As filed with the Securities and Exchange Commission on December 17, 1999.
Registration Nos. 333-
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. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 35 [X]
Variable Account A
(Exact name of Registrant)
Keyport Life Insurance Company
(Name of Depositor)
125 High Street, Boston Massachusetts 02110
(Address of Depositor's Principal Executive Offices (Zip Code)
Depositor's Telephone Number, including Area Code: 617-526-1400
Bernard R. Beckerlegge, Esq.
Senior Vice President and General Counsel
Keyport Life Insurance Company
125 High Street, Boston, Massachusetts 02110
(Name and Address of Agent for Service)
copy to:
Joan E. Boros, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on [date] pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) on [date] pursuant to paragraph (a) of Rule 485
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Title of Securities Being Registered: Variable Portion of the Contracts
Funded Through the Separate Account.
No filing fee is due because an indefinite amount of securities is deemed
to have been registered in reliance on Section 24(f) of the Investment
Company Act of 1940.
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Exhibit Index on Page ____
<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
<PAGE>
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. . . . . . . . . .Definitions
3. . . . . . . . . .Summary of Contract Features
Fee Table
Example
Explanation of Fee Table and Example
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 Contract
Death Benefit Provisions
Contract Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Benefits
Suspension of Payments
Inquiries by Contract Owners
8. . . . . . . . . .Annuity Provisions
9. . . . . . . . . .Death Benefit Provisions
Annuity Options
10. . . . . . . . . .Purchase Payments and Applications
Variable Account Value
Valuation Periods
Net Investment Factor
Sales of the Contracts
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
<PAGE>
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
<PAGE>
PART A
<PAGE>
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Prospectus for
The Rydex Variable Annuity
Individual Flexible Purchase Payment
Deferred Variable Annuity Contract
issued by
Variable Account A
of
Keyport Life Insurance Company
125 High Street
Boston, Massachusetts 02110
Service Office:
Keyport Life Insurance Co.
P.O. Box 691
Leesburg, VA 20178
(877) 569-3789
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This prospectus describes the Rydex variable annuity Contracts offered by
Keyport Life Insurance Company. This Contract may be sold under different
names. Most transactions involving this Contract may be performed through
the Internet Service Center.
The value of your Contract will fluctuate on a variable basis. The Contract
is designed to help you in your retirement planning. You may purchase it on
a tax qualified or non-tax qualified basis.
To apply for the Contract, you must be of legal age, in a state where the
Contracts may lawfully be sold.
You may not purchase a Contract if either you or the Annuitant are over 90
years old before we receive your application. You may not purchase a tax-
qualified Contract if you or the Annuitant are over 75 years old before we
receive your application (age 90 applies to Roth IRAs).
The minimum initial purchase payment for the Contract in most cases is
$15,000. After the initial purchase payment, the minimum subsequent
payment is $1,000. If you elect to have monthly electronic fund transfers,
the minimum subsequent payment is $250. We reserve the right to limit the
total purchase payments made under this Contract to $5,000,000.
If the value of your Contract is less than $5,000, we reserve the right to
cancel your Contract and pay you the value of your Contract.
We will allocate your initial purchase payment to the investment options
you choose in the proportions you choose. Subsequent purchase payments will
automatically be allocated to the Rydex U.S. Government Money Market Sub-
account. You may then transfer funds from the Rydex U.S. Government Money
Market Sub-account to any of the other available Sub-accounts. The
Contract currently offers seven investment options, each of which is a Sub-
account of Variable Account A. Currently, you may choose among the Sub-
accounts investing in the following Eligible Funds:
RYDEX VARIABLE TRUST: Rydex Nova Fund; Rydex Ursa Fund; Rydex OTC Fund;
Rydex Precious Metals Fund; Rydex U.S. Government Bond Fund; Rydex Juno
Fund and Rydex U.S. Government Money Market Fund
Prospectuses for the Eligible Funds are attached. The purchase of a
Contract involves certain risks. Investment performance of the Eligible
Funds may vary. We do not guarantee any minimum Contract Value under the
Contract. An investment in the Rydex U.S. Government Money Market Sub-
account is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the Rydex U.S.
Government Sub-account seeks to preserve the value of your investment at
$1.00 per share it is possible to lose money by investing in the Rydex U.S.
Government Money Market Sub-account.
This prospectus contains important information about the Contract you
should know before investing. You should read it before investing and keep
it for future reference. You may download or print the prospectus from our
website. If you prefer a paper copy of the prospectus, please call or write
our Service Office at the address above.
We have filed a Statement of Additional Information ("SAI") with the
Securities and Exchange Commission. The current SAI has the same date as
this prospectus and is incorporated by reference in this prospectus. A
table of contents for the SAI appears on the last page of this prospectus.
A free paper copy of the SAI is available upon e-mail request through our
Internet Service Center website (http://www.AnnuityNet.com) or by calling
the telephone number above. The SAI is also available through the SEC
website (http://www.sec.gov). In addition, other information regarding the
Company and the Separate Account is available through the SEC website or,
if you prefer a paper copy, by sending an e-mail request to our Internet
Service Center or by calling the telephone number above.
The date of this prospectus is __________, 2000.
The SEC has not approved or disapproved these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
<PAGE>
TABLE OF CONTENTS
Page
Definitions 3
Summary of Contract Features 4
Fee Table 5
Example 8
Explanation of Fee Table and Example 9
Keyport and the Variable Account 11
Purchase Payments and Applications 12
Investments of the Variable Account 12
Allocations of Purchase Payments 12
Eligible Funds 13
Transfer of Variable Account Value 16
Substitution of Eligible Funds and Other Variable Account Changes 17
Deductions 17
Deductions for Annuity Asset Charge 18
Deductions for Premium Taxes 19
Deductions for Income Taxes 19
Total Variable Account Expenses 20
Contract Value Deductions 20
The Contracts 23
Variable Account Value 23
Valuation Periods 23
Calculation of Contract Value 24
Modification of the Contract 24
Right to Revoke 24
Death Benefit Provisions 25
Death of Annuitant 25
Contract Ownership 32
Assignment 32
Partial Withdrawals and Surrender 32
Annuity Provisions 33
Annuity Benefits 33
Annuity Option and Income Date 33
Annuity Options 33
Variable Annuity Payment Values 36
Proof of Age, Sex, and Survival of Annuitant 36
Suspension of Payments 40
Advertising
Year 2000 Matters 41
Tax Status 41
Introduction 41
Taxation of Annuities in General 41
Qualified Plans 44
Individual Retirement Annuities 45
Annuity Purchases by Nonresident Aliens 45
Variable Account Voting Privileges 45
Sales of the Contracts 46
Legal Proceedings 47
Records and Reports
Inquiries by Contract Owners 47
Table of Contents--Statement of Additional Information 48
<PAGE>
DEFINITIONS
Accumulation Unit: A unit of measurement which we use to calculate Variable
Account Value.
Annuitant: The natural person on whose life annuity benefits are based
starting on the Income Date.
Annuity Option: A form of payment of the annuity available under the
Contract.
Annuity Payment: An amount paid at regular intervals after the Income Date
under one of several Annuity Options. The amount paid may vary.
Annuity Unit: A unit of measure used to calculate the amount of Annuity
Payments after the Income Date.
Contract: The variable annuity contract between you and us.
Contract Anniversary: Each anniversary of the Contract Date.
Contract Date: The date your Contract becomes effective. The date we
receive your completed application and initial purchase payment.
Contract Owner ("you"): The person(s) having the privileges of ownership
defined in the Contract.
Contract Value: The value of all Variable Account amounts at a given time.
Contract Year: Each 12-month period beginning on the Contract Date and each
Contract Anniversary thereafter.
Company ("we", "us", "our", "Keyport"): Keyport Life Insurance Company.
Designated Beneficiary: The person you designate to receive any death
benefits under the Contract.
Eligible Funds: The underlying mutual funds in which the Variable Account
invests.
In Force: The status of your Contract before the Income Date, as long as:
(1) you do not totally surrender it,
(2) your Contract Value is greater than zero, and
(3) if the Annuitant or any Contract Owner has died, fewer than five
years have passed since the date of death.
Income Date: The date on which Annuity Payments are to begin.
Internet Service Center: The Internet site that provides variable annuity
contract documents and information to current and prospective Contract
Owners and through which various transactions may be performed. Certain of
these transactions may require faxed or mailed signatures.
Net Asset Value: The difference between the value of assets and the amount
of liabilities.
Non-Qualified Contract: Any Contract that is not issued under a Qualified
Plan.
Qualified Contract: A Contract issued under a Qualified Plan.
Qualified Plan: A retirement plan which receives special tax treatment
under Sections 401, 403(b), 408(b) or 408A of the Internal Revenue Code
("Code") or a deferred compensation plan for a state and local government
or another tax exempt organization under Section 457 of the Code.
Sub-account: The portion of the Variable Account which invests in shares of
a particular Eligible Fund.
Valuation Date: Each day the New York Stock Exchange (NYSE) is open for
trading.
Valuation Period: The period commencing at the close of trading (currently
4:00 p.m. EST) on each day that the NYSE is open for trading (in other
words, the Valuation Date) and ending at the close of such trading on the
next succeeding Valuation Date.
Variable Account: Variable Account A which is a separate investment account
of the Company into which purchase payments under the Contracts may be
allocated. The Variable Account is divided into Sub-accounts, each of which
invests in shares of an Eligible Fund.
SUMMARY OF CONTRACT FEATURES
Because this is a summary, it does not contain all of the information that
may be important to you. You should read the entire prospectus before
deciding to invest. Further, individual state requirements that are
different from the information in this prospectus are described in
supplements to this prospectus or in endorsements to the Contract.
WHAT ARE MY INVESTMENT CHOICES? You can allocate and reallocate your
investment among the Sub-accounts of the Variable Account, each of which in
turn invests in one of the following Eligible Funds:
Rydex Variable Trust ("Rydex Trust"):
Rydex Nova Fund
Rydex Ursa Fund
Rydex OTC Fund
Rydex Precious Metals Fund
Rydex U.S. Government Bond Fund
Rydex Juno Fund
Rydex U.S. Government Money Market Fund
HOW DOES THE CONTRACT WORK? During the accumulation period, you may make
purchase payments to us. Prior to annuitization, you may choose to withdraw
some or all of your Contract Value. When you begin Annuity Payments, your
periodic Annuity Payments will be based upon your Contract Value on the
Income Date. Subsequently, Annuity Payments will vary depending upon the
performance of the Funds you select. (See "The Contracts".)
WHAT CAN I DO THROUGH THE INTERNET SERVICE CENTER? Most transactions
associated with your Contract can be accomplished through the Internet
Service Center. We will send you information concerning your Contract, and
you can receive documents concerning your Contract, through the Internet
Service Center. You can monitor the status of your Contract, move funds
from one Sub-account to another, change your e-mail or mailing address,
etc., all through the Internet Service Center. For security reasons, we
may issue you a PIN or password which you will use to access the Internet
Service Center. Certain transactions, however, such as a change of
Beneficiary or a total withdrawal of funds from the Contract, may not be
completed through the Internet Service Center, but will also require a
signed request that is faxed or mailed to our Service Office.
WHAT CHARGES ARE ASSOCIATED WITH THIS CONTRACT? We apply an annual charge
totaling .90% to the daily net asset value of the Variable Account. (See
"Deductions".)
Each Eligible Fund also has additional operating expenses associated with
its daily operation. Finally, each fund pays a management fee to its
investment advisors based upon the average daily net asset value of the
Fund. See the FEE TABLE. These fees and expenses are more fully described
in the prospectuses for the funds.
If your state assesses a premium tax with respect to your Contract, we will
deduct those amounts upon full surrender (including a surrender for the
Death Benefit) or annuitization.
HOW WILL MY ANNUITY PAYMENTS BE CALCULATED? If you decide to annuitize, you
elect an Annuity Option. Your periodic payment will be based upon the
Annuity Option you selected, the changing values of the Sub-accounts in
which you have invested, and your age at the Income Date. (See "Annuity
Options".) Remember that you will benefit from any gain, and bear the risk
of any drop, in the value of the securities in the Sub-accounts of the
Variable Account.
WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE? We will pay to your designated
beneficiary the greater of your Contract Value or the sum of your purchase
payments adjusted for partial withdrawals. (See "Death Provisions".)
MAY I SURRENDER THE CONTRACT OR MAKE A WITHDRAWAL? Yes. (See "Partial
Withdrawals and Surrender".) You will be subject to income taxes on any
earnings you withdraw and you may also be subject to a 10% income tax
penalty. (See "Tax Status".)
DO I GET A FREE LOOK AT THIS CONTRACT? Yes. If within ten days (or a longer
period if required by law) of the date you receive the signed Contract
through the Internet Service Center, you cancel the Contract through the
Internet Service Center or return it, postage prepaid, to the Service
Office of Keyport, it will be canceled. During this period and for ten
additional days to allow for delivery of the notice from and to Us (the
"Right to Revoke Period"), your purchase payments will be invested in the
Rydex U.S. Government Money Market Sub-account. (See "Right to Revoke".)
FEE TABLE
Contract Owner Transaction Expenses
Sales Load Imposed on Purchases: 0%
Maximum Surrender Charge
(as a percentage of purchase payments): 0%
Annual Contract Maintenance Charge: $0
Transfer Charge: $0
Variable Account Annual Expenses
(as a percentage of average net assets)
Annuity Asset Charge: .90%
(This charge is for administrative, mortality and expense risk
fees. See "Deductions".)
Total Variable Account Annual Expenses: .90%
Rydex Variable Trust Annual Expenses1
(After any Fee Waivers and/or Expense Reimbursements -- Numbers in
Parentheses Represent Expenses Before Any Such Waivers and/or
Reimbursements)2
(as a percentage of average net assets)
Total Fund
Management Other Operating
Fund Fees Expenses Expenses
Rydex Nova Fund .71% (.74%) 1.47% 2.18% (2.22%)
Rydex Ursa Fund .73% (.90%) 1.57% 2.30% (2.48%)
Rydex OTC Fund .72% 1.24% 1.96%
Rydex Precious Metals Fund .59% (.75%) 1.61% 2.20% (2.36%)
Rydex U.S. Government
Bond Fund .50% 1.30% 1.80%
Rydex Juno Fund .51% (.90%) 1.79% (3.59%) 2.30% (4.49%)
Rydex U.S. Government
Money Market Fund .28% (.50%) 1.32% (1.42%) 1.60% (1.92%)
The above expenses for the Eligible Funds were provided by the Funds. We
have not independently verified the accuracy of the information.
