
Certificate Values or allocate Purchase Payments to the additional Sub-
Accounts, Eligible Funds or Portfolios. However, the right to make such
transfers or allocations will be limited by the terms and conditions
imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account,
to combine two or more Sub-accounts or to substitute a new Portfolio for
the Portfolio in which a Sub-account invests. A substitution may become
necessary if, in Our discretion, a Portfolio or Sub-account no longer suits
the purposes of the Group Contract. This may happen: due to a change in
laws or regulations or a change in a Portfolio's investment objectives or
restrictions; because the Portfolio or Sub-account is no longer available
for investment; or for some other reason. We will obtain any prior
approvals that may be required from the insurance department of Our state
of domicile, and from the SEC or any other governmental entity before
making such a substitution.
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
(2) Operate a Variable Account as a management company under the
1940 Act, if it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the
1940 Act, if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
Valuation of Assets
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
Accumulation Units
A Certificate Owner's Variable Account value will fluctuate in accordance
with the investment results of the Sub-accounts to which the Certificate
Owner has allocated his or her Purchase Payments or Certificate Value. In
order to determine how these fluctuations affect a Certificate Owner's
Certificate Value, We use an Accumulation Unit value. Accumulation Units
are used to account for all amounts allocated to or withdrawn from the Sub-
accounts of the Variable Account as a result of Purchase Payments, partial
withdrawals, transfers, or charges deducted from the Certificate Value.
We determine the number of Accumulation Units of a Sub-account purchased or
cancelled by dividing the amount allocated to, or withdrawn from, the Sub-
account by the dollar value of one Accumulation Unit of the Sub-account as
of the end of the Valuation Period during which We receive the request for
the transaction.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-account was initially set at $10.
Subsequent Accumulation Unit Values for each Sub-account are determined by
multiplying the Accumulation Unit Value for the immediately preceding
Valuation Period by a net investment factor for the Sub-account for the
current period. This factor may be greater or less than 1.0; therefore,
the Accumulation Unit Value may increase or decrease from Valuation Period
to Valuation Period.
We calculate the net investment factor for each Sub-account investing in
shares of mutual funds by dividing (a) by (b) and then subtracting (c)
where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which the
Sub-account invests at the end of the Valuation Period; plus
(ii) any dividend per share declared for the Portfolio that has
an ex-dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual
rate for the Mortality and Expense Risk Charge, for the
Administrative Charge, and for the Distribution Charge, if
any, which are shown on the Certificate Schedule; plus
(ii) a charge factor, if any, for any tax provision established
by Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing
directly in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the end of
the preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current
Valuation Period; less
(iii) any capital losses, realized or unrealized, charged against
the assets during the current Valuation Period; less
(iv) all operating and investment expenses relating to the
assets that are incurred during the current Valuation
Period.
(b) is the value of the assets in the Sub-account at the end of the
preceding Valuation Period.
Mortality and Expense Risk Charge
Each Valuation Period We deduct a Mortality and Expense Risk Charge from
each Sub-account of the Variable Account which is equal, on an annual
basis, to the amount shown on the Certificate Schedule. The Mortality and
Expense Risk Charge compensates Us for assuming the mortality and expense
risks with respect to the Certificates We issue. We guarantee the dollar
amount of each Annuity Payment after the first Annuity Payment will not be
affected by variations in mortality or expense experience.
Administrative Charge
Each Valuation Period We deduct an Administrative Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Administrative Charge compensates Us for the
costs associated with administration of the Variable Account and the
Certificates We issue.
Distribution Charge
Each Valuation Period We deduct a Distribution Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Distribution Charge compensates Us for the costs
associated with the distribution of the Certificates We issue.
Certificate Maintenance Charge
We deduct a Certificate Maintenance Charge from the Certificate Value by
cancelling Accumulation Units from each applicable Sub-account to reimburse
Us for expenses relating to the maintenance of the Certificate. We will
deduct the Certificate Maintenance Charge from the Sub-accounts of the
Variable Account in the same proportion that the amount of Certificate
Value in each Sub-account bears to the Certificate Value. The Certificate
Maintenance Charge is shown on the Certificate Schedule. The Certificate
Maintenance Charge will be deducted from the Certificate Value on each
Certificate Anniversary during the Accumulation Period.
If a total surrender is made on a date other than a Certificate
Anniversary, the Certificate Maintenance Charge will be deducted at the
time of surrender.
During the Annuity Period, the Certificate Maintenance Charge will be
deducted on a pro-rata basis from each Annuity Payment.
Transfers
Transfers: Subject to any limitation We impose on the number of
transfers permitted in a Certificate Year, a Certificate Owner may transfer
all or part of Certificate Owner's Certificate Value among the Sub-accounts
and the Fixed Account, if any, by Written Request or by telephone without
the imposition of any fees or charges. Transfers among the Sub-accounts
and the Fixed Account are permitted only during the Accumulation Period.
The number of permitted transfers, and the charge for transfers in excess
of that number, are shown on the Certificate Schedule. All transfers are
subject to the following:
(1) If more than the number of free transfers, shown on the
Certificate Schedule, are made in a Certificate Year, We will deduct a
transfer charge, shown on the Certificate Schedule, for each subsequent
transfer. The transfer fee will be deducted from the Sub-account from
which the transfer is made. However, if Certificate Owner transfers his or
her entire interest in a Sub-account, the transfer fee will be deducted
from the amount transferred. If a Certificate Owner makes a transfer from
more than one Sub-account, any transfer fee will be allocated pro-rata
among such Sub-accounts in proportion to the amount transferred from each.
(2) During the Annuity Period, transfers of values between Sub-
accounts will be made by converting the number of Annuity Units being
transferred to the number of Annuity Units in the Sub-account to which a
transfer is made, so that the next Annuity Payment, if it were made at that
time, would be the same amount that it would have been without the
transfer. Thereafter, Annuity Payments will reflect changes in the value
of the new Annuity Units.
(3) The minimum amount which can be transferred is shown on the
Certificate Schedule. The minimum amount which must remain in a Sub-
account after a transfer is shown on the Certificate Schedule.
(4) If 100% of the value of any Sub-account is transferred and
the current allocation for Purchase Payments includes that Sub-account, the
allocation for future Purchase Payments will change to reflect a
Certificate Owner's allocation of Certificate Value following the transfer.
(5) We reserve the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privileges
described above.
We will not be liable for transfers made in accordance with a Certificate
Owner's instructions. All amounts and Accumulation Units will be
determined as of the end of the Valuation Period in which We receive the
request for transfer.
Partial Withdrawals and Total Surrender
Partial Withdrawals
During the Accumulation Period while the Certificate is In Force, a
Certificate Owner may, upon Written Request, make a partial withdrawal,
subject to the provisions and limitations shown on the Certificate
Schedule. For purposes of determining whether a Surrender Charge is
applicable to a partial withdrawal:
(1) A partial withdrawal will first be taken from the portion of
a Certificate Owner's Certificate Value which is in excess of Purchase
Payments, and then from Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in
the order inwhich the Purchase Payments were made, starting with the first.
A withdrawal will result in the cancellation of Accumulation Units from
each applicable Sub-account in the ratio that a Certificate Owner's
interest in the Sub-account bears to his or her Certificate Value in all
the Sub-accounts. A Certificate Owner must specify by Written Request in
advance if he or she wants Accumulation Units to be cancelled in a manner
other than the method described above. If there is no value or
insufficient value in the Variable Account, then the amount withdrawn, or
the insufficient portion, will be deducted from the Fixed Account. If a
Certificate Owner has multiple Guarantee Periods, We will deduct such
amount from each Guarantee Period's values in the ratio that each Period's
values bears to the total Fixed Account Value. A Certificate Owner must
specify by Written Request in advance if he or she wants multiple Guarantee
Periods to be reduced in a manner other than the method described above.
Each partial withdrawal must be for an amount not less than the amount
shown on the Certificate Schedule. The Certificate Value which must remain
in a Certificate is shown on the Certificate Schedule. The Certificate
Schedule also shows any charge.
Total Surrender
During the Accumulation Period while the Certificate is In Force, a
Certificate Owner may, upon Written Request, make a total surrender of the
Certificate Withdrawal Value. The Certificate Withdrawal Value is:
(1) the Certificate Value as of the end of the Valuation Period
during which We receive a Written Request for a withdrawal or
surrender; less
(2) any applicable taxes not previously deducted; less
(3) any Surrender Charge; less
(4) any Certificate Maintenance Charge.
We will pay the amount of any withdrawal or surrender within seven days
unless the Suspension or Deferral of Payments Provision is in effect.
Death Provisions
Death of Certificate Owner
These provisions apply if, during the Accumulation Period while the
Certificate is In Force, the Certificate Owner or any Joint Certificate
Owner dies (whether or not the decedent is also the Annuitant) or the
Annuitant dies under a Certificate owned by a non-natural Person. The
"designated beneficiary" will control the Certificate after such a death.
This "designated beneficiary" will be the first Person among the following
who is alive on the date of death: Certificate Owner; Joint Certificate
Owner; primary Beneficiary; Contingent Beneficiary; and Certificate Owner's
estate. If the Certificate Owner and Joint Certificate Owner are both
alive, they shall be the "designated beneficiary" together.
If the decedent's surviving spouse (if any) is the sole "designated
beneficiary", the surviving spouse will automatically become the new sole
Certificate Owner as of the date of the death. And, if the Annuitant is
the decedent, the new Annuitant will be any living Contingent Annuitant,
otherwise the surviving spouse. The Certificate may stay in force until
another death occurs (i.e., until the death of the Certificate Owner or
Joint Certificate Owner). Except for this paragraph, all of "Death
Provisions" will apply to that subsequent death.
In all other cases, the Certificate may stay in force up to five years from
the date of death. During this period, the "designated beneficiary" may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to surrender the Certificate for its
Certificate Withdrawal Value. If this Certificate is still in force at the
end of the five-year period, We will automatically end it then by paying to
the "designated beneficiary" the Certificate Withdrawal Value without the
deduction of any applicable Surrender Charges. If the "designated
beneficiary" is not alive then, We will pay any Person(s) named by the
"designated beneficiary" in a Written Request; otherwise the "designated
beneficiary's" estate.
Death of Annuitant
These provisions apply if during the Accumulation Period while the
Certificate is In Force, (a) the Annuitant dies, (b) the Annuitant is not
an Owner, and (c) the Owner is a natural person. The Certificate will
continue In Force after the Annuitant's death. The new Annuitant will be
any living Contingent Annuitant, otherwise the Certificate Owner.
Payment of Benefits
Instead of receiving a lump sum, a Certificate Owner or any "designated
beneficiary" may by Written Request direct that We pay any benefit of
$5,000 or more under an Annuity Option that meets the following: (a) the
first payment to the "designated beneficiary" must be made no later than
one year after the date of death; (b) payments must be made over the life
of the "designated beneficiary" or over a period not extending beyond that
person's life expectancy; and (c) any Annuity Option that provides for
payments to continue after the death of the "designated beneficiary" will
not allow the successor payee to extend the period of time over which the
remaining payments are to be made.
Annuity Provisions
General
If the Certificate is In Force on the Income Date, the Adjusted Certificate
Value will be applied under the Annuity Option selected by a Certificate
Owner. Annuity Payments may be made on a fixed or variable basis or both.
Income Date
The Income Date may be selected by a Certificate Owner. It is shown on the
Certificate Schedule. The Income Date can be any time after the
Certificate Date for variable payments and any time after the first
Certificate Anniversary for fixed payments. The Income Date may not be
later than the earlier of when the Annuitant reaches attained age 90 or
that required under state law. If no Income Date is selected, it will be
the earlier of when the Annuitant reaches attained age 90 or the maximum
date permitted under state law, if any.
Prior to the Income Date, a Certificate Owner may change the Income Date by
Written Request. Any change must be requested at least 30 days prior to
the new Income Date.
Selection of an Annuity Option
An Annuity Option may be selected by a Certificate Owner. If no Annuity
Option is selected, Option B will automatically be applied. Prior to the
Income Date, a Certificate Owner can change the Annuity Option selected by
Written Request. Any change must be requested at least 30 days prior to
the Income Date.
Frequency and Amount of Annuity Payments
Annuity Payments are paid in monthly installments unless quarterly, semi-
annual or annual payments are chosen. The Adjusted Certificate Value is
applied to the Annuity Table for the Annuity Option selected. If the
Adjusted Certificate Value to be applied under an Annuity Option is less
than $5,000, We reserve the right to make a lump sum payment in lieu of
Annuity Payments. If the Annuity Payment would be or becomes less than
$100, We will reduce the frequency of payments to a longer interval which
will result in each payment being at least $100.
Annuity Options
The following Annuity Options or any other Annuity Option acceptable to Us
may be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Annuity Payments for a
chosen number of years, not less than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to continue for
the remainder of the period, he/she may elect to have the present value of
the remaining payments commuted and paid in a lump sum. During the payment
period of a Variable Annuity, the payee may elect by Written Request to
receive the following amount: (a) the present value of the remaining
payments commuted; less (b) any Surrender Charge that may be due by
treating the value defined in (a) as a surrender. Instead of receiving a
lump sum, the payee may elect another Annuity Option. The amount applied
to that Option would not be reduced by the charge defined in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Annuity
Payments during the lifetime of the payee and in any event for 10 years
certain. If the payee dies during the guaranteed payment period and the
Beneficiary does not desire payments to continue for the remainder of the
guaranteed period, he/she may elect to have the present value of the
guaranteed payments remaining commuted and paid in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Annuity Payments payable during
the joint lifetime of the payee and a designated second natural person and
then during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee
may not withdraw or otherwise end an Annuity Option after it begins.
Payments will end upon the payee's death unless the Annuity Option provides
for payments continuing to a successor payee. No successor payee may
extend the period of time over which the remaining payments are to be made.
Annuity
If a Certificate Owner selects a Fixed Annuity, the Adjusted Certificate
Value is allocated to the General Account and the Annuity is paid as a
Fixed Annuity. If the Certificate Owner selects a Variable Annuity, the
Adjusted Certificate Value will be allocated to the Sub-accounts of the
Separate Account in accordance with the selection he or she makes, and the
Annuity will be paid as a Variable Annuity. A Certificate Owner can also
select a combination of a Fixed and Variable Annuity and the Adjusted
Certificate Value will be allocated accordingly. If a Certificate Owner
does not select between a Fixed Annuity and a Variable Annuity, any
Adjusted Certificate Value in the Variable Account will be applied to a
Variable Annuity and any Adjusted Certificate Value in the Fixed Account
will be applied to a Fixed Annuity.
The Adjusted Certificate Value will be applied to the applicable Annuity
Table contained in the Certificate based upon the Annuity Option a
Certificate Owner selects. If, as of the Income Date, the current Annuity
Option rates applicable to the class of Certificates issued under the Group
Contract provide an initial Annuity Payment greater than the initial
Annuity Payment guaranteed under the applicable Annuity Table in the
Certificate, the greater payment will be made.
