66
As filed with the Securities and Exchange Commission on January 29, 1999.
Registration Nos. 333-1043
811-7543
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22 [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
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 Certificate Features
Fee Table
Examples
Explanation of Fee Tables and Examples
4. . . . . . . . . .[Condensed Financial Information]
Performance Information
5. . . . . . . . . .Keyport and the Variable Account
Eligible Funds
6. . . . . . . . . .Deductions
7. . . . . . . . . .Allocations of Purchase Payments
Transfer of Variable Account Value
Substitution of Eligible Funds and Other Variable
Account Changes
Modification of the Certificate
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates Certificate
Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Benefits
Suspension of Payments
Inquiries by Certificate Owners
8. . . . . . . . . .Annuity Provisions
9. . . . . . . . . .Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates Annuity
Options
10. . . . . . . . . .Purchase Payments and Applications
Variable Account Value Valuation Periods
Net Investment Factor Sales of the Certificates
11. . . . . . . . . .Partial Withdrawals and Surrender
Option A: Income For a Fixed Number of Years
Right to Revoke
12. . . . . . . . . .Tax Status
13. . . . . . . . . .Legal Proceedings
14. . . . . . . . . .Table of Contents - Statement of Additional Information
Caption in Statement of Additional Information
15. . . . . . . . . .Cover Page
16. . . . . . . . . .Table of Contents
17. . . . . . . . . .Keyport Life Insurance Company
18. . . . . . . . . .Experts
19. . . . . . . . . .Not applicable
20. . . . . . . . . .Principal Underwriter
21. . . . . . . . . .Investment Performance
22. . . . . . . . . .Variable Annuity Benefits
23. . . . . . . . . .Financial Statements
<PAGE>
This Amendment No. 16 to the Registration Statement on Form N-4 which
initially became effective on October 18, 1996 (the "Registration
Statement") is being filed pursuant to Rule 485(a) under the Securities Act
of 1933, as amended, to supplement the Registration Statement with a
separate prospectus and statement of additional information ("SAI"), and
related exhibits, describing a generic form of the Group and Individual
Flexible Premium Deferred Annuity Contracts. This Amendment relates only to
the prospectus, SAI and exhibits included in this Amendment and does not
otherwise delete, amend, or supersede any information contained in Post
Effective Amendment Nos. 10, 12, and 14 to the Registration Statement.
<PAGE>
PART A
<PAGE>
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The information contained within double rows of asterisks is
provided at the request of the staff of the Securities and
Exchange Commission. It is not and will not be part of any
documents delivered to purchasers or existing owners, and is
included solely for purposes of clarifying the content of this
registration statement. In addition, throughout the prospectus
and statement of additional information ("SAI") that follow there are
similar inserts that specifically summarize the parameters of change
for the particular design feature.
This registration statement includes a prospectus and SAI that
describes a generic form of the Group and Individual Flexible
Premium Deferred Annuity Contracts (the "Contracts") that are the
subject of the registration statement. The prospectus and SAI
contain numerous bracketed portions to indicate those portions
which may be included or eliminated in any particular form of the
Contracts, including but not limited to those, as follows:
death benefits;
funding media;
withdrawal rights;
transfer privileges;
annuity options;
other features
such as dollar cost averaging,
asset allocation, systematic withdrawals, and
Account rebalancing.
In all cases variations in other bracketed features, such as issue and
annuity ages and interest rates, will be in conformity with state
insurance law. Bracketed features representing maximum limits for
which a range is not provided will not exceed, but may be less than,
the amount shown. Bracketed features representing minimum limits for
which a range is not provided will not be less than, but may exceed,
the amount shown.
The prospectus and SAI also include bracketed references to the fees
and charges to be imposed under the particular form of the Contract.
Of course, in each case, Keyport only will impose such charges in a
manner and subject to the conditions of applicable rules. In
connection with the various charges under the Contracts, Keyport and
its separate accounts will rely upon and be limited by such rules as 0
1(e), 6c-8, and 22d-2 under the Investment Company Act of 1940, as
amended, and in compliance with their respective requirements. Any
descriptions of the potential range of fees and charges should be read
in the context of such rules requirements.
Each form of the Contracts will be offered pursuant to a separate
prospectus and a separate or combined SAI, as appropriate. The content
of all prospectuses and SAIs will be identical with respect to
contractual and securities law related features to those contained in
this registration statement, except for provisions that are bracketed
and which will vary within the parameters established herein, and
except for non-material changes consistent with the requirements of
Rule 485(b) under the 1933 Act ("Rule 485(b)").
Except as provided for by Rule 485(b), each prospectus and SAI and
related exhibits will be filed pursuant to Rule 485(a) with a request
for expedited or selective review consistent with precedent and the
fact that all relevant disclosure is included in this Post-Effective
Amendment No. 17.
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<PAGE>
- ---------------------------------------------------------------------------
Prospectus for
[Variable Annuity]
Group And Individual Flexible Purchase Payment
Deferred Variable Annuity Contracts
issued by
Variable Account A
of
Keyport Life Insurance Company
This prospectus describes the [XXXXXXX] variable annuity group Contracts
and Certificates offered by Keyport Life Insurance Company. The prospectus
also offers the Certificates in the form of Individual Contracts, where
required by certain states. All discussion of Certificates applies to the
Contracts and Individual Contracts unless specified otherwise.
The Contracts and Certificates provide for accumulation of value on a
variable [or fixed basis]. You may also elect to receive periodic annuity
payments on [either a variable or] a fixed basis. This prospectus generally
describes only the variable features of the Certificate. [For a summary of
the Fixed Account and its features, see Appendix A.] The Certificates are
designed to help you in your retirement planning. You may purchase them on
a tax qualified or non-tax qualified basis. Because they are offered on a
flexible payment basis, you are permitted to make multiple payments (except
in Oregon where they are offered only on a single purchase payment basis).
We will allocate your purchase payments to the investment options [and the
Fixed Account] in the proportions you choose. The Certificate currently
offers [XXXXXXXX] investment options, each of which is a Sub-account of
Variable Account A. Currently, you may choose among the following Eligible
Funds:
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The terms XXXXX Trust, YYYYY Fund, and XX-1 Sub-account are
included to indicate that disclosure relevant to an actual
Eligible Fund will be provided. The actual names of the Eligible
Funds and corresponding Sub-accounts will be included in the
subsequent forms of the prospectus and SAI.
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The Variable Account may offer other forms of the Contracts and
Certificates with features, and fees and charges which vary from the
Certificates, and provide for investment in other Sub-Accounts which may
invest in different or additional mutual funds. Other Contracts and
Certificates will be described in separate prospectuses and statements of
additional information. [The agent selling the Contracts and Certificates
has information concerning the eligibility for and the availability of the
other forms of the Contracts and Certificates.]
You may not purchase a Certificate if either you or the Annuitant are [90]
years old or older before we receive your application. You may not purchase
a tax-qualified Certificate if you or the Annuitant are [75] years old or
older before we receive your application [(age [90] applies to Roth IRAs)].
The purchase of a Contract or Certificate involves certain risks.
Investment performance of the Eligible Funds to which you may allocate
purchase payments may vary. We do not guarantee any minimum Certificate
Value for amounts allocated to the Eligible Funds. [Benefits provided by
this Certificate, when based on the Fixed Account, may be subject to a
market value adjustment, which may result in an upward or downward
adjustment in withdrawal benefits, death benefits, settlement values,
transfers to Eligible Funds, or periodic income payments.]
The Variable Account may offer other certificates with different features,
fees and charges, and other Sub-accounts which may invest in different or
additional mutual funds. Separate prospectuses and statements of additional
information will describe other certificates. [The agent selling the
Certificates has information concerning the eligibility for and the
availability of the other certificates.]
This prospectus contains important information about the Contracts and
Certificates you should know before investing. You should read it before
investing and keep it for future reference. 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. You may obtain a free copy by writing us at
125 High Street, Boston, MA 02110, by calling (800) 437-4466, or by
returning the postcard on the back cover of this prospectus. A table of
contents for the SAI appears on page ___ of this prospectus.
The date of this prospectus is _____________________, [1999].
The Securities and Exchange Commission 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
Summary of Certificate Features
Fee Tables
Examples
Explanation of Fee Tables and Examples
[Condensed Financial Information]
Performance Information
Keyport and the Variable Account
Purchase Payments and Applications
Investments of the Variable Account
Allocations of Purchase Payments
Eligible Funds
Transfer of Variable Account Value
Limits on Transfers
Substitution of Eligible Funds and Other Variable Account Changes
Deductions
[Deductions for Certificate Maintenance Charge]
Deductions for Mortality and Expense Risk Charge
[Deductions for Daily Distribution Charge]
[Deductions for Daily Administrative Charge]
[Deductions for Contingent Deferred Sales Charge]
[Deductions for Transfers of Variable Account Value]
Deductions for Premium Taxes
Deductions for Income Taxes
Total Variable Account Expenses Other Services
The Certificates
Variable Account Value Valuation Periods
Net Investment Factor
Modification of the Certificate
Right to Revoke
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Certificate Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Provisions
Annuity Benefits
Annuity Option and Income Date
Annuity Option and Change in Income Date
Annuity Options
Variable Annuity Payment Values
Proof of Age, Sex, and Survival of Annuitant
Suspension of Payments
[Year 2000 Matters]
Tax Status
Introduction
[Recent Developments]
Taxation of Annuities in General
Qualified Plans
[Tax-Sheltered Annuities]
Individual Retirement Annuities
[Corporate Pension and Profit-Sharing Plans]
[Deferred Compensation Plans with Respect to Service
for State and Local Governments]
Variable Account Voting Privileges
Sales of the Certificates
Legal Proceedings
Inquiries by Certificate Owners
Table of Contents-Statement of Additional Information
[Appendix A-The Fixed Account (also known as the Modified
Guaranteed Annuity Account)]
Appendix [B]-Telephone Instructions
<PAGE>
DEFINITIONS
Accumulation Unit: A unit of measurement used to calculate Variable Account
Value.
Annuitant: The natural person on whose life annuity benefits are based and
who will receive annuity payments starting on the Income Date.
Certificate Anniversary: Each anniversary of the Certificate Date.
Certificate Date: The date when the Certificate becomes effective.
Certificate Owner ("You"): The person(s) having the privileges of ownership
defined in the Certificate
Certificate Value: The [sum of the] Variable Account Value [and the Fixed
Account Value].
Certificate Withdrawal Value: The Certificate Value [increased or
decreased by a limited Market Value Adjustment] less any premium taxes
[and] [Certificate Maintenance Charge] [and] [applicable Contingent
Deferred Sales Charges].
Certificate Year: Each twelve-month period beginning on the Certificate
Date and each Certificate Anniversary thereafter.
Company ("We", "Us", "Our". "Keyport"): Keyport Life Insurance Company
[Covered Person: The person(s) identified in Certificate whose death may
result in an adjustment of Certificate Value [and waiver of any Contingent
Deferred Sales Charges] [and a waiver of any Market Value Adjustment] [or
whose medically necessary stay in a hospital or nursing facility may allow
the Certificate Owner to be eligible for either a total or partial waiver
of the Contingent Deferred Sales Charge].]
Designated Beneficiary: The person designated to receive any death benefits
under the Certificate.
Eligible Funds: The underlying mutual funds in which the Variable Account
invests.
[Fixed Account: Part of our general account to which purchase payments or
Certificate Values may be allocated or transferred.]
[Fixed Account Value: The value of all Fixed Account amounts accumulated
under the Certificate prior to the Income Date.]
[Guarantee Period Anniversary: An anniversary of a Guarantee Period's
Start Date.]
[Guarantee Period Month: The first Guarantee Period Month is the monthly
period which begins on the Start Date. Later Guarantee Period Months begin
on the same day in the following months.]
[Guarantee Period Year: The twelve-month period begins on the Start Date.
Guarantee Period Years thereafter begin on each Guaranteed Period
Anniversary.]
In Force: The status of the Certificate before the Income Date so long as
it is not totally surrendered, the Certificate Value under a Certificate
does not go to zero, and there has not been a death of the Annuitant or any
Certificate Owner that will cause the Certificate to end within at most
five years of the date of death.
Income Date: The date on which annuity payments are to begin.
Non-Qualified Certificate: Any Certificate that is not issued under a
Qualified Plan.
Qualified Certificate: Certificates issued under Qualified Plans.
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
[Start Date: The date money is first allocated to a Guarantee Period of
the Fixed Account].
Variable Account: Variable Account A which is a separate investment account
of the Company into which purchase payments under the Certificates may be
allocated. The Variable Account is divided into Sub-accounts which invest
in shares of an Eligible Fund.
Variable Account Value: The value of all Variable Account amounts
accumulated under the Certificate prior to the Income Date.
Written Request: A request written on a form satisfactory to us, signed by
you and a disinterested witness, and filed at our office.
<PAGE>
SUMMARY OF CERTIFICATE 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 and
Statement of Additional Information before deciding to invest. Further,
individual state requirements, which are different from the information in
this prospectus, are described in supplements to this prospectus or in
endorsements to the Certificates.
The Certificate
The Certificate is a flexible premium deferred variable annuity
certificate. It is designed for retirement planning purposes. It allows
you to allocate purchase payments to and receive annuity payments from the
Variable Account [and/or the Fixed Account].
The Variable Account is a separate investment account we maintain. If you
allocate payments to the Variable Account, your accumulation values and
annuity payments will fluctuate according to the investment performance of
the Eligible Funds chosen.
[The Fixed Account is part of our "general account", which consists of all
our assets except the Variable Account and the assets of other separate
investment accounts we maintain. If you allocate payments to the Fixed
Account, your accumulation value will increase at guaranteed interest rates
and annuity payments will be of a fixed amount. Any surrender, withdrawal,
transfer or annuitization of your values in the fixed account may be
subject to a limited market value adjustment, which could increase or
decrease the applicable amount. (See Appendix A for more information on the
Fixed Account.)]
[If you allocate payments to both the variable and the fixed accounts, then
the accumulation value and annuity payments will be variable in part and
fixed in part.]
Purchase of the Certificate
You may (except in Oregon) make multiple purchase payments. The minimum
initial payment is [$5,000]. [For individual retirement annuities the
minimum payment is [$2,000]]. The minimum amount for each subsequent
payment is [$1,000] or a lesser amount as we may permit from time to time
which is currently [$250]. (see "Purchase Payments and Applications".)