1All Trust and Fund expenses are for 1998. The Rydex Trust expenses reflect
such Trust's manager's and servicing company's agreement to reimburse
expenses above certain limits (see footnote 2).
2 PADCO Advisors, II, Inc., investment adviser to the Eligible Funds, and
PADCO Service Company, Inc., servicer to the Eligible Funds, have
voluntarily agreed to waive fees and/or reimburse expenses to ensure that
expenses do not exceed the total expenses shown. Each percentage shown in
the parentheses is what the expenses would have been in the absence of any
waiver or reimbursement of expenses: for Rydex Nova Fund -- .74% for
management fees and 2.22% for total expenses; for Rydex Ursa Fund -- .90%
for management fees and 2.48% for total expenses; for Rydex Precious Metals
Fund -- .75% for management fees and 2.36% for total expenses; for Rydex
Juno Fund -- .90% for management fees, 3.59% for other expenses, and 4.49%
for total expenses; and for Rydex U.S. Government Money Market Fund -- .50%
for management fees, 1.42% for other expenses and 1.92% for total expenses.
EXAMPLE
Example 1. If your Contract stays in force through the periods shown or is
surrendered or annuitized at the end of the periods shown, you would pay
the following expenses on a $1,000 investment, assuming 5% annual return on
assets.
Sub-account 1 Year 3 Years 5 Years 10 Years
Rydex Nova $31 $ 99 $177 $419
Rydex Ursa 32 103 183 434
Rydex OTC 29 92 165 393
Rydex Precious Metals 31 100 178 422
Rydex U.S. Government Bond 27 87 156 374
Rydex Juno 32 103 183 434
Rydex U.S. Government Money Market 25 81 145 349
EXPLANATION OF FEE TABLE AND EXAMPLE
The purpose of the fee table is to illustrate the expenses you may directly
or indirectly bear under a Contract. The table reflects expenses of the
Variable Account as well as the Eligible Funds. You should read
"Deductions" in this prospectus and the sections relating to expenses of
the Eligible Funds in their prospectuses. The fee table and example does
not include any taxes or tax penalties you may be required to pay if you
surrender your Contract. We deduct the amount of any premium taxes (which
currently range from 0% to 5%) upon full surrender (including a surrender
for the Death Benefit) or annuitization.
The example should not be considered a representation of past or future
expenses and charges of the Sub-accounts. Your actual expenses may be
greater or less than those shown. Similarly, the 5% annual rate of return
assumed in the example is not an estimate or a guarantee of future
investment performance. See "Deductions" in this prospectus, and
"Management" in the prospectus for Rydex Trust.
The Contracts described in this prospectus have not previously been made
available for sale, and may include fees and charges that are different
from our other variable annuity contracts. These differences will produce
differing Accumulation Unit values. Therefore, no condensed financial
information is provided. Our full financial statements and those for the
Variable Account 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.
Performance information is not an estimate or guarantee of future
investment performance, and does not represent the actual experience of
amounts invested by a particular Contract Owner.
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 Sub-account
over a given period of time.
The Sub-accounts may present, along with any current required performance
information, additional total return information that is computed on a
different basis. Certain of the Eligible Funds have been available for
other variable annuity contracts prior to the beginning of the offering of
the Contracts described in this prospectus. Any performance information for
such periods will be based on the historical results of the Eligible Funds
and applying the fees and charges of the Contract for the specified time
periods.
The Rydex U.S. Government Money Market Sub-account is a money market Sub-
account that also may advertise yield and effective yield information. The
yield of the Sub-account refers to the income generated by an investment in
the Sub-account over a specifically identified seven-day period. We
annualize this income by assuming that the amount of income generated by
the investment during that week is generated each week over a 52-week
period. It is shown as a percentage. The yield reflects the deduction of
all charges assessed against the Sub-account but does not include premium
tax charges. The yield would be lower if those charges were included.
We calculate the effective yield of the Rydex U.S. Government Money Market
Sub-account in a similar manner but, when annualizing the yield, we assume
income earned by the Sub-account is reinvested. This compounding effect
causes effective yield to be higher than yield.
KEYPORT AND THE VARIABLE ACCOUNT
We were incorporated in Rhode Island in 1957 as a stock life insurance
company. Our executive and administrative offices are at 125 High Street,
Boston, Massachusetts 02110. Our home office is at 695 George Washington
Highway, Lincoln, Rhode Island 02865. The mailing address of our Service
Office is Post Office Box 691, Leesburg, Virginia 20178. Our Internet
Service Center is http://www.AnnuityNet.com.
We write individual life insurance and individual and group annuity
contracts on a non-participating basis. We are licensed to do business in
all states except New York and are also licensed in the District of
Columbia and the Virgin Islands. We are rated A (Excellent) for financial
strength by A.M. Best and Company, independent analysts of the insurance
industry. Standard & Poor's ("S&P") rates us AA for very strong financial
security, Moody's rates us A2 for good financial strength and Duff & Phelps
rates us AA- for very high claims paying ability. The Best's A rating is in
the second highest rating category, which also includes a lower rating of 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 "2" modifier means that we are in the middle of the A
category. The Duff & Phelps "-" modifier signifies that we are at the lower
end of the AA category. These ratings reflect the opinion of the rating
company as to our relative financial strength and ability to meet
contractual obligations to our policyholders. Even though we hold the
assets in the Variable Account separately from our other assets, our
ratings may still be relevant to you since not all of our contractual
obligations relate to payments based on those segregated assets. Our
ratings do not affect or influence the performance of the Eligible Funds or
the Separate Account.
We are 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 we have chosen to participate in
IMSA's Life Insurance Ethical Market Conduct Program.
We are indirectly owned by Liberty Financial Companies, Inc. and are
ultimately controlled by Liberty Mutual Insurance Company of Boston,
Massachusetts, a multi-line insurance and financial services institution.
We established the Variable Account pursuant to the provisions of Rhode
Island Law on January 30, 1996. 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 mean the
Securities and Exchange Commission supervises us or the management of the
Variable Account.
Obligations under the Contracts are our obligations. Although the assets of
the Variable Account are our property, these assets are held separately
from our other assets and are not chargeable with liabilities arising out
of any other business we 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 we may conduct.
PURCHASE PAYMENTS AND APPLICATIONS
The initial purchase payment is due on the Contract Date. The minimum
initial purchase payment is $15,000. You may make additional purchase
payments. Each subsequent purchase payment must be at least $1,000 or any
lesser amount we may permit. We will reduce the subsequent purchase payment
to $250 in cases where you arrange for subsequent purchase payments by
electronic funds transfer. We reserve the right to cancel this Contract
and return the Contract Value to you if the value of your Contract is less
than $5,000. We may reject any purchase payment or any application.
Purchase payments are allocated to a Contract based on the applicable Sub-
account accumulation unit value(s) next determined after we receive it.
We have attempted to make the application process for the Contract as
simple as possible. You may apply for the Contract on this Internet Service
Center website (http://www.AnnuityNet.com) by completing our online
application. During the application process, information is transferred
between your computer and the Internet Service Center through a secure
internet connection. In order to complete the online application, you will
need to supply the following information:
o the full name, address, telephone number, date of birth, and Social
Security or Taxpayer Identification Number for the Primary Owner,
Annuitant, and any Joint Owner; and
o the full name, address, and relationship to the Owner of any
Beneficiary(ies) that you wish to designate. If you do not designate
any Beneficiary(ies), your estate will be the beneficiary.
Once you have completed the online application, you will be asked to print
a copy of the application. You must sign this application and fax or mail
it to our Service Office before we can process your application.
You may make your initial purchase payment by personal check, by enclosing
your check with your signed application. During the online application
process, you may also choose to make purchase payments by Electronic Funds
Transfer (EFT). If you choose the EFT option, it will still be necessary
for you to enclose either a deposit slip or a voided check with your signed
application when you mail the application to our Service Office.
If your application for a Contract is complete, we will apply your initial
purchase payment to the Variable Account within two business days of
receipt. If the application is incomplete, we will notify you and try to
complete it within five business days. If it is not complete at the end of
this period, we will inform you of the reason for the delay. The purchase
payment will be returned immediately unless you specifically consent to our
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.
We will send you a written notification by e-mail, to your last known e-
mail address, showing the allocation of all purchase payments and the re-
allocation of values after any transfer you have requested. You must notify
us immediately of any error.
We may request you to confirm that the information is correct by signing a
copy of the letter or a Contract delivery receipt. We will send you a
written notice confirming all purchases. Our liability under any Contract
relates only to amounts so confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
Allocations of Purchase Payments
The Variable Account is segmented into Sub-accounts. Each Sub-account
invests in shares of one of the Eligible Funds. We may add or withdraw
Eligible Funds and Sub-accounts as permitted by applicable law.
We will invest your initial purchase payment to the Variable Account in the
Sub-accounts you choose, after the expiration of the Right to Revoke
Period. Your selection must specify the percentage of the initial purchase
payment that is allocated to each Sub-account. The percentage for each Sub-
account, if not zero, must be a whole number. The total of your specified
allocations for the initial purchase payment must equal 100%. Subsequent
purchase payments will automatically be allocated to the Rydex U.S.
Government Money Market Sub-account. From there, you may transfer purchase
payments to the Sub-account investing in other Eligible Funds as you may
select.
Eligible Funds
The Eligible Funds are the separate funds listed within the Rydex Trust.
Keyport and the Variable Account may enter into agreements with other
mutual funds for the purpose of making such mutual funds available as
Eligible Funds under certain Contracts.
We do not promise that the Eligible Funds will meet their investment
objectives. Amounts you have allocated to Sub-accounts may grow, decline,
or grow less in value than you expect, depending on the investment
performance of the Eligible Funds in which the Sub-accounts invest. You
bear the investment risk that those Eligible Funds possibly will not meet
their investment objectives. You should carefully review their attached
prospectuses before allocating amounts to the Sub-accounts of the Variable
Account. The Eligible Funds are available for the separate accounts of
insurance companies unaffiliated with us. The risks involved in this "mixed
and shared funding" are disclosed in the Eligible Funds' prospectuses under
the following caption: "Purchasing and Redeeming Shares".
PADCO Advisors II, Inc. serves as the investment adviser and manager of the
Eligible Funds of the Rydex Trust.
Please see the Fund Prospectus for a complete description of the investment
techniques utilized by the Funds, including the risks and volatility of
these investments. Moreover, the strategic or tactical asset allocation
program that can be utilized in a contract of this type may be
characterized as aggressive investing. There can be no assurance that you
or any financial advisor will predict market moves successfully. If you
utilized a financial advisor, you should carefully consider his or her
education, experience, and reputation.
We briefly describe the Eligible Funds and the objectives they seek to
achieve below:
Eligible Funds of Rydex Trust
and Variable Account
Sub-accounts Investment Objective
Rydex Nova Fund Investment returns that correspond
("Rydex Nova Sub-account") to 150% of the daily price movement
of the S&P 500 Index.
Rydex Ursa Fund Investment returns that will
("Rydex Ursa Sub-account") inversely correlate to the
performance of the S&P 500 Index.
Rydex OTC Fund Investment results that correspond
("Rydex OTC Sub-account") to a benchmark for over-the-counter
securities. The current benchmark
is the NASDAQ 100 Index.
Rydex Precious Metals Fund Seeks to provide capital
("Rydex Precious Metals appreciation by investing in U.S.
Sub-account") and foreign companies that are
involved in the precious metals
sector, including exploration,
mining, production and development,
and other precious metals related
services.
Rydex U.S. Government Bond Fund Investment results that correspond
("Rydex U.S. Government Bond to a benchmark for U.S. Government
Sub-account") Securities. The current benchmark is
120% of the daily price movement of
the Long Treasury Bond.
Rydex Juno Fund ("Rydex Juno Total returns that will inversely
Sub-account") correlate to the price movements
of a benchmark for U.S. Treasury
debt instruments or futures contract
on a specified debt instrument. The
current benchmark is the inverse
price movement of the Long Treasury
Bond.
Rydex U.S. Government Money Security of principal, high current
Market Fund ("Rydex U.S. Government income and liquidity.
Money Market Sub-account")
Transfer of Variable Account Value
You may transfer Variable Account Value from one Sub-account to another
after expiration of the Right to Revoke Period. We do not limit the number
or frequency of transfers.
You may submit your transfer requests through the Internet Service Center.
If we receive your request before the relevant transaction cut-off times,
we will initiate it at the close of business that day. We will initiate any
requests received after the relevant transaction cut-off time at the close
of the next business day. We will execute your request to transfer value by
both redeeming and acquiring Accumulation Units on the day we initiate the
transfer.
The transaction cut-off times for the receipt of transfer requests are
currently as follows:
o for the Rydex U.S. Government Bond and Rydex Juno Sub-accounts,
the time is 2:30 p.m. Eastern Time;
o for the Rydex Precious Metals Sub-account, the time is 3:15 p.m.
Eastern Time;
o for the Rydex Nova, Rydex Ursa, and Rydex OTC Sub-accounts, the
time is 3:30 p.m. Eastern time;
o for the Rydex U.S. Government Money Market Sub-account, the time
is 4:00 p.m. Eastern Time.
If you choose to make a transfer between Sub-accounts that have different
transaction cut-off times, the earlier cut-off time as shown above will
apply to your transfer request. If the primary exchange or market on which
the underlying Eligible Fund transacts business closes early, the above cut-
off time will be approximately thirty minutes (forty-five minutes, in the
case of the Rydex Precious Metals Fund) prior to the close of such exchange
or market.
