As filed with the Securities and Exchange Commission on February 6, 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. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 [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.
Katten Muchin & Zavis
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: Units of Interest in the Separate
Account under the Contracts
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. 7 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 generic form of the Group and Individual
Flexible Premium Deferred Annuity Contracts. 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 6 to the Registration Statement.
PART A
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The information contained within double rows of
asterisks is provided at the request of the staff of
the Securities and Exchange Commission. It is not and
will not be part of any documents delivered to
purchasers or existing owners, and is included solely
for purposes of clarifying the content of this
registration statement. In addition, throughout the
prospectus and statement of additional information
("SAI") that follow there are similar inserts that
specifically summarize the parameters of change for the
particular design feature.
This registration statement includes a prospectus and
SAI that describes a generic form of the Group and
Individual Flexible Premium Deferred Annuity Contracts
(the "Contracts") that are the subject of the
registration statement. The prospectus and SAI contain
numerous bracketed portions to indicate those portions
which may be included or eliminated in any particular
form of the Contracts, including but not limited to
those, as follows:
death benefits;
funding media;
withdrawal rights;
transfer privileges;
annuity options;
other features
such as dollar cost averaging,
asset allocation,
systematic withdrawals, and
Account rebalancing.
In all cases variations in other bracketed features, such as
issue and annuity ages and interest rates, will be in
conformity with state insurance law. Bracketed features
representing maximum limits for which a range is not
provided will not exceed, but may be less than, the amount
shown. Bracketed features representing minimum limits for
which a range is not provided will not be less than, but may
exceed, the amount shown.
The prospectus and SAI also include bracketed references to
the fees and charges to be imposed under the particular form
of the Contract. Of course, in each case, Keyport only will
impose such charges in a manner and subject to the
conditions of applicable rules. In connection with the
various charges under the Contracts, Keyport and its
separate accounts will rely upon and be limited by such
rules as 0-1(e), 6c-8, 22d-2, 26a-1 and 26a-2 under the
Investment Company Act of 1940, as amended, and in
compliance with their respective requirements. Any
descriptions of the potential range of fees and charges
should be read in the context of such rules requirements.
Each form of the Contracts will be offered pursuant to a
separate prospectus and a separate or combined SAI, as
appropriate. The content of all prospectuses and SAIs will
be identical with respect to contractual and securities law
related features to those contained in this registration
statement, except for provisions that are bracketed and
which will vary within the parameters established herein,
and except for non-material changes consistent with the
requirements of Rule 485(b) under the 1933 Act ("Rule
485(b)").
Except as provided for by Rule 485(b), each prospectus and
SAI and related exhibits will be filed pursuant to Rule
485(a) with a request for expedited or selective review
consistent with precedent and the fact that all relevant
disclosure is included in this Post-Effective Amendment No.
7.
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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] a 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 xx)]. 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").
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The terms XXXXX Trust, YYYYY Fund, and XX-1 Sub-Account
are included to indicate that disclosure relevant to an
actual Eligible Fund will be provided. The actual names
of the Eligible Funds and corresponding Sub-Accounts
will be included in the subsequent forms of the
prospectus and SAI.
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The Variable Account invests in shares of the following Eligible
Funds of [The XXXXX Trust ("XXXXX Trust")] at their net asset
value: [X-1, X-2 and X-3]. The Variable Account also invests in
shares of the following Eligible Funds of [The YYYYY Fund ("YYYYY
Fund")] at their net asset value: [Y-1, Y-2, Y-3].
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
xx.
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 _______________, [1998]
TABLE OF CONTENTS
Page
Glossary of Special Terms
Summary of Expenses
Synopsis
Performance Information
Keyport and the Variable Account
[Year 2000 Matters]
Purchase Payments and Applications
Investments of the Variable Account
Allocations of Purchase Payments
Eligible Funds
Transfer of Variable Account Value
Substitution of Eligible Funds and
Other Variable Account Changes
Deductions
[Deductions for Certificate Maintenance Charge]
Deductions for Mortality and Expense Risk Charge
[Deductions for Daily Distribution Charge]
[Deductions for Daily Administrative Charge]
[Deductions for Contingent Deferred Sales Charge]
[Deductions for Transfers of Variable Account Value]
Deductions for Premium Taxes
Deductions for Income Taxes
Total Variable Account Expenses
Other Services
The Certificates
Variable Account Value
Valuation Periods
Net Investment Factor
Modification of the Certificate
Right to Revoke
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Certificate Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Provisions
Annuity Benefits
Income Date and Annuity Option
Change in Income Date and Annuity Option
Annuity Options
Variable Annuity Payment Values
Proof of Age, Sex, and Survival of Annuitant
Suspension of Payments
Tax Status
Introduction
[Recent Developments]
Taxation of Annuities in General
Qualified Plans
Tax-Sheltered Annuities
Individual Retirement Annuities
Corporate Pension and Profit-Sharing Plans
Deferred Compensation Plans with Respect to
Service for State and Local Governments
Variable Account Voting Privileges
Sales of the Certificates
Legal Proceedings
Inquiries by Certificate Owners
Table of Contents_Statement of Additional Information
[Appendix A_The Fixed Account (also known as the Modified
Guaranteed Annuity Account)]
Appendix [B]_Telephone Instructions
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 [and] [Certificate Maintenance Charge] [and]
[applicable Contingent Deferred Sales Charges].