Fixed Annuity
The minimum dollar amount of each Fixed Annuity Payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. After the
initial Fixed Annuity payment, the payments will not change regardless of
investment, mortality or expense experience.
Variable Annuity
Variable Annuity Payments reflect the investment performance of the
Variable Account in accordance with the allocation of the Adjusted
Certificate Value to the Sub-accounts during the Annuity Period. Variable
Annuity payments are not guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. The dollar
amount of Variable Annuity payments for each applicable Sub-account after
the first Variable Annuity Payment is determined as follows:
(1) the dollar amount of the first Variable Annuity payment is
divided by the value of an Annuity Unit for each applicable Sub-account as
of the Income Date. This sets the number of Annuity Units for each monthly
payment for the applicable Sub-account. The number of Annuity Units for
each applicable Sub-account remains fixed during the Annuity Period;
(2) the fixed number of Annuity Units per payment in each Sub-
account is multiplied by the Annuity Unit Value for that Sub-account for
the Valuation Period for which the payment is due. This result is the
dollar amount of the payment for each applicable Sub-account.
The total dollar amount of each Variable Annuity payment is the sum of all
Sub-account Variable Annuity payments reduced by the applicable portion of
the Certificate Maintenance Charge.
Annuity Unit
The value of any Annuity Unit for each Sub-Account of the Separate Account
was initially set at $10.
The Sub-account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
(1) the net investment factor calculated as set forth on pages 11-
12 (but without the Distribution Charge, if any) for the current Valuation
Period is multiplied by the value of the Annuity Unit for the Sub-account
for the immediately preceding Valuation Period.
(2) the result in (1) is then divided by the Assumed Investment
Rate Factor which equals 1.00 plus the Valuation Period equivalent of the
Assumed Investment Rate for the number of days in the current Valuation
Period. The Assumed Investment Rate is equal to 6% per year.
The value of an Annuity Unit may increase or decrease from Valuation Period
to Valuation Period.
Using the Tables
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first annuity
payment will be based on an age a specified number of years younger than
the person's then-attained age (i.e., age last birthday). This age setback
is as follows:
Date of First Payment Age Setback
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next
section. Upon request, We will tell a Certificate Owner any such amount.
Basis of Calculation
Tables 1 and 4 are based on interest at 6% and 3%, respectively. Tables 2,
3, 5, and 6 are based on the 1983 Individual Annuity Valuation Tables,
weighted 40% male and 60% female, with interest at 6% (Tables 2 and 3) and
3% (Tables 5 and 6), projected dynamically with Projection Scale G.
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $19.17 12 $9.63 19 $7.24 25 $6.32
6 16.42 13 9.12 20 7.04 26 6.21
7 14.46 14 8.69 21 6.86 27 6.11
8 13.00 15 8.31 22 6.70 28 6.02
9 11.87 16 7.99 23 6.56 29 5.94
10 10.97 17 7.71 24 6.43 30 5.87
11 10.24 18 7.46
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $5.09 43 $5.40 56 $6.06 69 $7.47 82 $ 9.72
31 5.11 44 5.44 57 6.13 70 7.63 83 9.87
32 5.13 45 5.47 58 6.21 71 7.79 84 10.02
33 5.14 46 5.51 59 6.30 72 7.95 85 10.15
34 5.16 47 5.55 60 6.39 73 8.12 86 10.27
35 5.18 48 5.60 61 6.48 74 8.30 87 10.38
36 5.20 49 5.64 62 6.59 75 8.48 88 10.48
37 5.23 50 5.69 63 6.69 76 8.66 89 10.57
38 5.25 51 5.74 64 6.81 77 8.84 90 10.65
39 5.28 52 5.80 65 6.93 78 9.03 91 10.72
40 5.31 53 5.86 66 7.05 79 9.21 92 10.77
41 5.34 54 5.92 67 7.19 80 9.38 93 10.82
42 5.37 55 5.99 68 7.33 81 9.55 94 10.86
95 10.89
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $4.97$4.99$5.00$5.02$5.04$5.05$5.06$5.07$5.08$5.09$5.09$5.09 $5.10 $5.10
35 5.01 5.04 5.07 5.09 5.11 5.13 5.15 5.16 5.17 5.18 5.18 5.19 5.19
40 5.08 5.12 5.16 5.19 5.22 5.25 5.27 5.29 5.30 5.31 5.31 5.32
45 5.18 5.23 5.29 5.34 5.38 5.41 5.44 5.46 5.48 5.49 5.49
50 5.32 5.40 5.47 5.54 5.60 5.64 5.68 5.70 5.72 5.72
55 5.51 5.62 5.73 5.85 5.90 5.96 6.00 6.02 6.04
60 5.79 5.95 6.11 6.24 6.34 6.41 6.45 6.48
65 6.20 6.44 6.66 6.84 6.97 7.05 7.10
70 6.80 7.15 7.47 7.71 7.87 7.97
75 7.69 8.22 8.66 8.99 9.20
80 9.03 9.81 10.43 10.87
85 11.02 12.11 12.98
90 13.82 15.34
95 17.66
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $3.05 43 $3.46 56 $4.24 69 $5.79 82 $8.24
31 3.07 44 3.50 57 4.32 70 5.96 83 8.41
32 3.09 45 3.55 58 4.41 71 6.13 84 8.57
33 3.12 46 3.60 59 4.51 72 6.31 85 8.72
34 3.15 47 3.65 60 4.61 73 6.50 86 8.85
35 3.18 48 3.70 61 4.71 74 6.69 87 8.97
36 3.21 49 3.76 62 4.82 75 6.88 88 9.08
37 3.24 50 3.82 63 4.94 76 7.08 89 9.18
38 3.27 51 3.88 64 5.07 77 7.28 90 9.27
39 3.31 52 3.94 65 5.20 78 7.48 91 9.34
40 3.34 53 4.01 66 5.34 79 7.68 92 9.40
41 3.38 54 4.08 67 5.48 80 7.87 93 9.46
42 3.42 55 4.16 68 5.63 81 8.06 94 9.50
95 9.53
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $2.88$2.92$2.95$2.98$3.00$3.01$3.02$3.03$3.04$3.04$3.04$3.05 $3.05 $3.05
35 2.97 3.02 3.06 3.09 3.12 3.14 3.15 3.16 3.17 3.17 3.18 3.18 3.18
40 3.09 3.15 3.20 3.24 3.27 3.30 3.32 3.33 3.34 3.34 3.34 3.35
45 3.24 3.31 3.38 3.44 3.48 3.51 3.53 3.54 3.55 3.56 3.56
50 3.43 3.53 3.62 3.69 3.74 3.78 3.80 3.82 3.83 3.83
55 3.68 3.81 3.93 4.02 4.09 4.13 4.16 4.18 4.19
60 4.01 4.19 4.35 4.47 4.56 4.61 4.65 4.66
65 4.47 4.73 4.94 5.11 5.21 5.28 5.32
70 5.11 5.48 5.78 6.00 6.13 6.21
75 6.04 6.57 6.99 7.28 7.46
80 7.40 8.16 8.75 9.15
85 9.38 10.46 11.29
90 12.18 13.68
95 16.02
Endorsements
To be inserted only by Us
Keyport
Life Insurance Company
Providence, Rhode Island
Group Variable Annuity Contract
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating -- No Dividends
EXHIBIT (4o)
Keyport
Life Insurance Company
A Stock Company
This Certificate describes the benefits and provisions of the Group
Contract. The Group Contract, as issued to the Group Contract Owner by Us
with any riders or endorsements, alone makes up the agreement under which
benefits are paid. The Group Contract may be inspected at the office of
the Group Contract Owner. In consideration of any application for this
Certificate and the payment of purchase payments, We agree, subject to the
terms and conditions of the Group Contract, to provide the benefits
described in this Certificate to the Certificate Owner.
If this Certificate is In Force on the Income Date, We will begin making
income payments to the Annuitant. We will make such payments according to
the terms of the Certificate and Group Contract.
RIGHT TO EXAMINE CERTIFICATE: You may return this Certificate to Us or the
agent through whom You purchased it within 10 days after You receive it.
If so returned, We will treat the Certificate as though it were never
issued. Upon receipt We will promptly refund the Certificate Value as of
the date the returned Certificate is received by Us plus any charges We
may have previously deducted.
Read This Certificate Carefully.
Read This Contract Carefully.
Signed: ________________________ ________________________
Secretary President
Variable Annuity Certificate
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating -- No Dividends
ANNUITY PAYMENTS AND OTHER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE
OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR
AMOUNT. THIS IS EXPLAINED FURTHER ON PAGES 11 AND 18.
Table of Contents
Page
Right to Examine Certificate............................................1
Definitions.............................................................2
Certificate Schedule....................................................3
General Provisions......................................................5
Variable Account Provisions............................................10
Transfers..............................................................13
Partial Withdrawals and Total Surrender................................14
Death Provisions.......................................................15
Annuity Provisions.....................................................16
Endorsements (if any) are before page................................. 22
Definitions
Accumulation Period: The period prior to the Income Date during which
Purchase Payments may be made by a Certificate Owner.
Accumulation Unit: An accounting unit used to calculate a Certificate
Owner's interest in a Sub-account of the Variable Account during the
Accumulation Period.
Adjusted Certificate Value: The Certificate Value less any applicable
taxes relating to a Certificate and Certificate Maintenance Charge. This
amount is applied to the applicable Annuity Tables to determine Annuity
Payments.
Annuitant: The natural person on whose life Annuity Payments are based,
and to whom any Annuity Payments will be made starting on the Income Date.
Annuity Options: Options available for Annuity Payments.
Annuity Payments: The series of payments made to the Annuitant, starting
on the Income Date, under the Annuity Option selected.
Annuity Period: The period after the Income Date during which Annuity
Payments are made.
Annuity Unit: An accounting unit used to calculate Variable Annuity
Payments during the Annuity Period.
Beneficiary: The person(s) or entity(ies) who controls the Certificate if
any Certificate Owner dies before the Income Date.
(Definitions continue on page 4)
KEYPORT LIFE INSURANCE COMPANY
125 High Street, Boston, MA 02110
Certificate Schedule
GROUP CONTRACT OWNER Keyport Insurance Trust
GROUP CONTRACT NUMBER [DVA002]
CERTIFICATE NUMBER [123455]
CERTIFICATE OWNER [John Q. Public, male, 1/1/40]
JOINT CERTIFICATE OWNER [Jane Q. Public, female, 2/29/40]
ANNUITANT [Thomas Doe, male, 11/22/40]
COVERED PERSONS [John Q. Public], [Jane Q. Public],
[Thomas Doe]
ISSUE STATE [Rhode Island]
IRS PLAN TYPE [Non-Qualified]
CERTIFICATE DATE [November 1, 1995]
INCOME DATE [November 1, 2010]
INITIAL PURCHASE PAYMENT [$25,000]
MINIMUM INITIAL PAYMENT $25,000
MINIMUM ADDITIONAL PAYMENT $250 ($50 for EFT payment)
Charges
Distribution Charge: None.
Administrative Charge: We deduct 0.000411% of the assets in each Variable
Account Sub-Account on a daily basis (equivalent to an annual rate of
0.15%) to compensate Us for a portion of Our administrative costs.
Mortality and Expense Risk Charge: We deduct 0.003403% of the assets in
each Variable Account Sub-account on a daily basis (equivalent to an annual
rate of 1.25%) for Our mortality and expense risks.
Certificate Maintenance Charge: We charge $36 to cover a portion of Our
ongoing Certificate maintenance expenses. The charge is incurred at the
beginning of the Certificate Year and is deducted on each Certificate
Anniversary and at the time of total surrender.
Transfer Charge: Currently none, however, We reserve the right to charge
$25 for a transfer if You make more than 12 transfers per Certificate Year.
Surrender Charge: None
Initial Purchase Payment Allocation
Currently, Certificate Owners can select 21 Sub-accounts and the Fixed
Account. We reserve the right to increase or decrease the number of
available Sub-accounts. The minimum You may allocate to any Sub-account or
the Fixed Account is 5% of any Purchase Payment. Your initial Purchase
Payment has been invested as follows:
[AIM Capital Appreciation x%
AIM Growth x%
AIM International x%
Alliance Global Bond x%
Alliance Growth and Income x%
Alliance Premier Growth x%
Alliance Real Estate x%
Colonial Growth and Income x%
Colonial High Yield Securities x%
Colonial Small Cap Value x%
Colonial Strategic Income x%
Colonial U.S. Stock x%
Liberty All-Star x%
MFS Bond x%
MFS Emerging Growth x%
MFS Research x%
Stein Roe Balanced x%
Stein Roe Global Utilities x%
Stein Roe Growth Stock x%
Stein Roe Money Market x%
Stein Roe Special Venture x%
Fixed Account x%]
Transfer Guidelines
Number of Transfers and Transfer Charge: Currently, Certificate Owners are
permitted unlimited transfers per Certificate Year during the Accumulation
Period and unlimited transfers during the Annuity Period. We reserve the
right to change, upon notice, the frequency of transfers You can make. We
also reserve the right to impose a charge for any transfer in excess of 12
per Certificate Year. The transfer charge is shown in the Charges section
of the Schedule.
Minimum amount to be transferred: None.
Minimum amount which must remain in a Sub-account after transfer: None.
Partial Withdrawals
You may make partial withdrawals during the Accumulation Period without
incurring a surrender charge, as follows:
(1) In any Certificate Year You may withdraw an aggregate amount
not to exceed, at the time of withdrawal:
(a) the Certificate Value, less
(b) the portion of Your Purchase Payments not previously
withdrawn; and
(2) In any Certificate Year after the first, You may also withdraw
the positive difference, if any, between the amount withdrawn
pursuant to (1) above in any such subsequent year and 10% of
Your Certificate Value as of the preceding Certificate
Anniversary.
We will collect the surrender charge shown on the Schedule with respect to
partial withdrawals in excess of the amounts described in (1) and (2)
above.
Minimum withdrawal amount: $300, unless the withdrawal is made pursuant to
Our systematic withdrawal program, in which case the minimum withdrawal is
$100.
Minimum Certificate Value which must remain after a partial withdrawal:
$2,500.
Death Benefits
Adjustment of Certificate Value
When We receive due proof of death of the Certificate Owner, or the
Annuitant if the Certificate Owner is a non-natural Person, We will
compare, as of the date of death, the Certificate Value to the Death
Benefit amount defined in this Schedule. If the Certificate Value is less
than the Death Benefit, We will increase the current Certificate Value by
the amount of the difference. Any amount credited will be allocated to the
Variable Account and/or the Fixed Account based on the Purchase Payment
allocation selection that is in effect when We receive due proof of death.