Transfer requests which you submit to us will remain in a queue with any
other transfers you have submitted for any given valuation date. Your
transfer requests will be executed in the order received. You may at any
time view a list of transfer requests you have submitted that are awaiting
execution by accessing your personal account information through the
Internet Service Center. You may also retract a transfer request by
removing it from the queue at any time prior to the earliest transaction
cutoff time for any of the Sub-accounts involved in the transaction. In
addition, you may not retract a transfer request if there are any
subsequent request(s) in the queue for which any of the relevant
transaction cutoff times have passed.
Substitution of Eligible Funds and Other Variable Account Changes
If shares of any of the Eligible Funds are no longer available for
investment by the Variable Account, or further investment in the shares of
an Eligible Fund is no longer appropriate under the Contract, we may add or
substitute shares of another Eligible Fund or of another mutual fund for
Eligible Fund shares already purchased or to be purchased in the future.
Any substitution of securities will comply with the requirements of the
Investment Company Act of 1940.
We also reserve the right to make the following changes in relation to the
Variable Account and Eligible Funds:
o to operate the Variable Account in any form permitted by law;
o to take any action necessary to comply with applicable law or
obtain and continue any exemption from applicable law;
o to transfer any assets in any Sub-account to another or to one or
more separate investment accounts;
o to add, combine or remove Sub-accounts in the Variable Account; and
o to change how we assess charges, so long as we do not increase them
above the maximum total amount shown in the Fee Table in connection
with your Contract.
DEDUCTIONS
Deductions for Annuity Asset Charge
We deduct an annuity asset charge from each Sub-account. The annuity asset
charge is equal, on an annual basis, to .90% of the average daily net asset
value of each Sub-account. We deduct the charge both before and after the
Income Date.
The charge compensates us for administrative expenses we incur and for
mortality and expense risks we assume. Our administrative expenses include,
but are not limited to, bookkeeping costs, the cost of maintaining our
Service Office and our Internet Service Center, and the costs associated
with sales of the Contract. We assume the risk that annuitants as a class
may live longer than expected (mortality risk), and that expenses may be
higher than the deductions for those expenses (expense risk). In either
case, the loss will fall on us. Conversely, if such deductions exceed our
actual expenses, the excess will be profit to us.
Deductions for Premium Taxes
We deduct the amount of any premium taxes required by any state or
governmental entity. Currently, we deduct premium taxes from Contract Value
upon full surrender (including a surrender for the Death Benefit) or
annuitization. The actual amount of any such premium taxes will depend,
among other things, on the type of Contract you purchase (Qualified or Non-
Qualified), on your state of residence, the state of residence of the
Annuitant, and the insurance tax laws of those states. Currently such
premium taxes range from 0% to 5.0% of total purchase payments.
Deductions for Income Taxes
We will deduct income taxes from any amount payable under the Contract that
a governmental authority requires us to withhold. See "Income Tax
Withholding".
Total Variable Account Expenses
Total Variable Account expenses you will incur will be the annuity asset
charge and, if applicable, a tax charge factor. (See "Calculation of
Contract Value".)
The value of the assets in the Variable Account will reflect the value of
Eligible Fund shares and the deductions and expenses paid out of the assets
of the Eligible Funds. Each Eligible Fund pays a management fee to its
investment adviser(s) based upon the average daily net asset value of the
Fund. Each Eligible Fund also has additional operating expenses associated
with the daily operation of the funds. The prospectuses for the Eligible
Funds describe these deductions and expenses.
THE CONTRACTS
Variable Account Value
The Variable Account Value for a Contract is the sum of the value of each
Sub-account to which you have allocated values. We determine the value of
each Sub-account at any time by multiplying the number of Accumulation
Units attributable to that Sub-account by its Accumulation Unit value.
Each purchase payment you make results in the credit of additional
Accumulation Units to your Contract and the appropriate Sub-account. 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
We determine the value of the Variable Account each valuation period using
the net asset value per share of the Eligible Fund shares. A valuation
period is the period generally beginning at 4:00 P.M. (EST), or any other
time for the close of trading on the New York Stock Exchange, and ending at
the close of trading for the next business day. 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.
Calculation of Contract Value
Contract Value at any time prior to the Income Date equals the sum of the
values of the Accumulation Units credited in the Sub-accounts under the
Contract. Your Contract Value will fluctuate with the investment results of
the Eligible Funds underlying the Sub-accounts you have selected.
The value of a Sub-account on any Valuation Date is the number of
Accumulation Units in the Sub-account multiplied by the value of an
Accumulation Unit in the Sub-account at the end of the Valuation Period.
Accumulation Units for each Sub-account are valued separately. Initially,
the value of an Accumulation Unit was arbitrarily established at the
inception of the Sub-account. It may increase or decrease from Valuation
Period to Valuation Period. The Accumulation Unit value for a Sub-account
for any later Valuation Period is determined as follows:
o The total value of Fund shares held in the Sub-account is calculated
by multiplying the number of Fund shares owned by the Sub-account at
the beginning of the Valuation Period by the net asset value per
share of the Fund at the end of the Valuation Period, and adding any
dividend or other distribution of the Fund if an ex-dividend date
occurs during the Valuation Period; minus
o The liabilities of the Sub-account at the end of the Valuation
Period (such liabilities include daily charges imposed on the Sub-
account, and may include a tax charge factor with respect to any
taxes paid or reserved for by us that we determine are as
a result of the operations from the Variable Account); and the
result is divided by
o The outstanding number of Accumulation Units in the Sub-account at
the beginning of the Valuation Period.
The daily charges imposed on a Sub-account for any Valuation Period
represent the annuity asset charge adjusted for the number of calendar days
in the Valuation Period.
Modification of the Contract
Only our President or Secretary may agree to alter the Contract or waive
any of its terms. A change may be made to the Contract if there have been
changes in applicable law or interpretation of law. Any changes will be
made in writing and with your consent, except as may be required by
applicable law.
Right to Revoke
Generally, you may return the Contract within 10 days after you receive it
by delivering or mailing it to us. You may also cancel the Contract within
10 days through the Internet Service Center. If you return the Contract to
us through the mail, the postmark on a properly addressed and postage-
prepaid envelope determines if a Contract is returned within the 10-day
period. We will treat the returned Contract as if we never issued it. We
will promptly refund the Contract Value or purchase payments, whichever is
required by state law, as of the date we receive the returned Contract or
the date it is cancelled through the Internet Service Center. You may ask
us which standard applies to your state. During the Right to Revoke Period,
your initial purchase payment will be held in the Rydex U.S. Government
Money Market Sub-account. Your initial purchase payment will not be
transferred to the Sub-account(s) you select until the Right to Revoke
Period has ended.
In some states, under applicable law or regulation, your Right to Revoke
Period may be longer than 10 days. Please refer to your Contract.
DEATH BENEFIT PROVISIONS
You may designate a Beneficiary during your lifetime and, unless prohibited
by a previous designation, change the Beneficiary by mailing a request to
our Service Office. A change of Beneficiary may be requested through the
Internet Service Center but requires a signed request to be mailed to our
Service Office. Each change of Beneficiary revokes any previous
designation.
If there is a single Contract Owner and the Contract Owner dies before the
Income Date, the Death Benefit paid to the designated Beneficiary will be
the Contract Value as of the date on which we approve the payment of the
claim.
The Death Benefit is the greater of premium payments or the current
Contract Value, less any applicable state premium taxes.
The premium payment death benefit is:
o the initial premium payment, plus
o any additional premium payments, minus
o any partial withdrawals.
We will determine the value of the Death Benefit as of the date on which
the death claim is approved for payment. We will approve a claim for a
Death Benefit upon receipt of:
o proof, satisfactory to us, of the death of the Contract Owner;
o a request for payment of the Death Benefit mailed to our Service
Office; and
o our receipt of all required claim forms, fully completed.
We will make payment of an approved Death Benefit in accordance with
applicable laws and regulations governing payment of Death Benefits. We
will not allow any payment that does not satisfy the requirements of
Internal Revenue Code section 72(s) or 401(a)(9) as applicable, as amended
from time to time.
Unless otherwise provided in the Beneficiary designation, one of the
following procedures will occur on the death of a Beneficiary:
o If any Beneficiary dies before the Contract Owner, that
Beneficiary's interest will go to any other Beneficiaries named,
according to their respective interests; and/or
o If no Beneficiary survives the Contract Owner, the proceeds of the
Death Benefit will be paid to the Contract Owner's estate.
The Death Benefit payable to the Beneficiary must be distributed within
five years of the Contract Owner's date of death unless the Beneficiary
begins receiving within one year of the Contract Owner's death
substantially equal installments over a period not extending beyond the
Beneficiary's life expectancy.
If the Beneficiary is the spouse of the Contract Owner, then he or she may
elect to continue the Contract as Contract Owner. If the Contract Owner is
a corporation or other non-natural person, the death of the Annuitant will
be treated as the death of the Contract Owner and the above distribution
rules will apply.
If there are joint Contract Owners, upon the death of the first joint
Contract Owner, the surviving joint Contract Owner will receive the Death
Benefit. The surviving joint Contract Owner will be treated as the
primary, Designated Beneficiary. Any other designation on record at the
time of death will be treated as a contingent Beneficiary.
If the surviving joint Contract Owner, as spouse of the deceased joint
Contract Owner, continues the Contract as the sole owner in lieu of
receiving the Death Benefit, then the designated Beneficiary(s) will
receive the Death Benefit upon the death of the surviving spouse.
Death of Annuitant
If the Annuitant is also the Contract Owner or joint Contract Owner, then
the Death Benefit will be subject to the provisions of the Contract
regarding death of the Contract Owner. If a surviving spouse assumes the
contract upon death of a joint Contract Owner Annuitant, then the
contingent Annuitant becomes the Annuitant. If no contingent Annuitant is
named, then the surviving spouse becomes the Annuitant.
If an Annuitant who is not the Contract Owner or joint Contract Owner dies,
then the contingent Annuitant, if any, becomes the Annuitant. If no
contingent Annuitant is named, the Contract Owner (or joint Contract Owner
if younger) becomes the Annuitant.
CONTRACT OWNERSHIP
The Contract Owner shall be the person designated in the application and
you may exercise all the rights of the Contract. Joint Contract Owners are
permitted. Contingent Contract Owners are not permitted.
You may direct us in writing to change the Contract Owner, primary
beneficiary, contingent beneficiary or contingent annuitant. An irrevocably-
named person may be changed only with the written consent of that person.
Because a change of Contract Owner by means of a gift may be a taxable
event, you should consult a competent tax adviser as to the tax
consequences resulting from such a transfer.
Any Qualified Contract may have limitations on transfer of ownership. You
should consult the plan administrator and a competent tax adviser as to the
tax consequences resulting from such a transfer.
ASSIGNMENT
You may assign the Contract at any time. You must file a copy of any
assignment with us. Your rights and those of any revocably-named person
will be subject to the assignment. A Qualified Contract may have
limitations on your ability to assign the Contract.
Because an assignment may be a taxable event, you should consult a
competent tax adviser as to the tax consequences resulting from any such
assignment.
PARTIAL WITHDRAWALS AND SURRENDER
You may make partial withdrawals from the Contract through the Internet
Service Center or by submitting to us by mail your request for a partial
withdrawal. You may not make a partial withdrawal during the Right to
Revoke Period. The minimum withdrawal amount is $300, or such lesser amount
as we may permit. If the Contract Value after a partial withdrawal would be
below $5,000, we will treat the request as a withdrawal of only the amount
over $5,000. Unless you specify otherwise, we will deduct the total amount
withdrawn 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.
The minimum withdrawal amount is waived if you enter into an agreement with
an investment adviser that allows the adviser to make partial surrenders
from your annuity to pay the service fees of the adviser. Such
distributions may have adverse tax consequences. Please consult your tax
adviser.
You may totally surrender the Contract by notifying us by mail.
Surrendering the Contract will end it. Upon surrender, you will receive the
Contract Value less any applicable premium taxes.
We will pay the amount of any surrender within seven days of receipt of
your request. Alternatively, you may purchase for yourself an annuity
payment option with any surrender benefit of at least $5,000. If the
Contract Owner is not a natural person, we must consent to the selection of
an annuity payment option.
You may not surrender annuity options based on life contingencies after
annuity payments have begun. Once annuity payments have begun, partial
withdrawals are available only under Option A.
Because of the potential tax consequences of a full or partial surrender,
you should consult a competent tax adviser regarding a surrender.
Participants under Qualified Plans as well as Contract Owners, Annuitants,
and Designated Beneficiaries are cautioned that you may not be able to take
a partial withdrawal or surrender the Contract under a Qualified Plan. You
should seek competent advice concerning the terms and conditions of the
particular Qualified Plan and use of the Contract with that Plan.
ANNUITY PROVISIONS
Each of the Rydex Trust Funds invests in the securities of a relatively few
number of issuers. Since the assets of each Fund are invested in a limited
number of issuers, the net asset value of the Fund may be more susceptible
to a single adverse economic, political or regulatory occurrence. You
should consider this in making your decision to annuitize.
Annuity Benefits
If the Annuitant is alive on the Income Date and the Contract is In Force,
we will begin variable income payments to the Annuitant under the Annuity
Option or Options you have chosen. We determine the amount of the initial
payment(s) on the Income Date by applying the Contract Value less any
premium taxes not previously deducted to the option selected. See "Variable
Annuity Payment Values" for additional information on how we calculate
annuity payment amounts.
Subsequent payments will fluctuate in amount.
Annuity Option and Income Date
You may select an Annuity Option and Income Date at the time of application
or later. Any Income Date must be:
o not earlier than the first day after the Contract Date, and
o not later than the earlier of
(i) the later of the Annuitant's 90th birthday and the 10th
Contract Anniversary and
(ii) any maximum date permitted under state law.
If you do not select an Income Date for the Annuitant, the Income Date will
automatically be the latest date specified above.
You may choose or change an Annuity Option or the Income Date through the
Internet Service Center or by writing to us at least 30 days before the
Income Date.
Annuity Options
The Annuity Options are:
Option A: Income for a Fixed Number of Years;
Option B: Life Income with 10 Years of Payments Guaranteed;
Option C: Joint and Last Survivor Income; and
You may arrange other variable income options if we agree. Fixed income
payments are not available. If you do not select an Annuity Option, we
automatically choose Option B.