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 [and waiver of any Contingent Deferred Sales Charges] [and
a waiver of any Market Value Adjustment] [or whose medically
necessary stay in a hospital or nursing facility may allow the
Certificate Owner to be eligible for either a total or partial
waiver of the Contingent Deferred Sales Charge].]
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
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Summary of Expenses will be completed in each Rule 485(a)
filing.
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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): [7%1
Years from Date of Payment Sales Charge
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or later 0%]
Maximum Total Certificate Owner Transaction Expenses2
(as a percentage of Purchase Payments): [7%]
Annual Certificate Maintenance Charge3 $[36]
[The Certificate Maintenance Charge will be waived before the
Income Date if:
(i) it is the first Certificate Anniversary;
(ii) the Certificate Value is greater than or equal to
[$40,000] on the Certificate Anniversary date this charge is
imposed, or
(iii) Purchase Payments of at least [$2,500] have been made
in the prior Certificate Year and there has been no partial
withdrawal in the prior Certificate Year.]
[The Certificate Maintenance Charge will be waived on or after
the Income Date for the current year if:
(i) variable annuity Option A (Income for a Fixed Number of
Years) is applicable; and
(ii) at the time of the first payment of the year, the
present value of all remaining payments (See "Option A" on Page
xx) is greater than or equal to [$40,000].]
Variable Account Annual Expenses
(as a percentage of average net assets)
Mortality and Expense Risk Charge: [1.25%]
[Distribution Charge:] [ .15%]
[Administrative Charge:] [ .15%]
Total Variable Account Annual Expenses: [1.55%]
[XXXXX Trust and YYYYY Fund] Annual Expenses4
(as a percentage of average net assets)
Total Fund
Operating Expenses
Management Other [After Any Expense
Fund Fees Expenses Reimbursements]
[5]
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.6
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
Example #2 _ Assuming annuitization of the Certificate at the end
of the periods shown.6
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
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.
[1Contingent Deferred Sales Charges are deducted only if the
Certificate is totally or partially surrendered. A surrender
will not incur the Charge percentage shown as follows:
1. In any Certificate Year, Certificate Owners may
withdraw an aggregate amount, not to exceed, at the time of
withdrawal, the Certificate's earnings, which equal: (a) the
Certificate Value, less (b) the portion of the Purchase
Payments not previously withdrawn.
2. In any Certificate Year after the first, Certificate
Owners may withdraw, in addition to the amount available in
1., the amount by which 10% of the Certificate Value as of
the preceding Certificate Anniversary exceeds the amount
available in 1.]
2 [Keyport 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.
3[This charge will be waived on the first Certificate Anniversary
and in certain other instances (see "Deductions for Certificate
Maintenance Charge").]
4[The XXXXX Trust] expenses are for [ ]. [The YYYYY Fund]
expenses [are estimated and] reflect the [YYYYY Fund's] Manager's
agreement to reimburse expenses above certain limits (see
footnote 5).
[5[YYYYY Fund's] manager has agreed until [a/bb/cc] 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. The total percentages shown in
the table for [YY-1, YY-2 and YY-3] are after expense
reimbursement. Each percentage shown in the parentheses is what
the total for 199[ ] would be in the absence of expense
reimbursement: for [YY-1 - xxx%; for YY-2 - xxx%; and for YYY-3
- - xxx%.]]
6The 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, ["How the Funds are Managed"] in the prospectus for
[XXXXX Trust], and ["Trust Management Organizations"] and
["Expenses of the Funds"] in the prospectus for [YYYYY Fund].
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 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 xx 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
$[5,000] [and [$2,000] for individual retirement annuities]. 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 x.)
There are no deductions made from Purchase Payments for sales
charges at the time of purchase. [A Contingent Deferred Sales
Charge may be deducted in the event of a total or partial
surrender (see "Partial Withdrawals and Surrender" on Page xx).
The Contingent Deferred Sales Charge is based on a graded table
of charges. The charge will not exceed [7]% of that portion of
the amount surrendered that represents Purchase Payments made
during the [seven] years immediately preceding the request for
surrender. (See "Deductions for Contingent Deferred Sales
Charge" on Page xx.)]
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 xx.) [Keyport also deducts a daily distribution
charge which is equal on an annual basis to [.15%] of the same
values. (See "Deductions for Daily Distribution Charge" on Page
xx.)] [Keyport deducts a Daily Administrative Charge which is
equal on an annual basis to [.15]% of the same values. (See
"Deductions for Daily Administrative Charge" on Page xx.)]
[Keyport deducts an annual Certificate Maintenance Charge
(currently $[36.00]) from the Variable Account Value for
administrative expenses. Prior to the Income Date, Keyport
reserves the right to change this charge for future years.
[Keyport will in certain instances waive this charge.] (See
"Deductions for Certificate Maintenance Charge" on Page xx.)]
Keyport reserves the right to deduct a charge of $[50] for each
transfer in excess of [12] per Certificate Year [but currently
does not do so]. [(See "Recent Developments" on Page xx.)]
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 xx.)
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 xx.)
The Certificate allows the Certificate Owner to revoke the
Certificate generally within 10 days of delivery (see "Right to
Revoke" on Page xx). For most states, Keyport will refund the
Certificate Value as of the date the returned Certificate is
received by Keyport, plus any distribution charges previously
deducted. The Certificate Owner thus will bear the investment
risk during the revocation period. In other states, Keyport will
return Purchase Payments. [In such other states Purchase Payments
will be allocated to the [XX-1] Sub-Account during the "freelook"
period plus an additional 10 days.]