Investment Choices
You can allocate and reallocate your investment among the Sub-accounts of
the Variable Account which in turn invest in the Eligible Funds. Each
Eligible Fund holds its assets separately from the assets of the other
Eligible Funds. Each has its own investment objectives and policies
described in the accompanying prospectuses for the Eligible Funds. Under
the Certificate, the Variable Account currently invests in the following:
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TEXT HERE WILL LIST THE ELIGIBLE FUNDS
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[XXXXX Trust]
[XX-1]
[XX-2]
[XX-3]
[YYYYY Fund]
[YY-1]
[YY-2]
[YY-3]
Fees and Charges
[Contingent Deferred Sales Charge.
There are no sales charges at the time of your purchase payment. We may
deduct a charge in the event of a total or partial surrender. That charge
is based on a table of charges. See page ____. The charge will not exceed
7% of that portion of the amount surrendered that represents purchase
payments made during the seven years immediately preceding the request for
surrender. (see "Deductions for Contingent Deferred Sales Charge".)]
Mortality and Expense Risk Charge.
We deduct a mortality and expense risk charge at an annual rate of [1.25]%
of your average daily net asset value in the Variable Account. (See
Deductions for Mortality and Expense Risk Charge".)
[Distribution Charge.
We deduct a daily distribution charge at an annual rate of [.15%] of your
daily net asset value in the Variable Account. (See "Deductions for Daily
Distribution Charge".)]
[Administrative Charge
We deduct a daily administrative charge at an annual rate of [.15%] of your
daily net asset value in the Variable Account. (See "Deductions for Daily
Administrative Charge".)]
[Certificate Maintenance Charge.
We deduct an annual [$36] certificate maintenance charge from Variable
Account Value for administrative expenses. Prior to the Income Date, we
reserve the right to change this charge for future years. [In certain
instances, this charge may be waived.] (See "Deductions for Certificate
Maintenance Charge".)]
Transfer Charge.
[Currently, there is no transfer charge.] However, the Certificate permits
us to charge you up to [$25] for each transfer in excess of [12] in each
year your contract is In Force.
Premium taxes.
We charge premium taxes against your Certificate Value. Currently such
premium taxes range from 0% to 5.0%. (See "Deductions for Premium Taxes".)
Federal Income Taxes.
There are no federal income taxes on increases in the value of a
Certificate until a withdrawal occurs, in the form of a lump sum payment,
annuity payments, or the making of a gift or assignment of the Certificate.
Currently, a 10% federal penalty tax may also apply. (See "Tax Status".)
Free Look
Generally, you may revoke the Certificate by returning it to us within 10
days after you receive it. (See "Right to Revoke".) For most states, we
will refund your Certificate Value, plus any distribution charges
previously deducted, as of the date we receive the returned Certificate.
You will bear the investment risk during the revocation period. In other
states, we will return purchase payments. [In these other states, purchase
payments will be allocated to the [XX-1] Sub-account during the "freelook"
period plus an additional ten days.] You may ask us for the rules that
apply to your state.
FEE TABLES
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Fee Tables will be completed in each Rule 485(a) filing.
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Certificate Owner Transaction Expenses
Sales Load Imposed on Purchases: 0%
Maximum Contingent Deferred Sales Charge
(as a percentage of purchase payments): [7%
Years from Date of Payment Sales Charge
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or later 0%]
Maximum Total Certificate Owner Transaction Expenses
(as a percentage of purchase payments): [7%]
Annual Certificate Maintenance Charge $[36]
Variable Account Annual Expenses
(as a percentage of average net assets)
Mortality and Expense Risk Charge: [1.25%]
[Distribution Charge:] [ .15%]
[Administrative Charge:] [ .15%]
Total Variable Account Annual Expenses: [1.55%]
[XXXXX Trust and YYYYY Fund] Annual Expenses[1] (as a
percentage of average net assets)
Management Other Total Fund
Fees Expenses Operating
[(After Any [(After Any Expenses [(After
Waiver and/or Waiver and/or Any Waiver and/or
Fund Reimbursement)][2] Reimbursement)][2] Reimbursement)][2]
The above expenses for the Eligible Funds were provided by the Funds. We
have not independently verified the accuracy of the information.
[[1][The XXXXX Trust] expenses are for [ ]. [The YYYYY Fund] expenses
[are estimated and] reflect the [YYYYY Fund's] [Manager's] [adviser's]
agreement to reimburse expenses above certain limits (see footnote [2]).
[[2][YYYYY Fund's] manager has agreed [until [a/bb/cc]] to reimburse all
expenses, including management fees, in excess of the following percentage
of the average annual net assets of each Eligible Fund, [xxx% for YY-1;
xxx% for YY-2 and xxx% for YY-3]. Each percentage shown in the parentheses
is what expenses would be without any expense reimbursement: for [YY-1
xxx% for other expenses and xxx% for total expenses; for YY-2 - xxx% for
other expenses and xxx% for total expenses; and for YYY-3 - xxx% for other
expenses and xxx% for total expenses.]]
EXAMPLES
[Example #1 - If you surrender your Certificate 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
Example #2 - If you annuitize or if you do not surrender your Certificate
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]
Example #3 - If your Certificate remains In Force through the periods
shown, you would pay the expenses shown in Example #2 on a $1,000
investment, assuming 5% annual return on assets. ]
[Example -- If you annuitize or if you do not surrender your Certificate 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]
EXPLANATION OF FEE TABLES AND EXAMPLES
The purpose of the fee tables is to illustrate the expenses you may
directly or indirectly bear under a certificate. 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 examples do not include
any taxes or tax penalties you may be required to pay if you surrender your
Certificate.
[We deduct contingent deferred sales charges only if you totally or
partially surrender the Certificate. You will not incur a surrender charge
in the following instances:
1. In the first Certificate Year, you may withdraw an aggregate
amount up to the Certificate's earnings. Earnings equal the
Certificate Value at the time of withdrawal less the portion of the
purchase payments not previously withdrawn.
2. In the second and later Certificate Years you may withdraw:
(a) earnings, and
(b) an amount up to (i) 10% of the Certificate Value as of the
preceding Certificate Anniversary, (ii) less earnings.]
The examples assume you did not make any transfers. We reserve the right to
impose a transfer fee after we notify you. [Currently, we do not impose any
transfer fee.] Premium taxes are not shown. We deduct the amount of any
premium taxes (which range from 0% to 5%) from Certificate Value upon full
surrender, death or annuitization.
[We waive the certificate maintenance charge on the first Certificate
Anniversary and in certain other instances.]
The fee tables and examples 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, ["Trust
Management Organizations"] in the prospectus for [YYY Trust], and ["How the
Funds are Managed"] in the prospectus for [XXX Fund].
[CONDENSED FINANCIAL 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 indicator of either past or future
performance of a Certificate.
The Sub-accounts may advertise total return information for various periods
of time. Total return performance information is based on the overall
percentage change in value of a hypothetical investment in the specific Sub
account over a given period of time.
Average annual total return information shows the average percentage change
in the value of an investment in the Sub-account from the beginning 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
Certificate charges and deductions. [(This would include any contingent
deferred sales charge that would apply you surrendered the Certificate at
the end of each period indicated)]. Average total return does not include
any premium taxes. Average total return would be lower if these taxes were
included.
In order to calculate average annual total return, we divide the change in
value of a Sub-account under a Certificate surrendered on a particular date
by a hypothetical $1,000 investment in the Sub-account. We then annualize
the resulting total rate for the period to obtain the average annual
percentage change during the period. Annualization assumes that the
application of a single rate of return each year during the period will
produce the ending value, taking into account the effect of compounding.
The Sub-accounts may present additional non-standardized total return
information computed on a different basis:
(a)[First, the Sub-accounts may present total return information as
described above, except deductions will not include the contingent deferred
sales charge. This presentation assumes that the investment in the
Certificate continues beyond the period when the contingent deferred sales
charge applies. This is consistent with the long-term investment and
retirement objectives of the Certificate. The total return percentage will
be higher using this method than the standard method described above.]
(b)[Second,] the Sub-accounts may present total return information. It is
calculated by dividing the change in a Sub-account's Accumulation Unit
value over a specified time period by the Accumulation Unit value of that
Sub-Account at the beginning of the period. This computation results in a
twelve-month change rate. For longer periods it is a total rate for the
period. We annualize the total rate in order to obtain the average annual
percentage change in the Accumulation Unit value for that period. The
change percentages do not take into account [the contingent deferred sales
charge,] [the certificate maintenance charge and] premium tax charges. The
percentages would be lower if these charges were included.
(c)[Third, certain of the Eligible Funds have been available for other
variable annuity contracts prior to the commencement of the offering of the
Certificates described in this prospectus. Any performance information for
such periods will be based on historical results of the Eligible Funds and
applying the fees and charges of the Certificate for the specified time
periods.]
The [XX-1] Sub-Account is a money market Sub-account that also may
advertise yield and effective yield information. The yield of the Sub
account refers to the income generated by an investment in the Sub-account
over a specifically identified 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 fifty-two week period. It is shown
as a percentage. The yield reflects the deduction of all charges assessed
against the Sub-account and a Certificate but does not include [contingent
deferred sales charges and] premium tax charges. The yield would be lower
if these charges were included.
We calculate the effective yield of the [XX-1] 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.
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) by A.M. Best
and Company, independent analysts of the insurance industry. Standard &
Poor's ("S&P") rates us AA for excellent 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.
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 meets the definition
of "separate account" under the federal securities laws. The Variable
Account is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. Such
registration does not mean the Securities and Exchange Commission
supervises us or the management of the Variable Account.
Obligations under the Certificates 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
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The minimums and maximums described in the following paragraph
may vary within any limits permitted under state insurance law and
Keyport's administrative guidelines in existence at the time of
issuance of the Certificate.
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The initial purchase payment is due on the Certificate Date. The minimum
initial purchase payment is [$5,000] [and [$2,000] for individual
retirement annuities]. You may make additional purchase payments. Each
subsequent purchase payment must be at least [$1,000] or any lesser amount
we may permit, which is currently [$250]. We may reject any purchase
payment or any application.
If your application for a Certificate is complete and amounts are to be
allocated to the Variable Account, 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 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 will permit others to act on your behalf in certain instances,
including:
o We will accept an application for a Certificate signed by an
attorney-in-fact if we receive a copy of the power of attorney
with the application.
o We will issue a Certificate to replace an existing life
insurance or annuity policy that we or an affiliated company
issued even though we did not previously receive a signed
application from you.
Certain dealers or other authorized persons such as employers and Qualified
Plan fiduciaries may inform us of your responses to application questions
by telephone or by order ticket and cause the initial purchase payment to
be paid to us. If the information is complete, we will issue the
Certificate with a copy of an application containing that information. We
will send you the Certificate and a letter so you may review the
information and notify us of any errors. We may request you to confirm that
the information is correct by signing a copy of the application or a
Certificate delivery receipt. We will send you a written notice confirming
all purchases. Our liability under any Certificate relates only to amounts
so confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
Allocations of Purchase Payments
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The percentage of required allocations to each Sub-Account may vary
from 1% to 10%.
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We will invest the purchase payments you applied to the Variable Account in
the Eligible Fund Sub-accounts chosen by you. Your selection must specify
the percentage of the purchase payment that is allocated to each Subaccount
[or must specify the asset allocation model selected. (See "Other Services,
The Programs".)] The percentage for each Sub-account, if not zero, must be
at least [10%] and a whole number. You may change the allocation
percentages without fee, penalty or other charge. You must notify us in
writing of your allocation changes unless you, your attorneyin-fact, or
another authorized person have given us written authorization to accept
telephone allocation instructions. By allowing us to accept telephone
changes, you agree to accept and be bound by our current conditions and
procedures. The current conditions and procedures are in Appendix B. We
will notify you of any changes in advance.
The Variable Account is segmented into Sub-accounts. Each Sub-account
contains the shares of one of the Eligible Funds and such shares are
purchased at net asset value. We may add or withdraw Eligible Funds and Sub
accounts as permitted by applicable law.
Eligible Funds
The Eligible Funds are the separate funds of [XXXXX Trust, the separate
funds of YYYYY Fund]. 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 Certificates.
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 Sub-accounts in which the Eligible Funds invest. You
bear the investment risk that those Sub-accounts possibly will not meet
their investment objectives. You should carefully review their prospectuses
before allocating amounts to the Sub-accounts of the Variable Account.
All the Eligible Funds are funding vehicles for variable annuity contracts
and variable life insurance policies offered by our separate accounts. The
Eligible Funds are also available for the separate accounts of insurance
companies affiliated and unaffiliated with us. The risks involved in this
"mixed and shared funding" are disclosed in the Eligible Fund prospectuses
under the following captions: [YYY Fund] ["Sales and Redemptions"] [XXX
Trust] ["The Trust"].
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TEXT HERE WILL DESCRIBE INDIVIDUAL INVESTMENT ADVISERS
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We have briefly described the Eligible Funds below. You should read the
current prospectus for the Eligible Funds for more details and complete
information. The prospectus is available, at no charge, from a salesperson
or by writing to us or by calling (800) 437-4466.
Eligible Funds of [XXXXX Trust]
and Variable Account Sub-Accounts Investment Objective
**************************************************************************
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TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
**************************************************************************
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Eligible Funds of [YYYYY Fund]
and Variable Account Sub-Accounts Investment Objective
**************************************************************************
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TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
**************************************************************************
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Transfer of Variable Account Value
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The number of transfers will vary between zero (0) and the
maximum number that Keyport determines is consistent with
interpretations of applicable tax law restrictions on contract owner
control which may permit an unlimited number of transfers. The
transfer charge, if any, imposed on transfers in excess of the
stipulated number will not exceed $50. The maximum number of free
transfers, assuming the imposition of a transfer charge,
will be 12. The minimum amount that may be transferred will
range between $0 and $500, and the minimum required remaining Sub-
Account Value ranges between $0 and $100.
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You may transfer Variable Account Value from one Sub-account to another Sub
account [and/or to the Fixed Account]. [See "Recent Developments".]
We may charge a transfer fee and limit the number of transfers that you can
make in a time period. Transfer limitations may prevent you from making a
transfer on the date you select. This may result in your Certificate Value
being lower than it would have been if you had been able to make the
transfer.
Limits on Transfers
Currently, we do [not] limit the number or frequency of transfers. [The
minimum amount of Variable Account Value that may be transferred is [$500]
and the remaining Variable Account Value in the Sub-account is [$100]]. We
do [not] charge a transfer fee for each transfer in excess of [12] in each
Certificate Year, except as follows:
o We impose a transfer limit of one transfer every thirty days, or
such other period as we may permit, for transfers on behalf of
multiple Certificates by a common attorney-in-fact, or transfers
that are, in our determination, based on the recommendation of a
common investment adviser or broker/dealer, and
o We limit each transfer to a maximum of $500,000, or such greater
amount as we may permit. We treat all transfer requests for a
Certificate made on the same day as a single transfer. We may
treat as a single transfer all transfers you request on the same
day for every Certificate you own. The total combined transfer
amount is subject to the $500,000 limitation. If the total
amount of the requested transfers exceeds $500,000, we will not
execute any of the transfers, and
o We treat as a single transfer all transfers made on the same day
on behalf of multiple Certificates by a common attorney-in-fact,
or transfers that are, in our determination, based on the
recommendation of a common investment adviser or broker/dealer.