Death Benefit Amount
Certificate Anniversary Death Benefit
On the Certificate Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Certificate
Date;
(b) Add to (a) any additional Purchase Payments paid since
the Certificate Date and subtract from (a) any partial
withdrawals (including any associated surrender charge
incurred) made since the Certificate Date;
(2) (a) Determine the Certificate Value for each Certificate
Anniversary (the "Anniversary Value") before the 81st
birthday of the Certificate Owner or, if the
Certificate Owner is a non-natural Person, the
Annuitant;
(b) Increase each "Anniversary Value" by any Purchase
Payments made after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following
amount calculated at the time of each partial
withdrawal made after that Value's Anniversary: (i) the
partial withdrawal amount (including any associated
surrender charge incurred) divided by the Certificate
Value immediately preceding the withdrawal, (ii)
multiplied by the "Anniversary Value" immediately
preceding the withdrawal;
(d) Select the highest "Anniversary Value" after the
adjustments in (b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).
If there is a change of Certificate Owner, the new Certificate Owner's age
will be used to determine the amount in (2) above.
The Variable Separate Account
Sub-accounts investing in shares of mutual funds
Variable Account A is a unit investment trust variable separate account,
organized in and governed by the laws of the State of Rhode Island, Our
state of domicile. Variable Account A is divided into Sub-accounts. Each
Sub-account listed below invests in shares of the corresponding Portfolio
of the Eligible Fund shown.
Eligible Funds of AIM Insurance
Funds and Variable Account
Sub-Accounts Investment Objective
AIM Capital Appreciation Capital appreciation through
(AIM Capital Appreciation investments in common stocks,
Sub-Account) with emphasis on medium-sized
and smaller emerging growth
companies.
AIM Growth Growth of capital through
(AIM Growth Sub-Account) investments primarily in
common stocks of leading U.S.
companies considered by AIM
to have strong earnings
momentum.
AIM International Equity Long-term growth of capital
(AIM International Equity by investing in international
Sub-Account) equity securities, the issuers
of which are considered by AIM
to have strong earnings
momentum.
Eligible Funds of Alliance Series
Fund and Variable Account
Sub-Accounts Investment Objective
Alliance Global Bond A high level of return from a
(Alliance Global Bond combination of current income and
Sub-Account) capital appreciation by investing
in a globally diversified portfolio
of high quality debt securities
denominated in the U.S. Dollar and
a range of foreign currencies.
Alliance Growth and Income Balance the objectives of
(Alliance Growth and Income reasonable current income and
Sub-Account) reasonable opportunities for
appreciation through investments
primarily in dividend-paying
common stocks of good quality.
Alliance Premier Growth Growth of capital rather than
(Alliance Premier Growth current income.
Sub-Account)
Alliance Real Estate Total return on its assets through
(Alliance Real Estate Sub- long-term growth of capital and
Account) income principally through
investing in a portfolio of equity
securities of issuers that are
primarily engaged in or related to
the real estate industry.
Eligible Funds of Liberty Trust
and Variable Account
Sub-Accounts Investment Objective
Colonial Growth and Income Primarily income and long-term
(Colonial Growth and Income capital growth and, secondarily,
Sub- Account)(formerly named preservation of capital.
Colonial-Keyport Growth and
Income Fund)
Colonial High Yield Securities High current income and total
(Colonial High Yield Securities return by investing primarily
Sub-Account) in lower rated corporate debt
securities.
Colonial Small Cap Value Long-term growth by investing
(Colonial Small Cap Value in smaller capitalization
Sub-Account) equity securities.
Colonial Strategic Income A high level of current income, as
(Colonial Strategic Income is consistent with prudent risk and
Sub-Account)(formerly named maximizing total return, by
Colonial-Keyport Strategic diversifying investments primarily
Income Fund) in U.S. and foreign government and
high yield, high risk corporate
debt securities.
Colonial U.S. Stock Long-term capital growth by
(Colonial U.S. Stock Sub-Account) investing primarily in large
(formerly named Colonial-Keyport capitalization equity securities.
U.S. Stock Fund)
Liberty All-Star Equity Total investment return, comprised
(Liberty All-Star Equity Sub-Account) of long-term capital appreciation
and current income, through
investment primarily in a
diversified portfolio of equity
securities.
Stein Roe Global Utilities Current income and long-term growth
(Stein Roe Global Utilities of capital and income.
Sub-Account)(formerly named
Colonial-Keyport Utilities Fund)
Eligible Funds of MFS Trust
and Variable Account
Sub-Accounts Investment Objective
MFS Bond High level of current income
(MFS Bond Sub-Account) as is believed consistent
with prudent investment risk
and secondarily to protect
shareholders' capital.
MFS Emerging Growth Long-term growth of capital.
(MFS Emerging Growth Sub-Account)
MFS Research Long-term growth of capital and
(MFS Research Sub-Account) future income.
Eligible Funds of SteinRoe Trust
and Variable Account
Sub-Accounts Investment Objective
Stein Roe Balanced High total investment return
(Stein Roe Balanced through investment in a changing
Sub-Account) (formerly named SteinRoe mix of securities.
Managed Assets Fund)
Stein Roe Growth Stock Long-term growth of capital through
(Stein Roe Growth Stock investment primarily in common
Sub-Account)(formerly named SteinRoe stocks.
Managed Growth Stock Fund)
Stein Roe Money Market High current income from short-term
(Stein Roe Money Market money market instruments while
Sub-Account)(formerly named SteinRoe emphasizing preservation of capital
Cash Income Fund) and maintaining excellent
liquidity.
Stein Roe Special Venture Capital growth by investing
(Stein Roe Special Venture primarily in common stocks,
Sub-Account)(formerly named SteinRoe convertible securities, and other
Capital Appreciation Fund) securities selected for prospective
capital growth.
Sub-accounts investing directly in securities - None.
The Fixed Account
The Fixed Account is part of Our General Account, which consists of all of
Our assets except the assets of the Variable Account and the assets of
other separate accounts that We maintain. Subject to applicable law, We
have sole discretion over investments of the assets of the Fixed Account.
If You allocate assets to the Fixed Account, Your accumulation values and
annuity payments will have guaranteed minimums.
Before the Income Date, Your interest in the Fixed Account is measured by
the Fixed Account Value. When annuity payments begin, the payee's interest
in the Fixed Account is measured by the amount of each periodic payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Certificate is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with
Your selection at the Certificate Date. You may change such selection by
Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus
the interest subsequently credited on those payments; plus
(2) any Variable Account value transferred to the Fixed Account
plus the interest subsequently credited on the transferred
value; less
(3) any prior partial withdrawals from the Fixed Account; less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account
at rates declared by Us for Guarantee Periods of one or more years from the
month and day of allocation. The minimum Guaranteed Interest Rate is 3%
per year.
Definitions (continued)
Certificate: The document issued to a Certificate Owner to evidence a
Certificate Owner's participation under the Group Contract. The
Certificate summarizes the benefits and provisions of the Group Contract.
Certificate Anniversary: An anniversary of the Certificate Date.
Certificate Date: The date a Certificate is issued to a Certificate Owner.
The Certificate Date is shown on the Certificate Schedule.
Certificate Owner: The person who owns a Certificate under the Group
Contract. Any Joint Certificate Owners and the Certificate Owner own the
Certificate equally with rights of survivorship.
Certificate Value: The sum of the Certificate Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account during the
Accumulation Period.
Certificate Year: The first Certificate Year is the annual period which
begins on the Certificate Date. Subsequent Certificate Years begin on each
Certificate Anniversary.
Eligible Fund: An investment entity shown on the Certificate Schedule.
Fixed Account: The account We establish to support Fixed Allocations. The
Certificate Schedule shows whether the Fixed Account is available under the
Certificate.
Fixed Account Value: The value of all Fixed Account amounts accumulated
under this Certificate prior to the Income Date.
Fixed Allocation: An amount allocated to the Fixed Account that is
credited with a Guaranteed Interest Rate for a specified Guarantee Period.
Fixed Annuity: An annuity with a series of payments made during the
Annuity Period which are guaranteed as to dollar amount by Us.
General Account: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate
accounts.
Group Contract Owner: The person or entity to which the Group Contract is
issued.
Guaranteed Interest Rate: The effective annual interest rate which We will
credit for a specified Guarantee Period.
Guarantee Period: The period of year(s) a rate of interest is guaranteed
to be credited within the Fixed Account.
Income Date: The date on which Annuity Payments begin. The Income Date is
shown on the Certificate Schedule.
In Force: The status of a Certificate before the Income Date so long as it
has not been totally surrendered and there has not been a death of a
Certificate Owner or Joint Certificate Owner that will cause the
Certificate to end within five years of the date of death.
Office: Our executive office shown on the Certificate Schedule.
Person: A human being, trust, corporation, or any other legally recognized
entity.
Portfolio: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
Purchase Payment: A payment made by or on behalf of a Certificate Owner
with respect to a Certificate.
Sub-account: Variable Account assets are divided into Sub-accounts.
Assets of each Sub-account will be invested in shares of a Portfolio of an
Eligible Fund, or directly in portfolio securities.
Valuation Date: Each day on which We and the New York Stock Exchange
("NYSE") are open for business, or any other day that the Securities and
Exchange Commission requires that mutual funds, unit investment trusts or
other investment portfolios be valued.
Valuation Period: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business on the
next succeeding Valuation Date.
Variable Account: Our Variable Account(s) shown on the Certificate
Schedule.
Variable Annuity: An annuity with payments which vary as to dollar amount
in relation to the investment performance of specified Sub-accounts of the
Variable Account.
We, Us, Our: Keyport Life Insurance Company.
Written Request: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
You, Your: The Certificate Owner and any Joint Certificate Owners.
General Provisions
Purchase Payments
The initial Purchase Payment is due on the Certificate Date. It must be
paid at Our Office in United States currency. Coverage under a Certificate
does not take effect until We have accepted the initial Purchase Payment
during Your lifetime. Each Purchase Payment after the Certificate Date
must be at least the amount shown on the Certificate Schedule. Provided
the Certificate Value under a Certificate does not go to zero, a
Certificate will stay in force until the Income Date even if You make no
payments after the initial one. We reserve the right to reject any
subsequent Purchase Payment.
Allocation of Purchase Payments
Your initial Purchase Payment is allocated to the Sub-accounts of the
Variable Account, and to the Fixed Account if available, in accordance with
the selections made by You at the Certificate Date. Unless otherwise
changed by You, subsequent Purchase Payments are allocated in the same
manner as the initial Purchase Payment. Allocation of Purchase Payments is
subject to the terms and conditions imposed by Us. We reserve the right to
allocate initial Purchase Payments to the Money Market Sub-account until
the expiration of the Right to Examine Certificate period set forth on the
first page of the Certificate.
The Contract
The Group Contract, including the application, if any, and any attached
rider or endorsement constitute the entire contract between the Group
Contract Owner and Us. All statements made by the Group Contract Owner,
any Certificate Owner or any Annuitant will be deemed representations and
not warranties. No such statement will be used in any contest unless it is
contained in the application signed by the Group Contract Owner or in a
written instrument signed by the Certificate Owner, a copy of which has
been furnished to the Certificate Owner, the Beneficiary or to the Group
Contract Owner.
Only Our President or Secretary may agree to change any of the terms of the
Group Contract. Any changes must be in writing. Any change to the terms
of a Certificate must be in writing and with Your consent, unless provided
otherwise by the Group Contract and the Certificate.
To assure that the Group Contract and the Certificate will maintain their
status as a variable annuity under the Internal Revenue Code, We reserve
the right to change the Group Contract and any Certificate issued
thereunder to comply with future changes in the Internal Revenue Code, any
regulations or rulings issued thereunder, and any requirements otherwise
imposed by the Internal Revenue Service. The Group Contract Owner and the
affected Certificate Owner will be sent a copy of any such amendment.
We reserve the right, subject to compliance with the law as currently
applicable or subsequently changed, to: (a) operate the Variable Account
in any form permitted under the Investment Company Act of 1940, as
amended, (the "1940 Act"), or in any other form permitted by law; (b) take
any action necessary to comply with or obtain and continue any exemptions
from the 1940 Act, or to comply with any other applicable law; (c) transfer
any assets in any Sub-account to another Sub-account, or to one or more
separate investment accounts, or the General Account; or to add, combine or
remove Sub-accounts in the Variable Account; and (d) change the way We
assess charges, so long as We do not increase the aggregate amount beyond
that currently charged to the Variable Account and the Eligible Funds in
connection with this Certificate. If the shares of any of the Eligible
Funds should become unavailable for investment by the Variable Account or
if in Our judgment further investment in such Portfolio shares should
become inappropriate in view of the purpose of the Certificate, We may add
or substitute shares of another mutual fund for the Portfolio shares
already purchased under the Certificate. No substitution of Portfolio
shares in any Sub-account may take place without prior approval of the
Securities and Exchange Commission and notice to the affected Certificate
Owners, to the extent required by the 1940 Act.
Certificate Owner
You are the Certificate Owner of this Certificate. You have all rights and
may receive all benefits under a Certificate. A Certificate Owner is the
person designated as such on the Certificate Date, unless changed. You may
exercise all rights of this Certificate while it is In Force, subject to
the rights of (a) any assignee under an assignment filed with Us, and (b)
any irrevocably named Beneficiary.
Joint Certificate Owner
A Certificate can be owned by Joint Certificate Owners. Upon the death of
any Certificate Owner or Joint Certificate Owner, the surviving owner(s)
will be the primary Beneficiary(ies). Any other beneficiary designation
will be treated as a Contingent Beneficiary unless otherwise indicated in a
Written Request filed with Us.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by You at the Certificate Date, unless
changed prior to the Income Date. Any change of Annuitant is subject to
Our underwriting rules then in effect. The Annuitant may not be changed in
a Certificate which is owned by a non-natural person. You may name a
Contingent Annuitant. The Contingent Annuitant becomes the Annuitant if
the Annuitant dies while this Certificate is In Force. If the Annuitant
dies and no Contingent Annuitant has been named, We will allow You sixty
days to designate someone other than Yourself as Annuitant. You will be
the Contingent Annuitant unless You name someone else. If the Certificate
is owned by a non-natural person, the death of the Annuitant will be
treated as the death of the Certificate Owner and a new Annuitant may not
be designated.
Beneficiary
The Beneficiary is the person who controls the Certificate if any
Certificate Owner dies prior to the Income Date. If the Certificate is
owned by Joint Certificate Owners, upon the death of any Certificate Owner
or Joint Certificate Owner, the surviving owner(s) will become the primary
Beneficiary. Any other beneficiary designation will be treated as a
Contingent Beneficiary unless otherwise indicated in a Written Request
filed with Us. If You name more than one Person as Primary Beneficiary or
as Contingent Beneficiary, and do not state otherwise on an application or
in a Written Request to Us, any non-survivors will not receive a benefit.