The full financial statements for [the Variable Account and]
Keyport are in the Statement of Additional Information.
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 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 [(including any Contingent Deferred Sales Charge that
would apply if a Certificate Owner surrendered the Certificate at
the end of each period indicated)]. 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, except deductions
will not include the Contingent Deferred Sales Charge. This
presentation assumes that the investment in the Certificate
continues beyond the period when the Contingent Deferred Sales
Charge applies, 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 Contingent Deferred Sales Charge,
the Certificate Maintenance Charge and] premium tax charges. The
percentages would be lower if these charges were included.
The [XX-1] 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 [Contingent Deferred Sales Charges and] premium
tax charges. The yield would be lower if these charges were
included.
The effective yield of the [XX-1] 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 and its home office is at 695 George
Washington Highway, Lincoln, Rhode Island 02865.
Keyport writes individual life insurance and 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 and financial
services institution.
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
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The minimums and maximums described in the following
paragraph may vary within any limits permitted under
state insurance law and Keyport's administrative
guidelines in existence at the time of issuance of the
Certificate.
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The initial Purchase Payment is due on the Certificate Date. The
minimum initial Purchase Payment is $[5,000] [and [$2,000] for
individual retirement annuities]. 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
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The percentage of required allocations to each Sub-Account
may vary from 1% to 10%.
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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" on
Page xx).] The percentage for each Sub-Account, if not zero, must
be at least [10]% 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:
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TEXT HERE WILL DESCRIBE ELIGIBLE FUNDS AND
CORRESPONDING SUB-ACCOUNTS
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Eligible Funds of [XXXXX Trust] Sub-Accounts
[XX-1] [XX-1 Sub-Account]
[XX-2] [XX-2 Sub-Account]
[XX-3] [XX-3 Sub-Account]
Eligible Funds of [YYYYY Fund] Sub-Accounts
[YY-1] [YY-1 Sub-Account]
[YY-2] [YY-2 Sub-Account]
[YY-3] [YY-3 Sub-Account]
Eligible Funds
The Eligible Funds which are the permissible investments of the
Variable Account are the separate funds of [XXXXX Trust, the
separate funds of YYYYY Fund], 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.
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TEXT HERE WILL DESCRIBE INDIVIDUAL INVESTMENT ADVISERS
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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 [XXXXX Trust]
and Variable Account Sub-Accounts Investment Objective
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TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
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Eligible Funds of [YYYYY Fund]
and Variable Account Sub-Accounts Investment Objective
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TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
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There is no assurance that the Eligible Funds will achieve their
stated objectives.
[XXXXX and YYYYY] 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 Trust's and
Fund's prospectus under the caption ["The Trust"] and [SALES AND
REDEMPTIONS,] respectively.
Transfer of Variable Account Value
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The number of transfers will vary between zero (0) and
the maximum number that Keyport determines is
consistent with interpretations of applicable tax law
restrictions on contract owner control which may permit
an unlimited number of transfers. The transfer charge,
if any, imposed on transfers in excess of the
stipulated number will not exceed $50. The maximum
number of free transfers, assuming the imposition of a
transfer charge, will be 12. The minimum amount that
may be transferred will range between $0 and $500, and
the minimum required remaining Sub-Account Value ranges
between $0 and $100.
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Certificate Owners may transfer Variable Account Value from one
Sub-Account to another Sub-Account [and/or to the Fixed Account].
[See "Recent Developments".] [Currently [x] transfers are
permitted.] [The minimum amount of Variable Account Value that
may be transferred is [$500] and the remaining Variable Account
Value in the Sub-Account is [$100]].
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 [x] for
each transfer in excess of [xx] 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 $[50].
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 Certificate Maintenance Charge
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The Certificate Maintenance Charge will not exceed a
maximum dollar amount of $100. Under certain forms of
the Certificate Keyport may not impose any Certificate
Maintenance Charge. The amount of purchase payments
necessary to support a waiver of the charge ranges
between $1000 and $5000.
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Keyport has responsibility for all administration of the
Certificates and the Variable Account. This administration
includes, but is not limited to, preparation of the Certificates,
maintenance of Certificate Owners' records, and all accounting,
valuation, regulatory and reporting requirements. Keyport makes
a Certificate Maintenance Charge for such services during the
accumulation and annuity payment periods. At the present time
the Certificate Maintenance Charge is $[36] per Certificate Year.
PRIOR TO THE INCOME DATE THE CERTIFICATE MAINTENANCE CHARGE IS
NOT GUARANTEED AND MAY BE CHANGED BY KEYPORT.
[The Certificate Maintenance Charge will be waived before the
Income Date if: [[(i)] it is the first Certificate Anniversary,]
[[(ii)] the Certificate Value is greater than or equal to
[$40,000] on the Certificate Anniversary date this charge is
imposed,] or [[(iii)] Purchase Payments of at least [$2,500] have
been made in the prior Certificate Year and there has been no
partial withdrawal in the prior Certificate Year].]
[The Certificate Maintenance Charge will be waived on and after
the Income Date for the current year if: (i) variable annuity
Option A is applicable; and (ii) at the time of the first payment
of the year, the present value of all the remaining payments (see
"Option A" on Page x) is greater than or equal to $40,000.]