The $500,000 limitation applies to such transfers. If the total
amount of the requested transfers exceeds $500,000, we will not
execute any of the transfers.
If we have executed a transfer with respect to your Certificate as part of
a multiple transfer request, we will not execute another transfer request
for your Certificate for thirty days.
By applying these limitations we intend to protect the interests of
individuals who do and those who do not engage in significant transfer
activity among Sub-accounts. We have determined that the actions of
individuals engaging in significant transfer activity may cause an adverse
affect on the performance of the Eligible Fund for the Sub-account
involved. The movement of values from one Sub-account to another may
prevent the appropriate Eligible Fund from taking advantage of investment
opportunities because the Eligible Fund must maintain a liquid position in
order to handle redemptions. Such movement may also cause a substantial
increase in fund transaction costs which all Certificate owners must
indirectly bear.
We will notify you prior to charging any transfer fee or a change in the
limitation on the number of transfers. The fee will not exceed [$25].
You must notify us in writing of your transfer requests unless you have
given us written authorization to accept telephone transfer requests from
you or your attorney-in-fact. By authorizing us to accept telephone
transfer instructions, you agree to accept and be bound by our current
conditions and procedures. The current conditions and procedures are in
Appendix [B]. You will be given prior notification of any changes. A person
acting on your behalf as an attorney-in-fact may make written transfer
requests.
If we receive your transfer requests before 4:00 P.M. Eastern Time, we will
initiate them at the close of business that day. We will initiate any
requests received after that 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.
If you transfer 100% of any Sub-account's value, and the allocation formula
for purchase payments on your application includes that Sub-account, the
allocation formula for future purchase payments will automatically change
unless you tell us otherwise.
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 Certificate, 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 the operation of
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, or to our general account;
o to add, combine or remove Sub-accounts in the Variable Account;
and
o to change how charges are assessed, so long as the total
charges do not exceed the maximum amount that may be charged the
Variable Account and the Eligible Funds in connection with the
Certificates.
DEDUCTIONS
[Deductions for Certificate Maintenance Charge
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The Certificate Maintenance Charge will not exceed a maximum
dollar amount of $100. Under certain forms of the Certificate
Keyport may not impose any Certificate Maintenance Charge. The amount
of purchase payments necessary to support a waiver of the charge
ranges between $1000 and $5000.
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We charge an annual certificate maintenance charge of [$36] per Certificate
Year. Before the Income Date we do not guarantee the amount of the
certificate maintenance charge and may change it. This charge reimburses us
for our expenses incurred in maintaining your Certificate.
Before the Income Date, we will deduct the certificate maintenance charge
from the Variable Account Value on each Certificate Anniversary and on the
date of any total surrender not falling on the Certificate Anniversary. [We
will waive this charge before the Income Date if:
[o it is the first Certificate Anniversary;]
[o the Certificate Value is at least [$40,000] on the date we impose
this charge, or ]
[o in the prior Certificate Year, purchase payments of at least
[$2,000] have been made and you have not made any partial
withdrawals.]]
On the Income Date, we will subtract a pro-rata portion of the charge due
on the next Certificate Anniversary from the Variable Account Value. This
pro-rata charge covers the period from the prior Certificate Anniversary to
the Income Date. We will deduct the charge proportionally from each Sub
account based upon the value each Sub-account bears to the Variable Account
Value.
Once annuity payments begin, the certificate maintenance charge is
guaranteed not to increase. We will subtract this charge in equal parts
from each annuity payment. For example, if annuity payments are monthly,
then we will deduct one-twelfth of the annual charge from each payment.
[We will waive the charge on and after the Income Date for the current year
if:
o you have selected variable annuity Option A; and
o the present value of all of the remaining payments is at least
$40,000 at the time of the first payment of the year.]
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The Mortality and Expense Risk Charge as stated in the body of
the prospectus will vary between 35 and 125 basis points. The
variations will depend upon the precise combination of features
incorporated into the particular form of the Certificate.
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Deductions for Mortality and Expense Risk Charge
Variable annuity payments fluctuate depending on the investment performance
of the Sub-accounts. The payments will not be affected by the mortality
experience (death rate) of persons receiving such payments or of the
general population. We guarantee the Death Benefits in "Death Provisions".
[We also assume an expense risk that the daily administrative charge will
not be sufficient to cover our administrative expenses.] [We also assume an
expense risk since the certificate maintenance charge after the Income Date
remains the same and does not change to reflect variations in expenses.]
We deduct a mortality and expense risk charge from each Sub-account. The
mortality and expense risk charge is equal, on an annual basis to [.35
1.25]% of the average daily net asset value of the Sub-account. We deduct
the charge both before and after the Income Date. [We may deduct less than
the full charge from Sub-account values attributable to Certificates issued
to our employees and other persons specified in "Sales of the
Certificates".] [Additionally, we may, in certain circumstances described
in "Sales of the Certificates" offer to credit additional interest from our
general account to a purchase payment upon receipt as an allowance for
future deductions of the mortality and expense risk charge.]
[Deductions for Daily Distribution Charge
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A daily Distribution Charge may not apply to all forms of the
Certificate. It will be imposed at a maximum rate of 15 basis
points of net assets when such imposition combined with any
contingent deferred sales charge does not result in the imposition of
sales charges that exceed 9% of Purchase Payments.
**************************************************************************
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We do not deduct the distribution charge during the annuity period. We
deduct from each Sub-account for each valuation period a daily distribution
charge equal on an annual basis to 0.[15]% of the average daily net asset
value of each Sub-account. This charge compensates us for certain sales
distribution expenses relating to the Certificate.
We will not deduct this charge from your Sub-account values once we have
reached the maximum cumulative distribution charge limit. We do not deduct
this charge from the values of to Certificates issued to our employees and
other persons specified in "Sales of the Certificates". We may decide not
to deduct the charge from Sub-account values attributable to a Certificate
issued in an internal exchange or transfer of an annuity contract of our
general account.]
[Deductions for Daily Administrative Charge
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A daily Administrative Charge may not apply to all forms of the
Certificate. The maximum daily Administrative Charge will be 15 basis
points. This charge may be adjusted giving consideration to the amount
of the Certificate Maintenance Charge.
**************************************************************************
**************************************************************************
We deduct from each Sub-account each valuation period an administrative
charge equal on an annual basis to [0.15]% of the average daily net asset
value of the Sub-account. This charge compensates us for a portion of the
administrative expenses relating to the Certificate.]
[Deductions for Contingent Deferred Sales Charge
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The Contingent Deferred Sales Charge may not apply to all forms
of the Certificate. The Contingent Deferred Sales Charge, including
any amounts deducted through the daily Sales Charge, will not exceed
9% of Purchase Payments. The Contingent Deferred Sales Charge, not
including any amount deducted through the daily Sales Charge, will in
no event exceed a duration of 7 years and 7%.
**************************************************************************
**************************************************************************
We do not deduct a sales charge from the Certificate when you purchase it.
We may deduct such a charge if you surrender your Certificate.
To determine whether we will deduct a contingent deferred sales charge if
you surrender your Certificate, we maintain a separate set of records.
These records identify the date and amount of each purchase payment you
have made and the Certificate Value over time. This allows us to determine
if a charge is due with respect to a particular purchase payment.
You may make partial surrenders during the Accumulation Period without
incurring a contingent deferred sales charge. During the first Certificate
Year, you may withdraw an amount up to the Certificate's earnings. Earnings
equal the Certificate Value at the time of withdrawal, less purchase
payments not previously withdrawn. Beginning with the second Certificate
Year, you may withdraw earnings, and an amount up to 10% of the Certificate
Value on the prior Certificate Anniversary, less earnings. We will deduct a
contingent deferred sales charge with respect to withdrawals in excess of
these amounts.
We will deduct the contingent deferred sales charge resulting from an
excess withdrawal in any Certificate Year from the purchase payments
beginning with the oldest payment until we have deducted the full amount.
The amount of the contingent deferred sales charge we deduct will equal the
amount of your surrender multiplied by the applicable percentage for the
number of years that have elapsed from the date of the purchase payment to
the date of surrender. We measure years from the date of each purchase
payment you make. The applicable percentages for each year are [[7%]
during the first year, [and decreasing by 1% each following year] until the
percentage is [0%]]. We will deduct the contingent deferred sales charges
from the Sub-accounts [and the Fixed Account] in the same manner as we
deduct the amount you surrender.
We keep a record of all amounts we have deducted for all contingent
deferred sales charges [and daily distribution charges]. We will never
deduct more than a total of 9% from your purchase payments for sales [and
distribution charges].
The contingent deferred sales charge is used to cover the expenses of
selling the Certificate, including compensation paid to selling dealers and
the cost of sales literature. We pay any expenses not covered by the charge
from our general account, which may include monies deducted from the
Variable Account for the mortality and expense risk charge.
We will waive the contingent deferred sales charge in the event a Covered
Person is confined in a medical facility in accordance with the provisions
and conditions of an endorsement to the Certificate relating to such
confinement.
The contingent deferred sales charge is not applicable to Certificates
issued to our employees and other persons specified in "Sales of the
Certificates".
[We may reduce or change any contingent deferred sales charge percentage to
0% under a Certificate issued in an internal exchange or transfer of an
annuity contract from our general account.]
[Under the "Systematic Withdrawal Program" on page ____ and under other
permitted circumstances, we may allow the 10% withdrawal amount to be
available in the first Certificate Year. If so, the initial purchase
payment will be substituted for the Certificate Value.]]
[Deductions for Transfers of Variable Account Value
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The charge for transfers will range from zero to an amount not to
exceed $50.
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The Certificate allows us to charge a transfer fee. [Currently we do not
charge such a fee.] We will notify you prior to imposition of any fee and
the fee will not exceed $[50].]
Deductions for Premium Taxes
We deduct the amount of any premium taxes levied by any state or
governmental entity. Currently, we deduct premium taxes from Certificate
Value upon full surrender, death or annuitization. The actual amount of any
such premium taxes will depend, among other things, on the type of
Certificate you purchase (Qualified or Non-Qualified), on your state of
residence, the state of residence of the Annuitant, and the insurance tax
laws of such states. Currently such premium taxes range from 0% to 5.0% of
either total purchase payments or Certificate Value.
Deductions for Income Taxes
We will deduct income taxes from any amount payable under the Certificate
that a governmental authority requires us to withhold. See "Income Tax
Withholding" [and "Tax-Sheltered Annuities"].
Total Variable Account Expenses
Total Variable Account expenses you will incur will be [the certificate
maintenance charge,] the mortality and expense risk charge, [the daily
distribution charge,] [and the daily administrative charge.]
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. The prospectuses for the Eligible Funds describe
these deductions and expenses.
[OTHER SERVICES
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Each of the following Programs may or may not be offered under
any form of the Certificate. If only one Program is offered, the
plural nature of the first two paragraphs will be adjusted
accordingly. The minimum amount that may be transferred under the
Dollar Cost Averaging Program ranges between $75 and $750. The
required notice period for the Rebalancing Program will not exceed
thirty days. The minimum Purchase Payment for the Systematic
Investment Program ranges between $50 and $1000. The minimum amount
that may be withdrawn under the Systematic Withdrawal Program ranges
between $100 and $250.
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[The Program[s]]. We offer the following investment related programs which
are available only prior to the Income Date:
o [asset allocation ];
o [dollar cost averaging];
o [systematic investment]; and
o [systematic withdrawal] programs.
[A rebalancing program is available before and after the Income Date.]
Under each program that uses transfers, the transfers between and among Sub
accounts [and the Fixed Account] are not counted as one of the [twelve]
free transfers. Each of the programs has its own requirements, as
discussed below. We reserve the right to terminate any program.
If you have submitted a telephone authorization form, you may make certain
changes by telephone. For those programs involving transfers, you may
change instructions by telephone with regard to which Sub-accounts [or the
Fixed Account] Certificate Value may be transferred. We describe the
current conditions and procedures in Appendix [B].
[Dollar Cost Averaging Program. Under the program, we make automatic
transfers of Accumulation Units on a periodic basis from the [XX-1] Sub
Account [or the One-Year Guarantee Period of the Fixed Account] to one or
more of the other available Sub-accounts you select. The program allows you
to invest in the Sub-accounts over time rather than all at once. The
program is available for purchase payments and amounts transferred into the
[XX-1] Sub-Account [or the One-Year Guarantee Period.] We reserve the right
to limit the number of Sub-accounts you may choose; currently there are no
limits.
If you wish to participate in the program, you must specify in writing the
[XX-1] Sub-Account [or the One Year Guarantee Period] from which you want
the transfers made. You must also tell us the monthly amount you want
transferred [(minimum $100)] and the Sub-account(s) to which you want the
transfers made. The first transfer will occur about 30 days after we
receive your request. Each subsequent periodic transfer will occur at the
close of the same valuation period. If you select monthly transfers and the
first transfer occurs on April 8, the second transfer will occur at the
close of the valuation period that includes May 8. When the remaining value
is less than the monthly transfer amount, we will transfer that remaining
value and the program will end. Before this final transfer, you may extend
the program by allocating additional purchase payments or by transferring
Certificate Value to the [XX-1] Sub-Account [or the One Year Guarantee
Period.]
You may change the monthly amount you want transferred, the Sub-account(s)
to which you want transfers made, or end the program. The program will
automatically end on the Income Date. We reserve the right to end the
program at any time by sending you a notice one month in advance.
We must receive your written or telephone instructions by 4:00 PM Eastern
Time of the business day before the next scheduled transfer in order for
the new instructions to be in effect for that transfer. We establish
conditions and procedures for telephone instructions for dollar cost
averaging from time to time. The current conditions and procedures appear
in Appendix [B], and you will be notified prior to any changes.]
[Asset Allocation Program. You may select from five asset allocation model
portfolios separately developed by Ibbotson Associates and Standard &
Poor's:
o Model A -- Capital Preservation,
o Model B -- Income and Growth,
o Model C -- Moderate Growth,
o Model D -- Growth, and
o Model E -- Aggressive Growth.
If you elect one of the models, we will automatically allocate initial and
subsequent purchase payments among the Sub-accounts in the model. You may
use only one model in a Certificate at a time. You may use a questionnaire
and scoring system to determine the model that corresponds to your risk
tolerance and time horizons.