The payee is the person who will receive the sum payable under a payment
option. Any payment 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 under any annuity option is less than $5,000, we
reserve the right to pay such amount in one sum to the payee in lieu of the
payment otherwise provided for.
We will make annuity payments monthly unless you have requested quarterly,
semi-annual or annual payments. However, if any payment would be less than
$100, we have the right to reduce the frequency of payments to a period
that will result in each payment being at least $100.
Option A: Income For a Fixed Number of Years. We will pay an annuity for a
chosen number of years, not less than 5 nor more than 50. You may choose a
period of years over 30 only if it does not exceed the difference between
age 100 and the Annuitant's age on the date of the first payment. We refer
to Option A as Preferred Income Plan (PIP). At any time, the payee may
elect to receive the following amount:
o the present value of the remaining variable annuity payments,
commuted at the 5% interest rate used to create the annuity factor
for this option (this interest rate for variable annuity payments
is also referred to as the assumed investment rate (AIR) or
benchmark rate).
Instead of receiving a lump sum, the payee may elect another payment
option.
If, at the death of the payee, Option A payments have been made for fewer
than the chosen number of years:
o we will continue payments during the remainder of the period to the
successor payee; or
o the successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the 5% interest rate
used to create the annuity factor for this option.
The annuity asset charge is deducted during the Option A payment period,
but we have no mortality risk during this period.
Currently, we permit the original payee to make a number of changes to
variable payments under Option A. For regular PIPs, a change may be made
generally only on the anniversary of the date of your initial PIP payment.
The permissible changes include:
o shortening or lengthening the period certain provided the payments
already made and those to be made meet the 5 - 50 year and age 100
limits described above;
o changing to a life option - note that under this option the payee
no longer may end the payments for a commuted value;
o changing the payment frequency; and
o changing the day of the month on which payment occurs.
See "Annuity Payments" for the manner in which Option A may be taxed.
Option B: Life Income with 10 Years of Payments Guaranteed. We 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:
o we will continue payments during the remainder of the period to the
successor payee; or
o the successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the 5% interest rate
used to create the annuity factor for this option.
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. We will pay an annuity for as
long as either the payee or a designated second natural person is alive.
The amount of the annuity payments will depend on the age of both persons
on the Income Date and it may also depend on each person's sex. It is
possible under this option to receive only one annuity payment if both
payees die after the receipt of the first payment, or to receive only two
annuity payments if both payees die after receipt of the second payment,
and so on.
Variable Annuity Payment Values
We determine the amount of the first payment by using an annuity purchase
rate based on an assumed annual investment rate (AIR or benchmark rate) of
5% per year. (See "Variable Annuity Payment Values" in the Statement of
Additional Information for more information on AIRs.) Subsequent payments
will fluctuate in amount and reflect whether the actual investment return
of the selected Sub-account(s) (after deducting the annuity asset charge)
is better or worse than the assumed investment rate. The total dollar
amount of each payment will be equal to the sum of all Sub-account
payments.
We limit the number of times or the frequency with which a payee may
instruct us to change the Sub-account(s) used to determine the amount of
the annuity payments to three times per contract year. We reserve the right
to change the number of transfers that we allow.
Proof of Age, Sex, and Survival of Annuitant
We 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, we
will compute the amount payable based on the correct age and sex. If income
payments have begun, we will pay in full any underpayments with the next
annuity payment and deduct any overpayments, unless repaid in one sum, from
future annuity payments until we are repaid in full.
SUSPENSION OF PAYMENTS
We reserve the right to suspend or postpone any type of payment from the
Variable Account for any period when:
o the New York Stock Exchange (NYSE) is closed other than customary
weekend or holiday closings;
o trading on the Exchange is restricted;
o 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
o 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 prior two conditions described
above exist.
ADVERTISING
We may provide to you and prospective Contract Owners advertising and other
information on a variety of topics. Such topics may include the
relationship between certain economic sectors and the economy as a whole
and its effect on various securities markets, investment strategies and
techniques (such as value investing, dollar cost averaging and asset
allocation). Such topics may also include, the advantages and
disadvantages of investing in tax-advantaged and taxable instruments,
customer profiles and hypothetical purchase scenarios, financial management
and tax and retirement planning, and other investment alternatives,
including comparisons between the Contracts and the characteristics of and
market for such alternatives.
In marketing the variable annuity Contracts, we may refer to certain
ratings assigned to us under the rating systems of the A.M. Best and
Company, Standard & Poor's, Moody's and Duff & Phelps. The objective of
these rating systems is to evaluate the various factors affecting the
overall performance of an insurance company in order to provide an opinion
about that company's relative financial strength and ability to meet its
contractual obligations. The procedure includes both a quantitative and
qualitative review of the insurance company. In marketing the Contracts and
the underlying funds, we may at times use data published by other
nationally-known independent statistical services. These service
organizations provide relative measures of such factors as an insurer's
claims paying ability, the features of particular Contracts, and the
comparative investment performance of the Eligible Funds with other
portfolios having similar objectives. A few such services are: Duff &
Phelps, the Lipper Group, Moody's, Morningstar, Standard and Poor's and
VARDS. Marketing materials may employ illustrations of compound interest,
discuss automatic withdrawal services, and describe our customer base,
assets, and our relative size in the industry. They may also discuss other
features of Keyport, the Variable Account, the Eligible Funds and their
investment management.
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 that are affected by the Year 2000 issue could impact
our 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.
We are assessing and addressing the Year 2000 issue by implementing a four-
step plan. The first two steps involve conducting an inventory of all
computer applications which support our business functions and prioritizing
computer applications which are affected by the Year 2000 issue, based upon
the degree of impact each application has on the functioning of our
business units. The first two steps of the plan are substantially complete.
The final two steps of the four-step plan involve repairing and replacing
affected computer programs and testing them for Year 2000 readiness. For
computer applications which are "mission critical" (i.e., their failure
would result in our complete inability to perform critical business
functions), we completed the final two steps of the plan on June 1, 1999.
We expect to complete the repair and replacement of non-critical computer
applications by December 31, 1999.
We believe the Year 2000 issue could have a material impact on our
operations if we do not implement the four-step plan in a timely manner.
However, based upon our progress, we believe we will meet our timetable,
and the Year 2000 issue will not pose significant operational problems for
our computer systems.
We do not expect the cost of addressing the Year 2000 issue to be material
to our financial condition or results of operations.
TAX STATUS
Introduction
This discussion is general in nature and is not intended as tax advice.
Each person concerned should consult a competent tax adviser. We make no
attempt to consider any applicable state or other tax laws. Moreover, this
discussion is based upon our understanding of current federal income tax
laws as they are currently interpreted. We make no representation regarding
the likelihood of continuation of those current federal income tax laws or
of the current interpretations by the Internal Revenue Service.
The Contract is for use by individuals in retirement plans which may or may
not be Qualified Plans that receive special tax deferral benefits under the
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
The ultimate effect of federal income taxes on the Contract Value, on
annuity payments, and on the economic benefit to the Contract Owner,
Annuitant or Designated Beneficiary depends on the type of retirement plan
for which you purchase the Contract and upon the tax and employment status
of the individual concerned.
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 Contract until a
distribution occurs, in the form of a full surrender, a partial surrender,
an assignment or gift of the Contract, or annuity payments. A trust or
other entity owning a Non-Qualified Contract, other than as an agent for an
individual, is taxed differently; increases in the value of a Contract are
taxed yearly whether or not a distribution occurs.
Surrenders, Assignments and Gifts. If you fully surrender your Contract,
the portion of the payment that exceeds your cost basis in the Contract is
subject to tax as ordinary income. For Non-Qualified Contracts, the cost
basis is generally the amount of the purchase payments made for the
Contract. For Qualified Contracts, 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 for lump-sum
distributions received before January 1, 2000. A Designated Beneficiary
receiving a lump sum surrender benefit after your death or the death of the
Annuitant is taxed on the portion of the amount that exceeds your cost
basis in the Contract. If the Designated Beneficiary elects that the lump
sum not be paid in order to receive annuity payments that begin within one
year of the decedent's death, different tax rules apply. See "Annuity
Payments" below. For Non-Qualified Contracts, 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 Contracts prior to
annuitization are first included in gross income to the extent Contract
Value exceeds purchase payments. Then, to the extent the Contract Value
does not exceed purchase payments, such withdrawals are treated as a non-
taxable return of principal to you. For partial withdrawals under a
Qualified Contract, 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 Contracts is generally zero, partial surrender
amounts will generally be fully taxed as ordinary income.
If you assign or pledge a Non-Qualified Contract, you will be treated as if
you had received the amount assigned or pledged. You will be subject to
taxation under the rules applicable to partial withdrawals or surrenders.
If you give away your Contract to anyone other than your spouse, you are
treated for income tax purposes as if you had fully surrendered the
Contract.
A special computational rule applies if we issue to you, during any
calendar year, two or more Contracts, or one or more Contracts and one or
more of our other annuity contracts. Under this rule, the amount of any
distribution includable in your gross income is determined under Section
72(e) of the Code. All of the contracts will be treated as one contract. We
believe this means the amount of any distribution under any one Contract
will be includable in gross income to the extent that at the time of
distribution the sum of the values for all the Contracts or contracts
exceeds the sum of each contract's cost basis.
Annuity Payments. We determine the non-taxable portion of each variable
annuity payment by dividing the cost basis of your values allocated to
Variable Account Value by the total number of expected payments. The
remaining portion of each payment is taxable. Such taxable portion is taxed
at ordinary income rates. For Qualified Contracts, 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.
Following any change by the payee to variable annuity payments under Option
A, other than a change of the payment day of the month where the remaining
payment length stays the same, the non-taxable portion of each payment will
be recalculated in accordance with IRS standards.
Penalty Tax. Payments received by you, Annuitants, and Designated
Beneficiaries under Contracts 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 the following amounts received:
o after the taxpayer attains age 59-1/2;
o in a series of substantially equal payments made for life or life
expectancy;
o after the death of the Contract Owner (or, where the Contract
Owner is not a human being, after the death of the Annuitant);
o if the taxpayer becomes totally and permanently disabled; or
o under a Non-Qualified Contract's annuity payment option that
provides for a series of substantially equal payments; provided
only that one purchase payment is made to the Contract, that the
Contract is not issued as a result of a Section 1035 exchange,
and that the first annuity payment begins in the first Contract
Year.
Income Tax Withholding. We are required to withhold federal income taxes on
taxable amounts paid under Contracts unless the recipient elects not to
have withholding apply. We will notify recipients of their right to elect
not to have withholding apply.
Section 1035 Exchanges. You may purchase a Non-Qualified Contract 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 our understanding that in such an event:
o the new Contract will be subject to the distribution-at-death
rules described in "Death Provisions for Non-Qualified
Contracts";
o 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 10 years prior to the distribution; and
o 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.
We base our understanding of the above principally on legislative reports
prepared by the Staff of the Congressional Joint Committee on Taxation.
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 intend to meet the diversification requirements for the
Contract, as those requirements may change from time to time. If the
diversification requirements are not satisfied, the Contract will not be
treated as an annuity contract. As a consequence, income earned on a
Contract would be taxable to you in the year in which diversification
requirements were not satisfied, including previously non-taxable income
earned in prior years. As a further consequence, we could 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 your
control of the investments of a segregated asset account may cause you,
rather than us, to be treated as the owner of the assets of the account.
The regulations could impose requirements that are not reflected in the
Contract. We, however, have reserved certain rights to alter the Contract
and investment alternatives so as to comply with such regulations. Since no
regulations have 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, you are urged to consult with your tax
adviser.
Qualified Plans
The variable annuity Contract may be used with certain Qualified Plans. The
Contract includes features such as tax deferral on accumulated earnings.
Qualified Plans provide their own tax deferral benefit. Please consult a
tax advisor for information specific to your circumstances in order to
determine whether the Contract is an appropriate investment for you.
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, we do not attempt to provide more than general
information about the use of the Contract with Qualified Plans.
Participants under such Qualified Plans, as well as Contract 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 Contract. Following is a brief description of the
Qualified Plans and of the use of the Contract in connection with them.
Purchasers of the Contract should seek competent advice concerning the
terms and conditions of the particular Qualified Plan and use of the
Contract with that Plan.
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 to contribute, 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.
Annuity Purchases by Nonresident Aliens
The discussion above provides general information regarding federal income
tax consequences to annuity purchasers who are U.S. citizens or resident
aliens. Purchasers who are not U.S. citizens or resident aliens will
generally be subject to U.S. federal income tax and withholding on annuity
distributions at a 30% rate, unless a lower rate applies in a U.S. treaty
with the purchaser's country. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may
be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to an annuity
purchase.
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with our view of present applicable law, we 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. We will vote shares for which we have not received
instructions in the same proportion as we vote shares for which we have
received instructions.
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended or if the present interpretation should change, and as a
result we determine that we are permitted to vote the shares of the
Eligible Funds in our own right, we may elect to do so.
You have the voting interest under a Contract prior to the Income Date. The
number of shares held in each Sub-account which are attributable to you is
determined by dividing your Variable Account Value in each Sub-account by
the net asset value of the applicable share of the Eligible Fund. The payee
has the voting interest after the Income Date under an annuity payment
option. 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.
We will determine the number of shares in which a person has a voting
interest as of the date established by the respective Eligible Fund for
determining shareholders eligible to vote at the meeting of the Fund. We
will solicit voting instructions in writing prior to such meeting in
accordance with the procedures established by the Eligible Fund.
Each person having a 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.
SALES OF THE CONTRACTS
The Contracts will be sold through the Internet Service Center we maintain
for this purpose. Keyport Financial Services Corp. ("KFSC"), our
subsidiary, serves as the principal underwriter for the Contract described
in this prospectus. 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. We may
also from time to time enter into selling agreements with other
broker/dealers who will also distribute the Contracts. Such broker/dealers
will be appropriately licensed to sell the Contracts.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the
Principal Underwriter are a party. We are engaged in various kinds of
routine litigation which, in our judgment, is not of material importance in
relation to our total capital and surplus.