Prior to the Income Date, the full amount of the charge will be
deducted from the Variable Account Value on each Certificate
Anniversary and on the date of any total surrender not falling on
the Certificate Anniversary. On the Income Date, a pro-rata
portion of the charge due on the next Certificate Anniversary
will be deducted from the Variable Account Value. This pro-rata
charge covers the period from the prior Certificate Anniversary
to the Income Date. For example, if the Income Date occurs 73
days after that prior anniversary, then one-fifth (i.e., 73
days/365 days) of the annual charge would be deducted on the
Income Date. The charge will be deducted from each Sub-Account
in the proportion that the value of each bears to the Variable
Account Value.
Once annuity payments begin on the Income Date or once they begin
after surrender benefits are applied under a settlement option,
the yearly cost of the Certificate Maintenance Charge for a
payee's annuity will be the same as the yearly amount in effect
immediately before the annuity payments begin. Keyport may not
later change the amount of the Certificate Maintenance Charge
deducted from the annuity payments. The charge will be deducted
on a pro-rata basis from each annuity payment. For example, if
annuity payments are monthly, then one-twelfth of the annual
charge will be deducted from each payment.
*****************************************************************
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The Mortality and Expense Risk Charge as stated in the
body of the prospectus will vary between 35 and 125
basis points. The variations will depend upon the
precise combination of features incorporated into the
particular form of the Certificate.
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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.] [Keyport assumes an expense
risk since the Certificate Maintenance Charge after the Income
Date will stay the same and not be affected by variations in
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
[.35 - 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 Distribution Charge
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A daily Distribution Charge may not apply to all forms
of the Certificate. It will be imposed at a maximum
rate of 15 basis points of net assets when such
imposition combined with any contingent deferred sales
charge does not result in the imposition of sales
charges that exceed 9% of Purchase Payments.
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Keyport also deducts from each Sub-Account each Valuation Period
a daily Distribution 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 certain sales distribution
expenses relating to the Certificate.
This charge will not be deducted from Sub-Account values
attributable to Certificates that have reached the maximum
cumulative distribution charge limit defined below and to
Certificates issued to employees of Keyport and other persons
specified in "Sales of the Certificates". The charge is also not
deducted from Sub-Account values attributable to Annuity Units.
Keyport may decide not to deduct the charge from Sub-Account
values attributable to a Certificate issued in an internal
exchange or transfer of an annuity contract of Keyport's general
account.]
[Deductions for Daily Administrative Charge
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A daily Administrative Charge may not apply to all forms of
the Certificate. The maximum daily Administrative Charge
will be 15 basis points. This charge may be adjusted giving
consideration to the amount of the Certificate Maintenance
Charge.
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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 Contingent Deferred Sales Charge
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The Contingent Deferred Sales Charge may not apply to
all forms of the Certificate. The Contingent Deferred
Sales Charge, including any amounts deducted through
the daily Sales Charge, will not exceed 9% of Purchase
Payments. The Contingent Deferred Sales Charge, not
including any amount deducted through the daily Sales
Charge, will in no event exceed a duration of 7 years
and 7%.
*****************************************************************
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A sales charge is not deducted from the Certificate's Purchase
Payments when initially received. However, a Contingent Deferred
Sales Charge may be deducted upon a surrender.
In order to determine whether a Contingent Deferred Sales Charge
will be due upon a partial or total surrender, Keyport maintains
a separate set of records. These records identify the date and
amount of each Purchase Payment made to the Certificate and the
Certificate Value over time.
Certificate Owners will be permitted to make partial surrenders
during the Accumulation Period without incurring a Contingent
Deferred Sales Charge, as follows:
1. In any Certificate Year, Certificate Owners may
withdraw an aggregate amount not to exceed, at the time of the
withdrawal, the Certificate's earnings, which equal: (a) the
Certificate Value, less (b) the portion of the Purchase Payments
not previously withdrawn.
2. In any Certificate Year after the first, Certificate
Owners may withdraw, in addition to the amount available in 1.,
the amount by which 10% of the Certificate Value as of the
preceding Certificate Anniversary exceeds the amount available in
1.
Contingent Deferred Sales Charges, as discussed below, will be
deducted with respect to withdrawals in excess of these amounts.
In computing the applicable charge amounts, the amount of any
surrender in any Certificate Year after the first as set forth in
2. above, will be deducted from the Purchase Payments in
chronological order from the oldest to the most recent until the
amount is fully deducted. Any amount so deducted will not be
subject to a charge.
The following additional amounts will be deducted from the
Purchase Payments in the same chronological order: the amount of
any surrender in the first Certificate Year in excess of the
amount set forth in 1. above and the amount of any surrender in
any later Certificate Year in excess of the combined amount set
forth in 1. and 2. above. The Contingent Deferred Sales Charge
for each Purchase Payment from which a deduction is made will be
equal to (a) multiplied by (b), where:
(a) is the amount so deducted; and
(b) is the applicable percentage for the number of years that
have elapsed from the date of that payment to the date of
surrender. Years are measured from the month and day of
payment to the same month and day in each subsequent
calendar year. The percentages applicable to each Purchase
Payment during the [seven] years after the date of its
payment are: [7% during year 1; 6% during year 2; 5% during
year 3; 4% during year 4; 3% during year 5; 2% during year
6; 1% during year 7;] and 0% thereafter.
The applicable Contingent Deferred Sales Charges for each
Purchase Payment are then totalled. The lesser of this total
amount and the Certificate's maximum cumulative distribution
charge will be deducted from the Certificate Value in the same
manner as the surrender amount. The maximum cumulative
distribution charge is equal to (a) less (b), where (a) is 9% of
the total Purchase Payments made to the Certificate and (b) is
the sum of all prior Contingent Deferred Sale Charge deductions
from the Certificate Value [and all prior Variable Account daily
distribution charges applicable to the Certificate from the 0.15%
distribution charge factor.] After each surrender, Keyport's
records will be adjusted to reflect any deductions made from the
applicable Purchase Payments.