Periodically Ibbotson Associates and Standard & Poor's will review the
models and may determine that a reconfiguration of the Sub-accounts and
percentage allocations among those Sub-accounts is appropriate. You will
receive notification prior to any reconfiguration.
[The Fixed Account is not available in any asset allocation model. You may
allocate initial or subsequent purchase payments, or Certificate Value,
between an asset allocation model and the Fixed Account.]
[Rebalancing Program. If you elect purchase payment percentage allocations,
we will automatically rebalance the Certificate Value of each Sub-account
on the last day of [the] [either] [month,] [calendar quarter,] [or] [year]
to match your current purchase payments percentage allocations. You may
terminate the program at any time or change the percentages by notifying us
in writing. We must receive your changes [thirty (30)] days before the end
of the [period selected] [month] [calendar quarter] [year]. [Certificate
Value allocated to the Fixed Account is not included in the rebalancing
program.] After the Income Date, the rebalancing program applies only to
variable annuity payments and we will rebalance the number of Annuity Units
in each Sub-account. Annuity Units are used to calculate the amount of
each Sub-account annuity payment.]
[Systematic Investment Program. You may make purchase payments for Non
Qualified Certificates through monthly deductions from your bank account
[or payroll]. You may elect this program by completing and returning a
systematic investment program application and authorization form to us. You
may obtain an application and authorization form from us or from your sales
representative. There is a current minimum of [$50] per payment for the
program.]
[Systematic Withdrawal Program. To the extent permitted by law, if you
enroll in the systematic withdrawal program, we will make monthly,
quarterly, semi-annual or annual distributions of a set dollar amount
directly to you. We will treat such distributions for federal tax purposes
as any other withdrawal or distribution of Certificate Value. You may
specify the amount of each partial withdrawal, subject to a minimum of
[$100]. [You may make systematic withdrawals from [only] [the] [any] Sub
Account[s] [[or][and] the [One][, Three][, Five][and Seven] [Year]
Guarantee Period[s] of the Fixed Account.]
[In each Certificate Year, you may withdraw portions of Certificate Value
without any contingent deferred sales charge ("free withdrawal amount"). If
your withdrawals under the program exceed the free withdrawal amount, the
excess will be subject to the applicable contingent deferred sales charge.
We will add any unrelated voluntary partial withdrawal you make during a
Certificate Year with withdrawals pursuant to the program to determine the
applicability of any contingent deferred sales charge.]
Unless you specify the Sub-account(s) [or the Fixed Account] from which you
want withdrawals of Certificate Value made or if the amount in a specified
Sub-account is less than the predetermined amount, we will make withdrawals
under the program in the manner specified for partial withdrawals in
"Partial Withdrawals and Surrender". We will process all Sub-account
withdrawals under the program by canceling the number of Accumulation Units
equal in value to the amount to be distributed to you [and to the amount of
any applicable contingent deferred sales charge].
[You may combine the program with all other programs [except the Systematic
Investment Program].]
[It may not be advisable to participate in the systematic withdrawal
program [and incur a contingent deferred sales charge] when making
additional purchase payments under the Certificate.]]
THE CERTIFICATES
Variable Account Value
The Variable Account Value for a Certificate is the sum of the value of
each Sub-account where 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 Certificate 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 of the Eligible Fund shares. A valuation period is the
period beginning at 4:00 P.M. (EST) which is 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.
Net Investment Factor
Your Variable Account Value will fluctuate with the investment results of
the underlying Eligible Funds you have selected. In order to determine how
these fluctuations affect value, we use an Accumulation Unit value. Each
Sub-account has its own Accumulation Units and value per Unit. We determine
the Unit value applicable during any valuation period at the end of that
period.
When we first purchased Eligible Fund shares on behalf of the Variable
Account, we valued each Accumulation Unit at a specified dollar amount. The
Unit value for each Sub-account in any valuation period thereafter is
determined by multiplying the value for the prior period by a net
investment factor. This factor may be greater or less than 1.0; therefore,
the Accumulation Unit may increase or decrease from valuation period to
valuation period. We calculate a net investment factor for each Sub-account
according to the following formula: (a , b) - c, where:
(a) is equal to:
(i) the net asset value per share of the Eligible Fund at the
end of the valuation period; plus
(ii) the per share amount of any distribution the Eligible Fund
made if the "ex-dividend" date occurs during that same valuation
period.
(b) is the net asset value per share of the Eligible Fund at the end of
the prior valuation period.
(c) is equal to:
(i) the valuation period equivalent of the
mortality and expense risk charge; plus
[(ii) the valuation period equivalent of the
daily distribution charge; plus]
[(iii) the valuation period equivalent of the
daily administrative charge; plus]
[(iv)] a charge factor for any tax provision
established by us as a result of the operations of that
Sub-account.
[If we have deducted the maximum cumulative sales charge, we will not
deduct the daily distribution charge in (c)(ii) above.] For Certificates
issued to our employees and other persons specified in "Sales of the
Certificates", the mortality and expense risk charge in (c)(i) above is
[.35]%[, and the daily [distribution][administrative] charge in
(c)[(ii)][(iii)] above is eliminated. We may eliminate the daily
distribution charge in (c)(ii) above for certain Certificates issued in an
internal exchange or transfer.]
Modification of the Certificate
Only our President or Secretary may agree to alter the Certificate or waive
any of its terms. A change may be made to the Certificate if there have
been changes in applicable law or interpretations of law. Any changes must
be made in writing and with your consent, except as may be required by
applicable law.
Right to Revoke
You may return the Certificate within 10 days after you receive it by
delivering or mailing it to us. The postmark on a properly addressed and
postage-prepaid envelope determines if a Certificate is returned within the
period. We will treat the Certificate as if we never issued it and will
refund either the Certificate Value or purchase payments, as required by
state law. [If the Certificate is delivered in a state that requires the
return of Certificate Value, Certificate Value will immediately be
allocated to the Sub-accounts selected in the application. If the
Certificate is delivered in a state that requires the return of purchase
payments, Certificate Value will be allocated to the [XX-1] Sub-account (a
Money Market Sub-account) for a period of 20 or 30 days if the particular
state requires a "free-look" period of 10 or 20 days, respectively. After
the "free-look" period, the Certificate Value will be allocated to the Sub
accounts selected in the application.]
If we deliver your Certificate to you in California and you are age 60 or
older, you may return the Certificate to us or to the agent from whom you
purchased it. If you return the Certificate within 30 days after you
receive it, we will refund the Certificate Value.
DEATH PROVISIONS FOR NON-QUALIFIED CERTIFICATES
Death of Primary Owner, Joint Owner or Certain Non-Owner Annuitant.
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One or more of the three Death Benefit options described below
may be included under any form of the Certificate.
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If, before the Income Date and the Certificate is In Force, you or any
joint Certificate Owner dies or if the Annuitant dies when a non-natural
person (such as a trust) owns the Certificate, we will treat the Designated
Beneficiary as the Certificate Owner after such a death.
If the decedent's surviving spouse (if any) is the sole Designated
Beneficiary, the surviving spouse will automatically become the new sole
primary Certificate Owner as of the decedent's date of death. And, if the
decedent is the Annuitant, the new Annuitant will be any living contingent
annuitant, otherwise the new Annuitant will be the surviving spouse. The
Certificate can stay In Force until another death occurs. Except for this
paragraph, all of "Death Provisions" will apply to that subsequent death.
In all other cases, the Certificate may remain In Force for a period not to
exceed five years from the date of death. During this period, the
Designated Beneficiary may exercise all ownership rights, including the
right to make transfers or partial surrenders or the right to totally
surrender the Certificate for its Surrender Value. If the Certificate is
still in effect at the end of the five-year period, we will automatically
end it by paying the Certificate Value to the Designated Beneficiary. If
the Designated Beneficiary is not then alive, we will pay any person(s)
named by the Designated Beneficiary in writing; otherwise we will pay the
Designated Beneficiary's estate.
The Covered Person under this paragraph shall be [the decedent if he or she
is the first to die among you], [any Joint Certificate Owner], [or
Annuitant]. If there is a non-natural Certificate Owner such as a trust,
the Annuitant shall be the Covered Person.
Upon the death of the Covered Person, we will increase the Certificate
Value so that it equals the death benefit amount if it is less than the
death benefit amount ("DBA"). The DBA is the[ greater of the "net purchase
payment death benefit"], [the current Certificate Value] [or the "greatest
Anniversary Value"].
[The net purchase payment death benefit is:
o the initial purchase payment, plus
o any additional purchase payments, minus
o any partial withdrawals [and any applicable surrender charges].]
[Each day we determine the value of your Certificate during a Certificate
Year, we will also value your "greatest Anniversary Value". The "greatest
Anniversary Value" on the issue date is the initial purchase payment. Each
day we will add to this amount any additional purchase payments made that
day, and subtract an adjustment for withdrawals made that day. This
adjustment equals the amount of the partial withdrawal:
o divided by the Certificate Value immediately before the
withdrawal; and
o multiplied by the "greatest Anniversary Value" immediately
before the withdrawal.
On each Certificate Anniversary, we compare the current Certificate Value
to "greatest Anniversary Value", adjusted as described above. If the
current Certificate Value exceeds the adjusted "greatest Anniversary
Value", the current Certificate Value will become the new "greatest
Anniversary Value". This new "greatest Anniversary Value" will be adjusted
as described above during the following Certificate Year, if necessary.
This process will continue until the Certificate Anniversary prior to the
81st birthday of the Covered Person. On this Certificate Anniversary, the
greater of the current Certificate Value and the adjusted "greatest
Anniversary Value" will become the new "greatest Anniversary Value". From
that point on, the "greatest Anniversary Value" will not change unless
subsequent purchase payments are made or withdrawals are taken, in which
case the "greatest Anniversary Value" will be adjusted as described above.]
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The period of time during which the Surrender Charge may be waived
following death ranges between 60 and 180 days.
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When we receive due proof of the Covered Person's death, we will compare,
as of the date of death, the Certificate Value and the DBA. If the
Certificate Value was less than the DBA, we will increase the current
Certificate Value by the amount of the difference. Note that while the
amount of the difference is determined as of the date of death, that amount
is not added to the Certificate Value until we receive due proof of death.
We allocate the amount credited, if any, to the Variable Account [and/or
the Fixed Account] based on the purchase payment allocation selection in
effect when we receive due proof of death. The Designated Beneficiary may,
by the later of the 90th day after the Covered Person's death and the 60th
day after we receive proof of the death, surrender the Certificate for the
Certificate Value [without incurring any applicable contingent deferred
sales charge]. [If the Designated Beneficiary surrenders the Certificate
after the applicable 90 or 60 day period or surrenders it at any time after
the death of a non-Covered Person, we will deduct any applicable contingent
deferred sales charge.] If the Designated Beneficiary does not surrender
the Certificate, it will continue for the time period specified above.
Payment of Benefits. Instead of receiving a lump sum, you or any Designated
Beneficiary may direct us in writing to pay any benefit of $5,000 or more
under an annuity payment option that meets the following:
o the first payment to the Designated Beneficiary must be made no
later than one year after the date of death;
o payments must be made over the life of the Designated Beneficiary
or over a period not extending beyond that person's life
expectancy; and
o any payment option that provides for payments to continue after
the death of the Designated Beneficiary will not allow the
successor payee to extend the period of time during which the
remaining payments are to be made.
Death of Certain Non-Certificate Owner Annuitant. These provisions apply
if, before the Income Date and while the Certificate is In Force, the
Annuitant dies, the Annuitant is not a Certificate Owner, and the
Certificate Owner is a natural person. The Certificate will continue after
the Annuitant's death. The new Annuitant will be any living contingent
annuitant, otherwise the primary Certificate Owner. If the Annuitant is the
first to die among the Certificate's primary Certificate Owner, joint
Certificate Owner and Annuitant, then the Annuitant is the Covered Person
and we will increase the Certificate Value, as provided below, if it is
less than the DBA, as defined above.
When we receive due proof of the Annuitant's death, we will compare, as of
the date of death, the Certificate Value and the DBA. If the Certificate
Value is less than the DBA, we will increase the current Certificate Value
by the amount of the difference. Note that while the amount of the
difference is determined as of the date of death, that amount is not added
to the Certificate Value until we receive due proof of death.
We allocate the amount credited, if any, to the Variable Account [and/or
the Fixed Account] based on the purchase payment allocation selection in
effect when we receive due proof of death. The Certificate Owner may
surrender the Certificate within 90 days of the date of the Annuitant's
death for the Certificate Value [without incurring any applicable
contingent deferred sales charge]. [If the Certificate Owner surrenders the
Certificate after 90 days, we will deduct any applicable contingent
deferred sales charge.]
DEATH PROVISIONS FOR QUALIFIED CERTIFICATES
Death of Annuitant. If the Annuitant dies before the Income Date while the
Certificate is In Force, the Designated Beneficiary will control the
Certificate. We will increase the Certificate Value, as provided below, if
it is less than the DBA as defined above. When we receive due proof of the
Annuitant's death, we will compare, as of the date of death, the
Certificate Value to the DBA. If the Certificate Value was less than the
DBA, we will increase the current Certificate Value by the amount of the
difference. Note that while the amount of the difference is determined as
of the date of death, that amount is not added to the Certificate Value
until we receive due proof of death.
We will allocate the amount credited, if any, to the Variable Account
[and/or the Fixed Account ]based on the purchase payment allocation
selection in effect when we receive due proof of death. The Designated
Beneficiary may, by the later of the 90th day after the Annuitant's death
and the 60th day after we are notified of the death, surrender the
Certificate for the Certificate Value [without incurring any applicable
contingent deferred sales charge]. [If the Designated beneficiary
surrenders the Certificate after the applicable 90 or 60 day period, we
will deduct any applicable contingent deferred sales charge.]
If the Designated Beneficiary does not surrender the Certificate, it may
continue for the time period permitted by the Internal Revenue Code
provisions applicable to the particular Qualified Plan. During this period,
the Designated Beneficiary may exercise all ownership rights, including the
right to make transfers or partial withdrawals or the right to totally
surrender the Certificate for its Certificate Withdrawal Value. If the
Certificate is still in effect at the end of the period, we will
automatically end it then by paying the Certificate Withdrawal Value
[(without the deduction of any applicable contingent deferred sales
charge)] to the Designated Beneficiary. If the Designated Beneficiary is
not alive then, we will pay any person(s) named by the Designated
Beneficiary in writing; otherwise we will pay the Designated Beneficiary's
estate.