The survivors will receive equal shares. Subject to the rights of any
irrevocable Beneficiary(ies), You may change primary or contingent
Beneficiary(ies). A change must be made by Written Request and will be
effective as of the date the Written Request is signed. We will not be
liable for any payment We make or action We take before We receive the
Written Request.
Group Contract Owner
The Group Contract Owner has title to the Group Contract. The Group
Contract and any amount accumulated under any Certificate are not subject
to the claims of the Group Contract Owner or any of its creditors. The
Group Contract Owner may transfer ownership of this Group Contract. Any
transfer of ownership terminates the interest of any existing Group
Contract Owner. It does not change the rights of any Certificate Owner.
Change of Certificate Owner, Beneficiary or Contingent Annuitant
While this Certificate is In Force, You may by Written Request change the
primary Certificate Owner, Joint Certificate Owner, primary Beneficiary,
Contingent Beneficiary, Contingent Annuitant, or in certain instances, the
Annuitant. An irrevocably named Person may be changed only with the
written consent of such Person. The change will be effective, following
Our receipt of the Written Request, as of the date the Written Request is
signed. The change will not affect any payments We make or actions We take
prior to the time We receive the Written Request.
Assignment of the Certificate
You may assign this Certificate at any time while it is In Force. The
assignment must be in writing and a copy must be filed at Our Office. Your
rights and those of any revocably named Person will be subject to the
assignment. An assignment will not affect any payments We make or actions
We take before We receive the assignment. We are not responsible for the
validity of any assignment.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Annuity
Payments have begun, any underpayment(s) that have been made will be paid
in full with the next Annuity Payment. Any overpayment, unless repaid to
Us in one sum, will be deducted from future Annuity Payments otherwise due
until We are repaid in full.
Non-Participating
This Certificate does not participate in Our divisible surplus.
Evidence of Death, Age, Sex or Survival
If a Certificate provision relates to the death of a natural Person, We
will require proof of death before We will act under that provision. Proof
of death shall be: (a) a certified death certificate; or (b) a certified
decree of a court of competent jurisdiction as to the finding of death; or
(c) a written statement by a medical doctor who attended the deceased; or
(d) any other document constituting due proof of death under applicable
state law. If Our action under a Certificate provision is based on the
age, sex, or survival of any Person, We may require evidence of the
particular fact before We act under that provision.
Protection of Proceeds
No Beneficiary or payee may commute or assign any payments under a
Certificate before they are due. To the extent permitted by law, no
payments shall be subject to the debts of any Beneficiary or payee or to
any judicial process for payment of those debts.
Reports
We will send Certificate Owners a report that shows the Certificate Value
at least once each Certificate Year. We will send any other reports that
may be required by law.
Taxes
Any taxes paid to any governmental entity relating to a Certificate will be
deducted from the Purchase Payments or Certificate Value. We may, in Our
sole discretion, delay the deduction until a later date. By not deducting
tax payments at the time of Our payment, We do not waive any right We may
have to deduct amounts at a later date. We will, in Our sole discretion,
determine when taxes relate to a Certificate or to the operation of the
Variable Account. We reserve the right to establish a provision for
federal income taxes if We determine, in Our sole discretion, that We will
incur a tax as a result of the operation of the Variable Account. Such a
provision will be reflected in the Accumulation and Annuity Unit Values.
We will deduct for any income taxes incurred by Us as a result of the
operation of the Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient. We will deduct from any
payment under this Certificate any withholding taxes required by applicable
law.
Regulatory Requirements
All values payable under a Certificate will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Certificate is delivered.
Suspension or Deferral of Payments
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal
of the assets and securities of the Variable Account is not
reasonably practicable; or
(4) the Securities and Exchange Commission, by order or
pronouncement, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and
Exchange Commission govern as to whether the conditions described in (2)
and (3) above exist.
We reserve the right to delay payment of amounts allocated to the Fixed
Account for up to six months.
Variable Account Provisions
The Variable Account
The Variable Account(s) is designated on the Certificate Schedule and
consists of assets set aside by Us, which are kept separate from Our
general assets and all other variable account assets We maintain. We own
the assets of the Variable Account. Variable Account assets equal to
reserves and other contract liabilities will not be chargeable with
liabilities arising out of any other business We may conduct. We may
transfer to Our General Account assets which exceed the reserves and other
liabilities of the Variable Account. Income and realized and unrealized
gains or losses from assets in the Variable Account are credited to or
charged against the account without regard to other income, gains or losses
in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-
accounts which are available under the Certificate are shown on the
Certificate Schedule. The assets of the Sub-accounts of the unit
investment trust variable separate account are allocated to the Eligible
Fund(s) and the Portfolio(s), if applicable, within an Eligible Fund shown
on the Certificate Schedule. The assets of the Sub-accounts of the
investment company variable separate account, if applicable, are invested
in portfolios of securities designed to meet the objectives of the Sub-
Account shown on the Certificate Schedule. We may, from time to time, add
additional Sub-accounts, Eligible Funds or Portfolios to those shown on the
Certificate Schedule. You may be permitted to transfer Certificate Values
or allocate Purchase Payments to the additional Sub-Accounts, Eligible
Funds or Portfolios. However, the right to make such transfers or
allocations will be limited by the terms and conditions imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account,
to combine two or more Sub-accounts or to substitute a new Portfolio for
the Portfolio in which a Sub-account invests. A substitution may become
necessary if, in Our discretion, a Portfolio or Sub-account no longer suits
the purposes of the Group Contract. This may happen: due to a change in
laws or regulations or a change in a Portfolio's investment objectives or
restrictions; because the Portfolio or Sub-account is no longer available
for investment; or for some other reason. We will obtain any prior
approvals that may be required from the insurance department of Our state
of domicile, and from the SEC or any other governmental entity before
making such a substitution.
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
(2) Operate a Variable Account as a management company under the
1940 Act, if it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the
1940 Act, if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
Valuation of Assets
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
Accumulation Units
Your Variable Account value will fluctuate in accordance with the
investment results of the Sub-accounts to which You have allocated Your
Purchase Payments or Certificate Value. In order to determine how these
fluctuations affect Your Certificate Value, We use an Accumulation Unit
value. Accumulation Units are used to account for all amounts allocated to
or withdrawn from the Sub-accounts of the Variable Account as a result of
Purchase Payments, partial withdrawals, transfers, or charges deducted
from the Certificate Value. We determine the number of Accumulation Units
of a Sub-account purchased or cancelled by dividing the amount allocated
to, or withdrawn from, the Sub-account by the dollar value of one
Accumulation Unit of the Sub-account as of the end of the Valuation Period
during which We receive the request for the transaction.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-account was initially set at $10.
Subsequent Accumulation Unit Values for each Sub-account are determined by
multiplying the Accumulation Unit Value for the immediately preceding
Valuation Period by a net investment factor for the Sub-account for the
current period. This factor may be greater or less than 1.0; therefore,
the Accumulation Unit Value may increase or decrease from Valuation Period
to Valuation Period.
We calculate the net investment factor for each Sub-account investing in
shares of mutual funds by dividing (a) by (b) and then subtracting (c)
where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which the
Sub-account invests at the end of the Valuation Period; plus
(ii) any dividend per share declared for the Portfolio that has
an ex-dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual
rate for the Mortality and Expense Risk Charge, for the
Administrative Charge, and for the Distribution Charge, if
any, which are shown on the Certificate Schedule; plus
(ii) a charge factor, if any, for any tax provision established
by Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing
directly in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the end of
the preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current
Valuation Period; less
(iii) any capital losses, realized or unrealized, charged against
the assets during the current Valuation Period; less
(iv) all operating and investment expenses relating to the
assets that are incurred during the current Valuation
Period.
(b) is the value of the assets in the Sub-account at the end of the
preceding Valuation Period.
Mortality and Expense Risk Charge
Each Valuation Period We deduct a Mortality and Expense Risk Charge from
each Sub-account of the Variable Account which is equal, on an annual
basis, to the amount shown on the Certificate Schedule. The Mortality and
Expense Risk Charge compensates Us for assuming the mortality and expense
risks with respect to the Certificates We issue. We guarantee the dollar
amount of each Annuity Payment after the first Annuity Payment will not be
affected by variations in mortality or expense experience.
Administrative Charge
Each Valuation Period We deduct an Administrative Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Administrative Charge compensates Us for the
costs associated with administration of the Variable Account and the
Certificates We issue.
Distribution Charge
Each Valuation Period We deduct a Distribution Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Distribution Charge compensates Us for the costs
associated with the distribution of the Certificates We issue.
Certificate Maintenance Charge
We deduct a Certificate Maintenance Charge from the Certificate Value by
cancelling Accumulation Units from each applicable Sub-account to reimburse
Us for expenses relating to the maintenance of the Certificate. We will
deduct the Certificate Maintenance Charge from the Sub-accounts of the
Variable Account in the same proportion that the amount of Certificate
Value in each Sub-account bears to the Certificate Value. The Certificate
Maintenance Charge is shown on the Certificate Schedule. The Certificate
Maintenance Charge will be deducted from the Certificate Value on each
Certificate Anniversary during the Accumulation Period.
If a total surrender is made on a date other than a Certificate
Anniversary, the Certificate Maintenance Charge will be deducted at the
time of surrender.
During the Annuity Period, the Certificate Maintenance Charge will be
deducted on a pro-rata basis from each Annuity Payment.
Transfers
Subject to any limitation We impose on the number of transfers permitted in
a Certificate Year, You may transfer all or part of Your Certificate Value
among the Sub-accounts and the Fixed Account, if any, by Written Request or
by telephone without the imposition of any fees or charges. Transfers
among the Sub-accounts and the Fixed Account are permitted only during the
Accumulation Period. The number of permitted transfers, and the charge for
transfers in excess of that number, are shown on the Certificate Schedule.
All transfers are subject to the following:
(1) If more than the number of free transfers, shown on the
Certificate Schedule, are made in a Certificate Year, We will deduct a
transfer charge, shown on the Certificate Schedule, for each subsequent
transfer. The transfer fee will be deducted from the Sub-account from
which the transfer is made. However, if You transfer Your entire interest
in a Sub-account, the transfer fee will be deducted from the amount
transferred. If You make a transfer from more than one Sub-account, any
transfer fee will be allocated pro-rata among such Sub-accounts in
proportion to the amount transferred from each.
(2) During the Annuity Period, transfers of values between Sub-
accounts will be made by converting the number of Annuity Units being
transferred to the number of Annuity Units in the Sub-account to which a
transfer is made, so that the next Annuity Payment, if it were made at that
time, would be the same amount that it would have been without the
transfer. Thereafter, Annuity Payments will reflect changes in the value
of the new Annuity Units.
(3) The minimum amount which can be transferred is shown on the
Certificate Schedule. The minimum amount which must remain in a Sub-
account after a transfer is shown on the Certificate Schedule.
(4) If 100% of the value of any Sub-account is transferred and the
current allocation for Purchase Payments includes that Sub-account, the
allocation for future Purchase Payments will change to reflect Your
allocation of Certificate Value following the transfer.
(5) We reserve the right, at any time and without prior notice to
any party, to terminate, suspend or modify the transfer privileges
described above.
We will not be liable for transfers made in accordance with Your
instructions. All amounts and Accumulation Units will be determined as of
the end of the Valuation Period in which We receive the request for
transfer.
Partial Withdrawals and Total Surrender
Partial Withdrawals
During the Accumulation Period while the Certificate is In Force, You may,
upon Written Request, make a partial withdrawal, subject to the provisions
and limitations shown on the Certificate Schedule. For purposes of
determining whether a surrender charge is applicable to Your partial
withdrawal:
(1) Your partial withdrawal will first be taken from the portion of
Your Certificate Value which is in excess of Your Purchase
Payments, and then from Your Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in the
order in which the Purchase Payments were made, starting with
the first.
A withdrawal will result in the cancellation of Accumulation Units from
each applicable Sub-account in the ratio that Your interest in the Sub-
account bears to Your Certificate Value in all the Sub-accounts. You must
specify by Written Request in advance if You want Accumulation Units to be
cancelled in a manner other than the method described above. If there is
no value or insufficient value in the Variable Account, then the amount
withdrawn, or the insufficient portion, will be deducted from the Fixed
Account. If You have multiple Guarantee Periods, We will deduct such
amount from each Guarantee Period's values in the ratio that each Period's
values bears to the total Fixed Account Value. You must specify by Written
Request in advance if You want multiple Guarantee Periods to be reduced in
a manner other than the method described above.
Each partial withdrawal must be for an amount not less than the amount
shown on the Certificate Schedule. The Certificate Value which must remain
in a Certificate is shown on the Certificate Schedule. The Certificate
Schedule also shows any charge.
Total Surrender
During the Accumulation Period while the Certificate is In Force, You may,
upon Written Request, make a total surrender of the Certificate Withdrawal
Value. The Certificate Withdrawal Value is:
(1) the Certificate Value as of the end of the Valuation Period
during which We receive a Written Request for a withdrawal or
surrender; less
(2) any applicable taxes not previously deducted; less
(3) any Surrender Charge; less
(4) any Certificate Maintenance Charge.
We will pay the amount of any withdrawal or surrender within seven days
unless the Suspension or Deferral of Payments Provision is in effect.
Death Provisions
Death of Certificate Owner
These provisions apply if, during the Accumulation Period while the
Certificate is In Force, the Certificate Owner or any Joint Certificate
Owner dies (whether or not the decedent is also the Annuitant) or the
Annuitant dies under a Certificate owned by a non-natural Person. The
"designated beneficiary" will control the Certificate after such a death.
This "designated beneficiary" will be the first Person among the following
who is alive on the date of death: Certificate Owner; Joint Certificate
Owner; primary Beneficiary; Contingent Beneficiary; and Certificate Owner's
estate. If the Certificate Owner and Joint Certificate Owner are both
alive, they shall be the "designated beneficiary" together.
If the decedent's surviving spouse (if any) is the sole "designated
beneficiary", the surviving spouse will automatically become the new sole
Certificate Owner as of the date of the death. And, if the Annuitant is
the decedent, the new Annuitant will be any living Contingent Annuitant,
otherwise the surviving spouse. The Certificate may stay in force until
another death occurs (i.e., until the death of the Certificate Owner or
Joint Certificate Owner). Except for this paragraph, all of "Death
Provisions" will apply to that subsequent death.
In all other cases, the Certificate may stay in force up to five years from
the date of death. During this period, the "designated beneficiary" may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to surrender the Certificate for its
Certificate Withdrawal Value. If this Certificate is still in force at the
end of the five-year period, We will automatically end it then by paying to
the "designated beneficiary" the Certificate Withdrawal Value without the
deduction of any applicable surrender charges. If the "designated
beneficiary" is not alive then, We will pay any Person(s) named by the
"designated beneficiary" in a Written Request; otherwise the "designated
beneficiary's" estate.