Example: Two Purchase Payments were made one year apart for
$5,000 and $7,000. The Certificate Value has grown to an assumed
$13,200 when the Certificate Owner decides to withdraw $8,000.
The Certificate Value at the beginning of the Certificate Year of
surrender was $13,000. The Contingent Deferred Sales Charge
percentages at the time of surrender are an assumed 5% for the
$5,000 payment and 6% for the $7,000 payment. The portion of the
surrender representing the Certificate's earnings ($13,200 less
$12,000, or $1,200) would not be subject to charges. Since
$1,200 is less than the amount guaranteed not to have charges
(10% of $13,000, or $1,300), an additional $100 would not be
subject to charges. This $100 would be deducted from the oldest
Purchase Payment, reducing it from $5,000 to $4,900. The $1,200
increase in value plus the additional $100 leaves $6,700 ($8,000
- - 1,200 - 100) to be deducted. This $6,700 would be deducted
from the $4,900 of the first payment still left and $1,800 of the
second payment. The total Contingent Deferred Sales Charge would
be $4,900 multiplied by the applicable 5% and $1,800 times the
applicable 6%, or a total of $353. The distribution charge
records would now reflect $0 for the 1st payment and $5,200 for
the 2nd payment. The $8,000 requested plus the $353 charge would
be deducted from Certificate Values under the rules specified in
the "Partial Withdrawals and Surrender" on Page x..
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The maximum compensation payable on the sale of
Certificates is 6.50%.
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The Contingent Deferred Sales Charge, when it is applicable, will
be used to cover the expenses of selling the Certificate,
including compensation paid to selling dealers and the cost of
sales literature. Any expenses not covered by the charge will be
paid from Keyport's general account, which may include monies
deducted from the Variable Account for the Mortality and Expense
Risk Charge. A dealer selling the Certificate may receive up to
[6.25%] of Purchase Payments [with additional compensation later
based on the Certificate Value of those payments. During certain
time periods selected by Keyport and [KFSC], the percentage may
increase to [6.50]%.] In addition, under certain circumstances,
Keyport or certain of its affiliates, under a marketing support
agreement with [KFSC] may pay certain sellers for other services
not directly related to the sale of the Certificates such as
special marketing support allowances.
The Contingent Deferred Sales Charge will be waived in the event
a Covered Person is confined in a medical facility in accordance
with the provisions and conditions of an endorsement relating to
such confinements.
The Contingent Deferred Sales Charge will be eliminated under
Certificates issued to employees of Keyport and other persons
specified in "Sales of the Certificates".
[Keyport may reduce or change to 0% any Contingent Deferred Sales
Charge percentage under a Certificate issued in an internal
exchange or transfer of an annuity contract of Keyport's general
account.]
[Keyport may allow, under the Systematic Withdrawal Program and
under other permitted circumstances, all or part of the amount in
2. on Page xx to also be available in the first Certificate Year.
If so, the amount in 2. above will be calculated by substituting
the initial Purchase Payment for the Certificate Value.]
[Deductions for Transfers of Variable Account Value
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The charge for transfers will range from zero to an
amount not to exceed $50.
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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 $[50].]
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 Certificate Maintenance Charge,] the Mortality and
Expense Risk Charge, [the Daily Sales 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
prospectus.
OTHER SERVICES
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Each of the following Programs may or may not be
offered under any form of the Certificate. If only one
Program is offered, the plural nature of the first two
paragraphs will be adjusted accordingly. The minimum
amount that may be transferred under the Dollar Cost
Averaging Program ranges between $75 and $750. The
required notice period for the Rebalancing Program will
not exceed thirty days. The minimum Purchase Payment
for the Systematic Investment Program ranges between
$50 and $1000. The minimum amount that may be withdrawn
under the Systematic Withdrawal Program ranges between
$100 and $250.
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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 [XX-1] 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 [XX-1] Sub-Account [or the
One-Year Guarantee Period.] Under the program, Keyport makes
automatic transfers on a periodic basis out of the [XX-1] 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 [XX-1]
Sub-Account [or the One Year Guarantee Period] from which the
transfers are to be made, the monthly amount to be transferred
[(minimum $750)] 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 [XX-1]
Sub-Account [or the One Year Guarantee Period] or by transferring
Certificate Value to the [XX-1] 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 of 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 Payments 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 Payments
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 [thirty (30)]
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 that 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 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 [only] be made from the Sub-Accounts
[and the [One] Year Guarantee Period of the Fixed Account.]] [In
each Certificate Year, portions of Certificate Value may be
withdrawn without the imposition of any Contingent Deferred
Sales Charge ("Free Withdrawal Amount"). If withdrawals pursuant
to the Program are greater than the Free Withdrawal Amount, the
amount of the withdrawals greater than the Free Withdrawal Amount
will be subject to the applicable Contingent Deferred Sales
Charge. Any unrelated voluntary partial withdrawal a Certificate
Owner makes during a Certificate Year will be aggregated with
withdrawals pursuant to the Program to determine the
applicability of any Contingent Deferred Sales Charge under the
Certificate provisions regarding partial withdrawals.]
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 [and any applicable Contingent Deferred Sales
Charge].