Payment of Benefits. You or any Designated Beneficiary may direct us in
writing to pay any benefit of $5,000 or more under an annuity payment
option that meets the following:
o the first payment to the Designated Beneficiary must be made no
later than one year after the date of death;
o payments must be made over the life of the Designated Beneficiary
or over a period not extending beyond that person's life
expectancy; and
o any payment option that provides for payments to continue after
the death of the Designated Beneficiary will not allow the
successor payee to extend the period of time over which the
remaining payments are to be made.
CERTIFICATE OWNERSHIP
You shall be the person designated in the application and may exercise all
the rights of the Certificate. Joint Certificate Owners are permitted.
Contingent Certificate Owners are not permitted.
You may direct us in writing to change the Certificate 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 Certificate 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 Certificate 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 Certificate 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 Certificate may have
limitations on your ability to assign the Certificate.
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
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The minimum amount to be withdrawn will range between $100 and
$500 and required Certificate Value following a withdrawal will
range between $500 to $2500.
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You may make partial withdrawals from the Certificate by notifying us in
writing. The minimum withdrawal amount is [$300]. We may permit a lesser
amount with the systematic withdrawal program. If the Certificate Value
after a partial withdrawal would be below $[2,500], we will treat the
request as a withdrawal of only the amount over $[2,500]. [The amount
withdrawn will include any applicable contingent deferred sales charge and
may be greater than the amount of the surrender check requested.] 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. [If there is no or
insufficient value in the Variable Account, the amount surrendered, or the
insufficient portion, will be deducted from the Fixed Account in the ratio
that each Guarantee Period's value bears to the total Fixed Account Value.]
You may totally surrender the Certificate notifying us in writing.
Surrendering the Certificate will end it. Upon surrender, you will receive
the Certificate Withdrawal Value.
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
Certificate 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. You may surrender Option A, described in
"Annuity Options" below, which is not based on life contingencies, if you
have selected a variable payout.
Because of the potential tax consequences of a full or partial surrender,
you should consult a competent tax adviser regarding a surrender.
ANNUITY PROVISIONS
Annuity Benefits
If the Annuitant is alive on the Income Date and the Certificate is In
Force, we will begin payments under the annuity option or options you have
chosen. We determine the amount of the payments on the Income Date by:
o applying payments to the option you choose for your Certificate
Value,
o [increasing or decreasing your Certificate Value by applying by a
limited market value adjustment of Fixed Account Value described
in Appendix A,] [and]
o subtracting any premium taxes not previously deducted, [and
o subtracting any applicable certificate maintenance charge]on the
Income Date in accordance with the option selected.
Annuity Option and Income Date
You may select an Annuity Option and Income Date at the time of
application. If you do not select an Annuity Option, we automatically
choose Option B. If you do not select an Income Date for the Annuitant, the
Income Date will automatically be the earlier of:
o the later of the Annuitant's 90th birthday and the 10th
Certificate Anniversary, and
o any maximum date permitted under state law.
Change in Annuity Option and Income Date
You may choose or change an Annuity Option or the Income Date by writing to
us at least 30 days before the Income Date. However, any Income Date must
be:
o for fixed annuity options, not earlier than the first Certificate
Anniversary, and
o not later than the earlier of
(i) the later of the Annuitant's 90th birthday and the 10th
Certificate Anniversary and
(ii) any maximum date permitted under state law.
Annuity Options
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Keyport does not currently anticipate offering any additional
variable annuity options, but may offer additional fixed annuity
options. Any additional variable annuity options would be limited to
those that could be added by a filing pursuant to Rule 497 or Rule
485(b).
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The Annuity Options are:
Option A: Income for a Fixed Number of Years;
Option B: Life Income with 10 Years of Payments Guaranteed; and
Option C: Joint and Last Survivor Income.
You may arrange other options if we agree. Each option is available in two
forms-as a variable annuity for use with the Variable Account and as a
fixed annuity for use with [our general account] [Fixed Account]. Variable
annuity payments will fluctuate. Fixed annuity payments will not fluctuate.
We will determine the dollar amount of each fixed annuity payment by:
o [deducting from the [Fixed Account Value], [increased or
decreased by a limited market value adjustment described in
Appendix A][, any premium taxes not previously deducted
and any applicable certificate maintenance charge];
o dividing the remainder] by $1,000; and
o multiplying the result by the greater of:
(i) the applicable factor shown in the appropriate table in the
Certificate; and
(ii) the factor we currently offer at the time annuity payments begin.
We may base this current factor on the sex of the payee unless
we are prohibited by law from doing so.
If you do not select an Annuity Option, we will automatically apply Option
B. Unless you choose otherwise, we will apply:
(a) Variable Account Value (less any premium taxes not previously deducted
[and less any applicable certificate maintenance charge]) in its
entirety to a variable annuity option, [and]
(b) [Fixed Account Value, increased or decreased by a limited market value
adjustment described in Appendix A less any premium taxes not
previously deducted, to a fixed annuity option.]
The same amount applied to a variable option and a fixed option will
produce a different initial annuity payment and different subsequent
payments.
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 variable or fixed 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 in writing
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
such 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 over [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 while we are
making variable annuity payments, the payee may elect to receive the
following amount:
[(a)] the present value of the remaining payments, commuted at the interest
rate used to create the annuity factor for this option (For the variable
annuity this interest rate is [6%] per year [(5% per year for Oregon and
Texas Certificates)], unless at the time you chose Option A you selected
[3]% per year in writing); [less
(b) any contingent deferred sales charge due by treating the value defined
in (a) as a total surrender. Instead of receiving a lump sum, the payee
may elect another payment option [and we will not reduce the amount applied
to the option by the market value adjustment above].
If, at the death of the payee, Option A payments have been made for fewer
than the chosen number of years:
(a) we will continue payments during the remainder of the period to the
successor payee; or
(b) the successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity,
this interest rate is [6%] per year [(5% per year for Oregon and Texas
Certificates)], unless the payee chose [3]% per year at the time the
option was selected.
The mortality and expense risk charge is deducted during the Option A
payment period if a variable payout has been selected, but we have no
mortality risk during this period.
[You may choose a "level monthly" payment option for variable payments
under Option A. Under this option, we convert your annual payment into
twelve equal monthly payments. Thus the monthly payment amount changes
annually instead of monthly. We will determine each annual payment as
described below in "Variable Annuity Payment Values", place each annual
payment in our general account, and distribute it in twelve equal monthly
payments. The sum of the twelve monthly payments will exceed the annual
payment amount because of an interest rate factor we use, which will vary
from year to year. If the payments are commuted, (1) we will use the
commutation method described above for calculating the present value of
remaining annual payments and (2) use the interest rate that determined the
current twelve monthly payments to commute any unpaid monthly payments.]
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:
(a) we will continue payments during the remainder of the period to the
successor payee; or
(b) such successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity,
this interest rate is [6%] per year [(5% per year for Oregon and Texas
Certificates)], unless the payee had chosen [3]% per year at the time
the option was selected.
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.
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The frequency with which Certificate Owners may transfer the Sub-accounts
from which variable annuity payments are made with vary between 0 and an
unlimited number of times during periods varying between 1 and 12 months.
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Variable Annuity Payment Values
We determine the amount of the first variable annuity payment by using an
annuity purchase rate based on an assumed annual investment return of [6%]
per year [(5% per year for Oregon and Texas Certificates)], unless you
choose [3]% in writing. Subsequent variable annuity payments will
fluctuate in amount and reflect whether the actual investment return of the
selected Sub-account(s) (after deducting the mortality and expense risk
charge) is better or worse than the assumed investment return. The total
dollar amount of each variable annuity payment will be equal to:
[(a)] the sum of all Sub-account payments; [less
(b) the pro-rata amount of the annual certificate maintenance charge.]
Currently, there is [no limit] on 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 variable annuity payments.
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 postpone surrender payments from the Fixed Account
for up to six months.] We also reserve the right to suspend or postpone any
type of payment from the Variable Account for any period when:
(a) the New York Stock Exchange is closed other than customary weekend or
holiday closings;
(b) trading on the Exchange is restricted;
(c) an emergency exists as a result of which it is not reasonably
practicable to dispose of securities held in the Variable Account
or determine their value; or
(d) the Securities and Exchange Commission permits delay for the
protection of security holders. The applicable rules and
regulations of the Securities and Exchange Commission shall govern
as to whether the conditions described in (b) and (c) exist.
[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 expect to complete the final two steps of the plan by June,
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 Certificate is for use by individuals in retirement plans which may or
may not be Qualified Plans under the provisions of the Internal Revenue
Code (the "Code"). The ultimate effect of federal income taxes on the
Certificate Value, on annuity payments, and on the economic benefit to the
Certificate Owner, Annuitant or Designated Beneficiary depends on the type
of retirement plan for which you purchase the Certificate 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 Certificate until a
distribution occurs, in the form of a full surrender, a partial surrender,
an assignment or gift of the Certificate, or annuity payments. A trust or
other entity owning a Non-Qualified Certificate, other than as an agent for
an individual, is taxed differently; increases in the value of a
Certificate are taxed yearly whether or not a distribution occurs.
Surrenders, Assignments and Gifts. If you fully surrender your Certificate,
the portion of the payment that exceeds your cost basis in the Certificate
is subject to tax as ordinary income. For Non-Qualified Certificates, the
cost basis is generally the amount of the purchase payments made for the
Certificate. For Qualified Certificates, the cost basis is generally zero
and the taxable portion of the surrender payment is generally taxed as
ordinary income subject to special 5-year income averaging 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 Certificate. If the Designated Beneficiary elects to receive
annuity payments within 60 days of the decedent's death, different tax
rules apply. See "Annuity Payments" below. For Non-Qualified Certificates,
the tax treatment applicable to Designated Beneficiaries may be contrasted
with the income-tax-free treatment applicable to persons inheriting and
then selling mutual fund shares with a date-of-death value in excess of
their basis.
Partial withdrawals received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Certificate
Value exceeds purchase payments. Then, to the extent the Certificate Value
does not exceed purchase payments, such withdrawals are treated as a non
taxable return of principal to you. For partial withdrawals under a
Qualified Certificate, payments are treated first as a non-taxable return
of principal up to the cost basis and then a taxable return of income.
Since the cost basis of Qualified Certificates is generally zero, partial
surrender amounts will generally be fully taxed as ordinary income.
If you assign or pledge a Non-Qualified Certificate, 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 Certificate to anyone other than your spouse, you are
treated for income tax purposes as if you had fully surrendered the
Certificate.
A special computational rule applies if we issue to you, during any
calendar year, two or more Certificates, or one or more Certificates 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 Certificate will be includable in gross income to the extent that at
the time of distribution the sum of the values for all the Certificates or
contracts exceeds the sum of the cost bases for all the contracts.
Annuity Payments. 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. We
determine the non-taxable portion of each fixed annuity payment with an
"exclusion ratio" formula which establishes the ratio that the cost basis
of your values [allocated to Fixed Account Value] bears to the total
expected value of annuity payments for the term of the annuity. The
remaining portion of each payment is taxable. Such taxable portion is taxed
at ordinary income rates. For Qualified Certificates, the cost basis is
generally zero. With annuity payments based on life contingencies, the
payments will become fully taxable once the payee lives longer than the
life expectancy used to calculate the non-taxable portion of the prior
payments. Because variable annuity payments can increase over time and
because certain payment options provide for a lump sum right of
commutation, it is possible that the IRS could determine that variable
annuity payments should not be taxed as described above but instead should
be taxed as if they were received under an agreement to pay interest. This
determination would result in a higher amount (up to 100%) of certain
payments being taxable.
With respect to the "level monthly" payment option available under Annuity
Option A, pursuant to which each annual payment is placed in our general
account and paid out with interest in twelve equal monthly payments, it is
possible the IRS could determine that receipt of the first monthly payout
of each annual payment is constructive receipt of the entire annual
payment. Thus, the total taxable amount for each annual payment would be
accelerated to the time of the first monthly payout and reported in the tax
year in which the first monthly payout is received.
Penalty Tax. Payments received by you, Annuitants, and Designated
Beneficiaries under Certificates may be subject to both ordinary income
taxes and a penalty tax equal to 10% of the amount received that is
includable in income. The penalty tax is not imposed on 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 Certificate Owner (or, where the
Certificate 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 Certificate's annuity payment option that
provides for a series of substantially equal payments; provided
only that one purchase payment is made to the Certificate, that
the Certificate is not issued as a result of a Section 1035
exchange, and that the first annuity payment begins in the first
Certificate Year.
Income Tax Withholding. We are required to withhold federal income taxes on
taxable amounts paid under Certificates unless the recipient elects not to
have withholding apply. We will notify recipients of their right to elect
not to have withholding apply. [See "Tax-Sheltered Annuities" (TSAs) for an
alternative type of withholding that may apply to distributions from TSAs
that are eligible for rollover to another TSA or an individual retirement
annuity or account (IRA).]
Section 1035 Exchanges. You may purchase a Non-Qualified Certificate 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:
(a) the new Certificate will be subject to the distribution-at-death
rules described in "Death Provisions for Non-Qualified Certificates";
(b) purchase payments made between August 14, 1982 and January 18, 1985
and the income allocable to them will, following an exchange, no
longer be covered by a "grandfathered" exception to the penalty tax
for a distribution of income that is allocable to an investment made
over ten years prior to the distribution; and
(c) purchase payments made before August 14, 1982 and the income allocable
to them will, following an exchange, continue to receive the following
"grandfathered" tax treatment under prior law:
(i) the penalty tax does not apply to any distribution;
(ii) partial withdrawals are treated first as a non-taxable
return of principal and then a taxable return of income;
and
(iii) assignments are not treated as surrenders subject to
taxation. We base our understanding of the above principally
on legislative reports prepared by the Staff of the
Congressional Joint Committee on Taxation. [See "Recent
Developments".]
Diversification Standards. The U.S. Secretary of the Treasury has issued
regulations that set standards for diversification of the investments
underlying variable annuity contracts (other than pension plan contracts).
The Eligible Funds intend to meet the diversification requirements for the
Certificate, as those requirements may change from time to time. If the
diversification requirements are not satisfied, the Certificate will not be
treated as an annuity contract. As a consequence, income earned on a
Certificate 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 would be subjected to
federal income taxes on assets in the Variable Account.
The Secretary of the Treasury announced in September 1986 that he expects
to issue regulations which will prescribe the circumstances in which 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
Certificate. We, however, have reserved certain rights to alter the
Certificate 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 Certificate is for use with several types of Qualified Plans. The tax
rules applicable to participants in such Qualified Plans vary according to
the type of plan and the terms and conditions of the plan itself.
Therefore, we do not attempt to provide more than general information about
the use of the Certificate with the various types of Qualified Plans.
Participants under such Qualified Plans as well as Certificate Owners,
Annuitants, and Designated Beneficiaries are cautioned that the rights of
any person to any benefits under such Qualified Plans may be subject to the
terms and conditions of the plans themselves regardless of the terms and
conditions of the Certificate issued in connection therewith. Following are
brief descriptions of the various types of Qualified Plans and of the use
of the Certificate in connection with them. Purchasers of the Certificate
should seek competent advice concerning the terms and conditions of the
particular Qualified Plan and use of the Certificate with that Plan.
[Tax-Sheltered Annuities
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts
and, subject to certain contribution limitations, exclude the amount of
purchase payments from gross income for tax purposes. However, such
purchase payments may be subject to Social Security (FICA) taxes. This type
of annuity contract is commonly referred to as a "Tax-Sheltered Annuity"
(TSA).
Section 403(b)(11) of the Code contains distribution restrictions.
Specifically, benefits may be paid, through surrender of the Certificate or
otherwise, only:
(a) when the employee attains age 59-1/2, separates from service, dies or
becomes totally and permanently disabled (within the meaning of Section
72(m)(7) of the Code) or
(b) in the case of hardship. A hardship distribution must be of employee
contributions only and not of any income attributable to such
contributions.
Section 403(b)(11) does not apply to distributions attributable to assets
held as of December 31, 1988. Thus, it appears that the law's restrictions
would apply only to distributions attributable to contributions made after
1988, to earnings on those contributions, and to earnings on amounts held
as of 12/31/88. The Internal Revenue Service has indicated that the
distribution restrictions of Section 403(b)(11) are not applicable when TSA
funds are being transferred tax-free directly to another TSA issuer,
provided the transferred funds continue to be subject to the Section
403(b)(11) distribution restrictions.
If you have requested a distribution from a Certificate, we will notify you
if all or part of such distribution is eligible for rollover to another TSA
or to an individual retirement annuity or account (IRA). Any amount
eligible for rollover treatment will be subject to mandatory federal income
tax withholding at a 20% rate unless you direct us in writing to transfer
the amount as a direct rollover to another TSA or IRA.]
Individual Retirement Annuities
Sections 408(b) and 408A of the Code permit eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" and "Roth IRA", respectively. These individual
retirement annuities are subject to limitations on the amount which may be
contributed, the persons who may be eligible 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.
[Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. Such retirement
plans may permit the purchase of the Certificate to provide benefits under
the plans.]
[Deferred Compensation Plans With Respect to Service for State and Local
Governments
Section 457 of the Code, while not actually providing for a Qualified Plan
as that term is normally used, provides for certain deferred compensation
plans that enjoy special income tax treatment with respect to service for
tax-exempt organizations, state governments, local governments, and
agencies and instrumentalities of such governments. The Certificate can be
used with such plans. Under such plans, a participant may specify the form
of investment in which his or her participation will be made. However, all
such investments are owned by and subject to the claims of general
creditors of the sponsoring employer.]
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with 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 Certificate 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 CERTIFICATES
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Another registered broker-dealer that is an affiliate of Keyport
may serve as the principal underwriter of the Certificates.
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[Keyport Financial Services Corp. ("KFSC")] serves as the principal
underwriter for the Certificate described in this prospectus. Salespersons
who represent us [KFSC's corporate parent] as variable annuity agents will
sell the Certificates. Such salespersons are also registered
representatives of broker/dealers who have entered into distribution
agreements with [KFSC]. [KFSC] is registered under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. It is located at [125 High Street, Boston, Massachusetts
02110].
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The maximum compensation payable on the sale of Certificates is
7.00%.
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[A dealer selling the Certificate [may] receive[s] [no commission] [up to
[6.25%] of purchase payments] [and additional compensation later based on
the Certificate Value of those payments. The percentage may increase to
[7.00]% during certain time periods Keyport and [KFSC] select.] [In
addition, under certain circumstances, we or certain of our affiliates,
under a marketing support agreement with [KFSC] may pay certain sellers for
other services not directly related to the sale of the Certificates such as
special marketing support allowances.]]
[We may sell Certificates with lower or no dealer compensation (1) to a
person who is an officer, director, or employee of ours, or an affiliate of
ours, [a trustee or officer of an Eligible Fund,] [an employee of the
investment adviser or sub-investment adviser of an Eligible Fund,] [or an
employee or associated person of an entity which has entered into a sales
agreement with the principal underwriter for the distribution of
Certificates,] or (2) to any Qualified Plan established for such a person.
Such Certificates may be different from the Certificates sold to others in
that [(1) they are not subject to the deduction for the [certificate
maintenance charge,] [the asset-based distribution charge] [or the
contingent deferred sales charge] and (2)] they have a mortality and
expense risk charge of 0[.35]% per year. ]
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The exchange program, including the crediting of interest equal to 3%,
only applies to the particular version of the Contract and
Certificates that were initially declared effective in Post-Effective
No. 1 on October 25, 1996. The exchange program will not be made
available under any other current or future version of the Contract
and Certificates contained in this Registration Statement.
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[We may sell Certificates with lower or no dealer compensation as part of
an exchange program for other fixed ("Old FA") and variable ("Old VA")
annuity contracts we previously issued. A Certificate issued in exchange
for an Old VA will be issued with an exchange endorsement. One effect of
the endorsement is that we will not assess a contingent deferred sales
charge under the Old VA at the time of the exchange. We will calculate any
contingent deferred sales charge assessed under the Certificate in relation
to the initial purchase payment (i.e., the amount exchanged) based on the
actual time of each purchase payment under the Old VA. The endorsement also
provides that we will not refund the amount described in "Right to Revoke"
if the Certificate is returned. Instead, we will return the Old VA to the
owner and treat it as if no exchange had occurred.
Additionally, under such an exchange program, we may offer to credit the
initial purchase payment upon receipt with additional interest equal to 3%
of the purchase payment. Interest credited represents an allowance for
future deductions of the mortality and expense risk charge consistent with
anticipated cost savings. Such interest will be allocated on a pro-rata
basis to the Sub-accounts you select. We will deduct the interest from the
Certificate Value payable in the event you return the Certificate pursuant
to the "Right to Revoke" provision.] [See "Recent Developments".]
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.]
INQUIRIES BY CERTIFICATE OWNERS
You may write us with questions about your Certificates to Keyport Life
Insurance Company, Client Service Department, 125 High Street, Boston, MA
02110, or call (800) 367-3653.
TABLE OF CONTENTS-STATEMENT OF ADDITIONAL INFORMATION
Page
Keyport Life Insurance Company
Variable Annuity Benefits
Variable Annuity Payment Values Re-Allocating Sub-Account Payments
Custodian
Principal Underwriter
Experts
Investment Performance
[Average Annual Total Return for a Certificate
that is Surrendered [and for a Certificate that Continues]]
[Change in Accumulation Unit Value]
Yield[s] for [XX-1] Sub-Accounts
Financial Statements
Variable Account [A]
Keyport Life Insurance Company
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The Certificate may or may not provide for a Fixed Account Option.
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[APPENDIX A
THE FIXED ACCOUNT [(ALSO KNOWN AS THE MODIFIED GUARANTEED ANNUITY ACCOUNT)]
Introduction
[THE FIXED ACCOUNT VALUES THE CERTIFICATE PROVIDES ARE SUBJECT TO A MARKET
VALUE ADJUSTMENT. THE ADJUSTMENT MAY RESULT IN UPWARD OR DOWNWARD
ADJUSTMENTS IN AMOUNTS TRANSFERRED AND AMOUNTS PAID TO YOU OR OTHER PAYEES
(INCLUDING WITHDRAWALS, SURRENDERS, DEATH BENEFITS, AND AMOUNTS APPLIED TO
PURCHASE ANNUITY PAYMENTS). IN NO EVENT WILL A DOWNWARD MARKET VALUE
ADJUSTMENT REDUCE TO LESS THAN 3% PER YEAR THE INTEREST RATE APPLIED TO
AMOUNTS ALLOCATED TO A GUARANTEED PERIOD. PAYMENTS MADE FROM FIXED ACCOUNT
VALUES AT THE END OF THEIR GUARANTEE PERIOD ARE NOT SUBJECT TO THE MARKET
VALUE ADJUSTMENT.]
Purchase payments allocated to the Fixed Account option become part of our
general account. Because of applicable exemptive and exclusionary
provisions in the securities laws, interests in the Fixed Account options
have not been registered under the Securities Act of 1933 ("1933 Act"), nor
is the general account an investment company under the Investment Company
Act. The general account, the Fixed Account option, and any interest
therein, are not subject to regulation under the 1933 Act or the Investment
Company Act. We understand that the Securities and Exchange Commission has
not reviewed the disclosure in the prospectus relating to the general
account and the Fixed Account option.
Investments in the Fixed Account and Capital Protection Plus
We will allocate purchase payments to the Fixed Account in accordance with
your selection in the application. Any selection must specify that
percentage of the purchase payment you want to allocate to each Guarantee
Period of the Fixed Account. The percentage, if not zero, must be at least
[5%]. You may change the allocation percentages without fee, penalty or
other charge. You must make allocation changes in writing unless you have,
in writing, authorized us to accept telephone allocation instructions from
you. By authorizing us to accept telephone changes, you are agreeing to
accept and be bound by the conditions and procedures we establish from time
to time. The current conditions and procedures are in Appendix [B] and we
will notify you in advance of any changes.
We currently offer Guarantee Periods of 1, [3, 5, and 7] years. We may
change at any time the number of Guarantee Periods we offer under newly
issued and in-force Certificates, as well as the length of those Guarantee
Periods. If we stop offering a particular Guarantee Period, existing Fixed
Account Value in such Guarantee Period would not be affected until the end
of the Period. (At that time, a Period of the same length would not be a
transfer option.) Each Guarantee Period currently offered is available for
initial and subsequent purchase payments and for transfers of Certificate
Value.
[We offer a Capital Protection Plus program that you may request. Under
this program, we will allocate part of the purchase payment to the
Guarantee Period you select so that such part, based on that Guarantee
Period's interest rate in effect on the date of allocation, will equal at
the end of the Guarantee Period the total purchase payment. We will
allocate the rest of the purchase payment to the Sub-account(s) of the
Variable Account based on your allocation instructions. If you surrender or
transfer any part of the Fixed Account Value before the end of the
Guarantee Period, the value at the end of that Period will not equal the
original purchase payment amount.
As an example of Capital Protection Plus, assume we receive a purchase
payment of $10,000 when the interest rate for the 7-year Guarantee Period
is 6.75% per year. We will allocate $6,331 to that Guarantee Period,
because $6,331 will increase at that interest rate to $10,000 after 7
years. The remaining $3,669 of the payment will be allocated to the Sub
account(s) you selected.]
Fixed Account Value
The Fixed Account Value at any time is equal to:
(a) all purchase payments allocated to the Fixed Account plus the interest
credited on those payments; plus
(b) any Variable Account Value transferred to the Fixed Account plus the
interest credited on the transferred value; less
(c) any prior partial withdrawals from the Fixed Account, including any
charges therefor; less
(d) any Fixed Account Value transferred to the Variable Account.
Interest Credits
We will credit interest daily (based on an annual compound interest rate)
to purchase payments allocated to the Fixed Account at rates declared by us
for Guarantee Periods of one or more years from the month and day of
allocation. Any rate set by us will be at least [3%] per year.
Our method of crediting interest means that Fixed Account Value might be
subject to different rates for each Guarantee Period you have selected in
the Fixed Account. For purposes of this section, we treat Variable Account
Value transferred to the Fixed Account and Fixed Account Value renewed for
or transfer to another Guarantee Period as a purchase payment allocation.
[Application of Market Value Adjustment
Any surrender, withdrawal, transfer, or application to an Annuity Option of
Fixed Account Value from a Guarantee Period of three years or more is
subject to a limited market value adjustment, unless:
(a) the effective date of the transaction is at the end of the
Guarantee Period, or
(b) the effective date of a surrender is within 90 days of the date of
death of the first Covered Person to die.
If a market value adjustment applies to either a surrender or the
application to an Annuity Option, we deduct any negative market value
adjustment amount from, or add any positive market value adjustment amount
to, the Certificate Value.
If a market value adjustment applies to either a partial withdrawal or a
transfer, we deduct any negative market value adjustment amount from, or
add any positive market value adjustment to, the partial withdrawal or
transfer amount after we have deducted the withdrawal or transfer amount
from the Fixed Account Value.
No market value adjustment is ever applicable to Guarantee Periods of fewer
than three years.
Effect of Market Value Adjustment
A market value adjustment reflects the change in prevailing current
interest rates since the beginning of a Guarantee Period. The market value
adjustment may be positive or negative, but any negative Adjustment may be
limited in amount (see "Market Value Adjustment Factor" below).
Generally, if the Treasury Rate for the Guarantee Period is lower than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, the application of the limited market
value adjustment will result in a reduction of the amount being
surrendered, withdrawn, transferred, or applied to an Annuity Option.
Similarly, if the Treasury Rate for the Guarantee Period is higher than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the market value
adjustment will result in an increase in the amount being surrendered,
withdrawn, transferred, or applied to an Annuity Option.
We apply the market value adjustment before the deduction of any applicable
surrender charges or applicable taxes.
Market Value Adjustment Factor
We compute the market value adjustment by multiplying the amount
surrendered, withdrawn, transferred, or applied to a Payment Option, by the
market value adjustment factor. The market value adjustment factor is
calculated as the larger of Formula (a) and (b):
(a) (1+a)/(1+b)(n/12)-1
where:
"a" is the Treasury Rate for the number of Guarantee Period Years in the
Guarantee Period;
"b" is the Treasury Rate for a period equal to the time remaining (rounded
up to the next whole number of Guarantee Period Years) to the expiration of
the Guarantee Period; and
"n" is the number of complete Guarantee Period Months remaining before the
expiration of the Guarantee Period.
(b) (1.03)/(1+i)(y+d/#)-1
where:
"i" is the Guaranteed Interest Rate for the Guarantee Period;
"y" is the number of complete Guarantee Period Years that have elapsed in
the Guarantee Period;
"d" is the number of days since the last Guarantee Period Anniversary or,
if "y" is zero, the number of days since the start of the Guarantee Period;
and
"#" is the number of days in the current Guarantee Period Year (i.e., the
sum of "d" and the number of days until the next Guarantee Period
Anniversary).
In Formulas (1) and (2), all references to Guarantee Period, Guarantee
Period Anniversary, Guarantee Period Month, and Guarantee Period Year
relate to the Guarantee Period from which is being taken the amount being
surrendered, withdrawn, transferred, or applied to an Annuity Option.
As stated above, the Formula (b) amount will apply only if it is greater
than the Formula (a) amount. This will occur only when the Formula (a)
amount is negative and the Formula (b) amount is a smaller negative number.
Formula (b) thus ensures that a full (normal) negative Market Value
Adjustment of Formula (a) will not apply to the extent it would decrease
the Guarantee Period's Fixed Account Value (before the deduction of any
applicable surrender charges or any applicable taxes) below the following
amount:
(i) the amount allocated to the Guarantee Period; less
(ii) any prior systematic or partial withdrawal amounts; less
(iii) any prior amounts transferred to the Variable Account or to
another Guarantee Period in the Fixed Account, plus
(iv) interest on the above items (i) through (iii) credited annually at
a rate of 3% per year.
Treasury Rates
The Treasury Rate for a Guarantee Period is the interest rate in the
Treasury Constant Maturity Series, as published by the Federal Reserve
Board, for a maturity equal to the number of years specified in "a" and "b"
in Formula (a) above. Weekly series are published at the beginning of the
following week. The Determination Dates are the last business day prior to
the first and fifteenth of each calendar month.
To determine "a", we use the weekly Series first published on or after the
most recent Determination Date which occurs on or before the Start Date for
the Guarantee Period, except that if the Start Date is the same as the
Determination Date or the date of publication, or any date in between, we
instead use the weekly Series first published after the prior Determination
Date. To determine "b", we use the Weekly Series first published on or
after the most recent Determination Date which occurs on or before the date
on which the market value adjustment factor is calculated, except that if
the calculation date is the same as the Determination Date or the date of
publication, or any date in between, instead we use the weekly Series first
published after the prior Determination Date.
If the number of years specified in "a" or "b" is not equal to a maturity
in the Treasury Constant Maturity Series, we determine the treasury rate by
straight line interpolation between the interest rates of the next highest
and next lowest maturities.
If the Treasury Constant Maturity Series becomes unavailable, we will adopt
a comparable constant maturity index or, if such a comparable index also is
not available, we will replicate calculation of the Treasury Constant
Maturity Series Index based on U.S. Treasury Security coupon rates.
End of A Guarantee Period
We will notify you in writing at least 30 days prior to the end of a
Guarantee Period. At the end of the Guarantee Period, we will automatically
transfer the Guarantee Period's Fixed Account Value to the Money Market Sub
Account of the Variable Account unless we previously received your written
instructions of:
(a) election of a new Guarantee Period from among those we offer at that
time; or
(b) instructions to transfer the ending Guarantee Period's Fixed Account
Value to one or more Sub-accounts of the Variable Account. A new
Guarantee Period cannot be longer than the number of years
remaining until the Income Date.]
Transfers of Fixed Account Value
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The limits on the number of transfers will range between unlimited
transfers and 12 per year. The limitations on transfers from the Fixed
Account will range between 10% and 110%.
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You may transfer Fixed Account Value from one Guarantee Period to another
or to one or more Sub-accounts of the Variable Account subject to any
applicable Market Value Adjustment. If the Fixed Account Value represents
multiple Guarantee Periods, your transfer request must specify from which
values you want the transfer made.
The Certificate allows us to limit the number of transfers you may make in
a specified time period. Currently, we generally limit Variable Account and
Fixed Account transfers to [xxx] transfers per calendar year with a
$500,000 per transfer dollar limit. See "Transfer of Variable Account
Value". [Transfers from the Fixed Account to the Variable Account are
limited to [110%] of the Fixed Account Value at the beginning of the
Certificate Year.] [We will waive this limitation if a systematic
withdrawal program is in effect.] These limitations will not apply to any
transfer made at the end of a Guarantee Period. You will be notified, in
advance, of a change in the limitation on the number of transfers.
You must request transfers in writing unless you have authorized us in
writing to accept telephone transfer instructions from you or from a person
acting on your behalf as an attorney-in-fact under a power of attorney. By
authorizing us to accept telephone transfer instructions, you agree to
accept and be bound by the conditions and procedures we establish from time
to time. The current conditions and procedures are in Appendix [B] and if
you have authorized telephone transfers you will be notified, in advance,
of any changes. A person acting on your behalf as an attorney-in-fact
under a power of attorney may request transfers in writing.
If we receive your transfer requests before the 4:00 PM Eastern Time close
of trading on the New York Stock Exchange, we will execute them at the
close of business that day. Any requests we receive later we will execute
at the close of the next business day.
We will deduct the amount of the transfer from the specified values in the
manner stated in the next section below.
If you transfer 100% of a Guarantee Period's value and your current
allocation for purchase payments includes that Guarantee Period, we will
automatically change the allocation formula for future purchase payments
unless you instruct otherwise. For example, if the allocation formula is
50% to the one-year Guarantee Period and 50% to Sub-account A and you
transfer all Fixed Account Value to Sub-account A, we will change the
allocation formula to 100% to Sub-account A.
<PAGE>
[APPENDIX [B]
TELEPHONE INSTRUCTIONS
Telephone Transfers of Certificate Values
1. If there are Joint Certificate Owners, both must authorize us to accept
telephone instructions but either Certificate Owner may give us telephone
instructions.
2. All callers must identify themselves. We reserve the right to refuse to
act upon any telephone instructions in cases where the caller has not
sufficiently identified himself/herself to our satisfaction.
3. Neither we nor any person acting on our behalf shall be subject to any
claim, loss, liability, cost or expense if we or such person acted in good
faith upon a telephone instruction, including one that is unauthorized or
fraudulent. However, we will employ reasonable procedures to confirm that a
telephone instruction is genuine and, if we do not, we may be liable for
losses due to an unauthorized or fraudulent instruction. You thus bear the
risk that an unauthorized or fraudulent instruction we execute may cause
your Certificate Value to be lower than it would be had we not executed the
instruction.
4. We record all conversations with disclosure at the time of the call.
5. The application for the Certificate may allow you to create a power of
attorney by authorizing another person to give telephone instructions.
Unless prohibited by state law, we will treat such power as durable in
nature and it shall not be affected by your subsequent incapacity,
disability or incompetency. Either we or the authorized person may cease to
honor the power by sending written notice to you at your last known
address. Neither we nor any person acting on our behalf shall be subject to
liability for any act executed in good faith reliance upon a power of
attorney.
6. Telephone authorization shall continue in force until:
o we receive your written revocation,
o we discontinue the privilege, or
o we receive written evidence that you have entered into a market
timing or asset allocation agreement with an investment adviser
or with a broker/dealer.
7. If we receive telephone transfer instructions at 800-367-3653 before the
4:00 P.M. Eastern Time close of trading on the New York Stock Exchange,
they will be initiated that day based on the unit value prices calculated
at the close of that day. We will initiate instructions we receive after
the close of trading on the NYSE on the following business day.
8. Once we accept instructions, they may not be canceled.
9. You must make all transfers in accordance with the terms of the
Certificate and current prospectus. If your transfer instructions are not
in good order, we will not execute the transfer and will notify the caller
within 48 hours.
10. If you transfer 100% of any Sub-account's value and the allocation
formula for purchase payments includes that Sub-account, then we will
change the allocation formula for future purchase payments accordingly
unless we receive telephone instructions to the contrary. For example, if
the allocation formula is 50% to Sub-account A and 50% to Sub-account B and
you transfer all of Sub-account A's value to Sub-account B, we will change
the allocation formula to 100% to Sub-account B unless you instruct us
otherwise.
Telephone Changes to purchase payment Allocation Percentages
Numbers 1-6 above are applicable.]
<PAGE>
PROSPECTUS
[DATE]
<PAGE>
Distributed by:
[Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712]
Issued by:
Keyport Life Insurance Company
125 High Street, Boston, MA 02110-2712
Yes. I would like to receive the Keyport [NAME OF ANNUITY] Statement of
Additional Information.
Yes. I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Yes. I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Name
Address
City, State Zip
<PAGE>
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 6719 BOSTON, MA POSTAGE WILL
BE PAID BY ADDRESSEE
KEYPORT LIFE INSURANCE CO
125 HIGH STREET
BOSTON, MA 02110-2712
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GROUP AND INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT A
OF
KEYPORT LIFE INSURANCE COMPANY ("Keyport")
This Statement of Additional Information (SAI) is not a prospectus but it
relates to, and should be read in conjunction with, the [XX] variable
annuity prospectus dated , [1998]. The SAI is
incorporated by reference into the prospectus. The prospectus is available,
at no charge, by writing Keyport at 125 High Street, Boston, MA 02110 or by
calling (800) 437-4466. [It may also be obtained by writing
.]
TABLE OF CONTENTS
Page
Keyport Life Insurance Company
Variable Annuity Benefits
Variable Annuity Payment Values Re-Allocating Sub-Account Payments
Custodian
Principal Underwriter
Experts
Investment Performance
[Average Annual Total Return for a Certificate that is Surrendered [and
for a Certificate that Continues]]
[Change in Accumulation Unit Value]
Yield[s] for [XX-1] Sub-Account[s]
Financial Statements
Variable Account [A]............................................
Keyport Life Insurance Company
The date of this statement of additional information is , [1998].
<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, [1997], owned,
indirectly, approximately [83]% of the combined voting power of the
outstanding stock of LFC (with the balance being publicly held).] For
additional information about Keyport, see page 8 of the prospectus.
VARIABLE ANNUITY BENEFITS
Variable Annuity Payment Values
For each variable payment option, the total dollar amount of each periodic
payment will be equal to: [(a)] the sum of all Sub-Account payments; [less
(b) the pro-rata amount of the annual Certificate Maintenance Charge.]
The first payment for each Sub-Account will be determined by deducting [any
applicable Certificate Maintenance Charge and] any applicable state premium
taxes and then dividing the remaining value of that Sub-Account by $1,000
and multiplying the result by the greater of: (a) the applicable factor
from the Certificate's annuity table for the particular payment option; or
(b) the factor currently offered by Keyport at the time annuity payments
begin. This current factor may be based on the sex of the payee unless to
do so would be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number
of Annuity Units remains fixed for the annuity payment period. Each
Sub-Account payment after the first one will be determined by multiplying
(a) by (b), where: (a) is the number of Sub-Account Annuity Units; and (b)
is the Sub-Account Annuity Unit value for the Valuation Period that
includes the date of the particular payment.
Variable annuity payments will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect annuity payments, Keyport uses an Annuity Unit value.
Each Sub-Account has its own Annuity Units and value per Unit. The Annuity
Unit value applicable during any Valuation Period is determined at the end
of such period.
***************************************************************************
***************************************************************************
The formula for the net investment factor will vary depending upon
whether certain asset charges are imposed, as explained in the notes
in the Prospectus. With regard to the AIR, the AIR will vary within
the limits permitted under state insurance law, but no less than 3%.
***************************************************************************
***************************************************************************
When Keyport first purchased the Eligible Fund shares on behalf of the
Variable Account, Keyport valued each Annuity Unit for each Sub-Account at
a specified dollar amount. The Unit value for each Sub-Account in any
Valuation Period thereafter is determined by multiplying the value for the
prior period by a net investment factor. This factor may be greater or
less than 1.0; therefore, the Annuity Unit may increase or decrease from
Valuation Period to Valuation Period. For each assumed annual investment
rate (AIR), Keyport calculates a net investment factor for each Sub-Account
by dividing (a) by (b), where:
(a) is equal to the net investment factor as defined in the
prospectus [without any deduction for the Distribution Charge
defined in (c)(ii) of the net investment factor formula]; and
(b) is the assumed investment factor for the current Valuation
Period. The assumed investment factor adjusts for the interest
assumed in determining the first variable annuity payment.
Such factor for any Valuation Period shall be the accumulated
value, at the end of such period, of $1.00 deposited at the
beginning of such period at the assumed annual investment rate
(AIR). The AIR for Annuity Units based on the
Certificate's annuity tables is [6]% per year [(5% per year for
Oregon and Texas Certificates)]. [An AIR of 3% per year
is also currently available upon Written Request.]
With a particular AIR, payments after the first one will increase or
decrease from month to month based on whether the actual annualized
investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed AIR
percentage. If a given amount of Sub-Account value is applied to a
particular payment option, the initial payment will be smaller if a [3]%
AIR is selected instead of a [6]% AIR but, all other things being equal,
the subsequent [3]% AIR payments have the potential for increasing in
amount by a larger percentage and for decreasing in amount by a smaller
percentage. For example, consider what would happen if the actual
annualized investment return (see the first sentence of this paragraph) is
[9]%, [6]%, [3]%, or [0]% between the time of the first and second
payments. With an actual [9]% return, the [3]% AIR and [6]% AIR payments
would both increase in amount but the [3]% AIR payment would increase by a
larger percentage. With an actual [6]% return, the [3]% AIR payment would
increase in amount while the [6]% AIR payment would stay the same. With an
actual return of [3]%, the [3]% AIR payment would stay the same while the
[6]% AIR payment would decrease in amount. Finally, with an actual return
of [0%], the [3]% AIR and [6]% AIR payments would both decrease in amount
but the [3]% AIR payment would decrease by a smaller percentage. Note that
the changes in payment amounts described above are on a percentage basis
and thus do not illustrate when, if ever, the [3]% AIR payment amount might
become larger than the [6]% AIR payment amount. Note though that if Option
A (Income for a Fixed Number of Years) is selected and payments continue
for the entire period, the [3]% AIR payment amount will start out being
smaller than the [6]% AIR payment amount but eventually the [3]% AIR
payment amount will become larger than the [6]% AIR payment amount.
Re-Allocating Sub-Account Payments
***************************************************************************
***************************************************************************
The number of times that Sub-Account(s) used to determine the amount
of variable annuity payments will range between unlimited times to once
every twelve months. The minimum percentage per Sub-Account will range
between 1% and 10%.
***************************************************************************
***************************************************************************
The number of Annuity Units for each Sub-Account under any variable annuity
option will remain fixed during the entire annuity payment period unless
the payee makes a written request for a change. Currently, a payee can
instruct Keyport to change the Sub-Account(s) used to determine the amount
of the variable annuity payments [once] every [12] months. The payee's
request must specify the percentage of the annuity payment that is to be
based on the investment performance of each Sub-Account. The percentage
for each Sub-Account, if not zero, must be at least [10]% and must be a
whole number. At the end of the Valuation Period during which Keyport
receives the request, Keyport will: (a) value the Annuity Units for each
Sub-Account to create a total annuity value; (b) apply the new percentages
the payee has selected to this total value; and (c) recompute the number of
Annuity Units for each Sub-Account. This new number of units will remain
fixed for the remainder of the payment period unless the payee requests
another change.
CUSTODIAN
The custodian of the assets of the Variable Account is [State Street Bank
and Trust Company, a state chartered trust company]. Its principal office
is at [225 Franklin Street, Boston, Massachusetts].