RECORDS AND REPORTS
As presently required by the Investment Company Act of 1940 ("1940 Act")
and applicable regulations, we are responsible for maintaining all records
and accounts relating to the Variable Account. We will electronically mail
to you, at your last know e-mail address, at least semiannually after the
first Contract Year, reports containing information required by the 1940
Act or any other applicable law or regulation.
INQUIRIES BY CONTRACT OWNERS
If you have questions about your Contract, you may send an e-mail to our
Internet Service Center ([email protected]) or visit the Internet
Service Center on the world wide web at http://www.AnnuityNet.com or write
to us at Keyport Life Insurance Co., P.O. Box 691, Leesburg, VA 20178.
TABLE OF CONTENTS-STATEMENT OF ADDITIONAL INFORMATION
Page
Keyport Life Insurance Company 2
Variable Annuity Benefits 2
Variable Annuity Payment Values 2
Re-Allocating Sub-account Payments 3
Custodian 4
Principal Underwriter 4
Experts 4
Investment Performance 4
Yield for Rydex U.S. Government Money Market Sub-account 5
Financial Statements 6
Variable Account A 7
Keyport Life Insurance Company 37
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
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 Rydex variable
annuity prospectus dated ___________, 2000. The SAI is incorporated by
reference into the prospectus. A free copy of the prospectus is available
by writing Keyport at its Service Office P.O. Box 691, Leesburg, VA 20178
or upon e-mail request through our Internet Service Center website
(http://www.AnnuityNet.com) or by calling (877) 569-3789. The prospectus is
also available through the SEC website (http://www.sec.gov). In addition,
other information regarding the Company and the Separate Account is
available at the SEC website and through our Internet Service Center.
TABLE OF CONTENTS
Page
Keyport Life Insurance Company.........................................2
Variable Annuity Benefits..............................................2
Variable Annuity Payment Values......................................2
Re-Allocating Sub-Account Payments...................................3
Custodian..............................................................4
Principal Underwriter..................................................4
Experts................................................................4
Investment Performance.................................................4
Yield for Rydex U.S. Government Money Market Sub-Account.............5
Financial Statements...................................................6
Variable Account A...................................................7
Keyport Life Insurance Company......................................37
The date of this statement of additional information is __________, 2000.
RA2000.SAI
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
Liberty Mutual Insurance Company ("Liberty Mutual"), a multi-line insurance
company, is the ultimate corporate parent of Keyport. Liberty Mutual
ultimately controls Keyport through the following intervening holding
company subsidiaries: Liberty Mutual Equity Corporation, LFC Holdings Inc.,
Liberty Financial Companies, Inc. ("LFC") and SteinRoe Services, Inc.
Liberty Mutual, as of December 31, 1998, owned, indirectly, approximately
72% of the combined voting power of the outstanding stock of LFC (with the
balance being publicly held). For additional information about Keyport, see
page 8 of the prospectus.
VARIABLE ANNUITY BENEFITS
Variable Annuity Payment Values
For each variable payment option, the total dollar amount of each periodic
payment will be equal to the sum of all Sub-Account payments.
The first payment for each Sub-Account will be determined by deducting any
applicable state premium taxes and then dividing the remaining value of
that Sub-Account by $1,000 and multiplying the result by the greater of:
(a) the applicable factor from the Contract's annuity table for the
particular payment option; or (b) the factor currently offered by Keyport
at the time annuity payments begin. This current factor may be based on the
sex of the payee unless to do so would be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number
of Annuity Units remains fixed for the annuity payment period. Each Sub-
Account payment after the first one will be determined by multiplying (a)
by (b), where: (a) is the number of Sub-Account Annuity Units; and (b) is
the Sub-Account Annuity Unit value for the Valuation Period that includes
the date of the particular payment.
Variable annuity payments will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect annuity payments, Keyport uses an Annuity Unit value.
Each Sub-Account has its own Annuity Units and value per Unit. The Annuity
Unit value applicable during any Valuation Period is determined at the end
of such period.
When Keyport first purchased Eligible Fund shares on behalf of the Variable
Account, Keyport valued each Annuity Unit for each Sub-Account at a
specified dollar amount. The Unit value for each Sub-Account in any
Valuation Period thereafter is determined by multiplying the value for the
prior period by a net investment factor. This factor may be greater or
less than 1.0; therefore, the Annuity Unit may increase or decrease from
Valuation Period to Valuation Period. For each assumed annual investment
rate (AIR), Keyport calculates a net investment factor for each Sub-Account
by dividing (a) by (b), where:
(a) is equal to the net investment factor as defined in the
prospectus; and
(b) is the assumed investment factor for the current Valuation Period.
The assumed investment factor adjusts for the interest assumed in
determining the first variable annuity payment. Such factor for
any Valuation Period shall be the accumulated value, at the end of
such period, of $1.00 deposited at the beginning of such period at
the assumed annual investment rate (AIR). The AIR for Annuity
Units based on the Contract's annuity tables is 5% per year.
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. For example, consider what would happen if the actual
annualized investment return is 9%, 5%, 3%, or 0% between the time of the
first and second payments. With an actual 9% return, the 5% AIR payments
would increase in amount. With an actual 5% return, the 5% AIR payment
would stay the same. With an actual return of 3%, the 5% AIR payment would
decrease in amount. Finally, with an actual return of 0%, the 5% AIR
payments would decrease in amount.
Re-Allocating Sub-Account Payments
The number of Annuity Units for each Sub-Account under any variable annuity
option will remain fixed during the entire annuity payment period unless
the payee makes a written request for a change. Currently, a payee can
instruct Keyport to change the Sub-Account(s) used to determine the amount
of the variable annuity payments unlimited times every 12 months. The
payee's request must specify the percentage of the annuity payment that is
to be based on the investment performance of each Sub-Account. The
percentage for each Sub-Account, if not zero, must be at least 5% and must
be a whole number. At the end of the Valuation Period during which Keyport
receives the request, Keyport will: (a) value the Annuity Units for each
Sub-Account to create a total annuity value; (b) apply the new percentages
the payee has selected to this total value; and (c) recompute the number of
Annuity Units for each Sub-Account. This new number of units will remain
fixed for the remainder of the payment period unless the payee requests
another change.
<PAGE>
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 Contracts, 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, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998, and the financial statements of Keyport Life
Insurance Company-Variable Account A at December 31, 1998 and for each of
the two years in the period ended December 31, 1998, 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 Contract values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926 on
capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term
performance of capital markets in order to illustrate general long-term
risk versus reward investment scenarios. Capital markets tracked by
Ibbotson Associates include common stocks, small company stocks, long-term
corporate bonds, long-term government bonds, U.S. Treasury Bills, and the
U.S. inflation rate. Historical total returns are determined by Ibbotson
Associates for: Common Stocks, represented by the Standard and Poor's
Composite Stock Price Index (an unmanaged weighted index of 90 stocks prior
to March 1957 and 500 stocks thereafter of industrial, transportation,
utility and financial companies widely regarded by investors as
representative of the stock market); Small Company Stocks, represented by
the fifth capitalization quintile (i.e., the ninth and tenth deciles) of
stocks on the New York Stock Exchange for 1926-1981 and by the performance
of the Dimensional Fund Advisors Small Company 9/10 (for ninth and tenth
deciles) Fund thereafter; Long Term Corporate Bonds, represented beginning
in 1969 by the Salomon Brothers Long-Term High-Grade Corporate Bond Index,
which is an unmanaged index of nearly all Aaa and Aa rated bonds,
represented for 1946-1968 by backdating the Salomon Brothers Index using
Salomon Brothers' monthly yield data with a methodology similar to that
used by Salomon Brothers in computing its Index, and represented for 1925-
1945 through the use of the Standard and Poor's monthly High-Grade
Corporate Composite yield data, assuming a 4% coupon and a 20-year
maturity; Long-Term Government Bonds, measured each year using a portfolio
containing one U.S. government bond with a term of approximately twenty
years and a reasonably current coupon; U.S. Treasury Bills, measured by
rolling over each month a one-bill portfolio containing, at the beginning
of each month, the shortest-term bill having not less than one month to
maturity; Inflation, measured by the Consumer Price Index for all Urban
Consumers, not seasonably adjusted, since January, 1978 and by the Consumer
Price Index before then. The stock capital markets may be contrasted with
the corporate bond and U.S. government securities capital markets. Unlike
an investment in stock, an investment in a bond that is held to maturity
provides a fixed rate of return. Bonds have a senior priority to common
stocks in the event the issuer is liquidated and interest on bonds is
generally paid by the issuer before it makes any distributions to common
stock owners. Bonds rated in the two highest rating categories are
considered high quality and present minimal risk of default. An additional
advantage of investing in U.S. government bonds and Treasury bills is that
they are backed by the full faith and credit of the U.S. government and
thus have virtually no risk of default. Although government securities
fluctuate in price, they are highly liquid.
Average annual total return information shows the average annual
compounding percentage change applied to the value of an investment in the
Sub-account from the beginning of the measuring period to the end of that
period. This average annual total return reflects all historical investment
results, less all Sub-account and Contract charges and deductions as
required by certain regulatory rules. Average total return is not reduced
by any premium taxes. Average total return would be less if these taxes
were deducted.
In order to calculate average annual total return, we divide the change in
value of a Sub-account under a Contract surrendered on a particular date by
a hypothetical $1,000 investment in the Sub-account. We then annualize the
resulting total rate for the period to obtain the average annual
compounding percentage change during the period.
Yield for Rydex U.S. Government Money Market Sub-Account
Yield percentages for the Rydex U.S. Government Money Market Sub-Account
are calculated using the method prescribed by the Securities and Exchange
Commission. Yields reflect the deduction of the annual .90% asset-based
Contract charges. Yields do not reflect premium tax charges. The yield
would be lower if these charges were included. The following is the
standardized formula:
Yield equals: (A - B - 1) x 365
C 7
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = $0.00.
C = the Accumulation Unit value at the beginning of the 7-day period.
The yield formula assumes that the weekly net income generated by an
investment in the Rydex U.S. Government Money Market Sub-Account will
continue over an entire year.
FINANCIAL STATEMENTS
The financial statements of the Variable Account and Keyport Life Insurance
Company 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 Contracts and should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
The financial statements for the Variable Account do not reflect the
Contract described in the prospectus because as of the date of the
financial statements, the sale of the Contract had not yet begun.
Financial Statements
Variable Account A
Keyport Life Insurance Company
[to be filed by Amendment]
<PAGE>
PART C
<PAGE>
Item 24. Financial Statements and Exhibits
+ (a) Financial Statements:
Included in Part B:
Variable Account A:
Statement of Assets and Liabilities - December 31, 1998
Statement of Operations and Changes in Net Assets for the years
ended December 31, 1998 and 1997
Notes to Financial Statements
Keyport Life Insurance Company:
Consolidated Balance Sheet - December 31, 1998 and 1997
Consolidated Income Statement for the years ended December 31,
1998, 1997 and 1996
Consolidated Statement of Stockholder's Equity for the years
ended December 31, 1998, 1997 and 1996
Consolidated Statement of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
Notes to Consolidated 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
(4a) Specimen Variable Annuity Contract of Keyport Life
Insurance Company
**** (4b) Form of Individual Retirement Annuity Endorsement
(5) Form of Application for a Variable Annuity Contract
* (6a) Articles of Incorporation of Keyport Life Insurance Company
* (6b) By-Laws of Keyport Life Insurance Company
(7) Not applicable
+ (8) Participation Agreement Among Rydex Variable Trust, PADCO
Financial Services, Inc. and Keyport Life Insurance Company
+ (9) Opinion and Consent of Counsel
+ (10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
+ (13) Schedule for Computations of Performance Quotations
** (15) Chart of Affiliations
(16) Powers of Attorney
*** (27) Financial Data Schedule
* Incorporated by reference to Registration Statement (File No.
333-1043) filed on or about February 16, 1996.
** Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (File No. 333-1043) filed on or about February
6, 1998.
*** Incorporated by reference to Post-Effective Amendment No. 19 to the
Registration Statement (File No. 333-1043) filed on or about
April 28, 1999.
**** Incorporated by reference to Registration Statement (File No.
333-84701) filed on or about August 6, 1999.
+ To be filed by amendment.
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
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
Philip K. Polkinghorn Director and President
Paul H. LeFevre, Jr. Chief Operating Officer
Bernard R. Beckerlegge Senior Vice President and General
Counsel
Bernhard M. Koch Senior Vice President and Chief
Financial Officer
Stewart R. Morrison Senior Vice President and Chief
Investment Officer
Francis E. Reinhart Senior Vice President and Chief
Information Officer
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
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
Ellen L. Wike Vice President
Daniel T. H. Yin Vice President
Nancy C. Atherton Assistant Vice President
John G. Bonvouloir Assistant Vice President &
Assistant Treasurer
Reese R. Boyd, III Assistant Vice President
Judith A. Brookins Assistant Vice President
Paul R. Coady Assistant Vice President
Stephen Cross Assistant Vice President and
Assistant Controller
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
Teresa M. Shumila Assistant Vice President
Daniel T. Smyth Assistant Vice President
Donald A. Truman Assistant Vice President and
Assistant Secretary
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), 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 Keyport Benefit Life Insurance Company
("Keyport Benefit"), a New York corporation functioning as a life insurance
company, through 100% stock ownership. Keyport Benefit files separate
financial statements.
The chart for the affiliations of the Depositor is incorporated by
reference to Post-Effective Amendment No. 7 to Registration Statement (File
No. 333-1043) filed on or about February 6, 1998.
Item 27. Number of Contract Owners.
None.
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter
are covered persons under Directors and Officers/Errors and Omissions
liability insurance policies issued by ICI Mutual Insurance Company,
Federal Insurance Company, Firemen's Fund Insurance Company, CNA and
Lumberman's Mutual Casualty Company. Insofar as indemnification for
liability arising under the Securities Act of 1933 may be permitted to
directors and officers under such insurance policies, or otherwise, the
Depositor has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Depositor of expenses incurred or paid by a director or officer in
the successful defense of any action, suit or proceeding) is asserted by
such director or officer in connection with the variable annuity contracts,
the Depositor will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters.