[The Program may be combined with all other Programs [except the
Systematic Investment Program].]
[It may not be advisable to participate in the Systematic
Withdrawal Program and incur a Contingent Deferred Sales Charge
when making additional Purchase Payments under the Certificate.]]
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 Distribution Charge;
plus]
[(iii) the Valuation Period
equivalent of the daily Administrative
Charge; plus]
[(iv)] a charge factor, if any, for
any tax provision established by Keyport as a
result of the operations of that Sub-Account.
[If a Certificate ever reaches the maximum cumulative sales
charge limit defined in "Deductions for Contingent Deferred Sales
Charge", Unit values without (c)(ii) above will be used
thereafter.] For Certificates issued to employees of Keyport and
other persons specified in "Sales of the Certificates", Unit
values with [.35]% in (c)(i) above [and without (c)(ii) above
will be used. Unit values without (c)(ii) above may be used for
certain Certificates issued in an internal exchange or transfer
(see "Deductions for Daily Distribution Charges".]
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. [If the Certificate is delivered in a state that
requires the return of Certificate Value, Certificate Value will
immediately be allocated to the Sub-Accounts selected in the
application. If the Certificate is delivered in a state that
requires the return of Purchase Payments, Certificate Value will
be allocated to the [XX-1] Sub-Account (a Money Market Sub-
Account) for a period of 20 or 30 days if the particular state
requires a "free-look" period of 10 or 20 days, respectively.
Thereafter the Certificate Value will be allocated to the Sub-
Accounts selected in the application.]
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 Annuita
nt
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One or more of the three Death Benefit options
described below may be included under any form of the
Certificate.
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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:
[[1]. The DBA at issue is the initial Purchase Payment.
Thereafter, it is the prior death benefit plus any additional
Purchase Payments, less any partial withdrawals, including any
applicable surrender charge.]
[[2]. 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, including any applicable surrender charge.
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.]
[[3]. The DBA at issue is the initial Purchase Payment.
Thereafter, the DBA is calculated for each Valuation Period by
applying a death benefit interest rate to the previously
calculated DBA, adding any Purchase Payments made during the
current Valuation Period and deducting any partial withdrawals,
including any applicable surrender charge, taken during the
current Valuation Period. The death benefit interest rate is
applied to each Purchase Payment until it equals the Maximum
Guaranteed Death Benefit. Initially, the Maximum Guaranteed
Death Benefit will be a multiple of the initial and additional
Purchase Payments made, each computed separately, determined as
of the date of death based on such factors as the then stipulated
interest rate or the net rate of return of certain Sub-Accounts
[or the Fixed Account], as described below. Thereafter, the
Maximum Guaranteed Death Benefit as of the effective date of a
partial withdrawal is reduced first by the amount of the
withdrawal representing earnings and second in proportion to the
reduction in Certificate Value for any partial withdrawal
representing Purchase Payments.
The death benefit interest rate compounded annually will be a
stipulated interest rate, except that with regard to amounts in
the Sub-Accounts investing in money market, short term bond or
income Funds [or the General Account (the "Fixed Account")] the
interest rate applied will be the net rate of return for such
Funds, respectively, if it is less than the stipulated death
benefit interest rate.]
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The period of time during which the Surrender Charge may be
waived following death ranges between 60 and 180 days.
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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 without any applicable
Contingent Deferred Sales Charge being deducted. For a surrender
after the applicable 90 or 60 day period and for a surrender at
any time after the death of a non-Covered Person, any applicable
Contingent Deferred Sales Charge would be deducted.] 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 without any applicable Contingent Deferred Sales Charge
being deducted. For a surrender after 90 days, any applicable
Contingent Deferred Sales Charge would be deducted.
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 without any applicable Contingent Deferred Sales
Charge being deducted. For a surrender after the applicable 90
or 60 day period, any applicable Contingent Deferred Sales Charge
would be deducted.]
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 (without the
deduction of any applicable Contingent Deferred Sales Charge) 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
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The minimum amount to be withdrawn will range between
$100 and $500 and required Certificate Value following
a withdrawal will range between $500 to $2500.
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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]. [The amount withdrawn will include any applicable
Contingent Deferred Sales Charge and therefore the amount
actually withdrawn may be greater than the amount of the
surrender check requested.] 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 [and less any applicable
Certificate Maintenance Charge]) 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
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Keyport does not currently anticipate offering any
additional variable annuity options, but may offer
additional fixed annuity options. Any additional
variable annuity options would be limited to those that
could be added by a filing pursuant to Rule 497 or Rule
485(b).
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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 any applicable
Certificate Maintenance Charge 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 premium taxes not previously
deducted [and less any applicable Certificate Maintenance Charge]
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: (a) 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, unless [3]% per year is chosen by Written Request at
the time the option is selected); [less (b) any Contingent
Deferred Sales Charge due by treating the value defined in (a) as
a total surrender. (See "Deductions for Contingent Deferred
Sales Charge".] 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, 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 x 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, 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.
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The frequency with which Certificate Owners may transfer the Sub-
Accounts from which variable annuity payments are made with vary
between 0 and an unlimited number of times during periods varying
between 1 and 12 months.
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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, 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: (a) the sum of all Sub-
Account payments; [less (b) the pro-rata amount of the annual
Certificate Maintenance Charge.] Currently, a payee may instruct
Keyport to change the Sub-Account(s) used to determine the amount
of the variable annuity payments [unlimited] [1] time[s] every
[6] 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
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Another registered broker-dealer that is an affiliate
of Keyport may serve as the principal underwriter of
the Certificates.