PRINCIPAL UNDERWRITER
The Contract and Certificates, which are offered continuously, are
distributed by [Keyport Financial Services Corp. ("KFSC"), a wholly-owned
subsidiary of Keyport].
EXPERTS
[The consolidated financial statements of Keyport Life Insurance Company at
December 31, [1996] and for the year then ended, and the financial
statements of Keyport Life Insurance Company-Variable Account A as of
December 31, [1996] and for the period then ended appearing in this
Statement of Additional Information have been audited by [Ernst & Young
LLP], independent auditors, as set forth in their reports thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.]
INVESTMENT PERFORMANCE
The Variable Account may from time to time quote performance information
concerning its various Sub-Accounts. A Sub-Account's performance may also
be compared to the performance of sub-accounts used with variable annuities
offered by other insurance companies. This comparative information may be
expressed as a ranking prepared by Financial Planning Resources, Inc. of
Miami, FL (The VARDS Report), Lipper Analytical Services, Inc., or by
Morningstar, Inc. of Chicago, IL (Morningstar's Variable Annuity
Performance Report), which are independent services that compare the
performance of variable annuity sub-accounts. The rankings are done on the
basis of changes in accumulation unit values over time and do not take into
account any charges (such as sales charges or administrative charges) that
are deducted directly from Certificate values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926 on
capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term
performance of capital markets in order to illustrate general long-term
risk versus reward investment scenarios. Capital markets tracked by
Ibbotson Associates include common stocks, small company stocks, long-term
corporate bonds, long-term government bonds, U.S. Treasury Bills, and the
U.S. inflation rate. Historical total returns are determined by Ibbotson
Associates for: Common Stocks, represented by the Standard and Poor's
Composite Price Index (an unmanaged weighted index of 90 stocks prior to
March 1957 and 500 stocks thereafter of industrial, transportation, utility
and financial companies widely regarded by investors as representative of
the stock market); Small Company Stocks, represented by the fifth
capitalization quintile (i.e., the ninth and tenth deciles) of stocks on
the New York Stock Exchange for 1926-1981 and by the performance of the
Dimensional Fund Advisors Small Company 9/10 (for ninth and tenth deciles)
Fund thereafter; Long Term Corporate Bonds, represented beginning in 1969
by the Salomon Brothers Long-Term High-Grade Corporate Bond Index, which is
an unmanaged index of nearly all Aaa and Aa rated bonds, represented for
1946-1968 by backdating the Salomon Brothers Index using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon
Brothers in computing its Index, and represented for 1925-1945 through the
use of the Standard and Poor's monthly High-Grade Corporate Composite yield
data, assuming a 4% coupon and a 20-year maturity. Long-Term Government
Bonds, measured each year using a portfolio containing one U.S. government
bond with a term of approximately twenty years and a reasonably current
coupon; U.S. Treasury Bills, measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the shortest-term
bill having not less than one month to maturity; Inflation, measured by the
Consumer Price Index for all Urban Consumers, not seasonably adjusted,
since January, 1978 and by the Consumer Price Index before then. The stock
capital markets may be contrasted with the corporate bond and U.S.
government securities capital markets. Unlike an investment in stock, an
investment in a bond that is held to maturity provides a fixed rate of
return. Bonds have a senior priority to common stocks in the event the
issuer is liquidated and interest on bonds is generally paid by the issuer
before it makes any distributions to common stock owners. Bonds rated in
the two highest rating categories are considered high quality and present
minimal risk of default. An additional advantage of investing in U.S.
government bonds and Treasury bills is that they are backed by the full
faith and credit of the U.S. government and thus have virtually no risk of
default. Although government securities fluctuate in price, they are
highly liquid.
***************************************************************************
***************************************************************************
Information regarding the Performance of the Certificates will be
included in the subsequent filings. Presentations of standardized
average annual total return with respect to the units offered by each
separate prospectus and SAI will be limited to the date of
effectiveness of the separate prospectus and SAI. Performance
information that pre-dates the date the funding option was made
available through the Variable Account, as well as other non
standardized performance information, may accompany the presentation
of standardized average annual total return.
***************************************************************************
***************************************************************************
[Average annual Total Return for A Certificate that is surrendered [and for
a Certificate that Continues]]
[Change in Accumulation Unit Value]
Yield[s] for [XX-1] Sub-Account[s]
Yield [and effective yield] percentages for the [XX-1] Sub-Account are
calculated using the method prescribed by the Securities and Exchange
Commission. [Both] yields reflect the deduction of the annual [1.25]%
asset-based Certificate charges. [[Both] yields also reflect, on an
allocated basis [after xx/xx/xx], the Certificate's annual $[36]
Certificate Maintenance Charge that is collected after the first
Certificate Anniversary.] [Both] yields do not reflect [Contingent
Deferred Sales Charges and] premium tax charges. The yield[s] would be
lower if these charges were included. The following [are] [is] the
standardized formulas:
Yield equals: (A - B - 1) X 365
C 7
[Effective Yield Equals: (A - B)365/7 - 1
C]
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = [0][hypothetical Certificate Maintenance Charge for the 7
day period. The assumed annual [XX-1] Sub-Account charge is equal
to the $[36] Certificate charge multiplied by a fraction equal to
the average number of Certificates with [XX-1] Sub-Account value
during the 7-day period divided by the average total number of
Certificates during the 7-day period. This annual amount is
converted to a 7-day charge by multiplying it by 7/365. It is
then equated to an Accumulation Unit size basis by multiplying it
by a fraction equal to the average value of one [XX-1] Sub
Account Accumulation Unit during the 7-day period divided by the
average Certificate Value in [XX-1] Sub-Account during the 7-day
period.]
C = the Accumulation Unit value at the beginning of the 7-day
period.
The yield formula assumes that the weekly net income generated by an
investment in the [XX-1] Sub-Account will continue over an entire year.
[The effective yield formula also annualizes seven days of net income but
it assumes that the net income is reinvested over the year. This
compounding effect causes effective yield to be higher than the yield.]
[For the 7-day period ended [XX/XX/XX], the yield for the [XX-1] Sub
Account was [3.90%] [and effective yield was [3.98%].]
FINANCIAL STATEMENT
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 Certificates and should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
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: (To be filed by Amendment)
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
*** (3c) Manning & Napier Broker/Dealer's Agreement
* (4a) Form of Group Variable Annuity Contract of Keyport Life
Insurance Company
* (4b) Form of Variable Annuity Certificate of Keyport Life
Insurance Company
* (4c) Form of Tax-Sheltered Annuity Endorsement
* (4d) Form of Individual Retirement Annuity Endorsement
* (4e) Form of Corporate/Keogh 401(a) Plan Endorsement
*** (4f) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (M&N)
*** (4g) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (M&N)
**** (4h) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (KA)
**** (4i) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (KA)
++ (4j) Form of Individual Variable Annuity Contract of Keyport
Life Insurance Company
++ (4k) Specimen Individual Variable Annuity Contract of Keyport
Life Insurance Company(KA)
++ (4l) Specimen Group Exchange Program Endorsement (KA)
++ (4m) Specimen Individual Exchange Program Endorsement (KA)
## (4n) Specimen Group Variable Annuity Contract of Keyport Life
Insurance Company (KAV)
## (4o) Specimen Variable Annuity Certificate of Keyport Life
Insurance Company (KAV)
## (4p) Specimen Individual Variable Annuity Contract of Keyport
Life Insurance Company (KAV)
* (5a) Form of Application for a Group Variable Annuity Contract
* (5b) Form of Application for a Group Variable Annuity Certificate
* (6a) Articles of Incorporation of Keyport Life Insurance Company
* (6b) By-Laws of Keyport Life Insurance Company
(7) Not applicable
** (8a) Form of Participation Agreement
*** (8b) Participation Agreement Among Manning & Napier Insurance
Fund, Inc., Manning & Napier Investor Services, Inc., Manning
& Napier Advisors, Inc., and Keyport Life Insurance Company
**** (8c) Participation Agreement Among MFS Variable Insurance Trust,
Keyport Life Insurance Company, and Massachusetts Financial
Services Corp.
**** (8d) Participation Agreement Among The Alger American Fund,
Keyport Life Insurance Company, and Fred Alger and Company,
Incorporated
**** (8e) Participation Agreement Among Alliance Variable Products
Series Fund, Inc., Alliance Fund Distributors, Inc., Alliance
Capital Management L.P., and Keyport Life Insurance Company
#### (8f) Participation Agreement By and Among AIM Variable Insurance
Funds, Inc., Keyport Life Insurance Company, on Behalf of
Itself and its Separate Accounts, and Keyport Financial
Services Corp.
# (8g) Amended and Restated Participation Agreement By and Among
Keyport Variable Investment Trust, Keyport Financial Services
Corp., Keyport Life Insurance Company and Liberty Life
Assurance Company of Boston
#### (8h) Amended and Restated Participation Agreement By and Among
SteinRoe Variable Investment Trust, Keyport Financial
Services Corp., Keyport Life Insurance Company and Liberty
Life Assurance Company of Boston
+ (9) Opinion and Consent of Counsel
(10) Consents of Independent Auditors (To be filed by Amendment)
(11) Not applicable
(12) Not applicable
++++ (13) Schedule for Computations of Performance Quotations
+++ (15) Chart of Affiliations
### (16) Powers of Attorney
### (27) Financial Data Schedule
* Incorporated by reference to Registration Statement (File No. 333-1043)
filed on or about February 16, 1996.
** Incorporated by reference to Pre-Effective Amendment No. 1 to
Registration Statement (File No. 333-1043) filed on or about August
22, 1996.
*** Incorporated by reference to Pre-Effective Amendment No. 3 to
Registration Statement (File No. 333-1043) filed on or about October
15, 1996.
**** Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement (File No. 333-1043) filed on or about October
18, 1996.
+ Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement (File No. 333-1043) filed on or about May 1,
1997.
++ Incorporated by reference to Post-Effective Amendment No. 5 to the
Registration Statement (File No. 333-1043) filed on or about July 30,
1997.
+++ Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (File No. 333-1043) filed on or about February
6, 1998.
++++ Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement (File No. 333-1043) filed on or about February
27, 1998.
# Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 of Variable Account J of Liberty
Life Assurance Company of Boston (Files No. 333-29811; 811-08269)
filed on or about July 17, 1997.
## Incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement (File No. 333-1043) filed on or about March 20,
1998.
### Incorporated by reference to Post-Effective Amendment No. 10 to the
Registration Statement (File No. 333-1043) filed on or about April 24,
1998.
#### Incorporated by reference to Post-Effective Amendment No. 12 to the
Registration Statement (File No. 333-1043) filed on or about May
8, 1998.
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
Paul H. LeFevre, Jr. Acting President and Executive
Vice President
Bernard R. Beckerlegge Senior Vice President and General
Counsel
Bernhard M. Koch Senior Vice President and Chief
Financial Officer
Stewart R. Morrison Senior Vice President and Chief
Investment Officer
Francis E. Reinhart Senior Vice President and Chief
Information Officer
Mark R. Tully Senior Vice President and Chief
Sales Officer
Garth A. Bernard Vice President
Daniel C. Bryant Vice President and Assistant
Secretary
Clifford O. Calderwood Vice President
James P. Greaton Vice President and Corporate
Actuary
Jacob M. Herschler Vice President
Kenneth M. Hughes Vice President
James J. Klopper Vice President and Secretary
Leslie J. Laputz Vice President
Jeffrey J. Lobo Vice President - Risk Management
Suzanne E. Lyons Vice President - Human Resources
Jeffery J. Whitehead Vice President and Treasurer
Daniel T. H. Yin Vice President
Nancy C. Atherton Assistant Vice President
Peter E. Berkeley Assistant Vice President
John G. Bonvouloir Assistant Vice President &
Assistant Treasurer
Judith A. Brookins Assistant Vice President
Paul R. Coady Assistant Vice President
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
Ellen L. Wike Assistant Vice President
Frederick Lippitt Assistant Secretary
*125 High Street, Boston, Massachusetts 02110, unless noted otherwise.
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant.
The Depositor controls the Registrant, KMA Variable Account, Keyport
401 Variable Account, Keyport Variable Account I, and Keyport Variable
Account II, under the provisions of Rhode Island law governing the
establishment of these separate accounts of the Company.
The Depositor controls Keyport Financial Services Corp. (KFSC), a
Massachusetts corporation functioning as a broker/dealer of securities,
through 100% stock ownership. KFSC files separate financial statements.
The Depositor controls Liberty Advisory Services Corp. (LASC)
(formerly known as Keyport Advisory Services Corp.), a Massachusetts
corporation functioning as an investment adviser, through 100% stock
ownership. LASC files separate financial statements.
The Depositor controls Independence Life and Annuity Company
("Independence Life")(formerly Keyport America Life Insurance Company), a
Rhode Island corporation functioning as a life insurance company, through
100% stock ownership. Independence Life files separate financial
statements.
The Depositor controls American Benefit Life Insurance Company
("American Benefit"), a New York corporation functioning as a life
insurance company, through 100% stock ownership. American Benefit files
separate financial statements.
The chart for the affiliations of the Depositor is incorporated by
reference to Post-Effective Amendment No. 7 to Registration Statement (File
No. 333-1043) filed on or about February 6, 1998.
Item 27. Number of Contract Owners.
At March 31, 1999, there were _________ Qualified Contract Owners and
_________ Non-Qualified Contract Owners.
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter
are covered persons under Directors and Officers/Errors and Omissions
liability insurance policies issued by ICI Mutual Insurance Company,
Federal Insurance Company, Firemen's Fund Insurance Company, CNA and
Lumberman's Mutual Casualty Company. Insofar as indemnification for
liability arising under the Securities Act of 1933 may be permitted to
directors and officers under such insurance policies, or otherwise, the
Depositor has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Depositor of expenses incurred or paid by a director or officer in
the successful defense of any action, suit or proceeding) is asserted by
such director or officer in connection with the variable annuity contracts,
the Depositor will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters.
Keyport Financial Services Corp. is also principal underwriter of the
SteinRoe Variable Investment Trust and Liberty Variable Investment Trust,
which offer eligible funds for variable annuity and variable life insurance
contracts.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
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.
<PAGE>
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 29th day of January, l999.
Variable Account A
(Registrant)
BY: Keyport Life Insurance Company
(Depositor)
BY: /s/ Paul H. LeFevre, Jr.
Paul H. LeFevre, Jr.
President
<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/ Paul H. LeFevre, Jr. 1/29/99
Kenneth R. Leibler Paul H. LeFevre, Jr. Date
Director and Chairman of the Board Acting 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
*BY: /s/ James J. Klopper January 29, 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 included
as Exhibit 16 to this Registration Statement.