Death of Annuitant
These provisions apply if during the Accumulation Period while the
Certificate is In Force, (a) the Annuitant dies, (b) the Annuitant is not
an Owner, and (c) the Owner is a natural person. The Certificate will
continue In Force after the Annuitant's death. The new Annuitant will be
any living Contingent Annuitant, otherwise the Certificate Owner.
Payment of Benefits
Instead of receiving a lump sum, You or any "designated beneficiary" may by
Written Request direct that We pay any benefit of $5,000 or more under an
Annuity Option that meets the following: (a) the first payment to the
"designated beneficiary" must be made no later than one year after the date
of death; (b) payments must be made over the life of the "designated
beneficiary" or over a period not extending beyond that person's life
expectancy; and (c) any Annuity Option that provides for payments to
continue after the death of the "designated beneficiary" will not allow the
successor payee to extend the period of time over which the remaining
payments are to be made.
Annuity Provisions
General
If the Certificate is In Force on the Income Date, the Adjusted Certificate
Value will be applied under the Annuity Option selected by You. Annuity
Payments may be made on a fixed or variable basis or both.
Income Date
The Income Date may be selected by You. It is shown on the Certificate
Schedule. The Income Date can be any time after the Certificate Date for
variable payments and any time after the first Certificate Anniversary for
fixed payments. The Income Date may not be later than the earlier of when
the Annuitant reaches attained age 90 or that required under state law. If
no Income Date is selected, it will be the earlier of when the Annuitant
reaches attained age 90 or the maximum date permitted under state law, if
any.
Prior to the Income Date, You may change the Income Date by Written
Request. Any change must be requested at least 30 days prior to the new
Income Date.
Selection of an Annuity Option
An Annuity Option may be selected by You. If no Annuity Option is
selected, Option B will automatically be applied. Prior to the Income
Date, You may change the Annuity Option selected by Written Request. Any
change must be requested at least 30 days prior to the Income Date.
Frequency and Amount of Annuity Payments
Annuity Payments are paid in monthly installments unless quarterly, semi-
annual or annual payments are chosen. The Adjusted Certificate Value is
applied to the Annuity Table for the Annuity Option selected. If the
Adjusted Certificate Value to be applied under an Annuity Option is less
than $5,000, We reserve the right to make a lump sum payment in lieu of
Annuity Payments. If the Annuity Payment would be or becomes less than
$100, We will reduce the frequency of payments to a longer interval which
will result in each payment being at least $100.
Annuity Options
The following Annuity Options or any other Annuity Option acceptable to Us
may be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Annuity Payments for a
chosen number of years, not less than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to
continue for the remainder of the period, he/she may elect to have the
present value of the remaining payments commuted and paid in a lump
sum. During the payment period of a Variable Annuity, the payee may
elect by Written Request to receive the following amount: (a) the
present value of the remaining payments commuted; less (b) any
surrender charge that may be due by treating the value defined in (a)
as a surrender. Instead of receiving a lump sum, the payee may elect
another Annuity Option. The amount applied to that Option would not
be reduced by the charge defined in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Annuity
Payments during the lifetime of the payee and in any event for 10
years certain. If the payee dies during the guaranteed payment period
and the Beneficiary does not desire payments to continue for the
remainder of the guaranteed period, he/she may elect to have the
present value of the guaranteed payments remaining commuted and paid
in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Annuity Payments payable during
the joint lifetime of the payee and a designated second natural person
and then during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee
may not withdraw or otherwise end an Annuity Option after it begins.
Payments will end upon the payee's death unless the Annuity Option provides
for payments continuing to a successor payee. No successor payee may
extend the period of time over which the remaining payments are to be made.
Annuity
If You select a Fixed Annuity, the Adjusted Certificate Value is allocated
to the General Account and the Annuity is paid as a Fixed Annuity. If You
select a Variable Annuity, the Adjusted Certificate Value will be allocated
to the Sub-accounts of the Separate Account in accordance with the
selection You make, and the Annuity will be paid as a Variable Annuity.
You can also select a combination of a Fixed and Variable Annuity and the
Adjusted Certificate Value will be allocated accordingly. If You don't
select between a Fixed Annuity and a Variable Annuity, any Adjusted
Certificate Value in the Variable Account will be applied to a Variable
Annuity and any Adjusted Certificate Value in the Fixed Account will be
applied to a Fixed Annuity.
The Adjusted Certificate Value will be applied to the applicable Annuity
Table contained in the Certificate based upon the Annuity Option You
select. If, as of the Income Date, the current Annuity Option rates
applicable to the class of Certificates issued under the Group Contract
provide an initial Annuity Payment greater than the initial Annuity Payment
guaranteed under the applicable Annuity Table in the Certificate, the
greater payment will be made.
Fixed Annuity
The minimum dollar amount of each Fixed Annuity Payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. After the
initial Fixed Annuity payment, the payments will not change regardless of
investment, mortality or expense experience.
Variable Annuity
Variable Annuity Payments reflect the investment performance of the
Variable Account in accordance with the allocation of the Adjusted
Certificate Value to the Sub-accounts during the Annuity Period. Variable
Annuity payments are not guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. The dollar
amount of Variable Annuity payments for each applicable Sub-account after
the first Variable Annuity Payment is determined as follows:
(1) the dollar amount of the first Variable Annuity payment is
divided by the value of an Annuity Unit for each applicable Sub-account as
of the Income Date. This sets the number of Annuity Units for each monthly
payment for the applicable Sub-account. The number of Annuity Units for
each applicable Sub-account remains fixed during the Annuity Period;
(2) the fixed number of Annuity Units per payment in each Sub-
account is multiplied by the Annuity Unit Value for that Sub-account for
the Valuation Period for which the payment is due. This result is the
dollar amount of the payment for each applicable Sub-account.
The total dollar amount of each Variable Annuity payment is the sum of all
Sub-account Variable Annuity payments reduced by the applicable portion of
the Certificate Maintenance Charge.
Annuity Unit
The value of any Annuity Unit for each Sub-Account of the Separate Account
was initially set at $10.
The Sub-account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
(1) the net investment factor calculated as set forth on pages 11-12
(but without the Distribution Charge, if any) for the current Valuation
Period is multiplied by the value of the Annuity Unit for the Sub-account
for the immediately preceding Valuation Period.
(2) the result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Valuation Period equivalent of the
Assumed Investment Rate for the number of days in the current Valuation
Period. The Assumed Investment Rate is equal to 6% per year.
The value of an Annuity Unit may increase or decrease from Valuation Period
to Valuation Period.
Using the Tables
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first annuity
payment will be based on an age a specified number of years younger than
the person's then-attained age (i.e., age last birthday). This age setback
is as follows:
Date of First Payment Age Setback
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next
section. Upon request, We will tell You any such amount.
Basis of Calculation
Tables 1 and 4 are based on interest at 6% and 3%, respectively. Tables 2,
3, 5, and 6 are based on the 1983 Individual Annuity Valuation Tables,
weighted 40% male and 60% female, with interest at 6% (Tables 2 and 3) and
3% (Tables 5 and 6), projected dynamically with Projection Scale G.
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $19.17 12 $9.63 19 $7.24 25 $6.32
6 16.42 13 9.12 20 7.04 26 6.21
7 14.46 14 8.69 21 6.86 27 6.11
8 13.00 15 8.31 22 6.70 28 6.02
9 11.87 16 7.99 23 6.56 29 5.94
10 10.97 17 7.71 24 6.43 30 5.87
11 10.24 18 7.46
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $5.09 43 $5.40 56 $6.06 69 $7.47 82 $ 9.72
31 5.11 44 5.44 57 6.13 70 7.63 83 9.87
32 5.13 45 5.47 58 6.21 71 7.79 84 10.02
33 5.14 46 5.51 59 6.30 72 7.95 85 10.15
34 5.16 47 5.55 60 6.39 73 8.12 86 10.27
35 5.18 48 5.60 61 6.48 74 8.30 87 10.38
36 5.20 49 5.64 62 6.59 75 8.48 88 10.48
37 5.23 50 5.69 63 6.69 76 8.66 89 10.57
38 5.25 51 5.74 64 6.81 77 8.84 90 10.65
39 5.28 52 5.80 65 6.93 78 9.03 91 10.72
40 5.31 53 5.86 66 7.05 79 9.21 92 10.77
41 5.34 54 5.92 67 7.19 80 9.38 93 10.82
42 5.37 55 5.99 68 7.33 81 9.55 94 10.86
95 10.89
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $4.97$4.99$5.00$5.02$5.04$5.05$5.06$5.07$5.08$5.09$5.09$5.09 $5.10 $5.10
35 5.01 5.04 5.07 5.09 5.11 5.13 5.15 5.16 5.17 5.18 5.18 5.19 5.19
40 5.08 5.12 5.16 5.19 5.22 5.25 5.27 5.29 5.30 5.31 5.31 5.32
45 5.18 5.23 5.29 5.34 5.38 5.41 5.44 5.46 5.48 5.49 5.49
50 5.32 5.40 5.47 5.54 5.60 5.64 5.68 5.70 5.72 5.72
55 5.51 5.62 5.73 5.85 5.90 5.96 6.00 6.02 6.04
60 5.79 5.95 6.11 6.24 6.34 6.41 6.45 6.48
65 6.20 6.44 6.66 6.84 6.97 7.05 7.10
70 6.80 7.15 7.47 7.71 7.87 7.97
75 7.69 8.22 8.66 8.99 9.20
80 9.03 9.81 10.43 10.87
85 11.02 12.11 12.98
90 13.82 15.34
95 17.66
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $3.05 43 $3.46 56 $4.24 69 $5.79 82 $8.24
31 3.07 44 3.50 57 4.32 70 5.96 83 8.41
32 3.09 45 3.55 58 4.41 71 6.13 84 8.57
33 3.12 46 3.60 59 4.51 72 6.31 85 8.72
34 3.15 47 3.65 60 4.61 73 6.50 86 8.85
35 3.18 48 3.70 61 4.71 74 6.69 87 8.97
36 3.21 49 3.76 62 4.82 75 6.88 88 9.08
37 3.24 50 3.82 63 4.94 76 7.08 89 9.18
38 3.27 51 3.88 64 5.07 77 7.28 90 9.27
39 3.31 52 3.94 65 5.20 78 7.48 91 9.34
40 3.34 53 4.01 66 5.34 79 7.68 92 9.40
41 3.38 54 4.08 67 5.48 80 7.87 93 9.46
42 3.42 55 4.16 68 5.63 81 8.06 94 9.50
95 9.53
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $2.88$2.92$2.95$2.98$3.00$3.01$3.02$3.03$3.04$3.04$3.04$3.05 $3.05 $3.05
35 2.97 3.02 3.06 3.09 3.12 3.14 3.15 3.16 3.17 3.17 3.18 3.18 3.18
40 3.09 3.15 3.20 3.24 3.27 3.30 3.32 3.33 3.34 3.34 3.34 3.35
45 3.24 3.31 3.38 3.44 3.48 3.51 3.53 3.54 3.55 3.56 3.56
50 3.43 3.53 3.62 3.69 3.74 3.78 3.80 3.82 3.83 3.83
55 3.68 3.81 3.93 4.02 4.09 4.13 4.16 4.18 4.19
60 4.01 4.19 4.35 4.47 4.56 4.61 4.65 4.66
65 4.47 4.73 4.94 5.11 5.21 5.28 5.32
70 5.11 5.48 5.78 6.00 6.13 6.21
75 6.04 6.57 6.99 7.28 7.46
80 7.40 8.16 8.75 9.15
85 9.38 10.46 11.29
90 12.18 13.68
95 16.02
Endorsements
To be inserted only by Us
Keyport
Life Insurance Company
Providence, Rhode Island
Variable Annuity Certificate
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating -- No Dividends
EXHIBIT (4p)
Keyport
Life Insurance Company
A Stock Company
If this Contract is In Force on the Income Date, We will begin making
Income Payments to the Annuitant. We will make such payments according to
the terms of this Contract.
RIGHT TO EXAMINE CONTRACT: You may return this Contract to Us or the agent
through whom You purchased it within 10 days after You receive it. If so
returned, We will treat the Contract as though it were never issued. Upon
receipt We will promptly refund the Contract Value as of the date the
returned Contract is received by Us plus any charges We may have
previously deducted.
This is a legal contract between You and Us.
Read This Contract Carefully.
Read This Contract Carefully.
Signed: ________________________ ________________________
Secretary President
Variable Annuity Contract
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating -- No Dividends
INCOME PAYMENTS AND OTHER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE
OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR
AMOUNT. THIS IS EXPLAINED FURTHER ON PAGES 11 AND 18.
Table of Contents
Page
Right to Examine Certificate............................................1
Definitions.............................................................2
Certificate Schedule....................................................3
General Provisions......................................................5
Variable Account Provisions............................................10
Transfers..............................................................13
Partial Withdrawals and Total Surrender................................14
Death Provisions.......................................................15
Annuity Provisions.....................................................16
Endorsements (if any) are before page..................................22
Definitions
Accumulation Period: The period prior to the Income Date during which
Purchase Payments may be made by a Contract Owner.
Accumulation Unit: An accounting unit used to calculate a Contract Owner's
interest in a Sub-account of the Variable Account during the Accumulation
Period.
Adjusted Contract Value: The Contract Value less the Contract Maintenance
Charge and any applicable taxes relating to the Contract. This amount is
applied to the Annuity Tables to determine Income Payments.
Annuitant: The natural person on whose life Income Payments are based, and
to whom any Income Payments will be made starting on the Income Date.
Annuity Options: Options available for Income Payments.
Income Payments: The series of payments made to the Annuitant, starting on
the Income Date, under the Annuity Option selected.
Annuity Period: The period after the Income Date during which Income
Payments are made.
Annuity Unit: An accounting unit used to calculate Variable Annuity
payments during the Annuity Period.
Beneficiary: The person(s) or entity(ies) who controls the Contract if any
Contract Owner dies before the Income Date.
(Definitions continue on Page 4)
KEYPORT LIFE INSURANCE COMPANY
125 High Street, Boston, MA 02110
Contract Schedule
CONTRACT OWNER: [John Doe, male, 1/1/40]
JOINT CONTRACT OWNER: [Jane Doe, female, 2/29/40]
ANNUITANT: [John Doe, male 1/1/40]
CONTINGENT ANNUITANT: [Jane Doe, female, 2/29/40]
COVERED PERSONS: [John Doe, male, 1/1/40], [Jane
Doe, female, 2/29/40][Annuitant]
CONTRACT NUMBER: [99999999]
INITIAL PURCHASE PAYMENT: [$25,000]
MINIMUM INITIAL PAYMENT: $25,000
MINIMUM ADDITIONAL PAYMENT: $250 ($50 for EFT payment)
CONTRACT DATE: [4/1/95]
ISSUE STATE: [Rhode Island]
IRS PLAN TYPE: [Non-Qualified]
INCOME DATE: [11/1/2010]
Charges
Distribution Charge: None
Administrative Charge: We deduct 0.000411% of the assets in each Variable
Account Sub-Account on a daily basis (equivalent to an annual rate of
0.15%) to compensate Us for a portion of Our administrative costs.