Keyport Financial Services Corp. is the principal underwriter of the
variable annuity contracts.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
Jacob M. Herschler Director
Paul T. Holman Director and Assistant Clerk
James J. Klopper Director, President and Clerk
Daniel C. Bryant Vice President
Rogelio P. Japlit Treasurer
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
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Boston and Commonwealth of Massachusetts, on
this 17th day of December, l999.
Variable Account A
(Registrant)
BY: Keyport Life Insurance Company
(Depositor)
BY: /s/ Philip K.Polkinghorn*
Philip K. Polkinghorn
President
*BY: /s/ James J. Klopper December 17, 1999
James J. Klopper Date
Attorney-in-Fact
* James J. Klopper has signed this document on the indicated date on
behalf of Mr. Polkinghorn pursuant to power of attorney duly executed by
him and included as part of Exhibit 16 in Pre-Effective Amendment No. 1 to
Registration Statement on Form N-4 filed on or about December 10, 1999
(File No. 333-84701; 811-7543).
<PAGE>
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/ Philip K. Polkinghorn*
Kenneth R. Leibler Philip K. Polkinghorn
Director and Chairman of the Board President
(Principal Executive Officer)
/s/ Frederick Lippitt* /s/ Bernhard M. Koch*
Frederick Lippitt Bernhard M. Koch
Director Senior Vice President
(Chief Financial Officer)
/s/ Robert C. Nyman*
Robert C. Nyman
Director
/s/ Philip K. Polkinghorn*
Philip K. Polkinghorn
Director
*BY: /s/ James J. Klopper December 17, 1999
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
incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement (File Nos. 333-84701; 811-7543) filed on or about
December 10, 1999.
<PAGE>
Exhibits
Item Page
(4a) Specimen Variable Annuity Contract of Keyport Life
Insurance Company
(5) Form of Application for a Variable Annuity Contract
9
DVA(2)/RY
Exhibit 4(a)
[Keyport Logo]
VARIABLE ANNUITY CONTRACT
If this Contract is In Force on the Income Date, We will begin making
income payments to the Annuitant. We will make such payments according to
the terms of this Contract.
RIGHT TO EXAMINE CONTRACT: You may cancel this Contract within 10 days
after You receive it by mailing it to us at our Service Office or by
canceling the Contract through Keyport's Internet Service Center. If so
returned or canceled, We will treat the Contract as though it were never
issued. Upon receipt of the Contract or upon cancellation of the Contract
through Our Internet Service Center, We will promptly refund the Contract
Value as of the date the returned Contract is received by Us or the date it
is cancelled through Our Internet Service Center plus any charges We may
have previously deducted. During this 10-day "Free-look" period and for
ten additional days to allow for delivery of the notice to Us, the funds
you invest will be held in the Rydex U.S. Government Money Market Fund sub-
account.
This is a legal contract between You and Us.
Read This Contract Carefully.
Secretary President
Variable Annuity Contract
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating - No Dividends
ANNUITY PAYMENTS AND OTHER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE
OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR
AMOUNT. THIS IS EXPLAINED FURTHER IN PARTS 4 AND 5.
TABLE OF CONTENTS
Part
1 Contract Schedule
2 Sub-Accounts Available in the Variable Account
3 Definitions
4 Purchase Payments, Options, and Benefits
5 Annuity Payout Option Benefits
6 Beneficiary Provisions
7 General Provisions
8 Annuity Purchase Rates Under Variable Payment Options
PART I: CONTRACT SCHEDULE
CONTRACT NUMBER: XX-0123456
CONTRACT OWNER INFORMATION
Primary Joint
Contract Owner: John Q. Customer Mary Q. Customer
Contract Owner Address: 123 Main Street 123 Main Street
Anytown, ST 12345 Anytown, ST 12345
Contract Owner SSN/TAX ID: 123-45-6789 234-56-7890
ANNUITANT INFORMATION
Annuitant: John Q. Customer Date of Birth: 04/02/1944
Sex: Male
Joint Annuitant: Mary Q. Customer Date of Birth: 01/13/1945
Sex: Female
CONTRACT INFORMATION
Type of Contract: Non-Qualified
State of Issue:
Effective Date: July 1, 1998
Income Date: April 1, 2023
Product: [Rydex Annuity]
Annuity Asset Charge: [0.90%]
Initial Purchase Payment: $15,000.00
Initial Purchase Payment Allocation:
[Rydex Nova Fund 0%
Rydex Ursa Fund 0%
Rydex OTC Fund 0%
Rydex Precious Metals Fund 50%
Rydex U.S. Government Bond Fund 25%
Rydex Juno Fund 25%
Rydex U.S. Government Money Market Fund 0%]
BENEFICIARY INFORMATION
Primary Beneficiary Name: David Q. Customer
KEYPORT LIFE INSURANCE COMPANY CONTACT INFORMATION
Service Office: Keyport Life Insurance Company
[P.O. Box 691
Leesburg, VA 20178]
Telephone: [1-877-569-3789]
Internet Address: [http:\\www.AnnuityNet.com]
PART 2: SUB-ACCOUNTS AVAILABLE IN THE VARIABLE ACCOUNT
There are currently [seven] Sub-accounts in the Variable Account available
to the Owner. The Owner may direct Purchase Payments under the Contract to
any of the available Sub-accounts, subject to limitations. The amounts
allocated to each Sub-account will be invested at net asset value in the
shares of one of the regulated investment companies (the Funds). The Funds
are:
[1. Rydex Nova Fund
2. Rydex Ursa Fund
3. Rydex OTC Fund
4. Rydex Precious Metals Fund
5. Rydex U.S. Government Bond Fund
6. Rydex Juno Fund
7. Rydex U.S. Government Money Market Fund]
See Section 4.03 for provisions governing any limitations, substitution or
elimination of Funds.
PART 3: DEFINITIONS
Accumulation Unit - A unit of measure used to calculate the Contract Value
during the accumulation period and in other ancillary computations.
Annuitant - The person upon whose life the annuity benefit payments made
after the Income Date will be based.
Annuity Payment - An amount paid at regular intervals after the Income Date
under one of several options available to the Annuitant and/or any other
payee. The amount paid may vary.
Annuity Payment Option - Any of the forms of annuity benefit payments
allowed under this Contract.
Annuity Unit - A unit of measure, used after the Annuity Commencement Date,
to calculate the amount of variable annuity benefit payments.
Beneficiary - The person or entity designated by the Owner to receive the
Death Benefit, if any, payable upon the death of the Owner.
Code - The Internal Revenue Code (IRC) of 1986, as amended.
Contract - The agreement between Keyport Life Insurance Company and the
Owner in which Keyport provides a variable annuity.
Contract Anniversary - An anniversary of the Contract Date.
Contract Date - The effective date of this contract, as shown on the
Contract Schedule.
Contract Owner - The individual or entity who exercises rights of ownership
under this Contract.
Contract Value - The sum of the values of all the Accumulation Units
attributable to this Contract at a given time.
Contract Year - The first Contract Year is the annual period which begins
on the Contract Date. Subsequent Contract Years begin on each Contract
Anniversary.
Death Benefit - The amount payable to the Owner's designated Beneficiary
upon death of the Owner.
Electronic Fund Transfer (EFT) - a transfer of funds by transaction which
is not originated by a paper instrument such as a check or money order. In
the case of Purchase Payments made under this Contract by EFT, funds are
transferred from You to Us by Your financial institution through an
automated electronic transfer initiated pursuant to a prearranged plan
which You have approved.
Fund - Any of the eligible investment entities as shown in Part 2 into
which Purchase Payments may be allocated.
Income Date - The date on which annuity payments begin. The Income Date is
shown on the Contract Schedule. On the Income Date, funds are withdrawn to
fund Annuity payments under the Annuity Payment Option selected.
Individual Retirement Annuity (IRA) - A retirement plan qualified for
special tax treatment under the Code, including traditional IRAs under
section 408 and Roth IRAs under section 408A.
Internet Service Center - The Internet site Keyport maintains to provide
contract and other information to You and other current and prospective
annuity Contract Owners, and through which various transactions may be
performed. Some transactions may not be fully completed through the
Internet Service Center, but may also require You to fax or mailed a signed
document to Us in order to be effective or executed. The internet address
for the Internet Service Center can be found on the Contract Schedule.
Purchase Payments - Amounts paid into this Contract.
Sub-account - That portion of the Variable Account which invests in shares
of a particular Fund. There is a separate Subaccount that corresponds to
each Fund.
Valuation Date - Each day on which We and the New York Stock Exchange
("NYSE") are open for business, or any other day that the Securities
Exchange Commission requires that mutual funds, unit investment trusts, or
other investment portfolios be valued.
Valuation Period - The period commencing at the close of trading on the
NYSE on a particular Valuation Date and ending at the close of trading on
the NYSE on the next succeeding Valuation Date.
Variable Account - Keyport Life Insurance Company Variable Annuity Account
A, the segregated investment account into which the Keyport Life Insurance
Company sets aside and invests the assets attributable to this variable
annuity Contract. The Variable Account is a unit investment trust variable
separate account organized in and governed by the laws of Rhode Island, Our
state of domicile, and registered with the SEC under the Investment Company
Act of 1940.
We, Us, Our - Keyport Life Insurance Company.
You, Your - The Contract Owner and any Joint Contract Owners.
PART 4: PURCHASE PAYMENTS, OPTIONS, AND BENEFITS
4.01 Where Payable
All Purchase Payments must be made either to Keyport at its Service Office
or through the Internet Service Center. All Purchase Payments must be made
in United States Currency.
4.02 Initial and Subsequent Purchase Payments
The minimum initial Purchase Payment is [$15,000.] The minimum amount for
subsequent Purchase Payments to the Contract is [$1,000.00.] However, We
will reduce the minimum subsequent Purchase Payment to [$250] in cases
where the Contract Owner establishes automatic subsequent Purchase Payments
of no less than [$250] per month by Electronic Fund Transfer. [We reserve
the right to cancel the Contract if You make partial withdrawal(s) which
reduce the value of the Contract to less than $5,000, but any such
cancellation will be made only in accordance with the terms of the
nonforfeiture law, applicable in the state of delivery shown on the
Contract Schedule, for individual deferred annuities.]
This Contract will not be effective until We have accepted the initial
Purchase Payment during Your lifetime.
Purchase Payments may be made until the earliest of the Income Date, the
surrender of the Contract, or payment of any Death Benefit. Keyport
reserves the right to limit the sum of Purchase Payments made under this
Contract to $5,000,000.
4.03 Variable Account
Purchase Payments under the Contract are allocated to the Variable Account.
The Variable Account is for the exclusive benefit of persons entitled to
receive benefits under variable annuity contracts. The Variable Account
will not be charged with the liabilities arising from any other part of
Keyport's business. The Owner may direct Purchase Payments under the
Contract to any of the available Subaccounts. The amounts allocated to each
Subaccount will be invested at net asset value in the shares of the Funds
You select. The available Funds are shown in "Part 2: Sub-accounts
available in the Variable Account."
Keyport reserves the right to eliminate the shares of any Fund and
substitute the securities of a different Fund, investment company or mutual
fund if the shares of a Fund are no longer available for investment, or, if
in the judgment of Keyport, further investment in any Fund becomes
inappropriate in view of the purposes of the Contract. Keyport may add new
Sub-accounts investing in a new Fund. Keyport will give the Owner notice
of the elimination and substitution of any Fund within fifteen days after
such substitution occurs. Such notice will be posted on the Internet
Service Center, and sent to the current e-mail address which You have
provided to Us. Any such elimination, substitution or addition will be
made only in compliance with any applicable regulatory requirements.
Keyport will use each Purchase Payment You make under this Contract to buy
Accumulation Units in the Subaccount(s) You selected. The number of
Accumulation Units purchased will be determined by dividing the amount
directed to the Subaccount by the dollar value of an Accumulation Unit in
such Subaccount as of the next valuation of such Accumulation Unit
immediately following Our receipt of the Purchase Payment. The number of
Accumulation Units held for an Owner in a Subaccount will not change simply
because of a change in the dollar value of those Units.
4.04 Valuation of Accumulation Units
The Contract Value at any time prior to the Income Date equals the sum of
the values of the Accumulation Units credited in the Subaccounts under the
Contract.
The value of a Subaccount on any Valuation Date is the number of
Accumulation Units in the Subaccount multiplied by the value of an
Accumulation Unit in the Subaccount at the end of the Valuation Period.
Accumulation Units for each Subaccount are valued separately. Initially,
the value of an Accumulation Unit was arbitrarily established at the
inception of the Subaccount. It may increase or decrease from Valuation
Period to Valuation Period. The Accumulation Unit value for a Subaccount
for any later Valuation Period is determined as follows:
(1) The total value of Fund shares held in the Subaccount is calculated
by multiplying the number of Fund shares owned by the Subaccount at
the beginning of the Valuation Period by the net asset value per
share of the Fund at the end of the Valuation Period, and adding
any dividend or other distribution of the Fund if an ex-dividend
date occurs during the Valuation Period; minus
(2) The liabilities of the Subaccount at the end of the Valuation
Period (such liabilities include daily charges imposed on the
Subaccount, and may include a charge or credit with respect to any
taxes paid or reserved for by Keyport that Keyport determines are
as a result of the operations from the Variable Account); the
result divided by
(3) The outstanding number of Accumulation Units in the Subaccount at
the beginning of the Valuation Period.
The daily charges imposed on a Subaccount for any Valuation Period
represent the annuity asset charge, shown on the Contract Schedule,
adjusted for the number of calendar days in the Valuation Period. The
Accumulation Unit value and Annuity Unit value may increase or decrease
the dollar value of benefits under the Contract. The dollar value of
benefits will not be adversely affected by expenses incurred by Keyport.
4.05 Transfers
Prior to the earlier of:
(1) the Income Date;
(2) surrender of the Contract; or
(3) payment of any Death Benefit;
the Owner may direct a transfer of assets from one Subaccount to another
Subaccount.