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[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, [a trustee or officer of an Eligible
Fund,] [an employee of the investment adviser or sub-investment
adviser of an Eligible Fund,] [or an employee or associated
person of an entity which has entered into a sales agreement with
the Principal Underwriter for the distribution of Certificates,]
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
Certificate Maintenance Charge, the asset-based Sales charge] [or
the Contingent Deferred Sales Charge] and (2)] they have a
Mortality and Expense Risk Charge of 0[.35]% per year.
[Certificates may be sold with lower or no dealer compensation as
part of an exchange program for other variable annuity contracts
previously issued by Keyport ("Old VA"). Such a Certificate will
be issued with an exchange endorsement. One effect of the
endorsement is that no Contingent Deferred Sales Charge will be
assessed under the Old VA at the time of the exchange and that
any Contingent Deferred Sales Charge assessed under the
Certificate in relation to the initial Purchase Payment (i.e.,
the amount exchanged) will be calculated based on the actual time
of each purchase payment under the Old VA. The endorsement also
provides that the refund amount described in "Right to Revoke"
will not be made if the Certificate is returned. Instead, Keyport
will return the Old VA to the owner and treat it as if no
exchange had occurred.] [See "Recent Developments".]
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
Variable Annuity Benefits
Variable Annuity Payment Values
Re-Allocating Sub-Account Payments
Custodian
Principal Underwriter
Experts
Investment Performance
Average Annual Total Return for a Certificate
that is Surrendered and for a Certificate that Continues
Change in Accumulation Unit Value
Yields for [XX-1] Sub-Accounts
Financial Statements
Keyport Life Insurance Company
Variable Account [A]
*****************************************************************
*****************************************************************
The Certificate may or may not provide for a Fixed Account
Option.
*****************************************************************
*****************************************************************
[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, are 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 [10%]. 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 limits on the number of transfers will range between
unlimited transfers and 12 per year. The limitations on
transfers from the Fixed Account will range between 10% and 50%.
*****************************************************************
*****************************************************************
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 [xx] 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.]
PROSPECTUS
[DATE]
Distributed by:
[Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712]
Issued by:
Keyport Life Insurance Company
125 High Street, Boston, MA 02110-2712
Keyport Life Insurance Company's ultimate parent is
Liberty Mutual Insurance Company
Service Hotline 800-367-3653 Keyline 800-367-3654
Keyport Logo is a registered service mark of Keyport Life
Insurance Company.
Yes. I would like to receive the Keyport [NAME OF ANNUITY]
Statement of Additional Information.
Yes. I would like to receive the [NAME OF FUND] Statement of
Additional Information.
Yes. I would like to receive the [NAME OF FUND] Statement of
Additional Information.
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.
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 (SAI) is not a prospectus but it
relates to, and should be read in conjunction with, the variable annuity
prospectus dated , [1998]. The 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
Variable Annuity Benefits
Variable Annuity Payment Values
Re-Allocating Sub-Account Payments
Custodian
Principal Underwriter
Experts
Investment Performance
Average Annual Total Return for a Certificate that is
Surrendered and for a Certificate that Continues
Change in Accumulation Unit Value
Yields for [XX-1] Sub-Accounts
Financial Statements
Keyport Life Insurance Company
Variable Account [A]............................................
The date of this statement of additional information is , [1998].
KEYPORT LIFE INSURANCE COMPANY
Liberty Mutual Insurance Company ("Liberty Mutual"), a multi-line
insurance and financial services institution, is the ultimate corporate
parent of Keyport. Liberty Mutual ultimately controls Keyport through the
following intervening holding company subsidiaries: Liberty Mutual Equity
Corporation, Liberty Financial Companies, Inc. ("LFC") and SteinRoe
Services, Inc. Liberty Mutual, as of December 31, 1996, 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 ___ 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: (a) the sum of all Sub-Account payments;
less [(b) the pro-rata amount of the annual Certificate Maintenance
Charge.]
The first payment for each Sub-Account will be determined by deducting
[any applicable Certificate Maintenance Charge and] 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.
***************************************************************************
***************************************************************************
**
The formula for the net investment factor will vary depending upon
whether certain asset charges are imposed, as explained in the notes
in the Prospectus. With regard to the AIR, the AIR will vary within
the limits permitted under state insurance law, but no less than 3%.
***************************************************************************
***************************************************************************
**
When Keyport first purchased the Eligible Fund shares of [XXXXX Trust
and YYYYY Fund] 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 [without any deduction for the sales charge defined in (c)(ii)
of the net investment factor formula]; 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. [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 times that Sub-Account(s) used to determine the amount
of variable annuity payments will range between unlimited times to once
every twelve months. The minimum percentage per Sub-Account will range
between 1% and 10%.
***************************************************************************
***************************************************************************
**
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 once 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 [10]% 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, [1996] and for the year then ended, and the
financial statements of Keyport Life Insurance Company-Variable Account A
as of December 31, [1996] and for the 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.
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 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.
***************************************************************************
***************************************************************************
**
Information regarding the Performance of the Certificates will be
included in the subsequent filings.
***************************************************************************
***************************************************************************
**
[Average annual Total Return for A Certificate that is surrendered and for
a Certificate that Continues]
[Change in Accumulation Unit Value]
Yields for [XX-1 Sub-Account]
Yield and effective yield percentages for the [XX-1 Sub-Account] are
calculated using the method prescribed by the Securities and Exchange
Commission. Both yields reflect the deduction of the annual [1.25]% asset-
based Certificate charges. [Both yields also reflect, on an allocated
basis, the Certificate's annual $[36] Certificate Maintenance Charge.]