Mortality and Expense Risk Charge: We deduct 0.003403% of the assets in
each Variable Account Sub-account on a daily basis (equivalent to an annual
rate of 1.25%) for Our mortality and expense risks.
Contract Maintenance Charge: We charge $36 to cover a portion of Our
ongoing Contract maintenance expenses. The charge is incurred at the
beginning of the Contract Year and is deducted on each Contract Anniversary
and at the time of total surrender.
Transfer Charge: Currently none; however, We reserve the right to charge
$25 for a transfer if You make more than 12 transfers per Contract Year.
Surrender Charge: None
Initial Purchase Payment Allocation
Currently, You may select 21 Sub-accounts and the Fixed Account. We
reserve the right to increase or decrease the number of available Sub-
accounts. The minimum You may allocate to any Sub-account or the Fixed
Account is 5% of any Purchase Payment. Your initial Purchase Payment has
been invested as follows:
[AIM Capital Appreciation x%
AIM Growth x%
AIM International x%
Alliance Global Bond x%
Alliance Growth and Income x%
Alliance Premier Growth x%
Alliance Real Estate x%
Colonial Growth and Income x%
Colonial High Yield Securities x%
Colonial Small Cap Value x%
Colonial Strategic Income x%
Colonial U.S. Stock x%
Liberty All-Star x%
MFS Bond x%
MFS Emerging Growth x%
MFS Research x%
Stein Roe Balanced x%
Stein Roe Global Utilities x%
Stein Roe Growth Stock x%
Stein Roe Money Market x%
Stein Roe Special Venture x%
Fixed Account x%]
Transfer Guidelines
Number of Transfers and Transfer Charge: Currently, You are permitted
unlimited transfers per Contract Year during the Accumulation Period and
unlimited transfers during the Annuity Period. We reserve the right to
change, upon notice, the frequency of transfers You may make. We also
reserve the right to impose a charge for any transfer in excess of 12 per
Contract Year. The transfer charge is shown in the Charges section of the
Contract Schedule.
Minimum amount to be transferred: None.
Minimum amount which must remain in a Sub-account after transfer: None.
Partial Withdrawals
You may make partial withdrawals during the Accumulation Period without
incurring a surrender charge, as follows:
(1) In any Contract Year You may withdraw an aggregate amount not to
exceed, at the time of withdrawal:
(a) the Contract Value, less
(b) the portion of Your Purchase Payments not previously
withdrawn; and
(2) In any Contract Year after the first, You may also withdraw the
positive difference, if any, between the amount withdrawn
pursuant to (1) above in any such subsequent year and 10% of
Your Contract Value as of the preceding Contract Anniversary.
We will collect the surrender charge shown on the Contract Schedule with
respect to partial withdrawals in excess of the amounts described in (1)
and (2) above.
Minimum withdrawal amount: $300, unless the withdrawal is made pursuant to
Our systematic withdrawal program, in which case the minimum withdrawal is
$100.
Minimum Contract Value which must remain after a partial withdrawal:
$2,500.
Death Benefits
Adjustment of Contract Value
When We receive due proof of death of the Contract Owner, any Joint
Contract Owner, or the Annuitant if the Contract Owner is a non-natural
Person, We will compare, as of the date of death, the Contract Value to the
Death Benefit amount defined in this Schedule. If the Contract Value is
less than the Death Benefit, We will increase the current Contract Value by
the amount of the difference. Any amount credited will be allocated to the
Variable Account and/or the Fixed Account based on the Purchase Payment
allocation that is in effect when We receive due proof of death.
Death Benefit Amount
Contract Anniversary Death Benefit
On the Contract Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Contract Date;
(b) Add to (a) any additional Purchase Payments paid since
the Contract Date and subtract from (a) any partial
withdrawals (including any associated surrender charge
incurred) made since the Contract Date;
(2) (a) Determine the Contract Value for each Contract
Anniversary (the "Anniversary Value") before the 81st
birthday of the Contract Owner or, if the Contract Owner
is a non-natural Person, the Annuitant;
(b) Increase each "Anniversary Value" by any Purchase
Payments made after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following amount
calculated at the time of each partial withdrawal made
after that Value's Anniversary: (i) the partial
withdrawal amount (including any associated surrender
charge incurred) divided by the Contract Value
immediately preceding the withdrawal, (ii) multiplied by
the "Anniversary Value" immediately preceding the
withdrawal;
(d) Select the highest "Anniversary Value" after the
adjustments in (b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).
If there is a change of Contract Owner, the new Contract Owner's age will
be used to determine the amount in (2) above.
The Variable Separate Account
Sub-accounts investing in shares of mutual funds
Variable Account A is a unit investment trust variable separate account,
organized in and
governed by the laws of the State of Rhode Island. Variable Account A is
divided into Sub-accounts. Each Sub-account listed below invests in shares
of the corresponding Portfolio of the Eligible Fund shown.
Eligible Funds of AIM Insurance
Funds and Variable Account
Sub-Accounts Investment Objective
AIM Capital Appreciation Capital appreciation through
(AIM Capital Appreciation investments in common stocks,
Sub-Account) with emphasis on medium-sized
and smaller emerging growth
companies.
AIM Growth Growth of capital through
(AIM Growth Sub-Account) investments primarily in
common stocks of leading U.S.
companies considered by AIM
to have strong earnings
momentum.
AIM International Equity Long-term growth of capital
(AIM International Equity by investing in international
Sub-Account) equity securities, the issuers
of which are considered by AIM
to have strong earnings
momentum.
Eligible Funds of Alliance Series
Fund and Variable Account
Sub-Accounts Investment Objective
Alliance Global Bond A high level of return from a
(Alliance Global Bond combination of current income and
Sub-Account) capital appreciation by investing
in a globally diversified portfolio
of high quality debt securities
denominated in the U.S. Dollar and
a range of foreign currencies.
Alliance Growth and Income Balance the objectives of
(Alliance Growth and Income reasonable current income and
Sub-Account) reasonable opportunities for
appreciation through investments
primarily in dividend-paying
common stocks of good quality.
Alliance Premier Growth Growth of capital rather than
(Alliance Premier Growth current income.
Sub-Account)
Alliance Real Estate Total return on its assets through
(Alliance Real Estate Sub- long-term growth of capital and
Account) income principally through
investing in a portfolio of equity
securities of issuers that are
primarily engaged in or related to
the real estate industry.
Eligible Funds of Liberty Trust
and Variable Account
Sub-Accounts Investment Objective
Colonial Growth and Income Primarily income and long-term
(Colonial Growth and Income capital growth and, secondarily,
Sub- Account)(formerly named preservation of capital.
Colonial-Keyport Growth and
Income Fund)
Colonial High Yield Securities High current income and total
(Colonial High Yield Securities return by investing primarily
Sub-Account) in lower rated corporate debt
securities.
Colonial Small Cap Value Long-term growth by investing
(Colonial Small Cap Value in smaller capitalization
Sub-Account) equity securities.
Colonial Strategic Income A high level of current income, as
(Colonial Strategic Income is consistent with prudent risk and
Sub-Account)(formerly named maximizing total return, by
Colonial-Keyport Strategic diversifying investments primarily
Income Fund) in U.S. and foreign government and
high yield, high risk corporate
debt securities.
Colonial U.S. Stock Long-term capital growth by
(Colonial U.S. Stock Sub-Account) investing primarily in large
(formerly named Colonial-Keyport capitalization equity securities.
U.S. Stock Fund)
Liberty All-Star Equity Total investment return, comprised
(Liberty All-Star Equity Sub-Account) of long-term capital appreciation
and current income, through
investment primarily in a
diversified portfolio of equity
securities.
Stein Roe Global Utilities Current income and long-term growth
(Stein Roe Global Utilities of capital and income.
Sub-Account)(formerly named
Colonial-Keyport Utilities Fund)
Eligible Funds of MFS Trust
and Variable Account
Sub-Accounts Investment Objective
MFS Bond High level of current income
(MFS Bond Sub-Account) as is believed consistent
with prudent investment risk
and secondarily to protect
shareholders' capital.
MFS Emerging Growth Long-term growth of capital.
(MFS Emerging Growth Sub-Account)
MFS Research Long-term growth of capital and
(MFS Research Sub-Account) future income.
Eligible Funds of SteinRoe Trust
and Variable Account
Sub-Accounts Investment Objective
Stein Roe Balanced High total investment return
(Stein Roe Balanced through investment in a changing
Sub-Account) (formerly named SteinRoe mix of securities.
Managed Assets Fund)
Stein Roe Growth Stock Long-term growth of capital through
(Stein Roe Growth Stock investment primarily in common
Sub-Account)(formerly named SteinRoe stocks.
Managed Growth Stock Fund)
Stein Roe Money Market High current income from short-term
(Stein Roe Money Market money market instruments while
Sub-Account)(formerly named SteinRoe emphasizing preservation of capital
Cash Income Fund) and maintaining excellent
liquidity.
Stein Roe Special Venture Capital growth by investing
(Stein Roe Special Venture primarily in common stocks,
Sub-Account)(formerly named SteinRoe convertible securities, and other
Capital Appreciation Fund) securities selected for prospective
capital growth.
Sub-accounts investing directly in securities: None.
The Fixed Account
The Fixed Account is part of Our General Account, which consists of all of
Our assets except the assets of the Variable Account and the assets of
other separate accounts that We maintain. Subject to applicable law, We
have sole discretion over investments of the assets of the Fixed Account.
If You allocate assets to the Fixed Account, Your accumulation values and
Income Payments will have guaranteed minimums.
Before the Income Date, Your interest in the Fixed Account is measured by
the Fixed Account Value. When Income Payments begin, the payee's interest
in the Fixed Account is measured by the amount of each periodic payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Contract is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with
Your selection on the Contract Date. You may change such selection by
Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus
the interest subsequently credited on those payments; plus
(2) any Variable Account Value transferred to the Fixed Account
plus the interest subsequently credited on the transferred
value; less
(3) any prior partial withdrawals from the Fixed Account; less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account
at rates declared by Us for Guarantee Periods of one or more years from the
month and day of allocation. The minimum Guaranteed Interest Rate is 3%
per year.
Definitions (continued)
Contract Anniversary: An anniversary of the Contract Date.
Contract Date: The date a Contract is issued to a Contract Owner. The
Contract Date is shown on the Contract Schedule.
Contract Owner: The Person who owns the Contract. Any Joint Contract
Owners and the Contract Owner own the Contract equally with rights of
survivorship.
Contract Value: The sum of the Contract Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account, if available,
during the Accumulation Period.
Contract Year: The first Contract Year is the annual period which begins
on the Contract Date. Subsequent Contract Years begin on each Contract
Anniversary.
Eligible Fund: An investment entity shown on the Contract Schedule.
Fixed Account: The account We establish to support Fixed Allocations. The
Contract Schedule shows whether the Fixed Account is available under the
Contract.
Fixed Account Value: The value of all Fixed Account amounts accumulated
under this Contract prior to the Income Date.
Fixed Allocation: An amount allocated to the Fixed Account that is
credited with a Guaranteed Interest Rate for a specified Guarantee Period.
Fixed Annuity: An annuity with a series of payments made during the
Annuity Period which are guaranteed as to dollar amount by Us.
General Account: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate
accounts.
Guaranteed Interest Rate: The effective annual interest rate which We will
credit for a specified Guarantee Period.
Guarantee Period: The period of year(s) a rate of interest is guaranteed
to be credited within the Fixed Account.
Income Date: The date on which Income Payments begin. The Income Date is
shown on the Contract Schedule.
In Force: The status of a Contract before the Income Date so long as it
has not been totally surrendered and there has not been a death of a
Contract Owner or Joint Contract Owner that will cause the Contract to end
within five years of the date of death.
Office: Our executive office shown on the Contract Schedule.
Person: A human being, trust, corporation, or any other legally recognized
entity.
Portfolio: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
Purchase Payment: A payment made by or on behalf of a Contract Owner with
respect to a Contract.
Sub-account: Variable Account assets are divided into Sub-accounts.
Assets of each Sub-account will be invested in shares of a Portfolio of an
Eligible Fund, or directly in portfolio securities.
Valuation Date: Each day on which We and the New York Stock Exchange
("NYSE") are open for business, or any other day that the Securities and
Exchange Commission requires that mutual funds, unit investment trusts or
other investment portfolios be valued.
Valuation Period: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business on the
next succeeding Valuation Date.
Variable Account: Our Variable Account(s) shown on the Contract Schedule.
Variable Account Value: The value of all amounts in the Sub-accounts
accumulated under this Contract prior to the Income Date.
Variable Annuity: An annuity with payments which vary as to dollar amount
in relation to the investment performance of specified Sub-accounts of the
Variable Account.
We, Us, Our: Keyport Life Insurance Company.
Written Request: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
You, Your: The Contract Owner and any Joint Contract Owners.
General Provisions
Purchase Payments
The initial Purchase Payment is due on the Contract Date. It must be paid
at Our Office in United States currency. Coverage under a Contract does
not take effect until We have accepted the initial Purchase Payment during
Your lifetime. Each Purchase Payment after the Contract Date must be at
least the amount shown on the Contract Schedule. Provided the Contract
Value under a Contract does not go to zero, a Contract will stay in force
until the Income Date even if You make no payments after the initial one.
We reserve the right to reject any subsequent Purchase Payment.
Allocation of Purchase Payments
Your initial Purchase Payment is allocated to the Sub-accounts of the
Variable Account and to the Fixed Account, if available, in accordance with
the selections made by You at the Contract Date. Unless otherwise changed
by You, subsequent Purchase Payments are allocated in the same manner as
the initial Purchase Payment. Allocation of Purchase Payments is subject
to the terms and conditions imposed by Us. We reserve the right to
allocate initial Purchase Payments to the Money Market Sub-account until
the expiration of the Right to Examine Contract period set forth on Page 1
of the Contract.
The Contract
This contract form, any attached copy of the application, and any attached
riders or endorsements make up the entire contract between You and Us. All
statements made by the Contract Owner or any Annuitant will be deemed
representations and not warranties. No such statement will be used in any
contest unless it is contained in the application signed by You, a copy of
which has been furnished to You, or to the Beneficiary.
Only Our President or Secretary may agree to change any of the terms of the
Contract. Any changes must be in writing. Any change to the terms of a
Contract must be in writing and with Your Consent, unless provided
otherwise by the Contract.
To assure that the Contract will maintain its status as a variable annuity
under the Internal Revenue Code, We reserve the right to change this
Contract to comply with future changes in the Internal Revenue Code, any
regulations or rulings issued thereunder, and any requirements otherwise
imposed by the Internal Revenue Service. You will be sent a copy of any
such amendment as well as a copy of the regulatory change requiring the
amendment. If the issue state shown on Page 3 is Connecticut or
Massachusetts, such amendment will be filed for approval with the state's
insurance supervisory official.
We reserve the right, subject to compliance with the law as currently
applicable or subsequently changed, to: (a) operate the Variable Account
in any form permitted under the Investment Company Act of 1940, as
amended, (the "1940 Act"), or in any other form permitted by law; (b) take
any action necessary to comply with or obtain and continue any exemptions
from the 1940 Act, or to comply with any other applicable law; (c) transfer
any assets in any Sub-account to another Sub-account, or to one or more
separate investment accounts, or the General Account; or to add, combine or
remove Sub-accounts in the Variable Account; and (d) change the way We
assess charges, so long as We do not increase the aggregate amount beyond
that currently charged to the Variable Account and the Eligible Funds in
connection with this Contract. If the shares of any of the Eligible Funds
should become unavailable for investment by the Variable Account or if in
Our judgment further investment in such Portfolio shares should become
inappropriate in view of the purpose of the Contract, We may add or
substitute shares of another mutual fund for the Portfolio shares already
purchased under the Contract. No substitution of Portfolio shares in any
Sub-account may take place without prior approval of the Securities and
Exchange Commission and notice to the affected Contract Owners, to the
extent required by the 1940 Act.
Contract Owner
The Contract Owner and any Joint Contract Owner are shown on Page 3. They
may be changed by You. If You change an owner who is also the Annuitant,
the owner being changed will still be the Annuitant.
You may exercise all rights of this Contract while it is In Force, subject
to the rights of: (a) any assignee under an assignment filed with Us; and
(b) any irrevocably-named beneficiary.
Joint Contract Owner
A Contract may be owned by Joint Contract Owners. Upon the death of any
Contract Owner or Joint Contract Owner, the surviving owner(s) will be the
primary Beneficiary(ies). Any other beneficiary designation will be
treated as a Contingent Beneficiary unless otherwise indicated in a Written
Request filed with Us.
Annuitant
The Annuitant is the natural Person on whose life Income Payments are
based. The Annuitant is the natural Person designated by You at the
Contract Date, unless changed prior to the Income Date. Any change of
Annuitant is subject to Our underwriting rules then in effect. The
Annuitant may not be changed in a Contract which is owned by a non-natural
Person. You may name a Contingent Annuitant. The Contingent Annuitant
becomes the Annuitant if the Annuitant dies while this Contract is In
Force. If the Annuitant dies and no Contingent Annuitant has been named,
We will allow You sixty days to designate someone other than Yourself as
Annuitant. You will be the Contingent Annuitant unless You name someone
else. If the Contract is owned by a non-natural Person, the death of the
Annuitant will be treated as the death of the Contract Owner and a new
Annuitant may not be designated.
Beneficiary
The Beneficiary is the person who controls the Contract if any Contract
Owner dies prior to the Income Date. If the Contract is owned by Joint
Contract Owners, upon the death of any Contract Owner or Joint Contract
Owner, the surviving owner(s) will become the primary Beneficiary. Any
other beneficiary designation will be treated as a Contingent Beneficiary
unless otherwise indicated in a Written Request filed with Us. If You name
more than one Person as Beneficiary or as Contingent Beneficiary, and do
not state otherwise on an application or in a Written Request to Us, any
non-survivors will not receive a benefit. The survivors will receive equal
shares. Subject to the rights of any irrevocable Beneficiary, You may
change the Beneficiary or Contingent Beneficiary. A change must be made by
Written Request and will be effective as of the date the Written Request is
signed. We will not be liable for any payment We make or action We take
before We receive the Written Request.
Change of Contract Owner, Beneficiary or Contingent Annuitant
While this Contract is In Force, You may by Written Request change the
Contract Owner, Joint Contract Owner, Beneficiary, Contingent Beneficiary,
Contingent Annuitant, or in certain instances, the Annuitant. An
irrevocably named Person may be changed only with the written consent of
such Person. The change will be effective, following Our receipt of the
Written Request, as of the date the Written Request was signed. The change
will not affect any payments We make or actions We take prior to the time
We receive the Written Request.
Assignment of the Contract
You may assign this Contract at any time while it is In Force. The
assignment must be in writing and a copy must be filed at Our Office. Your
rights and those of any revocably named Person will be subject to the
assignment. An assignment will not affect any payments We make or actions
We take before We receive the assignment. We are not responsible for the
validity of any assignment.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Income
Payments have begun, any underpayment(s) that have been made will be paid
in full with the next Income Payment. Any overpayment, unless repaid to Us
in one sum, will be deducted from future Income Payments otherwise due
until We are repaid in full.
Non-Participating
This Contract does not participate in Our divisible surplus.
Evidence of Death, Age, Sex or Survival
If a Contract provision relates to the death of a natural Person, We will
require proof of death before We will act under that provision. Proof of
death shall be: (a) a certified death certificate; or (b) a certified
decree of a court of competent jurisdiction as to the finding of death; or
(c) a written statement by a medical doctor who attended the deceased; or
(d) any other document constituting due proof of death under applicable
state law. If Our action under a Contract provision is based on the age,
sex, or survival of any Person, We may require evidence of the particular
fact before We act under that provision.
Protection of Proceeds
No Beneficiary or payee may commute or assign any payments under a Contract
before they are due. To the extent permitted by law, no payments shall be
subject to the debts of any Beneficiary or payee or to any judicial process
for payment of those debts.
Reports
We will send You a report that shows the Contract Value at least once each
Contract Year. We will send any other reports that may be required by law.
Taxes
Any taxes paid to any governmental entity relating to the Contract will be
deducted from the Purchase Payments or Contract Value. We may, in Our sole
discretion, delay the deduction until a later date. By not deducting tax
payments at the time of Our payment, We do not waive any right We may have
to deduct amounts at a later date. We will, in Our sole discretion,
determine when taxes relate to the Contract or to the operation of the
Variable Account. We reserve the right to establish a provision for
federal income taxes if We determine, in Our sole discretion, that We will
incur a tax as a result of the operation of the Variable Account. Such a
provision will be reflected in the Accumulation and Annuity Unit Values.
We will deduct for any income taxes incurred by Us as a result of the
operation of the Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient. We will deduct from any
payment under this Contract any withholding taxes required by applicable
law.
Regulatory Requirements
All values payable under the Contract will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Contract is delivered.
Suspension or Deferral of Payments
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal
of the assets and securities of the Variable Account is not
reasonably practicable; or
(4) the Securities and Exchange Commission, by order or
pronouncement, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and
Exchange Commission govern as to whether the conditions described in (2)
and (3) above exist.
We reserve the right to delay payment of amounts allocated to the Fixed
Account for up to six months.
Variable Account Provisions
The Variable Account
The Variable Account(s) is designated on the Contract Schedule and consists
of assets set aside by Us, which are kept separate from Our general assets
and all other variable account assets We maintain. We own the assets of
the Variable Account. Variable Account assets equal to reserves and other
contract liabilities will not be chargeable with liabilities arising out of
any other business We may conduct. We may transfer to Our General Account
assets which exceed the reserves and other liabilities of the Variable
Account. Income and realized and unrealized gains or losses from assets in
the Variable Account are credited to or charged against the account without
regard to other income, gains or losses in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-
accounts which are available under the Contract are shown on the Contract
Schedule. The assets of the Sub-accounts of the unit investment trust
variable separate account are allocated to the Eligible Fund(s) and the
Portfolio(s), if applicable, within an Eligible Fund shown on the Contract
Schedule. The assets of the Sub-accounts of the investment company
variable separate account, if applicable, are invested in portfolios of
securities designed to meet the objectives of the Sub-Account shown on the
Contract Schedule. We may, from time to time, add additional Sub-accounts,
Eligible Funds or Portfolios to those shown on the Contract Schedule. You
may be permitted to transfer Contract Values or allocate Purchase Payments
to the additional Sub-Accounts, Eligible Funds or Portfolios. However, the
right to make such transfers or allocations will be limited by the terms
and conditions imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account,
to combine two or more Sub-accounts or to substitute a new Portfolio for
the Portfolio in which a Sub-account invests. A substitution may become
necessary if, in Our discretion, a Portfolio or Sub-account no longer suits
the purposes of the Contract. This may happen: due to a change in laws or
regulations or a change in a Portfolio's investment objectives or
restrictions; because the Portfolio or Sub-account is no longer available
for investment; or for some other reason. We will obtain any prior
approvals that may be required from the insurance department of Our state
of domicile, and from the SEC or any other governmental entity before
making such a substitution.
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
(2) Operate a Variable Account as a management company under the
1940 Act, if it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the
1940 Act, if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
Valuation of Assets
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
Accumulation Units
Your Variable Account Value will fluctuate in accordance with the
investment results of the Sub-accounts to which You have allocated Your
Purchase Payments or Contract Value. In order to determine how these
fluctuations affect Your Contract Value, We use an Accumulation Unit value.
Accumulation Units are used to account for all amounts allocated to or
withdrawn from the Sub-accounts of the Variable Account as a result of
Purchase Payments, partial withdrawals, transfers, or charges deducted
from the Contract Value. We determine the number of Accumulation Units of
a Sub-account purchased or cancelled by dividing the amount allocated to,
or withdrawn from, the Sub-account by the dollar value of one Accumulation
Unit of the Sub-account as of the end of the Valuation Period during which
We receive the request for the transaction.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-account was initially set at $10.
Subsequent Accumulation Unit Values for each Sub-account are determined by
multiplying the Accumulation Unit Value for the immediately preceding
Valuation Period by a net investment factor for the Sub-account for the
current period. This factor may be greater or less than 1.0; therefore,
the Accumulation Unit Value may increase or decrease from Valuation Period
to Valuation Period.
We calculate the net investment factor for each Sub-account investing in
shares of mutual funds by dividing (a) by (b) and then subtracting (c)
where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which the
Sub-account invests at the end of the Valuation Period; plus
(ii) any dividend per share declared for the Portfolio that has
an ex-dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual
rate for the Mortality and Expense Risk Charge, for the
Administrative Charge, and for the Distribution Charge, if
any, which are shown on the Contract Schedule;
plus
(ii) a charge factor, if any, for any tax provision established
by Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing
directly in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the end of the
preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current
Valuation Period; less
(iii) any capital losses, realized or unrealized, charged against
the assets during the current Valuation Period; less
(iv) all operating and investment expenses relating to the assets
that are incurred during the current Valuation Period.
(b) is the value of the assets in the Sub-account at the end of the
preceding Valuation Period.
Mortality and Expense Risk Charge
Each Valuation Period We deduct a Mortality and Expense Risk Charge from
each Sub-account of the Variable Account which is equal, on an annual
basis, to the amount shown on the Contract Schedule. The Mortality and
Expense Risk Charge compensates Us for assuming the mortality and expense
risks with respect to the Contracts We issue. We guarantee the dollar
amount of each Income Payment after the first Income Payment will not be
affected by variations in mortality or expense experience.
Administrative Charge
Each Valuation Period We deduct an Administrative Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Contract Schedule. The Administrative Charge compensates Us for the costs
associated with administration of the Variable Account and the Contracts We
issue.
Distribution Charge
Each Valuation Period We deduct a Distribution Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Contract Schedule. The Distribution Charge compensates Us for the costs
associated with the distribution of the Contracts We issue.
Contract Maintenance Charge
We deduct a Contract Maintenance Charge from the Variable Account Value by
cancelling Accumulation Units from each applicable Sub-account to reimburse
Us for expenses relating to the maintenance of the Contract. We will
deduct the Contract Maintenance Charge from the Sub-accounts of the
Variable Account in the same proportion that the amount of Variable
Contract Value in each Sub-account bears to the Variable Contract Value.
The Contract Maintenance Charge is shown on the Contract Schedule. The
Contract Maintenance Charge will be deducted from the Variable Contract
Value on each Contract Anniversary during the Accumulation Period.
If a total surrender is made on a date other than a Contract Anniversary,
the Contract Maintenance Charge will be deducted at the time of surrender.
During the Annuity Period, the Contract Maintenance Charge will be deducted
on a pro-rata basis from each Annuity Payment.
Transfers
Subject to any limitation We impose on the number of transfers permitted in
a Contract Year, You may transfer all or part of Your Contract Value among
the Sub-accounts and the Fixed Account, if any, by Written Request or by
telephone without the imposition of any fees or charges. Transfers among
the Sub-accounts and the Fixed Account are permitted only during the
Accumulation Period. The number of permitted transfers, and the charge for
transfers in excess of that number, are shown on the Contract Schedule.
All transfers are subject to the following:
(1) If more than the number of free transfers, shown on the Contract
Schedule, are made in a Contract Year, We will deduct a transfer charge,
shown on the Contract Schedule, for each subsequent transfer. The transfer
fee will be deducted from the Sub-account from which the transfer is made.
However, if You transfer Your entire interest in a Sub-account, the
transfer fee will be deducted from the amount transferred. If You make a
transfer from more than one Sub-account, any transfer fee will be allocated
pro-rata among such Sub-accounts in proportion to the amount transferred
from each.
(2) During the Annuity Period, transfers of values between Sub-
accounts will be made by converting the number of Annuity Units being
transferred to the number of Annuity Units in the Sub-account to which a
transfer is made, so that the next Income Payment, if it were made at that
time, would be the same amount that it would have been without the
transfer. Thereafter, Income Payments will reflect changes in the value of
the new Annuity Units.
(3) The minimum amount which you may transfer is shown on the
Contract Schedule. The minimum amount which must remain in a Sub-account
after a transfer is shown on the Contract Schedule.
(4) If 100% of the value of any Sub-account is transferred and the
current allocation for Purchase Payments includes that Sub-account, the
allocation for future Purchase Payments will change to reflect Your
allocation of Contract Value following the transfer.
(5) We reserve the right, at any time and without prior notice to
any party, to terminate, suspend or modify the transfer privileges
described above.
We will not be liable for transfers made in accordance with Your
instructions. All amounts and Accumulation Units will be determined as of
the end of the Valuation Period in which We receive the request for
transfer.
Partial Withdrawals and Total Surrender
Partial Withdrawals
During the Accumulation Period while the Contract is In Force, You may,
upon Written Request, make a partial withdrawal, subject to the provisions
and limitations shown on the Contract Schedule. For purposes of
determining whether a surrender charge is applicable to Your partial
withdrawal:
(1) Your partial withdrawal will first be taken from the portion of
Your Contract Value which is in excess of Your Purchase
Payments, and then from Your Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in the
order in which the Purchase Payments were made, starting with
the first.
A withdrawal will result in the cancellation of Accumulation Units from
each applicable Sub-account in the ratio that Your interest in the Sub-
account bears to Your Variable Account Value. You must specify by Written
Request in advance if You want Accumulation Units to be cancelled in a
manner other than the method described above. If there is no value or
insufficient value in the Variable Account, then the amount withdrawn, or
the insufficient portion, will be deducted from the Fixed Account. If You
have multiple Guarantee Periods, We will deduct such amount from each
Guarantee Period's values in the ratio that each Period's values bears to
the total Fixed Account Value. You must specify by Written Request in
advance if You want multiple Guarantee Periods to be reduced in a manner
other than the method described above.
Each partial withdrawal must be for an amount not less than the amount
shown on the Contract Schedule. The Contract Value which must remain in
the Contract is shown on the Contract Schedule. The Contract Schedule also
shows any charge.
Total Surrender
During the Accumulation Period while the Contract is In Force, You may,
upon Written Request, make a total surrender of the Contract. We will pay
You the Contract Surrender Value which equals:
(1) the Contract Value as of the end of the Valuation Period during
which We receive a Written Request for a withdrawal or
surrender; less
(2) any applicable taxes not previously deducted; less
(3) any surrender charge; less
(4) any Contract Maintenance Charge.
We will pay the amount of any withdrawal or surrender within seven days
unless the Suspension or Deferral of Payments Provision is in effect.
Death Provisions
Death of Contract Owner
These provisions apply if, during the Accumulation Period while the
Contract is In Force, the Contract Owner or any Joint Contract Owner dies
(whether or not the decedent is also the Annuitant) or the Annuitant dies
under a Contract owned by a non-natural Person. The "designated
beneficiary" will control the Contract after such a death. This
"designated beneficiary" will be the first Person among the following who
is alive on the date of death: Contract Owner; Joint Contract Owner;
primary Beneficiary; Contingent Beneficiary; and Contract Owner's estate.
If the Contract Owner and Joint Contract Owner are both alive, they shall
be the "designated beneficiary" together.
If the decedent's surviving spouse (if any) is the sole "designated
beneficiary", the surviving spouse will automatically become the new sole
Contract Owner as of the date of the death. And, if the Annuitant is the
decedent, the new Annuitant will be any living Contingent Annuitant,
otherwise the surviving spouse. The Contract may stay in force until
another death occurs (i.e., until the death of the Contract Owner or Joint
Contract Owner). Except for this paragraph, all of "Death Provisions" will
apply to that subsequent death.
In all other cases, the Contract may stay in force up to five years from
the date of death. During this period, the "designated beneficiary" may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to surrender the Contract for its Contract
Surrender Value. If this Contract is still in force at the end of the five-
year period, We will automatically end it then by paying to the "designated
beneficiary" the Contract Surrender Value without the deduction of any
applicable surrender charges. If the "designated beneficiary" is not alive
then, We will pay any Person(s) named by the "designated beneficiary" in a
Written Request; otherwise the "designated beneficiary's" estate.
Death of Annuitant
These provisions apply if during the Accumulation Period while the Contract
is In Force, (a) the Annuitant dies, (b) the Annuitant is neither the
Contract Owner nor a Joint Contract Owner, and (c) the Contract Owner is a
natural Person. The Contract will continue in force after the Annuitant's
death. The new Annuitant will be any living Contingent Annuitant. We will
allow You sixty days to designate someone other than Yourself as Annuitant.
You will be the Contingent Annuitant unless You name someone else.
Payment of Benefits
Instead of receiving a lump sum, You or any "designated beneficiary" may by
Written Request direct that We pay any benefit of $5,000 or more under an
Annuity Option that meets the following: (a) the first payment to the
"designated beneficiary" must be made no later than one year after the date
of death; (b) payments must be made over the life of the "designated
beneficiary" or over a period not extending beyond that person's life
expectancy; and (c) any Annuity Option that provides for payments to
continue after the death of the "designated beneficiary" will not allow the
successor payee to extend the period of time over which the remaining
payments are to be made.
Annuity Provisions
General
If the Contract is In Force on the Income Date, the Adjusted Contract Value
will be applied under the Annuity Option selected by You. Income Payments
may be made on a fixed or variable basis or both.
Income Date
The Income Date may be selected by You. It is shown on the Contract
Schedule. The Income Date can be any time after the Contract Date for
variable payments and any time after the first Contract Anniversary for
fixed payments. The Income Date may not be later than the earlier of when
the Annuitant reaches attained age 90 or that required under state law. If
no Income Date is selected, it will be the earlier of when the Annuitant
reaches attained age 90 or the maximum date permitted under state law, if
any.
Prior to the Income Date, You may change the Income Date by Written
Request. Any change must be requested at least 30 days prior to the new
Income Date.
Selection of an Annuity Option
An Annuity Option may be selected by You. If no Annuity Option is
selected, Option B will automatically be applied. Prior to the Income
Date, You may change the Annuity Option selected by Written Request. Any
change must be requested at least 30 days prior to the Income Date.
Frequency and Amount of Income Payments
Income Payments are paid in monthly installments unless quarterly, semi-
annual or annual payments are chosen. The Adjusted Contract Value is
applied to the Annuity Table for the Annuity Option selected. If the
Adjusted Contract Value to be applied under an Annuity Option is less than
$5,000, We reserve the right to make a lump sum payment in lieu of Income
Payments. If the Income Payment would be or becomes less than $100, We
will reduce the frequency of payments to a longer interval which will
result in each payment being at least $100.
Annuity Options
The following Annuity Options or any other Annuity Option acceptable to Us
may be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Income Payments for a
chosen number of years, not fewer than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to continue for
the remainder of the period, he/she may elect to have the present value of
the remaining payments commuted and paid in a lump sum. During the payment
period of a Variable Annuity, the payee may elect by Written Request to
receive the following amount: (a) the present value of the remaining
payments commuted; less (b) any surrender charge that may be due by
treating the value defined in (a) as a surrender. Instead of receiving a
lump sum, the payee may elect another Annuity Option. The amount applied
to that Option would not be reduced by the charge defined in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Income Payments
during the lifetime of the payee and in any event for 10 years certain. If
the payee dies during the guaranteed payment period and the Beneficiary
does not desire payments to continue for the remainder of the guaranteed
period, he/she may elect to have the present value of the guaranteed
payments remaining commuted and paid in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Income Payments payable during the
joint lifetime of the payee and a designated second natural person and then
during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee
may not withdraw or otherwise end an Annuity Option after it begins.
Payments will end upon the payee's death unless the Annuity Option provides
for payments continuing to a successor payee. No successor payee may
extend the period of time over which the remaining payments are to be made.
Annuity
If You select a Fixed Annuity, the Adjusted Contract Value is allocated to
the General Account and the Annuity is paid as a Fixed Annuity. If You
select a Variable Annuity, the Adjusted Contract Value will be allocated to
the Sub-accounts of the Separate Account in accordance with the selection
You make, and the Annuity will be paid as a Variable Annuity. You may also
select a combination of a Fixed and Variable Annuity and the Adjusted
Contract Value will be allocated accordingly. If You do not select between
a Fixed Annuity and a Variable Annuity, any Adjusted Contract Value in the
Variable Account will be applied to a Variable Annuity and any Adjusted
Contract Value in the Fixed Account will be applied to a Fixed Annuity.
The Adjusted Contract Value will be applied to the applicable Annuity Table
contained in the Contract based upon the Annuity Option You select. If, as
of the Income Date, the current Annuity Option rates provide an initial
Income Payment greater than the initial Income Payment guaranteed under the
applicable Annuity Table in the Contract, the greater payment will be made.
Fixed Annuity
The minimum dollar amount of each Fixed Annuity Income Payment for each
$1,000 of Adjusted Contract Value is shown in the Annuity Tables. After
the initial Fixed Annuity Income Payment, the payments will not change
regardless of investment, mortality or expense experience.
Variable Annuity
Variable Annuity payments reflect the investment performance of the
Variable Account in accordance with the allocation of the Adjusted Contract
Value to the Sub-accounts during the Annuity Period. Variable Annuity
Income Payments are not guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity Income Payment for each
$1,000 of Adjusted Contract Value is shown in the Annuity Tables. The
dollar amount of Variable Annuity Income Payments for each applicable Sub-
account after the first Variable Annuity Income Payment is determined as
follows:
(1) the dollar amount of the first Variable Annuity Income Payment
is divided by the value of an Annuity Unit for each applicable Sub-account
as of the Income Date. This sets the number of Annuity Units for each
monthly payment for the applicable Sub-account. The number of Annuity
Units for each applicable Sub-account remains fixed during the Annuity
Period;
(2) the fixed number of Annuity Units per payment in each Sub-
account is multiplied by the Annuity Unit Value for that Sub-account for
the Valuation Period for which the payment is due. This result is the
dollar amount of the payment for each applicable Sub-account.
The total dollar amount of each Variable Annuity Income Payment is the sum
of all Sub-account Variable Annuity payments reduced by the applicable
portion of the Contract Maintenance Charge.
Annuity Unit
The value of any Annuity Unit for each Sub-Account of the Separate Account
was initially set at $10.
The Sub-account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
(1) the net investment factor calculated as set forth on Pages 11-12
(but without the Distribution Charge, if any) for the current Valuation
Period is multiplied by the value of the Annuity Unit for the Sub-account
for the immediately preceding Valuation Period.
(2) the result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Valuation Period equivalent of the
Assumed Investment Rate for the number of days in the current Valuation
Period. The Assumed Investment Rate is equal to 6% per year.
The value of an Annuity Unit may increase or decrease from Valuation Period
to Valuation Period.
Using the Tables
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first Income
Payment will be based on an age a specified number of years younger than
the person's then-attained age (i.e., age last birthday). This age setback
is as follows:
Date of First Payment Age Setback
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next
section. Upon request, We will tell You any such amount.
Basis of Calculation
Tables 1 and 4 are based on interest at 6% and 3%, respectively. Tables 2,
3, 5, and 6 are based on the 1983 Individual Annuity Valuation Tables,
weighted 40% male and 60% female, with interest at 6% (Tables 2 and 3) and
3% (Tables 5 and 6), projected dynamically with Projection Scale G.
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $19.17 12 $9.63 19 $7.24 25 $6.32
6 16.42 13 9.12 20 7.04 26 6.21
7 14.46 14 8.69 21 6.86 27 6.11
8 13.00 15 8.31 22 6.70 28 6.02
9 11.87 16 7.99 23 6.56 29 5.94
10 10.97 17 7.71 24 6.43 30 5.87
11 10.24 18 7.46
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $5.09 43 $5.40 56 $6.06 69 $7.47 82 $ 9.72
31 5.11 44 5.44 57 6.13 70 7.63 83 9.87
32 5.13 45 5.47 58 6.21 71 7.79 84 10.02
33 5.14 46 5.51 59 6.30 72 7.95 85 10.15
34 5.16 47 5.55 60 6.39 73 8.12 86 10.27
35 5.18 48 5.60 61 6.48 74 8.30 87 10.38
36 5.20 49 5.64 62 6.59 75 8.48 88 10.48
37 5.23 50 5.69 63 6.69 76 8.66 89 10.57
38 5.25 51 5.74 64 6.81 77 8.84 90 10.65
39 5.28 52 5.80 65 6.93 78 9.03 91 10.72
40 5.31 53 5.86 66 7.05 79 9.21 92 10.77
41 5.34 54 5.92 67 7.19 80 9.38 93 10.82
42 5.37 55 5.99 68 7.33 81 9.55 94 10.86
95 10.89
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $4.97$4.99$5.00$5.02$5.04$5.05$5.06$5.07$5.08$5.09$5.09$5.09 $5.10 $5.10
35 5.01 5.04 5.07 5.09 5.11 5.13 5.15 5.16 5.17 5.18 5.18 5.19 5.19
40 5.08 5.12 5.16 5.19 5.22 5.25 5.27 5.29 5.30 5.31 5.31 5.32
45 5.18 5.23 5.29 5.34 5.38 5.41 5.44 5.46 5.48 5.49 5.49
50 5.32 5.40 5.47 5.54 5.60 5.64 5.68 5.70 5.72 5.72
55 5.51 5.62 5.73 5.85 5.90 5.96 6.00 6.02 6.04
60 5.79 5.95 6.11 6.24 6.34 6.41 6.45 6.48
65 6.20 6.44 6.66 6.84 6.97 7.05 7.10
70 6.80 7.15 7.47 7.71 7.87 7.97
75 7.69 8.22 8.66 8.99 9.20
80 9.03 9.81 10.43 10.87
85 11.02 12.11 12.98
90 13.82 15.34
95 17.66
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $3.05 43 $3.46 56 $4.24 69 $5.79 82 $8.24
31 3.07 44 3.50 57 4.32 70 5.96 83 8.41
32 3.09 45 3.55 58 4.41 71 6.13 84 8.57
33 3.12 46 3.60 59 4.51 72 6.31 85 8.72
34 3.15 47 3.65 60 4.61 73 6.50 86 8.85
35 3.18 48 3.70 61 4.71 74 6.69 87 8.97
36 3.21 49 3.76 62 4.82 75 6.88 88 9.08
37 3.24 50 3.82 63 4.94 76 7.08 89 9.18
38 3.27 51 3.88 64 5.07 77 7.28 90 9.27
39 3.31 52 3.94 65 5.20 78 7.48 91 9.34
40 3.34 53 4.01 66 5.34 79 7.68 92 9.40
41 3.38 54 4.08 67 5.48 80 7.87 93 9.46
42 3.42 55 4.16 68 5.63 81 8.06 94 9.50
95 9.53
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $2.88$2.92$2.95$2.98$3.00$3.01$3.02$3.03$3.04$3.04$3.04$3.05 $3.05 $3.05
35 2.97 3.02 3.06 3.09 3.12 3.14 3.15 3.16 3.17 3.17 3.18 3.18 3.18
40 3.09 3.15 3.20 3.24 3.27 3.30 3.32 3.33 3.34 3.34 3.34 3.35
45 3.24 3.31 3.38 3.44 3.48 3.51 3.53 3.54 3.55 3.56 3.56
50 3.43 3.53 3.62 3.69 3.74 3.78 3.80 3.82 3.83 3.83
55 3.68 3.81 3.93 4.02 4.09 4.13 4.16 4.18 4.19
60 4.01 4.19 4.35 4.47 4.56 4.61 4.65 4.66
65 4.47 4.73 4.94 5.11 5.21 5.28 5.32
70 5.11 5.48 5.78 6.00 6.13 6.21
75 6.04 6.57 6.99 7.28 7.46
80 7.40 8.16 8.75 9.15
85 9.38 10.46 11.29
90 12.18 13.68
95 16.02
Endorsements
To be inserted only by Us
Keyport
Life Insurance Company
Providence, Rhode Island
Variable Annuity Contract
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating -- No Dividends