A transfer will result in the redemption of Accumulation Units in one
Subaccount and the purchase of Accumulation Units in the other Subaccount.
Such a transfer will be accomplished at relative Accumulation Unit values
as of the Valuation Date the transfer request is received.
Keyport reserves the right to refuse a transfer if, in a Fund's investment
advisor's judgement, the Fund would be unable to invest effectively
according to the Fund's investment objectives as a result of such a
transfer. Keyport reserves the right to revise the transfer privilege at
any time.
4.06 Withdrawal Option
The Owner may withdraw a part of the surrender value of this Contract at
any time subject to certain limitations. The withdrawal will be effective
on the Valuation Date on which We receive a request:
(1) in writing at Our Service Office; or
(2) through the Internet Service Center.
The minimum withdrawal is $300. Partial withdrawals will not be permitted
if they lower the Contract Value below [$5,000.] Keyport reserves the
right to surrender this Contract if any withdrawal reduces the total
Contract Value to a level in which this Contract may be surrendered in
accordance with the terms set forth in the nonforfeiture law, applicable in
the state of issue shown on the Contract Schedule, for individual deferred
annuities. In such cases, We will surrender the Contract for its Contract
Value.
We will transmit to you by mail or, at Your request, by EFT, any amount
that You withdraw within seven days following the date of withdrawal;
however, We reserve the right to suspend or postpone payment for a
withdrawal when the Suspension or Deferral of Payments Provision is in
effect. See Section 4.10, "Suspension or Deferral of Payments."
The withdrawal option is not available after the Income Date.
4.07 Surrender Option
You may surrender this Contract for its surrender value. On surrender, this
Contract terminates. Surrender will be effective on the Valuation Date We
receive a Surrender request that You have signed and mailed or faxed to Our
Service Office. The Contract Surrender Value will be the total Contract
Value on the Valuation Date, less any applicable taxes.
Payment will be made within seven days after the date of surrender, subject
to the Suspension or Deferral of Payments Provision (see Section 4.10).
The surrender option is not available after the Income Date.
4.08 Death of Owner
Before the Annuity Commencement Date:
If there is a single Owner, upon the death of the Owner, Keyport will pay a
Death Benefit to the designated Beneficiary(s). If the designated
Beneficiary is the surviving spouse of the deceased Owner, the designated
Beneficiary may elect to continue the Contract as the new Owner in lieu of
receiving the Death Benefit. If there is no designated Beneficiary,
Keyport will pay a Death Benefit to the Owner's estate.
In cases where a designated Beneficiary continues the Contract as the new
Owner, We will pay a Death Benefit to the designated Beneficiary(s)
selected by the new Owner or, if none, We will pay the Death Benefit to the
new Owner's estate.
If there are Joint Owners, upon the death of the first Joint Owner, the
surviving Joint Owner as the spouse of the deceased Joint Owner, may either
continue the Contract as sole Owner or receive a Death Benefit. Upon the
death of the Joint Owner who continues the Contract, Keyport will pay a
Death Benefit to the designated Beneficiary(s).
The Death Benefit will be paid if Keyport is in receipt of:
(1) proof of death acceptable to Us;
(2) authorization for payment; and
(3) all claim forms, fully completed.
Proof of death may be:
(1) a certified copy of a death certificate;
(2) a certified copy of the statement of death from the attending
physician;
(3) a certified copy of a decree of a court of competent
jurisdiction as to the findings of death; or
(4) any other proof of death acceptable to Keyport.
All Death Benefit payments will be subject to the laws and regulations
governing death benefits.
Notwithstanding any provision of this Contract to the contrary, no payment
of Death Benefits provided under the Contract will be allowed that does not
satisfy the requirements of Code section 72(s) or 401(a)(9), as applicable,
and as amended from time to time. If the Owner is a corporation or other
non-individual person (non-natural person), the death of the Annuitant will
be treated as the death of the Owner.
Determination of amounts
In the case of the death of the Owner, or in the case of Joint Owners, one
of the Owners; this Contract provides a Death Benefit equal to the greater
of: (1) Contract Value; (2) the sum of Purchase Payments paid into the
Contract minus all withdrawals and applicable State premium taxes.
Payment of amounts
The Death Benefit payable on the death of the Owner, or after the death of
the first Joint Owner, or upon the death of the spouse who continues the
Contract, will be distributed to the designated Beneficiary(s) as follows:
(1) The Death Benefit must be completely distributed within five
years of the Owner's date of death; or
(2) The designated Beneficiary may elect, within the one year period
after the Owner's date of death, to receive the Death Benefit in
substantially equal installments over the life of such
designated Beneficiary or over a period not extending beyond the
life expectancy of such designated Beneficiary, provided that
such distributions begin not later than one year after the
Owner's date of death.
If a lump sum settlement is elected, We will pay the proceeds to You within
seven days of Our approval of the claim. This payment may be postponed
pursuant to the Suspension or Deferral of Payments Provision. See Section
4.10.
On or after the Income Date:
If the Owner dies on or after the Income Date, any remaining benefits
payable will continue to be distributed under the Annuity Payment Option
then in effect. All of the Owner's rights granted by the Contract will
pass to the Joint Owner, if any; otherwise to the designated Beneficiary.
If there is no named Beneficiary at the time of the Owner's death, then the
Owner's rights will pass to the Annuitant, if applicable. If no named
Beneficiary, Annuitant, or Joint Annuitant survives the Owner, any
remaining annuity benefit payments will continue to the Owner's estate.
4.09 Death of Annuitant
Before the Income Date:
If the Annuitant is also the Owner or a Joint Owner, then the Death Benefit
paid will be subject to the Contract provisions regarding death of the
Owner. If, based on the provisions of the Contract, the surviving spouse of
the Owner/Annuitant assumes the Contract, then the contingent Annuitant
becomes the Annuitant. If no contingent Annuitant is named, the surviving
spouse becomes the Annuitant.
If an Annuitant who is not the Owner or Joint Owner dies, then the
contingent Annuitant, if any, becomes the Annuitant. If no contingent
Annuitant is named, the Owner (or the younger of the Joint Owners) becomes
the Annuitant.
On or After the Income Date:
On receipt of proof of death, as described in Section 4.08, of the
Annuitant or both Joint Annuitants, any remaining annuity benefit payments
under the Annuity Payment Option will be paid to the Owner, if living,
otherwise, to the Beneficiary. If there is no Beneficiary, any remaining
benefit payments will continue to the Annuitant's estate.
4.10 Suspension or Deferral of Payments
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender, or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); or
(2) trading of the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal
of assets and securities of the Variable Account is not
reasonably practicable; or
(4) the Securities Exchange Commission, by order or pronouncement,
so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities Exchange
Commission govern as to whether the conditions described in (2) and (3)
above exist.
PART 5: ANNUITY PAYOUT OPTION BENEFITS
5.01 Annuity Payments
An election to receive payments under an Annuity Payment Option must be
made before the Income Date.
If an Annuity Payment Option is not chosen before the Income Date, payments
will commence to the Annuitant on the Income Date under the Annuity Payment
Option which provides a life annuity with annuity payments guaranteed for
10 years.
The Income Date may be deferred upon request (either in writing or through
the Internet Service Center) by the Owner and any Beneficiary who cannot be
changed. Purchase Payments may be made until the new Income Date.
5.02 Choice of Annuity Payment Option
By Owner -- Before the Income Date, the Owner may choose or change any
Annuity Payment Option.
By Beneficiary -- At the time proceeds are payable to a Beneficiary, the
Beneficiary may choose or change the selected Annuity Payment Option if the
change meets the requirements of Code section 72(s) or 401(a)(9) if
proceeds are available to the Beneficiary in a lump sum. The Beneficiary
then becomes the Annuitant.
A choice or change in the Annuity Payment Option may only be made through a
signed request that is mailed or faxed to Keyport at Our Service Office.
After the Income Date, the Annuity Payment Option may not be changed.
5.03 Choice of Annuitant and Income Date
If the Owner is a natural person, then prior to the earlier of:
(1) the Income Date;
(2) surrender of the Contract; or
(3) payment of any Death Benefit;
the Owner may, with Our concurrence, change the Annuitant(s) or the Income
Date. However, Income Date must occur when at least one of the following
conditions continues to apply: (1) the Annuitant(s) has not exceeded age
90, or (2) the Income Date is not more than 10 years from the Contract
Date. After the Income Date, the Annuity Payment Option may not be changed.
If the Owner is a non-natural person, then prior to the earlier of:
(1) the Income Date;
(2) surrender of the Contract; or
(3) payment of any Death Benefit;
the Owner may add the spouse of the Annuitant as a Joint Annuitant and may
change the Income Date. However, the Income Date must occur when at least
one of the following conditions continue to apply: (1) the Annuitant(s) has
not exceeded age 90, or (2) the Income Date is not more than 10 years from
the Contract Date. After the Income Date, the Annuity Payment Option may
not be changed.
5.04 Annuity Payment Options
(A) Income for a fixed number of years - payments will be made for a
chosen number of years, not less than 5 nor more than 50. You may choose a
period certain longer than 30 years only if it does not exceed the
difference between age 100 and the Annuitant's age on the date of first
payment. At any time, however, the payee may elect to receive the present
value of the remaining variable annuity payments, commuted at the 5%
interest rate used to create the annuity factor for this option.
(B) Life Income with 10 Years of Payments Guaranteed - payments will be
made for life with a 10 year period certain. If, at the death of the
payee, Annuity Payments have been made for a period less than 10 years, we
will continue payments during the remainder of the period to the successor
payee; or, the successor payee may elect to receive in a lump sum the
present value of the remaining Annuity Payments, commuted at the 5%
interest rate used to create the annuity factor for this option.
(C) Joint and Last Survivor Income - payments will be made during the
joint life of the Annuitant and a joint Annuitant of the Owner's choice.
Payments will be made for life with no period certain. Annuity Payments
will continue for as long as either the payee or a designated second
natural person is alive. The amount of Annuity Payments will depend on the
age of both persons on the Income Date and it may also depend on each
person's sex.
(D) Other Annuity payment Options We may offer from time to time.
On the Income Date, at the time an Annuity Payment Option is selected under
the provisions of this Contract, the total Contract Value (after deduction
of any applicable Premium Taxes) will be applied to provide variable
Annuity Payment benefits under the Annuity Payment Option You select. If
you do not select an Annuity Payment Option before the Income Date, We will
automatically choose Option B.
The amount of annuity payment will depend on the age and sex (except in
cases where unisex rates are required) of the Annuitant as of the Income
Date. Annuity payments will be made once each month. The Contract Value
and Annuity Unit value used to effect benefit payments will be calculated
as of the Income Date and on a monthly basis from the Income Date
thereafter. Payments will be made within fourteen days following each
monthly calculation of benefit payment, subject to the Suspension or
Deferral of Payments provision. See Section 4.10.
5.05 Determination of the Amount of the First Variable Annuity Payment
Part 8 of this Contract illustrates the minimum payment amounts and the age
adjustments that will be used to determine the first monthly payment under
a variable Annuity Payment Option. The tables show the dollar amount of the
first monthly payment that can be purchased with each $1,000 of Contract
Value after deduction of any applicable premium taxes.. Amounts shown use
the 1983 'a' individual annuity mortality table, modified, with an assumed
rate of return of 5% per year.
5.06 Determination of the Amount of Subsequent Variable Annuity Payments
The first variable annuity payment is sub-divided into components, each of
which represents the product of:
(1) the percentage elected by the Contract Owner of a specific Sub-
account; and
(2) the entire first variable annuity payment.
On the Income Date, the Contract is credited with Annuity Units for each
Sub-account. The number of Annuity Units credited is computed by dividing
the component of the first payment attributable to a specific Sub-account
by the Annuity Unit value for that Subaccount. Each component of each
variable annuity payment after the first payment attributable to a specific
Subaccount will be determined by multiplying the Annuity Unit value for
that Subaccount on the monthly anniversary of the Income Date by the number
of Annuity Units attributable to that Sub-account. The total variable
annuity payment will be the sum of the payments attributable to each Sub-
account. In the absence of transfers between Sub-accounts, the number of
Annuity Units attributable to each Sub-account remains constant, although
the Annuity Unit values will vary with the investment performance of the
Sub-accounts.
The Annuity Unit value for any Valuation Period for any Subaccount is
determined by multiplying the Annuity Unit value for the immediately
preceding Valuation Period by the product of (A) and (B), where:
(A) is 0.999866337 raised to a power equal to the number of days in
the current Valuation Period; and
(B) is the Accumulation Unit value of the same Subaccount for this
Valuation Period divided by the Accumulation Unit value of the
same Subaccount for the immediately preceding Valuation Period.
Keyport will value all assets in the Subaccount in accordance with the
provisions of applicable laws, rules, and regulations. The determination by
Keyport of the value of an Accumulation Unit or of an Annuity Unit,
consistent with the above described methodology, will be binding on the
Owner(s) and any Beneficiaries.
Keyport guarantees that the dollar amount of each payment after the first
will not be affected by variations in mortality experience from mortality
assumptions on which the first payment is based.
After the Income Date, the Owner may direct a transfer of assets from one
Subaccount to another. Such transfers will be limited to three (3) per
Contract Year.
A transfer from one Subaccount to another Subaccount will result in the
purchase of Annuity Units in one Subaccount, and the redemption of Annuity
Units in the other Subaccount. Such a transfer will be accomplished at
relative Annuity Unit values as of the Valuation Date the transfer request
is received.
5.07 Proof of Age
Payment will be subject to proof of age acceptable to Keyport, such as a
certified copy of a birth certificate.
5.08 Evidence of Survival
If payments depend upon the continuing life of an Annuitant, We may require
proof that the Annuitant is alive when each payment is due.
5.09 Change in Annuity Payment Option
The Annuity Payment Option may not be changed after the Income Date.
PART 6: BENEFICIARY
6.01 Designation
The Owner may designate a Beneficiary(s). Unless there are Joint Owners,
the designated Beneficiary(s) will receive the Death Benefit proceeds upon
the death of the Owner.
If there are Joint Owners, the surviving Joint Owner will receive the Death
Benefit proceeds upon the death of the first Joint Owner. The surviving
Joint Owner will be treated as the primary, designated Beneficiary. Any
other Beneficiary designation on record at the time of death of the first
Joint Owner will be treated as a contingent Beneficiary.
If the surviving Joint Owner, as spouse of the deceased Joint Owner,
continues the Contract as the sole Owner in lieu of receiving the Death
Benefit proceeds, then the designated Beneficiary(s) will receive the Death
Benefit proceeds upon the death of the surviving spouse.
Unless otherwise stated in the Beneficiary designation, designated
Beneficiaries will share the Death Benefit equally.
6.02 Change
The Owner may change any designated Beneficiary, unless prohibited by the
previous designation. A change of Beneficiary will then revoke any
previous designation.
A change may be made by mailing or faxing a signed request to Our Service
Office. The change will become effective upon Our receipt of Your signed
request.
6.03 Death
Unless otherwise provided in the Beneficiary designation, if any
Beneficiary dies before the Owner, that Beneficiary's interest will go to
any other named Beneficiaries, according to their respective interests. If
there are no other named Beneficiaries, benefits will be paid to the
contingent Beneficiary(s), if any. Any other Beneficiary designation on
record at the time of death of the first joint Owner will be treated as a
contingent Beneficiary. Before the Income Date, if no Beneficiary or
contingent Beneficiary survives the Owner the proceeds will be paid to the
Owner's estate.
Once a Beneficiary is entitled to Death Benefit proceeds, the Beneficiary
may name his or her own Beneficiary(s) to receive any remaining benefits
due under the Contract, should the Beneficiary die prior to receipt of all
benefits. If no Beneficiary is named, or if the named Beneficiary
predeceases the original Beneficiary, any remaining benefits will continue
to the original Beneficiary's estate. The Beneficiary designation must be
signed and mailed or faxed to Our Service Office.
PART 7: GENERAL PROVISIONS
7.01 The Contract
The Contract, the application, and any endorsements attached to the
Contract constitute the entire Contract. Only the president, a vice
president, or the secretary of Keyport has the power, on behalf of Keyport,
to change, modify, or waive any provisions of this Contract.
We reserve the right to unilaterally change the Contract for the purpose of
keeping the Contract in compliance with federal or state law.
Any changes, modifications, or waivers must be in writing. No
representative or person other than the above named officers has authority
to change or modify this Contract or waive any of its provisions. All terms
used in this Contract will have their usual and customary meaning except
when specifically defined.
7.02 The Internet Service Center
The Internet Service Center is maintained to provide information to current
and prospective customers and to enable various transactions. For security
the Internet Service Center may issue the Owner a PIN or password. The
Owner is responsible for any use of this PIN or password. For legal
reasons certain transactions require a document with a signature (faxed or
mailed). E-mailed requests for transactions that require a signed document
will not be processed. Detailed instructions on how to perform various
transactions such as transferring funds from one Subaccount to another
Subaccount, changing the Beneficiary, or making a withdrawal can be found
at the Internet Service Center. You agree to receive all required documents
through the Internet Service Center. Documents will be considered to be
delivered to You when they
are placed in Your personal folder at the Internet Service Center.
7.03 Ownership
The Owner is the person who has the ability to exercise the rights within
this Contract.
The Owner may name only his or her spouse a Joint Owner. Joint Owner(s)
will be treated as having equal, undivided interests in the Contract,
including rights of survivorship. Joint Owners may not exercise Ownership
rights in the Contract independently of one another, and for certain
requests or transactions, We reserve the right to require the request to be
signed by both Joint Owners.
Before the Income Date, the Owner may, with Our concurrence, change the
Annuitant. A request for such change must be made in a signed request that
is mailed or faxed to Us. The Annuitant may not be changed in a Contract
owned by a non-natural person. The Owner may also name a Contingent
Annuitant by submitting a signed request designating the Contingent
Annuitant by fax or mail to our Service Office. The contingent Annuitant
designation is no longer applicable after the Income Date.
7.04 Assignments
If used with an Individual Retirement Annuity, the Contract will not be
transferable. It may not be sold, assigned, discounted or pledged as
collateral for a loan or as security for the performance of an obligation
or for any other purpose.
7.05 Incontestability
We will not contest this Contract.
7.06 Misstatement of Age and/or Sex
If the age and/or sex of the Annuitant has been misstated, the benefits
available under this Contract will be those which the Purchase Payments
would have purchased using the correct age and/or sex. Any underpayment
already made by Keyport will be made up immediately and any overpayments
already made by Keyport will be charged against the annuity payments
falling due after the correction is made.
7.07 Nonparticipating
The Contract is nonparticipating and will not share in the surplus earnings
of Keyport.
7.08 Voting Rights
We will vote the Fund shares held in the Variable Account meetings of the
various Funds. The votes will be cast according to the instructions of
Owners with interests in a Fund. An Owner may give instructions for a
number of votes equal to the Owner's percentage interest in a sub-account
multiplied by the total number of votes attributable to the sub-account;
fractional shares will be recognized.
Ownership of this Contract will not entitle any person to vote at any
meeting of shareholders of Keyport Life Insurance Co.
7.09 Ownership of the Assets
Keyport will have exclusive and absolute ownership and control of its
assets, including all assets in the Variable Account.
7.10 Premium Tax
State and local government premium tax, if applicable, will be deducted
from Purchase
Payments or Contract Value when incurred by Keyport or at another time of
Keyport's choosing.
7.11 Maximum Issue Age
This Contract will not be issued to Owners or Joint Owners over the age of
90, or for Contracts issued as part of an Individual Retirement Annuity
("IRA") or other tax-qualified plan, this Contract will not be issued to
Owners or Joint Owners over the age of 75.
7.12 Reports
Keyport will send a report to the Owner at least once each Contract Year.
The report will be mailed electronically to the last e-mail address known
to Keyport. The report will include a statement of the number of units
credited to the Variable Account under this contract and the dollar value
of such units. The information in the report will be as of a date not more
than one month prior to the date the report is e-mailed. In addition,
Keyport will e-mail the Owner at least once in each Contract Year a report
of the investments held in the Sub-accounts under this contract. These
reports will also be available to the Owner through the Internet Service
Center.
PART 8: ANNUITY PURCHASE RATES FOR VARIABLE PAYMENT OPTIONS
Using the Tables
Tables 2 and 3 are age-dependent. The amount of the first annuity payment
will be based on an age a specified number of years younger than the
person's then-attained age (i.e., age last birthday). This age setback is
as follows:
Date of First Payment Age Setback
1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2 and 3 in accordance with the next
section. Upon request, We will tell You any such amount.
Basis of Calculation
Table 1 is based on interest at 5%. Tables 2 and 3 are based on the 1983
Individual Annuity Valuation Tables, weighted 40% male and 60% female, with
interest at 5% (Tables 2 and 3), projected dynamically with Projection
Scale G.
[TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION A FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $18.74 12 $9.16 19 $6.71 25 $5.76
6 15.99 13 8.64 20 6.51 26 5.65
7 14.02 14 8.20 21 6.33 27 5.54
8 12.56 15 7.82 22 6.17 28 5.45
9 11.42 16 7.49 23 6.02 29 5.36
10 10.51 17 7.20 24 5.88 30 5.28
11 9.77 18 6.94
]
[TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $4.39 43 $4.73 56 $5.43 69 $6.90 82 $9.22
31 4.40 44 4.77 57 5.51 70 7.06 83 9.38
32 4.42 45 4.81 58 5.59 71 7.22 84 9.52
33 4.44 46 4.85 59 5.68 72 7.39 85 9.66
34 4.46 47 4.89 60 5.78 73 7.57 86 9.79
35 4.49 48 4.94 61 5.88 74 7.75 87 9.90
36 4.51 49 4.99 62 5.98 75 7.94 88 10.01
37 4.54 50 5.04 63 6.09 76 8.12 89 10.10
38 4.57 51 5.10 64 6.21 77 8.31 90 10.18
39 4.59 52 5.16 65 6.34 78 8.50 91 10.25
40 4.63 53 5.22 66 6.47 79 8.69 92 10.31
41 4.66 54 5.29 67 6.60 80 8.87 93 10.36
42 4.69 55 5.36 68 6.75 81 9.05 94 10.40
95 10.43]
[TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30$4.24$4.27$4.29$4.31$4.33$4.34$4.36$4.37$4.37$4.38$4.38$4.39$4.39$ 4.39
35 4.30 4.34 4.37 4.40 4.42 4.44 4.46 4.47 4.48 4.48 4.49 4.49 4.49
40 4.39 4.44 4.48 4.52 4.55 4.57 4.59 4.61 4.62 4.63 4.63 4.63
45 4.50 4.57 4.62 4.68 4.72 4.75 4.78 4.80 4.81 4.82 4.82
50 4.66 4.75 4.83 4.90 4.95 5.00 5.03 5.05 5.06 5.07
55 4.87 4.99 5.11 5.20 5.28 5.33 5.37 5.39 5.40
60 5.17 5.34 5.50 5.63 5.73 5.79 5.83 5.85
65 5.60 5.85 6.07 6.24 6.37 6.44 6.49
70 6.22 6.58 6.89 7.12 7.28 7.37
75 7.13 7.66 8.10 8.41 8.61
80 8.48 9.25 9.86 10.29
85 10.4711.56 12.42
90 13.27 14.78
95 17.11]
Endorsements
To be inserted only by Us
[Keyport Logo]
Service Office:
[Keyport Life Insurance Co.
P.O. Box 691
Leesburg, VA 20178]
Variable Annuity Certificate
Flexible Purchase Payments
Deferred Income Payments
Nonparticipating - No Dividends
EXHIBIT 5
Complete this form by signing Keyport Life Insurance Co.
it and either fax or mail the P.O. Box 691
form to the address on the right Leesburg, VA 20178
Fax (703) 443-8940
If you have any questions or need
assistance with this form,
please contact us at
Help @ Mail.AnnuityNet.com
Rydex Annuity Application_________________________________ _
Contract Owner: Joint Contract Owner:
(May only be spouse)
________________________________ _________________________________
Full Legal Name Full Legal Name
________________________________ _________________________________
Street Address Street Address
________________________________ _________________________________
Street Address (Continued) Street Address (Continued)
________________________________ _________________________________
City, State Zip City, State Zip
________________________________ _________________________________
email Address/Phone email Address/Phone
Social Security # Social Security #
Date of Birth Sex Date of Birth Sex
Annuitant(s)
Beneficiary Social Security Type
Contract Type
__________________________________________________________________________
Allocation After the free look period, please allocate my initial
Purchase Payment of ______________ as follows:
This allocation will apply to future purchase
payments unless otherwise specified through
the Internet Service Center.
_% Rydex Nova Fund
_% Rydex Ursa Fund
_% Rydex OTC Fund
_% Rydex Precious Metals Fund
_% Rydex U.S. Government Bond Fund
_% Rydex Juno Fund
_% Rydex U.S. Government Money Market Fund
Replacements Will the proposed contract replace any existing annuity or
insurance contract (including any Keyport Life Insurance
Co. contracts) which have been, or are being, reduced in
premium amount, placed on paid-up, or surrendered? ____
(if "Yes")
________________________________________________________
Existing Company
________________________________________________________
Address
___________________________ ________________________
Policy No. Approximate Amount
Internet Service Center and Telephone Authorization
I hereby consent to receive all documents, including,
without limitation, the annuity contract, required in
connection with the variable annuity through the Internet
Service Center. I hereby authorize Keyport Life Insurance
Company to accept any instructions received through the
Internet Service Center or by telephone from any person who
Can furnish proper identification. The undersigned agrees
that Keyport Life Insurance Co. is not liable for any loss
arising from following such instructions.
Initial Here Initial of Contract Owner:____________
Automatic
Bank Draft
to ________________________ ______________________________
Bank Name ABA Number
________________________ ________________________________
Bank Street Address City, State Zip
________________________ _________________ ______________
Automatic bank draft Checking Account# Monthly Amount
Start date
I/We hereby request and authorize you to pay and charge to
my/our account checks or electronic fund transfer debits
processed by and payable to the order of Keyport Life
Insurance Co., P.O.Box 691, Leesburg, VA 20178, provided
there are sufficient collected funds in said account to pay
the same upon presentation. It will not be necessary for any
officer or employee of Keyport Life Insurance Co. to sign
such checks. I/We agree that your rights in respect to each
such check shall be the same as if it were a check drawn on
you and signed personally by me/us. This authority is to
remain in effect until revoked by me/us, and until you
actually receive such notice I/We agree that you shall be
fully protected in honoring any such check or electronic fund
transfer debit. In addition to regular bank draft I/We
authorize such ad hoc drafts as are requested through the
Internet Service Center. I/We further agree that if any such
check or electronic fund transfer debit be dishonored, whether
with or without cause and whether intentionally or
inadvertently, you shall be under no liability whatsoever even
though such dishonor results in the forfeiture of insurance or
investment loss to me/us.
_____________________________ _____________________________
Signature(s)EXACTLY as shown Signature(s)EXACTLY as shown
on bank records on bank records
_____________________________ _____________________________
Print full legal name(s) Date Print full legal name(s) Date
I acknowledge receipt of a prospectus. I agree to accept the
copy of the application (without original signature) delivered
to me with the Keyport Life Insurance contract as a binding,
valid contract. Documents will be considered delivered when
Keyport places them in the Contract Owner's personal folder at
the Internet Service Center. I understand all payments and
values provided by this contract are based on the investment
experience of a variable account and so are variable and are
not guaranteed as to a fixed dollar amount.
Signatures
Certification
Under penalty of perjury, the contract Owner certifies that
The social security or taxpayer ID number is correct as it
appears in this application.
___________________________________________________________
Application signed at
Sign Here ________________________________ __________________________
Signature of Contract Date Signature of Joint Date
Owner Contract Owner
________________________________ ________________________
Full Name of Contract Owner Full Name of Joint Contract
Owner
Form APP/DVA(2)/RY