Both yields do not reflect [Contingent Deferred Sales Charges and] 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
Effective Yield Equals: (A - B)365/7 - 1
C
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = [hypothetical Certificate Maintenance Charge for the 7-day
period. The assumed annual XX-1 Sub-Account charge is equal to
the $[36] Certificate charge multiplied by a fraction equal to
the average number of Certificates with [XX-1] Sub-Account value
during the 7-day period divided by the average total number of
Certificates during the 7-day period. This annual amount is
converted to a 7-day charge by multiplying it by 7/365. It is
then equated to an Accumulation Unit size basis by multiplying it
by a fraction equal to the average value of one [XX-1] Sub-
Account Accumulation Unit during the 7-day period divided by the
average Certificate Value in [XX-1] Sub-Account during the 7-day
period.]
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 [XX-1] Sub-Account will continue over an entire year.
The effective yield formula also annualizes seven days of net income but it
assumes that the net income is reinvested over the year. This compounding
effect causes effective yield to be higher than the yield.
FINANCIAL STATEMENT
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)
* (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
++ (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 (To be
filed by Amendment)
(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 the
Registration Statement (File No. 333-1043) filed on or about November
14, 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
Paul H. LeFevre, Jr. Executive Vice President
Bernard R. Beckerlegge Senior Vice President and General
Counsel
Stephen B. Bonner Senior Vice President - Income
Markets
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"), 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 Exhibit 15.
Item 27. Number of Contract Owners.
At January 26, 1998, there were 1423 Qualified Contract Owners and
2,112 Non-Qualified Contract Owners.
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
Francis E. Reinhart Director and Vice President
James J. Klopper Director and Clerk
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 6th day of February, 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 February 6, 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 February 6, 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
(15) Chart of Affiliations
EXHIBIT
15
..................................
:Liberty Mutual Insurance Company:
:................................:
:
...............:.................
: Liberty Mutual Equity Company :
:...............................:
:
..........:...........
: LFC Holdings, Inc. :
:....................:
:
.................:.................
:Liberty Financial Companies, Inc.:
:.................................:
:
....................................:...............................
: : : : : :
....:....... ....:....... .....:..... .....:....... ....:..... ....:....
: The : :Liberty : :Liberty : :Independent: :SteinRoe::Liberty:
: Colonial : :Newport : :Financial: :Holdings : :Services::Real :
: Group, : :Holdings : :Services : :Inc. : :Inc. ::Estate :
: Inc. : : Ltd. : :Inc. : :...........: :........::Gp.Inc.:
:..........: :..........: :.........: : ::.......:
: : : : :
...........:.............. : ...........:.......... :...........:..........
:Colonial: : :Colonial : : :Liberty : : :Copley : : :Stein Roe::Keyport :
:Advisory: : :Investors : : :Asset : : :Venture: : :& Farnham::Life :
:Services: : :Services : : :Mgmt. : : :Capital: : :Inc. ::Ins. Co.:
:Inc. : : :Center,Inc.: : :Co. : : :Inc. : : :.........::........:
:........: : :...........: : :........: : :.......: : ....:..... :
......: .......: ........: ...: :SteinRoe: :
.....:....... ......:..... .....:...... .........:... :Futures : :
: Colonial : :Newport : :Liberty : :Independent: :Inc. : :
: Management: :Pacific : :Investment: :Financial : :........: :
: Associates: :Management: :Svcs.,Inc.: :Marketing : .........:...
: Inc. : :Inc. : :..........: :Group Inc. : :...........:
:...........: :..........: : :...........: ::Keyport ::
.....:....... .....:...... : : ::Financial::
: Colonial : :Newport : : ...........:..... ::Services ::
: Investment: :Fund : : :............. : ::Corp. ::
: Services, : :Management: : ::Independent: : ::.........::
: Inc. : :Inc. : : ::Financial : : :.......... :
:...........: :..........: : ::Securites : : ::Keyport : :
..................: ::Inc. : : ::Advisory: :
...........:............... :............. : ::Services: :
:........... ............: :.............. : ::Corp. : :
::Liberty : :Liberty :: ::IFS Agencies: : ::........: :
::Financial: :Securities:: ::Inc. : : :.......... :
::Advisors : :Corp. :: ::............: : ::Independ-::
::Inc. : : :: :.............. : ::ence Life::
::.........: :..........:: ::IFS Agencies: : ::& Annuity::
:............. ...........: ::of NM, Inc. : : ::Company ::
::Financial : :LSC Ins. :: ::............. : ::.........::
::Centre : :Agency of:: :...............: :...........:
::Ins. Agency: :AZ, Inc. :: ::IFMG Agencies:: ::American ::
::Inc. : :.........:: ::of ME, Inc. :: ::Benefit ::
::...........: : ::.............:: ::Life Ins.::
:........... ...........: :.............. : ::Company ::
::LSC Ins. : :LSC Ins. :: ::IFS Agencies: : ::.........::
::Agency of: :Agency of:: ::of AL, Inc. : : :...........:
::ME, Inc. : :NM, Inc. :: ::............: :
::.........: :.........:: :............. :
:.........................: ::IFS Ins. : :
::Agencies of: :
::OH, Inc. : :
::...........: :
:...............:
