AS FILED WITH THE SEC ON __________. REGISTRATION NO. 333-01031
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-6
PRE-EFFECTIVE AMENDMENT NO. 2
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
------------
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2
(Exact Name of Trust)
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(Name of Depositor)
PRUDENTIAL PLAZA
NEWARK, NEW JERSEY 07102-3777
(201) 802-6000
(Address and telephone number of principal executive offices)
------------
C. CHRISTOPHER SPRAGUE
ASSISTANT GENERAL COUNSEL
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copy to:
JEFFREY C. MARTIN
SHEA & GARDNER
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20036
------------
Group Variable Universal Life Insurance Certificates. The Registrant hereby
elects to register an indefinite amount of securities pursuant to Rule 24f-2
under the Investment Company Act of 1940. The required fee of $500 was submitted
with the initial filing of this registration statement.
Approximate date of proposed public offering: as soon as practicable after the
effective date of the Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
------------
This filing is being made pursuant to Rules 6c-3 and 6e-3(T) under the
Investment Company Act of 1940.
================================================================================
<PAGE>
CROSS REFERENCE SHEET
[AS REQUIRED BY FORM N-8B-2]
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. The Prudential Variable Contract Account GI-2
6. The Prudential Variable Contract Account GI-2
7. Not Applicable
8. Not Applicable
9. Litigation
10. Brief Description of the Group Contract and
Certificates; Issuance of a Certificate;
Applicant Owner Provision; Short-Term
Cancellation or "Free Look"; Procedures;
Premiums; Effective Date of Insurance; Allocation
of Premiums; Transfers; Dollar Cost Averaging;
Death Benefits; Changes in Face Amount; Charges
and Expenses; Reduction of Charges;
Dividends/Experience Credits; Cash Surrender
Value; Full Surrenders; Election of Paid-Up
Insurance; Partial Withdrawals; Loans;
Certificate Exchange Privilege; Telephone and
Electronic Transactions; Lapse; Termination of
the Contractholder's Participation in Group
Contracts; Participants Who Are No Longer
Eligible Group Members; Options on Termination of
Coverage; Reinstatement; Tax Treatment of
Certificate Benefits; ERISA considerations; When
Proceeds are Paid; Beneficiary; Incontestability;
Misstatement of Age; Suicide Exclusion;
Assignment; Voting Rights; Substitution of Fund
Shares; Additional Insurance Benefits
11. Brief Description of the Group Contract and
Certificate; The Prudential Variable Contract
Account GI-2; The Funds.
12. Cover Page; Brief Description of the Group
Contract and Certificate; The Funds; Sale of the
Contract and Sales Commissions
13. Brief Description of the Group Contract and
Certificate; Premiums; Reduction of Charges; Sale
of the Contract and Sales Commissions
14. Brief Description of the Group Contract and
Certificate; Issuance of a Certificate;
Procedures
15. Brief Description of the Group Contract and
Certificate; Procedures; Allocation of Premiums;
Transfers
16. Brief Description of the Group Contract and
Certificate; Detailed Information About the
Variable Universal Life Insurance Certificates
17. Death Benefits; Full Surrenders; Partial
Withdrawals; Loans; When Proceeds are Paid
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
18. The Prudential Variable Contract Account GI-2;
The Funds
19. Reports
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
24. Incontestability; Misstatement of Age; Suicide
Exclusion; Assignment
25. The Prudential Insurance Company of America
26. The Funds; Charges and Expenses
27. General Information About The Prudential; The
Prudential Variable Contract Account GI-2 and the
Variable Investments Under the Certificates
28. The Prudential Insurance Company of America;
Directors and Officers
29. The Prudential Insurance Company of America
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Prudential Insurance Company of America
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
44. Brief Description of the Group Contract and
Certificate; The Funds; Premiums; Cash Surrender
Value
45. Not Applicable
46. Brief Description of the Group Contract and
Certificate; The Prudential Variable Contract
Account GI-2; The Funds; Death Benefits; Full
Surrenders; Partial Withdrawals
47. The Prudential Variable Contract Account GI-2;
The Funds
48. Not Applicable
49. Not Applicable
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
50. Not Applicable
51. Brief Description of the Group Contract and
Certificates; Detailed Information About the
Variable Universal Life Insurance Certificates
52. Substitution of Fund Shares
53. Tax Treatment of Certificate Benefits; ERISA
considerations
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements; Consolidated Financial
Statements of The Prudential Insurance Company of
America and Subsidiaries
<PAGE>
PART I
INFORMATION IN PROSPECTUS
<PAGE>
PROSPECTUS
_____________, 1997
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2
GROUP VARIABLE UNIVERSAL LIFE
INSURANCE CONTRACTS
This prospectus describes Group Variable Universal Life insurance contracts
offered by The Prudential Insurance Company of America ("Prudential") which are
designed for use in group-sponsored insurance programs.
Each Eligible Group Member or "eligible applicant owner" (as defined in this
prospectus) who elects to obtain coverage under the Group Contract
("Participant") will receive a Certificate describing the coverage. Certain
Group Contracts may also permit a Participant to apply for separate insurance
coverage for his or her dependents.
The Group Contracts and Certificates provide life insurance protection with
flexible premium payments and a choice of underlying investment options. The
Death Benefit and Cash Surrender Value of a Certificate will vary daily with the
performance of the investment options selected, but the Death Benefit will not
be less than the Face Amount of the Certificate. Subject to certain requirements
and limitations, surrenders, partial withdrawals and loans are available.
The Prudential Variable Contract Account GI-2 (the "Separate Account") is
composed of 127 variable investment options (each, a "Subaccount"). The assets
of each Subaccount will be invested in a corresponding portfolio of The
Prudential Series Fund, Inc. (the "Series Fund") or certain other mutual fund
portfolios available to insurance company separate accounts (collectively, the
"Funds"). A Contractholder will be permitted to choose up to 20 of such Funds,
one of which must be a money market fund. Once that choice is made, the
Contractholder's Participants will then be allowed to direct premium payments
only to the Subaccounts corresponding to the selected Funds or to the Fixed
Account, an investment option under which Prudential guarantees an effective
annual interest rate of at least 4%.
The Funds in which the Separate Account invests are briefly described under THE
FUNDS, beginning on page 6. The investment objectives and policies of each Fund,
and the risks of investing in the Fund, are described in each Fund's prospectus
and statement of additional information. This prospectus is accompanied by
current prospectuses for each of the Funds that the Contractholder has chosen on
behalf of its Participants.
REPLACING EXISTING INSURANCE WITH A CERTIFICATE DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE. MOREOVER, IF YOU CURRENTLY OWN A LIFE INSURANCE
CONTRACT OR CERTIFICATE, THE BENEFITS AND COSTS OF PURCHASING ADDITIONAL LIFE
INSURANCE UNDER THE EXISTING POLICY SHOULD BE COMPARED WITH THE BENEFITS AND
COSTS OF PURCHASING THE CERTIFICATE DESCRIBED IN THIS PROSPECTUS. IN MAKING THIS
COMPARISON, YOU SHOULD CONSULT WITH QUALIFIED TAX AND FINANCIAL PLANNING
ADVISORS.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ACCOMPANIED
BY CURRENT PROSPECTUSES FOR EACH OF THE FUNDS THAT YOUR GROUP CONTRACTHOLDER HAS
MADE AVAILABLE TO YOU. EACH OF THESE PROSPECTUSES SHOULD BE READ CAREFULLY AND
RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
PRUDENTIAL PLAZA
NEWARK, NEW JERSEY 07102-3777
TELEPHONE (201) 716-8721
Form #_______ Ed. __-97
Catalog No. __________
<PAGE>
TABLE OF CONTENTS
PAGE
----
BRIEF DESCRIPTION OF THE GROUP CONTRACT AND CERTIFICATES................... 1
HYPOTHETICAL ILLUSTRATIONS OF DEATH BENEFITS AND CASH SURRENDER VALUES..... 4
GENERAL INFORMATION ABOUT PRUDENTIAL, THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT GI-2, AND THE VARIABLE INVESTMENT OPTIONS AVAILABLE
UNDER THE CERTIFICATES............................................... 6
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA.......................... 6
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2........................ 6
THE FUNDS ........................................................... 6
THE FIXED ACCOUNT.................................................... 24
DETAILED INFORMATION ABOUT THE CERTIFICATES................................ 25
ISSUANCE OF A CERTIFICATE............................................ 25
APPLICANT OWNER PROVISION............................................ 25
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"......................... 25
PROCEDURES .......................................................... 26
PREMIUMS ............................................................ 26
EFFECTIVE DATE OF INSURANCE.......................................... 26
ALLOCATION OF PREMIUMS............................................... 27
TRANSFERS ........................................................... 27
DOLLAR COST AVERAGING................................................ 27
DEATH BENEFITS....................................................... 28
CHANGES IN FACE AMOUNT............................................... 30
CHARGES AND EXPENSES................................................. 31
REDUCTION OF CHARGES................................................. 32
DIVIDENDS/EXPERIENCE CREDITS......................................... 33
CASH SURRENDER VALUE................................................. 33
FULL SURRENDERS...................................................... 33
ELECTION OF PAID-UP INSURANCE........................................ 33
PARTIAL WITHDRAWALS.................................................. 34
LOANS ............................................................... 34
CERTIFICATE EXCHANGE PRIVILEGE....................................... 35
TELEPHONE AND ELECTRONIC TRANSACTIONS................................ 35
LAPSE ............................................................... 35
TERMINATION OF A CONTRACTHOLDER'S PARTICIPATION IN GROUP CONTRACTS... 36
PARTICIPANTS WHO ARE NO LONGER ELIGIBLE GROUP MEMBERS................ 36
OPTIONS ON TERMINATION OF COVERAGE................................... 36
REINSTATEMENT........................................................ 37
TAX TREATMENT OF CERTIFICATE BENEFITS................................ 37
ERISA CONSIDERATIONS................................................. 40
WHEN PROCEEDS ARE PAID............................................... 40
BENEFICIARY ......................................................... 40
INCONTESTABILITY..................................................... 40
MISSTATEMENT OF AGE.................................................. 41
SUICIDE EXCLUSION.................................................... 41
ASSIGNMENT .......................................................... 41
VOTING RIGHTS........................................................ 41
SUBSTITUTION OF FUND SHARES.......................................... 42
ADDITIONAL INSURANCE BENEFITS........................................ 42
REPORTS ............................................................. 43
SALE OF THE CONTRACT AND SALES COMMISSIONS........................... 43
RATINGS AND ADVERTISEMENTS........................................... 44
PAYMENTS TO THIRD-PARTY ADMINISTRATORS AND ASSOCIATIONS
SPONSORING PARTICIPATION IN THE GROUP CONTRACTS................... 44
STATE REGULATION..................................................... 44
EXPERTS.............................................................. 44
LITIGATION........................................................... 44
ADDITIONAL INFORMATION............................................... 45
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS....................... 46
DIRECTORS AND OFFICERS OF THE PRUDENTIAL................................... 48
<PAGE>
FINANCIAL STATEMENTS....................................................... 50
CONSOLIDATED FINANCIAL STATEMENTS OF THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA AND SUBSIDIARIES.......................................... A-1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR
EACH OF THE FUNDS.
<PAGE>
BRIEF DESCRIPTION OF THE GROUP CONTRACT
AND CERTIFICATES
The following section provides brief answers to some common questions about the
more significant features of the Contracts and Certificates. More detailed
information is provided in the subsequent sections of this prospectus and in the
Group Contract and Certificate themselves.
WHAT IS A GROUP VARIABLE UNIVERSAL LIFE INSURANCE CONTRACT?
It is an insurance contract issued by Prudential to an employer or other
sponsoring entity that sets forth the terms under which eligible members of the
group can obtain life insurance protection for themselves and, under some Group
Contracts, their dependents as well. Group members (or "eligible applicant
owners") who obtain such insurance ("Participants") receive a Certificate
describing their coverage. Certificates will provide for a Death Benefit and a
Cash Surrender Value. Both the Death Benefit and the Cash Surrender Value of a
Certificate will vary daily with the performance of the investment options
chosen by the Participant. Prudential will determine the share, if any, of its
divisible surplus allocable to a Group Contract as of each Contract Anniversary,
if the Group Contract stays in force by the payment of all required premiums to
that date.
HOW IS THE DEATH BENEFIT UNDER A CERTIFICATE COMPUTED?
A Participant will choose a Face Amount of insurance for his or her Certificate,
within certain limits. The Death Benefit will generally be that Face Amount plus
the value of the Participant's Certificate Fund as of the date of death. The
Certificate Fund initially consists of the Net Premiums invested in the
investment options chosen by the Participant. The value of the Certificate Fund
will vary daily to reflect the investment performance of the selected option(s)
and the deduction of charges by Prudential. Under certain circumstances, the
Death Benefit will be increased above the value of the Face Amount plus the
Certificate Fund to assure that the Certificate continues to meet the definition
of "life insurance" under the Internal Revenue Code. Any Death Benefit otherwise
payable will be reduced by any Certificate Debt and outstanding charges. See
DEATH BENEFITS, page 28.
HOW IS THE CASH SURRENDER VALUE OF A CERTIFICATE COMPUTED?
The Cash Surrender Value of a Certificate as of any date is equal to the value
of the Certificate Fund as of that date, reduced by any Certificate Debt,
outstanding charges, and under certain Group Contracts, a transaction charge of
up to $20. See CASH SURRENDER VALUE, page 33.
WHAT PREMIUMS MUST BE PAID?
A Participant generally has flexibility to select the frequency and amount of
premium payments, and the insurance will remain in force so long as the balance
in the Certificate Fund is sufficient to pay the monthly charges under the
Certificate. There may be an initial minimum premium required to enroll as a
Participant. If the balance in the Certificate Fund is not sufficient to pay any
month's charges, and the Participant fails to make premium payments sufficient
to bring the balance above this minimum amount during the grace period, the
Participant's insurance will lapse. See PREMIUMS, page 26.
Some Group Contracts may provide that if a Participant pays certain specified
premiums during the first two Certificate Years, the Certificate will not lapse
even if the Certificate Fund balance is insufficient to pay monthly charges. See
LAPSE, page 35.
WHAT INVESTMENT OPTIONS ARE AVAILABLE?
The Separate Account is composed of 127 Subaccounts, each of which invests in a
single corresponding Fund. Prudential permits a Contractholder to choose up to
20 Funds as investment options for such Contractholder's Participants, provided
that at least one of such Funds is a money market fund. In lieu of selecting
Funds itself, a Contractholder may ask Prudential to present it with one or more
predetermined groups of Funds in which the Contractholder's Participants would
invest. Whether the Contractholder selects Funds itself or from a predetermined
set presented by Prudential, the Contractholder will be prohibited from
substituting other Funds for any Funds that it has already selected. However, a
Contractholder that chose fewer than 20 Funds initially will be permitted to
select additional Funds so long as the total number of Funds available to the
Participants does not exceed 20. Participants in a Contractholder's insurance
program will be allowed to allocate their premium payments only to the
Subaccounts that correspond to the Funds chosen by their Contractholder.
Participants may
1
<PAGE>
also allocate premium payments to the Fixed Account, an option under which
interest is credited at rates declared periodically by Prudential. See THE FIXED
ACCOUNT, page 24. For more information about the Funds and the different
investment objectives of all the Fund portfolios in which the Separate Account
invests, see THE FUNDS, page 6. More information about the Funds available to a
particular Contractholder is contained in the prospectuses for such Funds, which
will accompany the delivery of this prospectus.
Under the Certificate, Prudential will notify affected Participants concerning a
material change in a Fund's investment objective. As discussed more fully on
page 42 of this prospectus, Prudential may seek to substitute the shares of a
different mutual fund for shares of a Fund, and would notify Contractholders and
Participants of any such substitution. Changes that Prudential may make to the
Group Contracts or the Certificates are detailed in those documents.
DO CERTIFICATES PROVIDE PARTICIPANTS WITH CHOICE AND FLEXIBILITY
IN ADDRESSING A RANGE OF DIFFERENT INSURANCE PROTECTION AND
INVESTMENT OBJECTIVES?
Yes. Because the Cash Surrender Value of a Participant's insurance will vary
with the investment experience of the investment options, a Certificate under
the Group Contract offers an opportunity for the Cash Surrender Value to
appreciate more than it would under comparable insurance without variable
investment options. It is also possible, however, for the Cash Surrender Value
to decrease in value if the investment experience of the selected investment
option(s) is unfavorable. The variable investment options vary in their risks,
and Participants can choose to direct the amounts in their Certificate Fund to
more aggressive or more conservative variable investment options as their
personal circumstances and investment objectives may dictate over time.
Participants who prefer to avoid or reduce the risks involved in any of the
variable options may elect to allocate all or a portion of Net Premiums to the
Fixed Account. Prudential guarantees that the part of the Certificate Fund
allocated to this option will accrue interest daily at a rate that Prudential
declares periodically. Although this rate will change from time to time, it may
not be less than an effective annual rate of 4%. See THE FIXED ACCOUNT, page 24.
In short, the Certificate's investment options and premium flexibility can be
used to meet the changing needs of Participants over time.
WHAT CHARGES ARE MADE?
Prudential deducts certain charges from each premium payment and from the
amounts held in the designated investment option(s). All of these charges, which
are designed to compensate Prudential for insurance costs and risks, as well as
cover Prudential's expenses, are fully described under CHARGES AND EXPENSES,
page 31. The following diagram briefly outlines the charges that may be made:
2
<PAGE>
-------------------------------------------------------------------
PREMIUM PAYMENT
-------------------------------------------------------------------
|
|
|
----------------------------------------------------
o less the sum of a charge (currently
2.6%, however, for certain Group
Contracts, this charge may equal up to
5.35%) for taxes attributable to
premium payments
o a processing fee of up to $2, which may be
reduced or waived under certain Group Contracts
o a sales charge of up to 3 1/2%, which may be
reduced or waived under certain Group Contracts
---------------------------------------------------
|
|
|
- --------------------------------------------------------------------------------
NET PREMIUM AMOUNT
o To be invested in one or a combination of the investment portfolio options
available to the Participant.
- --------------------------------------------------------------------------------
|
|
|
- --------------------------------------------------------------------------------
DAILY CHARGES
o A daily charge is deducted from the assets of the Subaccounts of the
Separate Account for mortality and expense risks. The current daily charge
is equivalent to an effective annual rate of 0.45%. The charge is
guaranteed not to exceed an effective annual rate of 0.90%.
o Investment management fees and expenses are deducted from the assets of the
Funds. In 1995, the total expenses (after expense reimbursement) of the
Funds ranged from 0.39% to 2.69% of their average net assets. See page 7.
- --------------------------------------------------------------------------------
|
|
|
- --------------------------------------------------------------------------------
MONTHLY CHARGES
o An administrative expense charge may be deducted each month from the
Certificate Fund. The charge is currently up to $3 per month and is
guaranteed not to exceed $6 per month.
o A charge for the cost of insurance is deducted from the Certificate Fund.
o Charges for any additional insurance benefits not already taken into
account in the cost of insurance charge are deducted from the Certificate
Fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
o Under certain Group Contracts, a transaction charge of up to the lesser of
$20 or 2% of the amount surrendered or withdrawn will be assessed under
each surrender or partial withdrawal.
o Under certain Group Contracts, a transaction charge of up to $20 may be
made in connection with each loan or additional statement request.
o No transaction charge is currently assessed in connection with transfers,
but certain Group Contracts may give Prudential the right to assess a
charge of up to $20 for each transfer after the twelfth with respect to the
same Certificate in the same Certificate Year.
o No charge is currently made for any other taxes imposed upon the operations
of the Separate Account, but Prudential reserves the right to impose such a
charge.
- --------------------------------------------------------------------------------
WHAT WITHDRAWAL OR LOAN RIGHTS DO PARTICIPANTS HAVE?
At any time while a Certificate is in effect, a Participant may elect to
surrender his or her insurance and receive its Cash Surrender Value. A
Participant may also request a partial withdrawal from the Certificate Fund. See
FULL SURRENDERS, page 33, and PARTIAL WITHDRAWALS, page 34.
A Participant may borrow (before any applicable transaction charge) a total
amount up to the Loan Value of his or her Certificate. The Loan Value of a
Certificate at any time is determined by multiplying the Certificate Fund by 90%
(or higher where required by state law) and then subtracting any existing loan
with accrued interest, outstanding charges, and the amount of the next month's
charges. When a loan is taken, an amount equal to the loan is transferred from
the investment options to a Loan Account that remains part of the Certificate
Fund. This Loan Account earns interest at an effective annual rate that is
generally 2% less than the interest charged on the loan. Any outstanding
Certificate Debt will be deducted from proceeds payable at the Covered Person's
death or upon surrender. See LOANS, page 34.
3
<PAGE>
HOW IS A PARTICIPANT'S INSURANCE AFFECTED IF HE OR SHE IS NO LONGER A
MEMBER OF THE GROUP?
Depending on the terms of the particular Group Contract, a Participant who is no
longer included in the group of eligible members may be able to elect to
continue the insurance provided by the Group Contract on a Portable basis.
Certificates continued on a Portable basis may be subject to higher charges. A
Participant may also surrender the insurance for its Cash Surrender Value, elect
to use the Cash Surrender Value of the insurance to purchase paid-up insurance,
or convert the insurance to an individual life insurance policy. See OPTIONS ON
TERMINATION OF COVERAGE, page 36.
WHAT IS THE FEDERAL INCOME TAX STATUS OF AMOUNTS RECEIVED
UNDER A CERTIFICATE?
Variable life insurance contracts, such as those offered by this Prospectus,
receive the same federal income taxation treatment as conventional fixed benefit
life insurance. This means, first, that any Death Benefit paid would generally
be excluded from the gross income of the beneficiary. Second, any annual
increases in the value of the Certificate Fund, whether from income or capital
appreciation, would not be included in the taxable income of a Participant.
Third, assuming that premiums are not paid above levels that would make a
Certificate a "Modified Endowment Contract" as defined in the Internal Revenue
Code, pre-death distributions, whether in the form of surrenders or partial
withdrawals, would be treated first as a return of the Participant's investment
in the Certificate and then as a distribution of taxable income, and loans would
not be treated as distributions at the time the loan was made. See TAX TREATMENT
OF CERTIFICATE BENEFITS, page 37.
HYPOTHETICAL ILLUSTRATIONS OF
DEATH BENEFITS AND CASH SURRENDER VALUES
The two illustrations that follow show how the Death Benefit and Cash Surrender
Value change with the investment experience of the Separate Account. They are
not projections of values; they are intended to show how a Certificate works.
They are "hypothetical" because they are based upon several assumptions, as
described below. Both illustrations assume that a Certificate with a Face Amount
of $100,000 has been bought by a 40-year old Covered Person. The illustrations
assume that a premium of $1,200 is paid at issuance and annually on each
Certificate Anniversary.
The first illustration assumes that a 2.6% charge is deducted for charges
attributable to premiums and that current sales, cost of insurance, mortality
and expense risk and administrative charges and processing fee will continue for
the indefinite future. It assumes that the Covered Person is in a risk class
that has current standardized cost of insurance charges equal to rates equal to
Table I under Section 79 of the Internal Revenue Code. It assumes a monthly
administrative charge of $3, which applies to Certificates that do not involve
any direct billing by Prudential. See ADMINISTRATIVE CHARGE, page 32.
The second illustration is based upon the same assumptions except it is assumed
that the maximum amount for taxes attributable to premiums, sales, cost of
insurance, mortality and expense risk and administrative charges and processing
fee permitted by the particular Certificate have been made throughout the life
of the Certificate. It assumes that the Covered Person is in a risk class that
has maximum guaranteed cost of insurance charges equal to the maximum rates that
could be charged, which are 150% of the 1980 Commissioner's Standard Ordinary
Mortality Table (Male), Age Last Birthday (the "1980 CSO Table").
Although Prudential may under some Group Contracts pay Dividends or Experience
Credits to Group Contractholders, who may distribute those Dividends/Experience
Credits to Participants in the Group Contract, neither table reflects Dividends
or Experience Credits. See DIVIDENDS/EXPERIENCE CREDITS, page 33.
Another assumption is that the Certificate Fund has been invested in equal
amounts in each of the 127 Funds. Finally, there are four assumptions, shown
separately, about the average investment performance of the portfolios. The
first is that there will be a uniform zero percent gross rate of return, that
is, that the average value of the Certificate Fund will uniformly be adversely
affected by very unfavorable investment performance. The other three assumptions
are that investment performance will be at a uniform gross annual rate of 4%, 8%
and 12%. These, of course, are merely assumptions, and actual returns will
fluctuate from year to year. Nevertheless, these tables help show how the Cash
Surrender Value and the Death Benefit change with investment experience.
4
<PAGE>
The first column in the following illustrations shows the contract year. The
second column, to provide context, shows what the aggregate amount would be if
the assumed premiums had been invested in a savings account paying a 4%
effective annual rate. Of course, if that were done, there would be no life
insurance protection. The next four columns show the Death Benefit payable in
each of the years shown for the four different assumed investment returns. Note
that a gross return (as well as the net return) is shown at the top of each
column. The gross return represents the combined effect of income and capital
appreciation of the portfolios before any reduction is made for investment
management fees or other Fund expenses. The net return reflects an average total
annual expense ratio of the 127 Funds of 0.96%, and the daily deduction from the
Certificate Fund of 0.45% per year for the first table, which is based on
current charges, and 0.90% for the second table, which is based on maximum
charges. Thus, assuming maximum charges, gross returns of 0%, 4%, 8% and 12% are
the equivalent of net returns of -1.86%, 2.14%, 6.14%, and 10.14% respectively.
The Death Benefits and Cash Surrender Values shown reflect the deduction of all
expenses and charges both for the Subaccounts and under the Certificate.
The amounts shown assume that there is no loan or partial withdrawal.
Upon request, Prudential will provide comparable hypothetical illustrations for
a Certificate reflecting the proposed Covered Person's age, risk class, proposed
Face Amount of insurance, and proposed premium payments.
5
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
GROUP VARIABLE UNIVERSAL LIFE INSURANCE CERTIFICATE
SPECIFIED FACE AMOUNT: $100,000
ISSUE AGE 40
ASSUME PAYMENT OF $1,200 ANNUAL PREMIUMS FOR ALL YEARS
USING CURRENT CHARGES
Death Benefit(1) Cash Surrender Value(1)
--------------------------------------------------- --------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End of Premiums --------------------------------------------------- --------------------------------------------------
Certificate Accumulated 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year at 4% per year (-1.41% Net) (2.59% Net) (6.59% Net) (10.59% Net) (-1.41% Net) (2.59% Net) (6.59% Net) (10.59% Net)
- ----------- -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,248 $100,914 $100,956 $106,997 $161,039 $ 914 $ 956 $ 997 $ 1,039
2 2,546 101,815 101,936 102,068 102,188 1,815 1,936 2,060 2,188
3 3,896 102,704 102,942 103,193 103,459 2,704 2,942 3,193 3,459
4 5,300 103,580 103,974 104,401 104,864 3,580 3,974 4,401 4,864
5 6,760 104,443 105,032 105,688 106,417 4,443 5,032 5,688 6,417
6 8,278 105,151 105,972 106,911 107,984 5,151 5,972 6,911 7,984
7 9,857 105,850 106,936 108,214 109,715 5,850 6,936 8,214 9,715
8 11,499 106,538 107,925 109,603 111,631 6,538 7,925 9,603 11,631
9 13,207 107,217 108,939 111,084 113,749 7,217 8,939 11,084 13,749
10 14,984 107,886 109,980 112,662 116,091 7,886 9,980 12,662 16,091
15 24,989 109,993 114,385 120,909 130,602 9,993 14,385 20,909 30,602
20 37,163 110,392 117,659 130,341 152,486 10,392 17,659 30,341 52,486
25 51,974 108,333 118,688 140,338 185,390 8,333 18,688 40,338 85,390
30 69,994 0(2) 113,900 147,502 232,525 0(2) 13,900 47,502 132,525
35 91,918 0 0(2) 145,593 297,480 0 0(2) 45,593 197,480
40 118,592 0 0 142,968 404,904 0 0 42,968 304,904
- ------------
(1) Assumes no loan or partial withdrawal has been made.
(2) Zero value in cash value and death benefit indicates lapse of insurance coverage in the absence of a sufficient additional
premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, FEDERAL AND
STATE INCOME TAXES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATE OF RETURN AVERAGED 0%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW
THOSE AVERAGES FOR INDIVIDUAL CERTIFICATE YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE FUNDS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR OVER ANY PERIOD OF TIME.
</TABLE>
T-1
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
GROUP VARIABLE UNIVERSAL LIFE INSURANCE CERTIFICATE
SPECIFIED FACE AMOUNT: $100,000
ISSUE AGE 40
ASSUME PAYMENT OF $1,200 ANNUAL PREMIUMS FOR ALL YEARS
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit(1) Cash Surrender Value(1)
--------------------------------------------------- --------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End of Premiums --------------------------------------------------- --------------------------------------------------
Certificate Accumulated 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year at 4% per year (-1.86% Net) (2.14% Net) (6.14% Net) (10.14% Net) (-1.86% Net) (2.14% Net) (6.14% Net) (10.14% Net)
- ----------- -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,248 $100,532 $100,504 $100,596 $100,628 $ 512 $ 544 $ 576 $ 608
2 2,546 101,013 101,098 101,186 101,276 993 1,078 1,166 1,256
3 3,896 101,443 101,600 101,768 101,945 1,423 1,580 1,748 1,925
4 5,300 101,818 102,065 102,336 102,632 1,798 2,045 2,316 2,612
5 6,760 102,136 102,489 102,887 103,334 2,116 2,469 2,867 3,314
6 8,278 102,393 102,866 103,415 104,050 2,373 2,846 3,395 4,030
7 9,857 102,588 103,193 103,915 104,777 2,568 3,173 3,895 4,757
8 11,499 102,719 103,464 104,383 105,514 2,699 3,444 4,363 5,494
9 13,207 102,782 103,674 104,811 106,255 2,762 3,654 4,791 6,235
10 14,984 102,771 103,815 105,190 106,994 2,751 3,795 5,170 6,974
15 24,989 101,296 103,035 105,821 110,217 1,276 3,015 5,801 10,197
20 37,163 0(2) 0(2) 102,601 110,967 0(2) 0(2) 2,581 10,947
25 51,974 0 0 0(2) 105,339 0 0 0(2) 5,319
30 69,994 0 0 0 0(2) 0 0 0 0(2)
35 91,918 0 0 0 0 0 0 0 0
40 118,592 0 0 0 0 0 0 0 0
- ------------
(1) Assumes no loan or partial withdrawal has been made.
(2) Zero value in cash value and death benefit indicates lapse of insurance coverage in the absence of a sufficient additional
premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, FEDERAL
AND STATE INCOME TAXES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATE OF RETURN AVERAGED 0%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW
THOSE AVERAGES FOR INDIVIDUAL CERTIFICATE YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE FUNDS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR OVER ANY PERIOD OF TIME.
</TABLE>
T-2
<PAGE>
GENERAL INFORMATION ABOUT PRUDENTIAL, THE
PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2, AND THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE
CERTIFICATES
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
The Prudential Insurance Company of America ("Prudential") is a mutual insurance
company, founded in 1875 under the laws of the State of New Jersey. It is
licensed to sell life insurance and annuities in all states, in the District of
Columbia, and in all United States territories and possessions. Prudential's
consolidated financial statements begin on page A-1 and should be considered
only as bearing upon Prudential's ability to meet its obligations under the
Group Contracts and the insurance provided thereunder. Prudential and its
affiliates act in a variety of capacities with respect to registered investment
companies including as depositor, advisor, and principal underwriter.
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2
The Prudential Variable Contract Account GI-2 (the "Separate Account") was
established on June 14, 1988 under New Jersey law as a separate investment
account. The Separate Account meets the definition of a "separate account" under
the federal securities laws. The Separate Account holds assets that are
segregated from all of Prudential's other assets.
The obligations arising under the Group Contracts and the Certificates are
general corporate obligations of Prudential. Prudential is also the legal owner
of the assets in the Separate Account. Prudential will at all times maintain
assets in the Separate Account with a total market value at least equal to the
liabilities relating to the benefits attributable to the Separate Account. These
assets may not be charged with liabilities which arise from any other business
Prudential conducts. In addition to these assets, the Separate Account's assets
may include funds contributed by Prudential to commence operation of the
Separate Account and may include accumulations of the charges Prudential makes
against the Separate Account. From time to time, these additional assets will be
transferred to Prudential's general account. Before making any such transfer,
Prudential will consider any possible adverse impact the transfer might have on
the Separate Account.
The Separate Account is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust, which is a type of investment company. This does not involve
any supervision by the SEC of the management or investment policies or practices
of the Separate Account. For state law purposes, the Separate Account is treated
as a part or division of Prudential. There are currently 127 Subaccounts within
the Separate Account, each of which invests in a single corresponding portfolio
of the Funds. Prudential reserves the right to take all actions in connection
with the operation of the Separate Account that are permitted by applicable law
(including those permitted upon regulatory approval).
THE FUNDS
Set out below is a list of each Fund, its investment objectives, investment
management fees and other expenses, and its investment adviser. For certain of
the Funds, policy information in addition to the Fund's fundamental investment
objective is provided.
THE PRUDENTIAL SERIES FUND, INC.
The ten portfolios of the Series Fund in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
MONEY MARKET PORTFOLIO: The maximum current income that is consistent with
stability of capital and maintenance of liquidity through investment in
high-quality short-term debt obligations.
DIVERSIFIED BOND PORTFOLIO: A high level of income over the longer term while
providing reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities that provide
attractive yields but do not involve substantial risk of loss of capital through
default.
CONSERVATIVE BALANCED PORTFOLIO: Achievement of a favorable total investment
return consistent with a portfolio having a conservatively managed mix of money
market instruments, fixed income securities, and common stocks,
6
<PAGE>
in proportions believed by the investment manager to be appropriate for an
investor desiring diversification of investment who prefers a relatively lower
risk of loss than that associated with the Flexible Managed Portfolio while
recognizing that this reduces the chances of greater appreciation.
FLEXIBLE MANAGED PORTFOLIO: Achievement of a high total return consistent with a
portfolio having an aggressively managed mix of money market instruments, fixed
income securities, and common stocks, in proportions believed by the investment
manager to be appropriate for an investor desiring diversification of investment
who is willing to accept a relatively high level of loss in an effort to achieve
greater appreciation.
HIGH YIELD BOND PORTFOLIO: Achievement of a high total return through investment
in high yield/high risk fixed income securities in the medium to lower quality
ranges.
STOCK INDEX PORTFOLIO: Achievement of investment results that correspond to the
price and yield performance of publicly traded common stocks in the aggregate by
following a policy of attempting to duplicate the price and yield performance of
the Standard & Poor's 500 Composite Stock Price Index.
EQUITY INCOME PORTFOLIO: Both current income and capital appreciation through
investment primarily in common stocks and convertible securities that provide
favorable prospects for investment income returns above those of the Standard &
Poor's 500 Composite Stock Price Index or the New York Stock Exchange Composite
Index.
EQUITY PORTFOLIO: Capital appreciation through investment primarily in common
stocks of companies, including major established corporations as well as smaller
capitalization companies, that appear to offer attractive prospects of price
appreciation that are superior to broadly-based stock indices. Current income,
if any, is incidental.
PRUDENTIAL JENNISON PORTFOLIO: Long-term growth of capital through investment
primarily in equity securities of established companies with above-average
growth prospects. Current income, if any, is incidental.
GLOBAL PORTFOLIO: Long-term growth of capital through investment primarily in
common stock and common stock equivalents of foreign and domestic issuers.
Current income, if any, is incidental.
The other portfolios described in the accompanying Series Fund prospectus are
not available in connection with these Group Contracts.
Prudential is the investment adviser of each of the portfolios of the Series
Fund. Prudential's principal business address is Prudential Plaza, Newark, New
Jersey 07102-3777. Prudential has a service agreement with its wholly-owned
subsidiary The Prudential Investment Corporation ("PIC"), which provides that,
subject to Prudential's supervision, PIC will furnish investment advisory
services in connection with the management of the Series Fund. In addition,
Prudential has entered into a subadvisory agreement with its wholly-owned
subsidiary Jennison Associates Capital Corp. ("Jennison"), under which Jennison
furnishes investment advisory services in connection with the management of the
Prudential Jennison Portfolio. Further detail is provided in the prospectus and
statement of additional information for the Series Fund. Prudential, PIC and
Jennison are registered as investment advisers under the Investment Advisers Act
of 1940.
================================================================================
Total Fund
Investment Other Annual Expenses
Funds Management Expenses (After Expense
Fee Reimbursements)
- --------------------------------------------------------------------------------
THE SERIES FUND
Money Market Portfolio (1) 0.40% 0.04% 0.44%
Diversified Bond Portfolio (1) 0.40% 0.04% 0.44%
Conservative Balanced Portfolio (1) 0.55% 0.03% 0.58%
Flexible Managed Portfolio (1) 0.60% 0.03% 0.63%
High Yield Bond Portfolio (1) 0.55% 0.06% 0.61%
Stock Index Portfolio (1) 0.35% 0.03% 0.38%
Equity Income Portfolio (1) 0.40% 0.03% 0.43%
Equity Portfolio (1) 0.45% 0.03% 0.48%
Prudential Jennison Portfolio (1) 0.60% 0.19% 0.79%
Global Portfolio (1) 0.75% 0.31% 1.06%
================================================================================
(1) SERIES FUND. With respect to the Series Fund portfolios, except for the
Global Portfolio, Prudential reimburses a portfolio when its ordinary operating
expenses, excluding taxes, interest, and brokerage commissions exceed 0.75% of
the portfolio's average daily net assets. The amounts listed for the portfolios
under other expenses are
7
<PAGE>
based on amounts incurred in the last fiscal year. The Prudential Jennison
Portfolio commenced operations in 1995. Consequently, the figures shown as other
expenses and total fund annual expenses are based on actual amounts from May 1,
1995 through May 1, 1996. It is anticipated that as average net assets of the
portfolio grow, the magnitude of other expenses will decrease and become
comparable to that of other portfolios.
AIM VARIABLE INSURANCE FUNDS, INC.
The portfolios of the AIM Variable Insurance Funds, Inc. in which the Separate
Account may currently invest and their investment objectives and fees are as
follows:
AIM V.I. CAPITAL APPRECIATION FUND: A diversified portfolio which seeks to
provide capital appreciation through investments in common stocks, with emphasis
on medium-sized and smaller emerging growth companies.
AIM V.I. GROWTH FUND: A diversified portfolio which seeks to provide growth of
capital through investments primarily in common stocks of leading U.S. companies
considered by AIM to have strong earnings momentum.
AIM V.I. GROWTH AND INCOME FUND: A diversified portfolio which seeks to provide
growth of capital, with current income as a secondary objective by investing
primarily in dividend paying common stocks which have prospects for both growth
of capital and dividend income.
AIM V.I. INTERNATIONAL EQUITY FUND: A diversified portfolio which seeks to
provide long-term growth of capital by investing in international equity
securities, the issuers of which are considered by AIM to have strong earnings
momentum.
AIM V.I. VALUE FUND: A diversified portfolio which seeks to achieve long-term
growth of capital by investing primarily in equity securities judged by AIM to
be undervalued relative to the current or projected earnings of the companies
issuing the securities, or relative to current market values of assets owned by
the companies issuing the securities or relative to the equity markets
generally. Income is a secondary objective.
AIM Advisors, Inc. ("AIM") serves as the investment advisor to each Fund. AIM's
principal business address is 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. The principal underwriter of the funds is AIM Distributors, a
subsidiary of AIM, located at 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173.
================================================================================
Investment
Funds Management Other Total Fund
Fee Expenses Annual Expenses
- --------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund 0.65% 0.10% 0.75%
AIM V.I. Growth Fund 0.65% 0.19% 0.84%
AIM V.I. Growth and Income Fund 0.65% 0.52% 1.17%
AIM V.I. International Equity Fund 0.75% 0.40% 1.15%
AIM V.I. Value Fund 0.65% 0.10% 0.75%
================================================================================
ALLIANCE CAPITAL
The portfolios of the Alliance Variable Products Series Fund, Inc. in which the
Separate Account may currently invest and their investment objectives and fees
are as follows:
GLOBAL DOLLAR GOVERNMENT PORTFOLIO: Seeks a high level of current income through
investing substantially all of its assets in U.S. and non-U.S. fixed-income
securities denominated only in U.S. dollars.
GROWTH PORTFOLIO: Seeks long-term growth of capital by investing primarily in
common stocks and other equity securities.
GROWTH AND INCOME PORTFOLIO: Seeks to balance the objectives of reasonable
current income and reasonable opportunities for appreciation through investments
primarily in dividend-paying common stocks of good quality.
INTERNATIONAL PORTFOLIO: Seeks to obtain a total return on its assets from
long-term growth of capital and from income principally through a broad
portfolio of marketable securities of established non-United States companies
(or United States companies having their principal activities and interests
outside the United States), companies participating in foreign economies with
prospects for growth, and foreign government securities.
8
<PAGE>
PREMIER GROWTH PORTFOLIO: Seeks growth of capital rather than current income. In
pursuing its investment objective, the Premier Growth Portfolio will employ
aggressive investment policies. Since investments will be made based upon their
potential for capital appreciation, current income will be incidental to the
objective of capital growth. This portfolio is not intended for investors whose
principal objective is assured income or preservation of capital.
QUASAR PORTFOLIO: Seeks growth of capital by pursuing aggressive investment
policies. This portfolio invests in a diversified portfolio of equity securities
of any company and industry and in any type of security which is believed to
offer possibilities for capital appreciation.
TECHNOLOGY PORTFOLIO: Seeks growth of capital through investment in companies
expected to benefit from advances in technology. This portfolio will invest
principally in a diversified portfolio of securities of companies which use
technology extensively in the development of new or improved products or
processes.
Alliance Capital Management L.P. ("Alliance") is the investment adviser to each
of the above-mentioned funds. Alliance's principal business address is 1345
Avenue of the Americas, New York, New York 10105. The principal underwriter of
the funds is Alliance Fund Distributors, Inc., a subsidiary of Alliance, located
at 1345 Avenue of the Americas, New York, New York 10105.
================================================================================
Total Fund
Investment Other Annual Expenses
Funds Management Expenses (After Expense
Fee Reimbursements)
- --------------------------------------------------------------------------------
ALLIANCE VARIABLE PRODUCTS SERIES
FUND, INC.
Global Dollar Government Portfolio (1) 0.00% 0.95% 0.95%
Growth Portfolio (1) 0.43% 0.52% 0.95%
Growth and Income Portfolio (1) 0.63% 0.16% 0.79%
International Portfolio (1) 0.00% 0.95% 0.95%
Premier Growth Portfolio (1) 0.76% 0.19% 0.95%
Quasar Portfolio (1) 0.00% 0.95% 0.95%
Technology Portfolio (1)(2) 0.00% 0.95% 0.95%
================================================================================
(1) Net of expense reimbursement. The expenses of the following Portfolios,
before expense reimbursements, would be: Global Dollar Government Portfolio:
investment management fees .75%, other expenses 4.07% and total fund annual
expenses 4.82%; Growth Portfolio: investment management fees .75%, other
expenses .52% and total fund annual expenses 1.27%; Growth and Income Portfolio:
investment management fees .63%, other expenses .16% and total fund annual
expenses .79%; International Portfolio: investment management fees 1.00%, other
expenses 1.99% and total fund annual expenses 2.99%; Premier Growth Portfolio:
investment management fees 1.00%, other expenses .19% and total fund annual
expenses 1.19%; Quasar Portfolio: investment management fees 1.00%, other
expenses 1.55% and total fund annual expenses 2.55%; and the Technology
Portfolio: investment management fees 1.00%, other expenses 1.55% and total fund
annual expenses 2.55%.
(2) Estimated
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
The portfolios of American Century Variable Portfolios, Inc. in which the
Separate Account may currently invest and their investment objectives and fees
are as follows:
GROWTH PORTFOLIO: Seeks capital growth over time by investing primarily in
common stocks that are considered by management to have better-than-average
prospects for appreciation.
INTERNATIONAL PORTFOLIO: Seeks capital growth over time by investing in common
stocks of foreign companies considered to have better-than-average prospects for
appreciation.
VALUE PORTFOLIO: Seeks long-term capital growth with income as a secondary
objective. The fund seeks to achieve its objectives by investing primarily in
equity securities of well-established companies with intermediate-to-large
market capitalizations that are believed by management to be undervalued at the
time of purchase.
The investment adviser for each fund is American Century Investment Management,
Inc. ("ACIM"). ACIM's principal business address is American Century Tower, 4500
Main Street, Kansas City, Missouri 64111. The principal underwriter of the funds
is American Century Services, Inc., located at 4500 Main Street, Kansas City,
Missouri 64111.
9
<PAGE>
================================================================================
Funds Total Fund
Annual Expenses
- --------------------------------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Growth Portfolio (1) 1.00%
International Portfolio (1) 1.50%
Value Portfolio (1) 1.00%
================================================================================
(1) Fees are all-inclusive.
THE BERGER FUNDS
The portfolios of the Berger Institutional Products Trust ("Berger IPT") in
which the Separate Account may currently invest and their investment objectives
and fees are as follows:
BERGER IPT - 100 FUND: The investment objective of the Berger IPT - 100 Fund is
long term capital appreciation. The Berger IPT - 100 Fund seeks to achieve this
objective by investing primarily in common stocks of established companies which
are believed to offer favorable growth prospects. Current income is not an
investment objective of the Berger IPT - 100 Fund, and any income produced will
be a by-product of the effort to achieve the Fund's objective.
BERGER IPT - GROWTH AND INCOME FUND: The primary investment objective of the
Berger IPT - Growth and Income Fund is capital appreciation. A secondary
objective is to provide a moderate level of current income. The Berger IPT -
Growth and Income Fund seeks to achieve these objectives by investing primarily
in common stocks and other securities, such as convertible securities or
preferred stocks, which the Fund's advisor believes offer favorable growth
prospects and are expected to also provide current income.
BERGER IPT - SMALL COMPANY GROWTH FUND: The investment objective of the Berger
IPT - Small Company Growth Fund is capital appreciation. The Berger IPT - Small
Company Growth Fund seeks to achieve this objective by investing primarily in
equity securities (including common and preferred stocks, convertible debt
securities and other securities having equity features) of small growth
companies with market capitalization of less than $1 billion at the time of the
initial purchase.
Berger Associates, Inc. ("Berger") is the investment adviser and principal
underwriter to each of the above-mentioned Berger funds. Berger's principal
business address is 210 University Boulevard, Suite 900, Denver, Colorado 80206.
================================================================================
Investment
Funds Management Other Total Fund
Fee Expenses Annual Expenses
- --------------------------------------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - 100 Fund (1) 0.75% 0.22% 0.97%
Berger IPT - Growth & Income Fund (1) 0.75% 0.22% 0.97%
Berger IPT - Small Company Growth
Fund (1) 0.90% 0.22% 1.12%
===============================================================================
(1) Based on estimated expenses for the Funds' first year of operations.
DREYFUS CORPORATION FUNDS
The portfolios of the Dreyfus Variable Investment Fund, the Dreyfus Socially
Responsible Growth Fund, and the Dreyfus Stock Index Fund in which the Separate
Account may currently invest and their investment objectives and fees are as
follows:
CAPITAL APPRECIATION PORTFOLIO: Seeks to provide long-term capital growth
consistent with the preservation of capital; current income is a secondary
investment objective. This portfolio invests primarily in the common stocks of
domestic and foreign issuers.
10
<PAGE>
DISCIPLINED STOCK PORTFOLIO: Seeks to provide investment results that are
greater than the total return performance of publicly-traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Index. This portfolio will use quantitative statistical modeling techniques to
construct a portfolio in an attempt to achieve its investment objective, without
assuming undue risk relative to the broad stock market.
GROWTH AND INCOME PORTFOLIO: Seeks to provide long-term capital growth, current
income and growth of income, consistent with reasonable investment risk. This
portfolio invests primarily in equity securities, debt securities and money
market instruments of domestic and foreign issuers.
INTERNATIONAL EQUITY PORTFOLIO: Seeks to maximize capital growth. This portfolio
invests primarily in equity securities of foreign issuers located throughout the
world.
INTERNATIONAL VALUE PORTFOLIO: Seeks long-term capital growth. This portfolio
invests primarily in a portfolio of publicly-traded equity securities of foreign
issuers which would be characterized as "value" companies according to criteria
established by The Dreyfus Corporation.
MANAGED ASSETS PORTFOLIO: Seeks to maximize total return, consisting of capital
appreciation and current income. This portfolio follows an asset allocation
strategy by investing in equity securities, debt securities and money market
instruments of domestic and foreign issuers.
MONEY MARKET PORTFOLIO: Seeks to provide as high a level of current income as is
consistent with the preservation of capital and the maintenance of liquidity.
This portfolio invests in short-term money market instruments.
QUALITY BOND PORTFOLIO: Seeks to provide the maximum amount of current income to
the extent consistent with the preservation of capital and the maintenance of
liquidity. This portfolio invests principally in the debt obligations of
corporations, the U.S. Government and its agencies and instrumentalities, and
U.S. major banking institutions.
SMALL CAP PORTFOLIO: Seeks to maximize capital appreciation. This portfolio
invests primarily in common stocks of domestic and foreign issuers. This
portfolio will be particularly alert to companies that The Dreyfus Corporation
considers to be emerging smaller-sized companies which are believed to be
characterized by new or innovative products, services, or processes which should
enhance prospects for growth in future earnings.
SMALL COMPANY STOCK PORTFOLIO: Seeks to provide investment results that are
greater than the total return performance in publicly-traded common stocks in
the aggregate, as represented by the Russell 2500(TM) Index. This portfolio
invests primarily in a portfolio of equity securities of small to medium-sized
domestic issuers, while attempting to maintain volatility and diversification
similar to that of the Russell 2500(TM) Index.
SOCIALLY RESPONSIBLE GROWTH FUND: The Fund's primary goal is to provide capital
growth through equity investment in companies that, in the opinion of the Fund's
management, not only meet traditional investment standards but which also show
evidence that they conduct their business in a manner that contributes to the
enhancement of the quality of life in America. Current income is secondary to
the primary goal.
STOCK INDEX FUND: Seeks to provide investment results that correspond to the
price and yield performance of publicly traded common stocks in the aggregate,
as represented by the Standard & Poor's 500 Composite Stock Price Index.
The Dreyfus Corporation ("Dreyfus") is the investment adviser to each of the
above-mentioned portfolios and funds. Dreyfus' principal business address is 200
Park Avenue, New York, New York 10166. The principal underwriter of the
portfolios and funds is Premier Mutual Fund Services, Inc., located at 60 State
Street, Boston, Massachusetts 02109.
11
<PAGE>
================================================================================
Total Fund
Investment Other Annual Expenses
Funds Management Expenses (After Expense
Fee Reimbursements)
- --------------------------------------------------------------------------------
DREYFUS FUNDS
Capital Appreciation Portfolio (1) 0.73% 0.12% 0.85%
Disciplined Stock Portfolio (1)(2) 0.75% 0.25% 1.00%
Growth and Income Portfolio (1) 0.72% 0.20% 0.92%
International Equity Portfolio (1) 0.30% 1.29% 1.59%
International Value Portfolio (1)(2) 1.00% 0.50% 1.50%
Managed Assets Portfolio (1) 0.75% 0.19% 0.94%
Money Market Portfolio (1) 0.47% 0.15% 0.62%
Quality Bond Portfolio (1) 0.61% 0.20% 0.81%
Small Cap Portfolio (1) 0.75% 0.08% 0.83%
Small Company Stock Portfolio (1)(2) 0.75% 0.25% 1.00%
Socially Responsible Growth Fund (1) 0.69% 0.58% 1.27%
Stock Index Fund (1)(3) 0.25% 0.14% 0.39%
================================================================================
(1) From time to time, the portfolios' investment advisers at their sole
discretion may waive all or part of their fees and/or voluntarily assume certain
portfolio expenses. For a more complete description of the portfolios' fees and
expenses, see the portfolios' prospectuses. As of the date of the last
prospectus, certain fees are being waived or expenses are being assumed, in each
case on a voluntary basis. Without such waivers or reimbursements, the
investment management fees, other expenses and total fund annual expenses that
would have been incurred for the last completed fiscal year, December 31, 1995,
would be - Capital Appreciation: 0.75%, 0.12% and 0.87%; Growth and Income:
0.75%, 0.20% and 0.95%; International Equity: 0.75%, 1.29% and 2.04%; Managed
Assets: 0.75%, 0.19% and 0.94%; Money Market: 0.50%, 0.15% and 0.65%; Quality
Bond: 0.65%, 0.20% and 0.85%; Small Cap: 0.75%, 0.08% and 0.83%; Socially
Responsible Growth: 0.75%, 0.58% and 1.33%; and Stock Index: 0.25%, 0.17% and
0.42%. There is no guarantee that this reimbursement will continue in the
future.
(2) The Disciplined Stock, International Value and Small Company Stock
Portfolios did not commence operations during 1995. These numbers are annualized
estimates of the expenses that each portfolio expects to incur during fiscal
year 1996.
(3) The Stock Index Fund expense information has been restated to reflect
current fees.
FRANKLIN TEMPLETON
The portfolios of the Franklin Valuemark Funds in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
CAPITAL GROWTH FUND: Seeks capital appreciation, with current income as a
secondary consideration, by investing primarily in equity securities, including
common stocks and securities convertible into common stocks.
GROWTH AND INCOME FUND: Seeks capital appreciation, with current income return
as a secondary objective, by investing primarily in U.S. common stocks,
securities convertible into common stocks, and preferred stocks.
INCOME SECURITIES FUND: Seeks to maximize income while maintaining prospects for
capital appreciation by investing in a diversified portfolio of domestic and
foreign, including developing markets, debt obligations and/or equity
securities. Debt obligations include high yield, high risk, lower rated
obligations (commonly referred to as "junk bonds") which involve increased risks
related to the creditworthiness of their issuers.
RISING DIVIDENDS FUND: Seeks capital appreciation, primarily through investment
in the equity securities of companies that have paid consistently rising
dividends over the past ten years. Preservation of capital is also an important
consideration. The Fund seeks current income incidental to capital appreciation.
SMALL CAP FUND: Seeks long-term capital growth by investing primarily in equity
securities of small capitalization growth companies. The Fund may also invest in
foreign securities, including those of developing markets issuers.
TEMPLETON DEVELOPING MARKETS EQUITY FUND: Seeks long-term capital appreciation
through investing primarily in equities of issuers in countries having
developing markets.
12
<PAGE>
TEMPLETON GLOBAL GROWTH FUND: Seeks long-term growth through a flexible policy
of investing in stocks and debt obligations of companies and governments of any
nation, including developing markets. The realization of income, if any, is only
incidental to accomplishment of the fund's objective of long-term capital
growth.
TEMPLETON INTERNATIONAL EQUITY FUND: Seeks long-term growth of capital. Under
normal conditions, the fund will invest at least 65% of its total assets in an
internationally mixed portfolio of foreign equity securities which trade on
markets in countries other than the U.S., including developing markets, and are
(i) issued by companies domiciled in countries other than the U.S., or (ii)
issued by companies that derive at least 50% of either their revenues or pre-tax
income from activities outside of the U.S.
TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND: Seeks long-term capital
appreciation by investing primarily in equity securities of smaller companies
outside the U.S., including developing markets.
TEMPLETON PACIFIC GROWTH FUND: Seeks long-term growth of capital, primarily
through investing at least 65% of its total assets in equity securities which
trade on markets in the Pacific Rim, including developing markets, and are (i)
issued by companies domiciled in the Pacific Rim or (ii) issued by companies
that derive at least 50% of either their revenues or pre-tax income from
activities in the Pacific Rim.
Franklin Advisers, Inc. is the investment adviser to the Capital Growth Fund,
the Growth & Income Fund, the Income Securities Fund, the Small Cap Fund, the
Templeton International Equity Fund and the Templeton Pacific Growth Fund. In
addition, Franklin Advisers, Inc. employs Templeton Investment Counsel, Inc. to
act as sub- advisor to the Templeton International Equity Fund and the Templeton
Pacific Growth Fund. Franklin Advisers, Inc.'s principal business address is 777
Mariners Island Boulevard, P.O. Box 7777, San Mateo, California 94403- 7777. The
investment adviser for the Rising Dividends Fund is Franklin Advisory Services,
Inc. Franklin Advisory Services, Inc.'s principal business address is One Parker
Plaza, Sixteenth Floor, Fort Lee, New Jersey 07024. The investment adviser for
the Templeton Developing Markets Fund is Templeton Asset Management Ltd.
("TAM"). TAM's principal business address is 7 Temasek Boulevard, #38-03, Suntec
Tower One, Singapore, 038987. The investment adviser for the Templeton Global
Growth Fund is Templeton Global Advisors Limited ("TGA"). TGA's principal
business address is Lyford Cay, Nassau, N.P., Bahamas. The investment adviser
for the Templeton International Smaller Companies Fund is Templeton Investment
Counsel, Inc. ("TIC"). TIC's principal business address is Broward Financial
Centre, Suite 2100, Fort Lauderdale, Florida 33394. The principal underwriter of
the funds is Franklin Templeton Investor Services, Inc., a subsidiary of
Franklin Resources, Inc., located at 777 Mariners Island Blvd., P.O. Box 7777,
San Mateo, California 94403-7777.
================================================================================
Investment
Management
Funds and Fund Other Total Fund
Administration Expenses Annual Expenses
Fee
- --------------------------------------------------------------------------------
FRANKLIN VALUEMARK FUNDS
Capital Growth Fund (1)(2)(3) 0.75% 0.04% 0.79%
Growth & Income Fund (1)(2) 0.49% 0.03% 0.52%
Income Securities Fund (1)(2) 0.47% 0.04% 0.51%
Rising Dividends Fund (1)(2) 0.75% 0.03% 0.78%
Small Cap Fund (1)(2)(4) 0.75% 0.15% 0.90%
Templeton Developing Markets Equity
Fund (1)(2) 1.25% 0.16% 1.41%
Templeton Global Growth Fund (1)(2) 0.93% 0.04% 0.97%
Templeton International Equity
Fund (1)(2) 0.83% 0.09% 0.92%
Templeton International Smaller
Companies Fund (1)(2)(3) 1.00% 0.10% 1.10%
Templeton Pacific Growth Fund (1)(2) 0.90% 0.11% 1.01%
================================================================================
(1) The fund administration fee is a direct expense of the Templeton
International Smaller Companies Fund; other funds pay for similar services
indirectly through the investment management fee.
(2) The investment management fees for each fund are based on a percentage of
that fund's assets under management.
(3) The Capital Growth Fund and Templeton International Smaller Companies Fund
commenced operations May 1, 1996. The expenses shown are estimated expenses for
the funds for 1996.
13
<PAGE>
(4) The Small Cap Fund commenced operations November 1, 1995. The expenses shown
are estimated expenses for the fund for 1996.
IAI RETIREMENT FUNDS, INC.
The portfolios of the IAI Retirement Funds, Inc. in which the Separate Account
may currently invest and their investment objectives and fees are as follows:
IAI BALANCED PORTFOLIO: Seeks to maximize total return to investors by investing
in a broadly diversified portfolio of stocks, bonds and short-term investments.
IAI REGIONAL PORTFOLIO: Seeks capital appreciation by investing at least 80% of
its equity investments in companies which have their headquarters in Minnesota,
Wisconsin, Iowa, Illinois, Nebraska, Montana, North Dakota, or South Dakota.
IAI RESERVE PORTFOLIO: Seeks to provide its shareholders with high levels of
capital stability and liquidity and, to the extent consistent with these primary
objectives, a high level of current income. The portfolio invests primarily in a
diversified portfolio of investment grade bonds and other debt securities of
similar quality. The portfolio's dollar weighted average maturity will not
exceed twenty-five (25) months.
Investment Advisers, Inc. ("IAI") is the investment adviser to each of the
above-mentioned funds. IAI's principal business address is 3700 First Bank
Place, P.O. Box 357, Minneapolis, Minnesota 55440-0357. The principal
underwriter of the funds is IAI Mutual Funds, Inc., a subsidiary of IAI, located
at 3700 First Bank Place, P.O. Box 357, Minneapolis, Minnesota 55440-0357.
================================================================================
Total Fund
Investment Other Annual Expenses
Portfolios Management Expenses (After Expense
Fee Reimbursements)
- --------------------------------------------------------------------------------
IAI RETIREMENT FUNDS
IAI Balanced Portfolio (1) 0.65% 0.60% 1.25%
IAI Regional Portfolio (1) 0.65% 0.60% 1.25%
IAI Reserve Portfolio (1) 0.45% 0.40% 0.85%
================================================================================
(1) The expense figures shown are net of expense reimbursements from Investment
Advisers, Inc. Without such reimbursements, investment management fees and total
fund annual expenses for the portfolios are estimated as follows: 0.65% and
5.29% for IAI Balanced Portfolio, 0.65% and 1.64% for IAI Regional Portfolio,
and 0.45% and 2.62% for IAI Reserve Portfolio.
INVESCO FUNDS
The portfolios of the INVESCO Variable Investment Funds, Inc. in which the
Separate Account may currently invest and their investment objectives and fees
are as follows:
DYNAMICS FUND: Seeks appreciation of capital through aggressive investment
policies. The Dynamics Fund invests primarily in common stocks of U.S. companies
traded on national securities exchanges and over-the-counter.
HEALTH SCIENCES FUND: Seeks capital appreciation by normally investing at least
80% of its total assets in equity securities of companies that develop, produce,
or distribute products or services related to health care.
INDUSTRIAL INCOME FUND: Seeks the best possible current income while following
sound investment practices. Capital growth potential is an additional, but
secondary, consideration in the selection of portfolio securities. The fund
normally invests at least 65% of its total assets in dividend-paying common
stocks. Up to 10% of the fund's total assets may be invested in other
income-producing securities such as corporate bonds. The fund also has the
flexibility to invest in other types of securities.
SMALL COMPANY GROWTH FUND: Seeks long-term capital growth. The Small Company
Growth Fund invests primarily in small-capitalization equity securities of U.S.
companies traded "over-the-counter."
TECHNOLOGY FUND: Seeks capital appreciation. The Technology Fund normally
invests at least 80% of its total assets in equity securities of companies in
technology-related industries such as computers, communications, video,
electronics, oceanography, office and factory automation, and robotics.
14
<PAGE>
TOTAL RETURN FUND: Seeks a high total return on investment through capital
appreciation and current income. The Total Return Fund seeks to achieve its
investment objective by investing in a combination of equity securities
(consisting of common stocks and, to a lesser degree, securities convertible
into common stock) and fixed income securities.
UTILITIES FUND: Seeks capital appreciation and income. The assets of the
Utilities Fund are invested primarily in equity securities of companies
principally engaged in business as public utilities.
INVESCO Funds Group, Inc. ("INVESCO") serves as the investment adviser and
principal underwriter of each of the above-mentioned funds. INVESCO's principal
business address is 7800 E. Union Avenue, Denver, Colorado 80217-3706.
================================================================================
Total Fund
Investment Other Annual Expenses
Funds Management Expenses (After Expense
Fee Reimbursements)
- --------------------------------------------------------------------------------
INVESCO VARIABLE INVESTMENT FUNDS
Dynamics Fund (1) 0.60% 0.30% 0.90%
Health Sciences Fund (1) 0.75% 0.25% 1.00%
Industrial Income Fund 0.75% 0.28% 1.03%
Small Company Growth Fund (1) 0.75% 0.25% 1.00%
Technology Fund (1) 0.75% 0.25% 1.00%
Total Return Fund 0.75% 0.26% 1.01%
Utilities Fund 0.60% 1.20% 1.80%
================================================================================
(1) Expenses for the Dynamics Fund, the Health Sciences Fund, the Small Company
Growth Fund and the Technology Fund are estimated. INVESCO is currently
absorbing certain of these Funds' expenses.
JANUS ASPEN SERIES
The portfolios of the Janus Aspen Series in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
AGGRESSIVE GROWTH PORTFOLIO: A nondiversified portfolio that seeks long-term
growth of capital by investing primarily in common stocks, with an emphasis on
securities issued by medium-sized companies.
BALANCED PORTFOLIO: A diversified portfolio that seeks long-term growth of
capital consistent with preservation of capital and balanced by current income.
The portfolio normally invests 40-60% of its assets in securities selected
primarily for their growth potential and 40-60% of its assets in securities
selected primarily for their income potential.
FLEXIBLE INCOME PORTFOLIO: A diversified portfolio that seeks to maximize total
return from a combination of income and capital appreciation, although income
will normally be the dominant component of total return. The portfolio invests
in many types income-producing securities and may have substantial holdings of
debt securities rated below investment grade.
GROWTH PORTFOLIO: A diversified portfolio that seeks long-term growth of capital
by investing primarily in common stocks, with an emphasis on issuers with larger
market capitalizations.
INTERNATIONAL GROWTH PORTFOLIO: A diversified portfolio that seeks long-term
growth of capital by investing primarily in the common stocks of foreign
issuers.
WORLDWIDE GROWTH PORTFOLIO: A diversified portfolio that seeks long-term growth
of capital by investing primarily in common stocks of foreign and domestic
issuers.
Janus Capital Corporation ("Janus Capital") serves as the investment adviser and
principal underwriter to each of the above-mentioned portfolios. Janus Capital's
principal business address is 100 Fillmore Street, Denver, Colorado 80206-4923.
15
<PAGE>
================================================================================
Total Fund
Investment Annual Expenses
Management Other (After Expense
Funds Fee Expenses Reimbursements)
- --------------------------------------------------------------------------------
JANUS ASPEN SERIES
Aggressive Growth Portfolio (1) 0.75% 0.11% 0.86%
Balanced Portfolio (1) 0.82% 0.55% 1.37%
Flexible Income Portfolio (1) 0.65% 0.42% 1.07%
Growth Portfolio (1) 0.65% 0.13% 0.78%
International Growth Portfolio (1) 0.84% 1.85% 2.69%
Worldwide Growth Portfolio (1) 0.68% 0.22% 0.90%
================================================================================
(1) The fees and expenses in the table above are based on gross expenses before
expense offset arrangements for the fiscal year ended December 31, 1995.
The information for each portfolio other than the Flexible Income Portfolio
is net of fee waivers or reductions from Janus Capital. Fee reductions for
the Aggressive Growth, Balanced, Growth, International Growth and Worldwide
Growth portfolios reduce the investment management fee to the level of the
corresponding Janus retail fund. Other waivers, if applicable, are first
applied against the investment management fee and then against other
expenses. Without such waivers or reductions, the investment management
fee, other expenses and total fund annual expenses would have been 0.82%,
0.11% and 0.93% for Aggressive Growth Portfolio; 1.00%, 0.55% and 1.55% for
Balanced Portfolio; 0.85%, 0.13% and 0.98% for Growth Portfolio; 1.00%,
2.57% and 3.57% for International Growth Portfolio; and 0.87%, 0.22% and
1.09% for Worldwide Growth Portfolio, respectively. Janus Capital may
modify or terminate the waivers or reductions at any time upon 90 days
notice to the Trustees.
KEMPER INVESTORS FUND
The portfolios of the Kemper Investors Fund in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
GOVERNMENT SECURITIES PORTFOLIO: Seeks high current return consistent with
preservation of capital from a portfolio composed primarily of U.S. Government
securities.
GROWTH PORTFOLIO: Seeks maximum appreciation of capital through diversification
of investment securities having potential for capital appreciation.
HIGH YIELD PORTFOLIO: Seeks to provide a high level of current income by
investing in fixed-income securities.
HORIZON 5 PORTFOLIO: Designed for investors with approximately a 5 year
investment horizon, seeks income consistent with preservation of capital, with
growth of capital as a secondary objective.
HORIZON 10+ PORTFOLIO: Designed for investors with approximately a 10+ year
investment horizon, seeks a balance between growth of capital and income,
consistent with moderate risk.
HORIZON 20+ PORTFOLIO: Designed for investors with approximately a 20+ year
investment horizon, seeks growth of capital, with income as a secondary
objective.
INTERNATIONAL PORTFOLIO: Seeks total return, a combination of capital growth and
income, principally through an internationally diversified portfolio of equity
securities.
INVESTMENT GRADE BOND PORTFOLIO: Seeks high current income by investing
primarily in a diversified portfolio of investment grade debt securities.
MONEY MARKET PORTFOLIO: Seeks maximum current income to the extent consistent
with stability of principal from a portfolio of high quality money market
instruments.
SMALL CAP GROWTH PORTFOLIO: Seeks maximum appreciation of investors' capital
from a portfolio primarily of growth stocks of smaller companies.
SMALL CAP VALUE PORTFOLIO: Seeks long-term capital appreciation from a portfolio
primarily of value stocks of smaller companies.
16
<PAGE>
TOTAL RETURN PORTFOLIO: Seeks a high total return, a combination of income and
capital appreciation, by investing in a combination of debt securities and
common stocks.
VALUE PORTFOLIO: Seeks to achieve a high rate of total return from a portfolio
primarily of value stocks of larger companies.
VALUE+GROWTH PORTFOLIO: Seeks growth of capital through professional management
of a portfolio of growth and value stocks.
Zurich Kemper Investments, Inc., ("ZKI", formerly named Kemper Financial
Services, Inc.) serves as investment manager for each of the portfolios other
than the Value Portfolio and the Small Cap Value Portfolio. Dreman Value
Advisors ("DVA"), a wholly owned subsidiary of ZKI, serves as the investment
manager for the Value and the Small Cap Value Portfolio. ZKI's principal
business address is 120 South LaSalle Street, Chicago, Illinois 60603. DVA's
principal business address is 10 Exchange Place, 20th Floor, Jersey City, New
Jersey 07302. Kemper Distributors, Inc. serves as the principal underwriter of
the portfolios and is located at 120 South LaSalle Street, Chicago, Illinois
60603.
================================================================================
Investment Total Fund
Management Other Annual
Funds Fee Expenses Expenses
- --------------------------------------------------------------------------------
KEMPER INVESTORS FUND
Government Securities Portfolio 0.55% 0.10% 0.65%
Growth Portfolio 0.60% 0.04% 0.64%
High Yield Portfolio 0.60% 0.05% 0.65%
Horizon 5 Portfolio (1) 0.60% 0.15% 0.75%
Horizon 10+ Portfolio (1) 0.60% 0.15% 0.75%
Horizon 20+ Portfolio (1) 0.60% 0.15% 0.75%
International Portfolio 0.75% 0.17% 0.92%
Investment Grade Bond Portfolio (1) 0.60% 0.15% 0.75%
Money Market Portfolio 0.50% 0.05% 0.55%
Small Cap Growth Portfolio (1) 0.65% 0.22% 0.87%
Small Cap Value Portfolio (1) 0.75% 0.15% 0.90%
Total Return Portfolio 0.55% 0.05% 0.60%
Value Portfolio (1) 0.75% 0.15% 0.90%
Value+Growth Portfolio (1) 0.75% 0.15% 0.90%
================================================================================
(1) Estimated first-year expenses
MFS VARIABLE INSURANCE TRUST
The portfolios of the MFS Variable Insurance Trust in which the Separate Account
may currently invest and their investment objectives and fees are as follows:
MFS BOND SERIES: Seeks primarily to provide as high a level of current income as
is believed consistent with prudent investment risk and secondarily to protect
shareholders' capital.
MFS EMERGING GROWTH SERIES: Seeks long-term growth of capital.
MFS GROWTH WITH INCOME SERIES: Seeks to provide reasonable current income and
long-term growth of capital and income.
MFS HIGH INCOME SERIES: Seeks high current income by investing primarily in a
professionally managed diversified portfolio of fixed-income securities, some of
which may involve equity features.
MFS LIMITED MATURITY SERIES: Seeks primarily to provide as high a level of
current income as is believed to be consistent with prudent investment risk and
secondarily to protect shareholders' capital.
MFS MONEY MARKET SERIES: Seeks as high a level of current income as is
considered consistent with the preservation of capital and liquidity.
MFS RESEARCH SERIES: Seeks to provide long-term growth of capital and future
income.
17
<PAGE>
MFS TOTAL RETURN SERIES: Seeks primarily to provide above-average income
(compared to a portfolio invested entirely in equity securities) consistent with
the prudent employment of capital and secondarily to provide a reasonable
opportunity for growth of capital and income.
MFS UTILITIES SERIES: Seeks capital growth and current income (income above that
available from a portfolio invested entirely in equity securities).
MFS VALUE SERIES: Seeks capital appreciation.
MFS WORLD GOVERNMENT SERIES: Seeks not only preservation, but also growth, of
capital, together with moderate current income.
The investment adviser for each series is Massachusetts Financial Services
Company ("MFS"). MFS' principal business address is 500 Boylston Street, Boston,
Massachusetts 02116. The principal underwriter of the series is MFS Fund
Distributors, Inc. located at 500 Boylston Street, Boston, Massachusetts 02116.
================================================================================
Investment
Management Total Fund
and Fund Annual Expenses
Administration Other (After Expense
Funds Fee Expenses Reimbursements)
- --------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
MFS Bond Series (1)(4) 0.60% 0.40% 1.00%
MFS Emerging Growth Series (1)(4) 0.75% 0.25% 1.00%
MFS Growth with Income Series (1)(4) 0.75% 0.25% 1.00%
MFS High Income Series (1)(4) 0.75% 0.25% 1.00%
MFS Limited Maturity Series (1)(4) 0.55% 0.45% 1.00%
MFS Money Market Series (2)(4) 0.50% 0.10% 0.60%
MFS Research Series (1)(4) 0.75% 0.25% 1.00%
MFS Total Return Series (1)(4) 0.75% 0.25% 1.00%
MFS Utilities Series (1)(4) 0.75% 0.25% 1.00%
MFS Value Series (1)(4) 0.75% 0.25% 1.00%
MFS World Government Series (3)(4) 0.75% 0.25% 1.00%
================================================================================
(1) MFS has agreed to bear, subject to reimbursement, expenses for each of the
Bond Series, Emerging Growth Series, Growth with Income Series, High Income
Series, Limited Maturity Series, Research Series, Total Return Series,
Utilities Series and Value Series such that each series' aggregate
operating expenses shall not exceed on an annualized basis, 1.00% of the
average daily net assets of the series from November 2, 1994 through
December 31, 1996, 1.25% of the average daily net assets of the series from
January 1, 1997 through December 31, 1998, and 1.50% of the average daily
net assets of the series from January 1, 1999 through December 31, 2004;
provided however, that this obligation may be terminated or revised at any
time. Absent this expense arrangement, other expenses and total fund annual
expenses would be 1.00% and 1.75%, respectively for the Value Series.
Absent this expense arrangement, other expenses for the Bond Series,
Emerging Growth Series, Growth with Income Series, High Income Series,
Limited Maturity Series, Research Series, Total Return Series and Utilities
Series would be 43.25%, 2.16%, 20.69%, 3.63%, 1.00%, 3.15%, 2.02% and
2.33%, respectively, and total fund annual expenses would be 43.85%, 2.91%,
21.44%, 4.38%, 1.55%, 3.90%, 2.77% and 3.08%, respectively.
(2) MFS has agreed to bear, subject to reimbursement, until December 31, 2004,
expenses of the Money Market Series, such that the series' aggregate
operating expenses do not exceed, on an annualized basis, 0.60% of its
average daily net assets. Absent this expense arrangement, other expenses
and total fund annual expenses would be 21.04% and 21.54%, respectively.
(3) MFS has agreed to bear, subject to reimbursement, until December 31, 2004,
expenses of the World Government Series such that the series' aggregate
operating expenses do not exceed, on an annualized basis, 1.00% of its
average daily net assets. Absent this expense arrangement, other expenses
and total fund annual expenses would be 1.24% and 1.99%, respectively.
(4) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent, and may enter into such other
18
<PAGE>
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the series' expenses). Any such fee reductions are not
reflected under other expenses.
NEUBERGER & BERMAN MANAGEMENT, INC.
The portfolios of the Neuberger & Berman Advisers Management Trust in which the
Separate Account may currently invest and their investment objectives and fees
are as follows:
N&B AMT GROWTH PORTFOLIO: Seeks capital growth through investments in common
stocks of companies believed to be under-valued and having above-average
potential for capital appreciation. The portfolio is heavily diversified among a
number of stocks to limit risk.
N&B AMT LIMITED MATURITY BOND PORTFOLIO: Seeks the highest current income
consistent with low risk to principal and liquidity; and secondarily, total
return. Investments are made in a diversified portfolio of short- to
intermediate-term U.S. Government and Agency securities and primarily investment
grade debt securities issued by financial institutions, corporations, and
others.
N&B AMT PARTNERS PORTFOLIO: Invests primarily in common stocks of established
companies, using the value-oriented investment approach. Capital growth is
sought through an investment approach that is designed to increase capital with
reasonable risk. Investments are made in securities that are believed to be
undervalued based on strong fundamentals such as low price-to-earnings ratios,
consistent cash flow, and support from asset values.
N&B Management ("N&B") serves as the investment manager of the portfolios and is
also the principal underwriter of the portfolios. N&B's principal business
address is 605 Third Avenue, New York, New York 10158-0180.
================================================================================
Investment
Management/ Total Fund
Administrative Other Annual
Funds Fees Expenses Expenses
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
N&B AMT Growth Portfolio 0.83% 0.09% 0.92%
N&B AMT Limited Maturity Bond Portfolio 0.65% 0.13% 0.78%
N&B AMT Partners Portfolio 0.84% 0.11% 0.95%
================================================================================
PUTNAM MUTUAL FUNDS
The funds of the Putnam Capital Manager Trust in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
PCM ASIA PACIFIC GROWTH FUND: Seeks capital appreciation by investing primarily
in securities of companies located in Asia and the Pacific Basin.
PCM DIVERSIFIED INCOME FUND: Seeks high current income consistent with capital
preservation by investing in the following three sectors of the fixed income
securities markets: U.S. Government sector, high yield sector (which invests
primarily in what are commonly referred to as "junk bonds"), and international
sector.
PCM GLOBAL ASSET ALLOCATION FUND: Seeks a high level of long-term total return
consistent with preservation of capital by investing in U.S. equities,
international equities, U.S. fixed income securities, and international fixed
income securities.
PCM GLOBAL GROWTH FUND: Seeks capital appreciation through a globally
diversified common stock portfolio.
PCM GROWTH AND INCOME FUND: Seeks capital growth and current income by investing
primarily in common stocks that offer potential for capital growth, current
income, or both.
PCM HIGH YIELD FUND: Seeks high current income by investing primarily in
high-yielding, lower-rated fixed income securities (commonly referred to as
"junk bonds"), constituting a diversified portfolio which is believed by
management not to involve undue risk to income or principal. Capital growth is a
secondary objective when consistent with high current income.
19
<PAGE>
PCM MONEY MARKET FUND: Seeks to achieve as high a level of current income as is
believed by management to be consistent with preservation of capital and
maintenance of liquidity by investing in high-quality money market instruments.
PCM NEW OPPORTUNITIES FUND: Seeks long-term capital appreciation by investing
principally in common stocks of companies in sectors of the economy which
management believes possess above-average long-term growth potential.
PCM U.S. GOVERNMENT AND HIGH QUALITY BOND FUND: Seeks current income consistent
with preservation of capital by investing primarily in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities and in other debt obligations rated at least A by
Standard & Poor's or Moody's or, if not rated, determined by management to be of
comparable quality.
PCM UTILITIES GROWTH AND INCOME FUND: Seeks capital growth and current income by
concentrating its investments in securities issued by companies in the public
utilities industries.
PCM VOYAGER FUND: Aggressively seeks capital appreciation primarily from a
portfolio of common stocks of companies that management believes have potential
for capital appreciation which is significantly greater than that of the market
averages.
Putnam Investment Management, Inc. ("PIM") is the investment manager to each of
the above-mentioned funds. PIM's principal business address is One Post Office
Square, Boston, Massachusetts 02109. The principal underwriter of the funds is
Putnam Mutual Funds, located at One Post Office Square, Boston, Massachusetts
02109.
================================================================================
Total Fund
Investment Annual Expenses
Management Other (After Expense
Funds Fee Expenses Reimbursements)
- --------------------------------------------------------------------------------
PUTNAM CAPITAL MANAGER TRUST
PCM Asia Pacific Growth Fund (2) 0.80% 0.90% 1.70%
PCM Diversified Income Fund 0.70% 0.15% 0.85%
PCM Global Asset Allocation Fund 0.70% 0.14% 0.84%
PCM Global Growth Fund 0.60% 0.15% 0.75%
PCM Growth and Income Fund 0.52% 0.05% 0.57%
PCM High-Yield Fund 0.70% 0.09% 0.79%
PCM Money Market Fund 0.45% 0.12% 0.57%
PCM New Opportunities Fund 0.70% 0.14% 0.84%
PCM U.S. Government and High
Quality Bond Fund 0.61% 0.09% 0.70%
PCM Utilities Growth and Income
Fund (1) 0.70% 0.08% 0.78%
PCM Voyager Fund 0.62% 0.06% 0.68%
================================================================================
(1) On July 11, 1996, shareholders approved an increase in the fees payable to
Putnam Management under the Management Contract for the Utilities Growth
and Income Fund. The investment management fees and total fund annual
expenses shown in the table have been restated to reflect the increase.
Actual investment management fees and total fund annual expenses were 0.60%
and 0.68%, respectively.
(2) The annualized total fund expenses and investment management fees shown
above for the Asia Pacific Growth Fund reflect the termination of an
expense limitation in effect for the period. Actual annualized investment
management fees and total fund annual expenses would have been 0.33% and
1.22%, respectively.
THE ROYCE PORTFOLIOS
The portfolios of Royce Capital Trust in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
ROYCE MICRO-CAP PORTFOLIO: Seeks long-term capital appreciation, primarily
through investments in common stocks and convertible securities of small and
micro-cap companies. Production of income is incidental to this objective.
ROYCE PREMIER PORTFOLIO: Seeks long-term growth and secondarily current income
by investing in a limited portfolio of common stocks and convertible securities
viewed as having superior financial characteristics and/or unusually attractive
business prospects.
20
<PAGE>
ROYCE TOTAL RETURN PORTFOLIO: Seeks to have an equal focus on both long term
growth of capital and current income by investing in a broadly diversified
portfolio of dividend paying common stocks of companies selected on a value
basis.
Quest Advisory Corp. ("Quest") serves as the investment manager of the
portfolios. Quest's principal business address is 1414 Avenue of the Americas,
New York, New York 10019. The principal underwriter of the portfolios is Quest
Distributors, Inc., 1414 Avenue of the Americas, New York, New York 10019.
================================================================================
Investment Total Fund
Management Annual Expenses
Fee (after Other (After Expense
Funds waivers) Expenses Reimbursements)
- --------------------------------------------------------------------------------
THE ROYCE PORTFOLIOS
Royce Micro-Cap Portfolio (1) 0.00% 1.99% 1.99%
Royce Premier Portfolio (1) 0.00% 1.99% 1.99%
Royce Total Return Portfolio (1) 0.00% 1.99% 1.99%
================================================================================
(1) Investment management fees would be 1.50%, 1.00% and 1.00% and total fund
annual expenses would be 3.49%, 2.99% and 2.99% for the Micro-Cap
Portfolio, the Premier Portfolio, and the Total Return Portfolio,
respectively, without the waivers of investment management fees by Quest.
Quest has voluntarily committed to waive its fees through December 31, 1997
to the extent necessary to maintain total fund annual expenses of each Fund
at or below 1.99%.
SCUDDER VARIABLE LIFE INVESTMENT FUND
The portfolios of the Scudder Variable Life Investment Fund in which the
Separate Account may currently invest and their investment objectives and fees
are as follows:
BALANCED PORTFOLIO: Seeks a balance of growth and income, as well as long-term
preservation of capital, from a diversified portfolio of equity and fixed income
securities.
GLOBAL DISCOVERY PORTFOLIO: Seeks above-average capital appreciation over the
long term by investing primarily in the equity securities of small companies
located around the world.
GROWTH & INCOME PORTFOLIO: Seeks long-term growth of capital, current income and
growth of income from a portfolio consisting of common stocks and securities
convertible into common stocks.
INTERNATIONAL PORTFOLIO: Seeks long-term growth of capital principally from a
diversified portfolio of foreign equity securities.
The investment adviser for each portfolio is Scudder, Stevens & Clark, Inc.
("Scudder"). Scudder's principal business address is Two International Place,
Boston, Massachusetts 02110-4103. The principal underwriter of the portfolios is
Scudder Investor Services, Inc., a Scudder subsidiary, located at Two
International Place, Boston, Massachusetts 02110-4103.
================================================================================
Other Total Fund
Management Expenses (after Annual
Funds Fee reimbursement) Expenses
- --------------------------------------------------------------------------------
SCUDDER VARIABLE LIFE INVESTMENT FUND
Balanced Portfolio 0.475% 0.175% 0.650%
Global Discovery Portfolio (1) 0.975% 0.525% 1.500%
Growth & Income Portfolio (2) 0.469% 0.281% 0.750%
International Portfolio 0.875% 0.205% 1.080%
================================================================================
(1) Because the Global Discovery Portfolio did not commence operations until
May 1, 1996, the other expenses (after reimbursement) and total fund annual
expenses are estimates.
21
<PAGE>
(2) Scudder, Stevens & Clark, Inc. voluntarily did not impose part of its
investment management fee in 1995. Had the fee been imposed, the ratio of
total fund annual expenses to average net assets for the year ended
December 31, 1995 would have been 0.756% for the Growth and Income
Portfolio.
THE STRONG FUNDS
The Strong Funds in which the Separate Account may currently invest and their
investment objectives and fees are as follows:
STRONG DISCOVERY FUND II: Seeks capital growth by investing in securities that
are believed to represent attractive growth opportunities. The fund's investment
advisor seeks companies, regardless of size or maturity, that are poised for
accelerated earnings growth due to innovative products or services, new
management, or favorable economic or market cycles.
STRONG GROWTH FUND II: Seeks capital growth by investing in securities that are
believed to have above-average growth prospects. The fund will generally invest
in companies whose earnings are believed to be in a relatively strong growth
trend, and to a lesser extent, in companies in which significant further growth
is not anticipated but whose market value is thought to be undervalued.
STRONG INTERNATIONAL STOCK FUND II: Seeks capital growth by investing in
securities of issuers located outside the United States. The fund will normally
invest in securities of issuers in at least three different countries.
STRONG SPECIAL FUND II: Seeks capital growth by investing in equity securities
and currently emphasizes investments in medium-sized companies that the
investment advisor believes are under-researched and attractively valued. The
fund's investment advisor looks for companies with fundamental value or growth
potential that is not yet reflected in their current market prices. The fund's
investments are likely to consist, in part, in securities in small and
medium-sized companies.
The investment adviser for each fund is Strong Capital Management, Inc.
("Strong"). Strong's principal business address is P.O. Box 2936, Milwaukee,
Wisconsin 53201. The principal underwriter of the funds is Strong Funds
Distributors, Inc., located at P.O. Box 2936, Milwaukee, Wisconsin 53201.
================================================================================
Investment Total Fund
Management Other Annual
Funds Fee Expenses Expenses
- --------------------------------------------------------------------------------
THE STRONG FUNDS
Strong Discovery Fund II (1) 1.000% 0.200% 1.200%
Strong Growth Fund II (1)(2) 1.000% 0.240% 1.240%
Strong International Stock Fund II (1) 1.000% 0.870% 1.870%
Strong Special Fund II (1) 1.000% 0.150% 1.150%
================================================================================
(1) As of September 30, 1996.
(2) Other expenses for the Strong Growth Fund II are estimated, as the fund is
still unfunded.
T. ROWE PRICE VARIABLE FUNDS
The portfolios of the T. Rowe Price Equity Series, Inc., T. Rowe Price
International Series, Inc., and the T. Rowe Price Fixed Income Series, Inc. in
which the Separate Account may currently invest and their investment objectives
and fees are as follows:
EQUITY INCOME PORTFOLIO: Seeks to provide substantial dividend income and also
long-term capital appreciation by investing primarily in dividend-paying common
stocks, particularly of established companies, with favorable prospects for both
increasing dividends and capital appreciation.
INTERNATIONAL STOCK PORTFOLIO: Seeks to provide capital appreciation through
investment primarily in established companies based outside the United States.
LIMITED-TERM BOND PORTFOLIO: Seeks to provide a high level of income consistent
with moderate fluctuation in principal value by investing primarily in
investment-grade, corporate bonds.
22
<PAGE>
MID-CAP GROWTH PORTFOLIO: Seeks to provide long-term capital appreciation by
investing primarily in common stocks of medium-sized (mid-cap) growth companies.
The portfolio will focus on companies with superior earnings growth potential
that are no longer considered new or emerging, but are not yet well-established.
NEW AMERICA GROWTH PORTFOLIO: Seeks to provide long-term capital growth by
investing primarily in common stocks of U.S. growth companies operating in
service industries. The portfolio invests in the stocks of large and small
service companies expected by the fund's investment advisor to show superior
earnings growth.
PERSONAL STRATEGY BALANCED PORTFOLIO: Seeks the highest total return over time
consistent with an emphasis on both capital appreciation and income by investing
in a diversified portfolio of stocks, bonds, and money market securities.
PRIME RESERVE PORTFOLIO: Seeks preservation of capital, liquidity, and the
highest possible income consistent with these goals by investing in
high-quality, U.S. dollar-denominated money market securities.
The investment manager for each portfolio, except the International Stock
Portfolio, is T. Rowe Price Associates, Inc. ("T. Rowe Price"). T. Rowe Price's
principal business address is 100 East Pratt Street, Baltimore, Maryland 21202.
Rowe Price-Fleming International Inc. ("Price-Fleming"), an affiliate of T. Rowe
Price, serves as investment adviser to the International Stock Portfolio and its
U.S. office is located at 100 East Pratt Street, Baltimore, Maryland 21202.
T. Rowe Price also serves as the principal underwriter of the portfolios.
================================================================================
Investment Total Fund
Management Other Annual
Funds Fee Expenses Expenses
- --------------------------------------------------------------------------------
T. ROWE PRICE VARIABLE FUNDS
Equity Income Portfolio (1) 0.00% 0.00% 0.85%
International Stock Portfolio (1) 0.00% 0.00% 1.05%
Limited-Term Bond Portfolio (1) 0.00% 0.00% 0.70%
Mid-Cap Growth Portfolio (1) 0.00% 0.00% 0.85%
New America Growth Portfolio (1) 0.00% 0.00% 0.85%
Personal Strategy Balanced Portfolio (1) 0.00% 0.00% 0.90%
Prime Reserve Portfolio (1) 0.00% 0.00% 0.55%
================================================================================
(1) Fees are all-inclusive.
WARBURG PINCUS PORTFOLIOS
The portfolios of Warburg Pincus Trust in which the Separate Account may
currently invest and their investment objectives and fees are as follows:
EMERGING MARKETS PORTFOLIO: Seeks long-term growth of capital by investing
primarily in equity securities of non-U.S. issuers consisting of companies in
emerging securities markets.
INTERNATIONAL EQUITY PORTFOLIO: Seeks long-term capital appreciation by
investing primarily in a broadly diversified portfolio of equity securities of
non-U.S. issuers.
POST-VENTURE CAPITAL PORTFOLIO: Seeks long-term growth of capital by investing
primarily in equity securities of issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy.
SMALL COMPANY GROWTH PORTFOLIO: Seeks capital growth by investing in equity
securities of small-sized domestic companies.
The investment adviser for each portfolio is Warburg Pincus Funds ("Warburg").
Warburg's principal business address is 466 Lexington Avenue, New York, New York
10017-3147. The principal underwriter of the portfolios is Counsellors
Securities, a Warburg subsidiary, located at 466 Lexington Avenue, New York, New
York 10017-3147.
23
<PAGE>
================================================================================
Total Fund
Investment Annual Expenses
Management Other (After Expense
Portfolios Fee Expenses Reimbursements)
- --------------------------------------------------------------------------------
WARBURG PINCUS TRUST
Emerging Markets Portfolio (1) 0.60% 0.80% 1.40%
International Equity Portfolio (2) 0.27% 1.17% 1.44%
Post-Venture Capital Portfolio (3) 0.64% 0.76% 1.40%
Small Company Growth Portfolio (4) 0.67% 0.58% 1.25%
================================================================================
(1) Absent the anticipated waiver of fees by the investment advisor and
co-administrator, investment management fees for the Emerging Markets
Portfolio would equal 1.25%; other expenses would equal .75%; and total
fund annual expenses would equal 2.00%. Other expenses for the Emerging
Markets Portfolio are based on annualized estimates of expenses for the
fiscal year ending December 31, 1996, net of any fee waivers or expense
reimbursements. The investment adviser has undertaken to limit the Emerging
Markets Portfolio's total fund annual expenses through December 31, 1996.
(2) Investment management fees, other expenses, and total fund annual expenses
are based on actual expenses for the fiscal year ended December 31, 1995,
net of any fee waivers or expense reimbursements. Without such waivers or
reimbursements, investment management fees for the International Equity
Portfolio would have equalled 1.00%; other expenses would have equalled
1.21% and total fund annual expenses would have equalled 2.21%. The
investment adviser had undertaken to reduce or otherwise limit total fund
annual expenses through December 31, 1995; there is no assurance that these
undertakings will continue.
(3) Absent the anticipated waiver of fees by the investment adviser and
co-administrator, investment management fees for the Post-Venture Capital
Portfolio would equal 1.25%; other expenses would equal .81%; and total
fund annual expenses would equal 2.06%. Other expenses for the Post-Venture
Capital Portfolio are based on annualized estimates of expenses for the
fiscal year ending December 31, 1996, net of any fee waivers or expense
reimbursements. The investment adviser has undertaken to limit the
Post-Venture Capital Portfolio's total fund annual expenses through
December 31, 1996.
(4) Investment management fees, other expenses, and total fund annual expenses
are based on actual expenses for the fiscal year ended December 31, 1995,
net of any fee waivers or expense reimbursements. Without such waivers or
reimbursements, investment management fees for the Small Company Growth
Portfolio would have equalled .90%; other expenses would have equalled
.60%; and total fund annual expenses would have equalled 1.50%. The
investment adviser had undertaken to reduce or otherwise limit total fund
annual expenses through December 31, 1995; there is no assurance that these
undertakings will continue.
A FULL DESCRIPTION OF THE FUNDS, THEIR INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, AND RESTRICTIONS, THEIR EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN, AND ALL OTHER ASPECTS OF THEIR OPERATIONS IS CONTAINED IN THE
ACCOMPANYING PROSPECTUSES FOR EACH AVAILABLE FUND AND IN THE RELATED STATEMENTS
OF ADDITIONAL INFORMATION, WHICH SHOULD BE READ IN CONJUNCTION WITH THIS
PROSPECTUS. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE MET.
THE EXPENSES RELATING TO THE FUNDS (OTHER THAN THOSE OF THE SERIES FUND) HAVE
BEEN PROVIDED TO PRUDENTIAL BY THE FUNDS, AND HAVE NOT BEEN INDEPENDENTLY
VERIFIED BY PRUDENTIAL.
THE FIXED ACCOUNT
A Participant may elect to allocate all or part of the amount in his or her
Certificate Fund to the Fixed Account. The amount so allocated or transferred
becomes part of Prudential's general assets, commonly referred to as the general
account. Subject to applicable law, Prudential has sole discretion over the
investment of the assets of the general account, and Participants do not share
in the investment experience of those assets. Instead, Prudential guarantees
that the part of the Certificate Fund allocated to the Fixed Account will accrue
interest daily at a rate that Prudential declares periodically. This rate may
not be less than an effective annual rate of 4%, but Prudential may in its sole
discretion periodically declare a higher rate. At least annually and on request,
a Participant will be advised of the interest rate that currently applies to his
or her Certificate. Under certain Group Contracts, interest rates may be
determined based on the contract year the premium payments were received.
24
<PAGE>
By allocating premium payments to the Fixed Account in amounts sufficient to
cover the monthly Certificate fund charges, a Participant can use the
Certificate as a way to obtain life insurance coverage, with little or no
accumulation of Cash Surrender Value. Even such a Participant retains, of
course, the option to build a Cash Surrender Value by paying larger premiums and
applying the excess amount to any of the investment options available under the
Certificate.
Transfers from the Fixed Account are subject to strict limits. See TRANSFERS,
page 27. The payment of any Cash Surrender Value attributable to the Fixed
Account may be delayed for up to 6 months. See WHEN PROCEEDS ARE PAID, page 40.
Because of exemptive and exclusionary provisions, interests in the Fixed Account
have not been registered under the Securities Act of 1933 and Prudential has not
been registered as an investment company under the Investment Company Act of
1940. Accordingly, interests in the Fixed Account are not subject to the
provisions of these Acts, and Prudential has been advised that the staff of the
Securities and Exchange Commission has not reviewed the disclosure in this
Prospectus relating to the Fixed Account. Disclosures concerning the Fixed
Account may, however, be subject to certain provisions of the federal securities
laws relating to the accuracy of statements made in a prospectus.
DETAILED INFORMATION ABOUT THE CERTIFICATES
ISSUANCE OF A CERTIFICATE
Eligible Group Members wishing to obtain insurance coverage through the Group
Contract must complete the appropriate enrollment form and undergo any required
medical underwriting, including in some cases a medical examination. If the
enrollment form is accepted, Prudential will issue a Certificate to that
individual (the "Participant") which will describe the rights, benefits,
coverage, and obligations with respect to the coverage. The minimum Face Amount
for a Certificate is $10,000. The maximum age at which a Certificate may
initially be issued is generally 74. The maximum age beyond which a person may
no longer be covered under a Certificate is generally 100. At age 100, the
Participant may: (1) elect to receive the Cash Surrender Value of the
Certificate; (2) elect to purchase Paid-Up Insurance; or (3) continue to hold
the Certificate. If option 3 is chosen, monthly charges attributable to the cost
of insurance and additional insurance benefits will be waived and the Death
Benefit will equal the Certificate Fund reduced by any Certificate Debt and any
past due monthly charges. Prudential believes a cash distribution upon
termination of coverage will be subject to the same tax treatment as other cash
surrenders. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37. Particular Group
Contracts may provide that coverage under a Certificate will terminate at less
than age 100. Participants should refer to their particular Certificate and
Group Contract for the details of when coverage will terminate.
Generally, the Participant is the Covered Person under a Certificate. Some Group
Contracts, however, may permit an Eligible Group Member to also apply for a
Certificate naming his or her spouse as the Covered Person. A separate
Certificate will be issued for such spousal coverage but, under each Certificate
the Participant and/or Assignee(s) are the only persons eligible to exercise the
rights provided under the Certificate.
APPLICANT OWNER PROVISION
The "applicant owner provision," included as part of the Group Contract, allows
an "eligible applicant owner" to apply for insurance coverage on the life of an
Eligible Group Member. An "eligible applicant owner" is a person other than the
Eligible Group Member who may be, but is not limited to, the Eligible Group
Member's spouse, child, parent, grandparent, grandchild, sister, brother, or the
trustee of any trust of which the Eligible Group Member is the grantor. At any
one time, only one person may be an "eligible applicant owner" with respect to a
Certificate.
The "eligible applicant owner" must complete the appropriate enrollment form,
which may require the Eligible Group Member to undergo any required medical
underwriting, including in some cases a medical examination. The enrollment form
must also be signed by the Eligible Group Member. If the enrollment form is
accepted, Prudential will issue a Certificate to the "eligible applicant owner"
which will describe the rights, benefits, coverage, and obligations with respect
to the coverage. References in this prospectus to "Participant" will be deemed
to include reference to an "eligible applicant owner".
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK".
Generally, a Certificate may be returned for a refund within 10 days after it is
received by the Participant. Some states allow a longer period of time during
which a Certificate may be returned for a refund. A refund can be requested by
mailing or delivering the Certificate to Prudential (or Prudential's designated
agent) at the address
25
<PAGE>
specified in the Certificate. The Participant who exercises his or her
short-term cancellation right will receive a refund of all premium payments
made, with no adjustment for investment experience. However, if applicable state
law so requires, the Participant will then receive a refund of all premium
payments made, plus or minus any change due to investment experience in the
value of the invested portion of the premiums, calculated as if no charges had
been made against the Separate Account or the Funds. During the first 20 days
following the Certificate Date, premium payments will be invested in a money
market fund. Prudential also reserves the right to limit contributions during
the Free Look period.
PROCEDURES
The procedures for submitting enrollment forms, premium payments, transfer
orders, reallocations, loan or withdrawal requests or other communications
relating to the Participant's insurance will depend on the specific terms of the
particular Group Contract. Under some Group Contracts, communications relating
to a Participant's insurance may be submitted to the Contractholder or its agent
who then passes the communications on to Prudential. Under some Group Contracts,
the Participant may communicate directly with Prudential (or Prudential's
designated agent) with respect to certain types of transactions. Each Group
Contract and the Certificates issued thereunder will set forth the applicable
procedures, so a Participant should consult those documents in determining how
to submit a payment or document, make transfers, request loans and withdrawals,
or reallocate premium payments. In all cases, enrollment forms and other
documents, payments, orders and all other communications will be deemed received
by Prudential when received in good order at the address specified in the
Certificate.
PREMIUMS
Participants will generally have flexibility in determining the amount and
timing of premium payments, although a Participant may be required to pay an
appropriate specified initial premium in order to become a Participant. The
minimum initial premium will vary by group, but will always be no more than 50%
of the Guideline Annual Premium. A Certificate will remain in force so long as
the Certificate Fund is sufficient to cover monthly charges. In general, if the
Certificate Fund minus Certificate Debt and outstanding charges on any
Monthiversary is insufficient to cover the charges for that month, then the
coverage will be in default and a grace period will begin. See LAPSE, page 35.
Some Contracts may provide that if a Participant pays certain specified premiums
during the first two Certificate Years, the Certificate will not go into default
even if the Certificate Fund is insufficient to cover monthly charges.
Participants should refer to their particular Certificates for the details of
this default protection.
In addition to any premium paid on a routine basis, for example through salary
deduction, a Participant may make additional premium payments at any time,
subject to any applicable charges. There is no minimum amount for premiums paid
on a routine basis, but any additional premium payment must be at least $100.
Prudential reserves the right to limit the amount of such additional premiums.
The method by which premiums will be paid will be set forth in the Group
Contract. Some Participants will make payments to the Contractholder (or its
agent), which will then remit them to Prudential as premium payments. Prudential
will then allocate premium payments it receives to the Participant's investment
options according to the instructions received. Other Participants will make
payments directly to Prudential at the address specified in their Certificate or
authorize Prudential (or Prudential's designated agent) to receive payment using
electronic funds transfers or credit/debit cards. There may be higher monthly
administrative charges when premium payments are made directly to Prudential.
See CHARGES AND EXPENSES, page 31.
Due to the payment of additional premiums, or investment growth, the total
amount of insurance may have to be increased for the insurance to continue to
qualify as life insurance for federal tax purposes. In addition, if a
Participant makes premium payments in excess of certain limits, the tax status
of the insurance may change to that of a "Modified Endowment Contract" under
Section 7702A of the Internal Revenue Code, which could be significantly
disadvantageous from a tax standpoint. See TAX TREATMENT OF CERTIFICATE
BENEFITS, page 37. Prudential reserves the right not to accept or to return any
premium payment which would cause a Participant's insurance to fail to qualify
as life insurance under applicable tax laws, or which would increase the Death
Benefit by more than it increases the Certificate Fund.
EFFECTIVE DATE OF INSURANCE
A Participant's insurance will go into effect on the first Contract
Monthiversary after his or her enrollment form for participation under the Group
Contract, including underwriting, if any, is approved. That effective date is
the Certificate Date.
26
<PAGE>
ALLOCATION OF PREMIUMS
BEFORE OR ON CERTIFICATE DATE. All premium payments (less any applicable
charges) received before the Certificate Date will not be invested and will be
deposited, for the benefit of the Participant, in Prudential's general account.
All premium payments received on the Certificate Date will be applied to the
money market fund chosen by the Contractholder as of the Certificate Date, after
the deduction of any applicable charges, see CHARGES AND EXPENSES, page 31. Such
Net Premiums will be invested as of the Certificate Date in the money market
fund chosen by the Contractholder for 20 days and will thereafter be allocated
to the investment options selected by the Participant.
AFTER CERTIFICATE DATE. Premiums paid after the Certificate Date will be reduced
by any applicable charges. See CHARGES AND EXPENSES, page 31. Assuming the
Certificate has been effective for 20 days, such Net Premiums will be allocated
to the investment options selected by the Participant as of the end of the
Valuation Period in which Prudential (or Prudential's designated agent) receives
such premium payments. Premium payments received within the first 20 days after
the Certificate Date will be applied to the money market fund chosen by the
Contractholder.
CHANGING PREMIUM ALLOCATIONS. If his or her insurance is not in default, a
Participant may change the way in which premiums are allocated among the
available investment option(s). Such a change will be effective as of the end of
the Valuation Period during which Prudential (or Prudential's designated agent)
receives the Participant's request on a form approved by Prudential. The minimum
percentage that a Participant may allocate to any available Subaccount or the
Fixed Account is 5%, and all allocations must be in whole percentages.
Currently, there is no transaction charge for reallocating future premiums,
although Prudential reserves the right to impose a transaction charge in the
future.
TRANSFERS
If his or her insurance is not in default, a Participant may transfer amounts
from one available Subaccount to another available Subaccount, or to the Fixed
Account. There is no limit on the number of transfers among available
Subaccounts or to the Fixed Account. Under certain Group Contracts, Prudential
may reserve the right to impose a transaction charge of up to $20 for each
transfer in a Certificate Year after the twelfth transfer in that Certificate
Year.
Transfers will take effect as of the end of the Valuation Period in which a
proper transfer request is received by Prudential (or Prudential's designated
agent) on a form approved by Prudential. The request may be in terms of dollars,
such as a request to transfer $10,000 from one available Subaccount to another
available Subaccount, or may be in terms of a percentage reallocation among
available Subaccounts. The minimum amount that may be transferred from any one
investment option is $100 or the entire balance in that investment option,
whichever is less. For transfer requests in percentage terms, as with premium
reallocations, the percentages must be in whole numbers and no allocation may be
less than 5%.
Transfers from the Fixed Account to the available Subaccounts are currently
permitted once each Certificate Year. The amount of that transfer cannot exceed
$5,000 or 25% of the balance in the Fixed Account, whichever is greater. Such
transfer requests will take effect as of the end of the Valuation Period in
which a proper transfer request is received by Prudential (or Prudential's
designated agent) on a form approved by Prudential. These limits are subject to
change in the future.
DOLLAR COST AVERAGING
Each Group Contract will include a provision under which a Participant may elect
Dollar Cost Averaging ("DCA"). DCA enables a Participant to systematically
transfer specified dollar amounts or percentages from a money market Subaccount
to the other available Subaccounts at regular intervals. The Participant can
elect that a certain number of transfers be made under the DCA feature. Once the
designated number of transfers has been made, DCA will terminate.
DCA may be selected by establishing a money market subaccount value of at least
$1,000. The minimum transfer amount is $100. All DCA transfers will be made
effective as of the end of the first Valuation Period following the first of the
month. Election of this arrangement may occur at any time by properly completing
the DCA election form and returning it to the address specified on the form. If
the DCA election form is received by the tenth day of the month, then DCA
processing will commence during the next month. If the DCA election form is
received after the tenth day of a month, then DCA processing will commence
during the month immediately following the next succeeding month. Any transfers
made pursuant to DCA are not counted in determining the number of transfers
subject to the transfer charge.
27
<PAGE>
DCA will terminate when any of the following occurs: (1) the number of
designated transfers has been completed; (2) the money market Subaccount value
is insufficient to complete the next transfer; (3) Prudential (or Prudential's
designated agent) receives a written request for termination by the tenth of the
month in order to cancel the transfer scheduled to take effect the following
month (written requests received after the tenth day of the month will take
effect during the month immediately following the next succeeding month); or (4)
the Certificate is lapsed, surrendered or otherwise terminated.
There is currently no charge for DCA. Prudential reserves the right to charge
for this feature in the future.
The main objective of DCA is to shield investments from short term price
fluctuations. Since the same dollar amount is transferred to an available
Subaccount with each transfer, more Subaccount units are purchased if the
Subaccount unit value is low, and fewer Subaccount units are purchased if the
unit value is high. Therefore, a lower than average cost per unit may be
achieved over the long term. This plan of investing allows investors to take
advantage of market fluctuations but does not assure a profit or protect against
a loss in declining markets.
DEATH BENEFITS
A Death Benefit is payable upon the death of the Covered Person. The Death
Benefit is generally the Face Amount of the Certificate, plus the value of the
Certificate Fund as of the date of death. The Death Benefit otherwise payable
will be reduced by any Certificate Debt and any past due monthly charges. If the
insurance is kept in force for several years and/or substantial premium payments
are made, the Certificate Fund may grow to a point where it is necessary to
increase the Death Benefit in order to ensure that the insurance will satisfy
the Internal Revenue Code's definition of life insurance. In that case, the
Death Benefit (before the subtraction of Certificate Debt and unpaid charges)
must, under most Group Contracts, at least equal the following "corridor
percentage" of the Certificate Fund based on the insured's Attained Age:
28
<PAGE>
INSURED'S CORRIDOR INSURED'S CORRIDOR
ATTAINED AGE PERCENTAGE ATTAINED AGE PERCENTAGE
------------ ---------- ------------ ----------
0-40 250% 70 115%
41 243 71 113
42 236 72 111
43 229 73 109
44 222 74 107
---- --- -- ---
45 215 75 105
46 209 76 105
47 203 77 105
48 197 78 105
49 191 79 105
---- --- -- ---
50 185 80 105
51 178 81 105
52 171 82 105
53 164 83 105
54 157 84 105
---- --- -- ---
55 150 85 105
56 146 86 105
57 142 87 105
58 138 88 105
59 134 89 105
---- --- -- ---
60 130 90 105
61 128 91 104
62 126 92 103
63 124 93 102
64 122 94 101
---- --- -- ---
65 120 95 100
66 119 96 100
67 118 97 100
68 117 98 100
69 116 99 100
Alternatively, certain Group Contracts may be issued under the cash value
accumulation test of the Internal Revenue Code. In such a case, the Death
Benefit under a Certificate (before the subtraction of Certificate Debt and
unpaid charges) must at least equal the Certificate Fund divided by the Net
Single Premium per dollar of insurance for the covered person's attained age.
For this purpose, Net Single Premiums are based upon the 1980 Commissioners'
Standard Ordinary Mortality Table (Male, Age Last Birthday) at 4.0% (the "1980
CSO Table").
The Death Benefit may be received in a lump sum. Alternatively, Prudential or
the Contractholder may elect for Death Benefits to be deposited into
Prudential's Alliance Account. However, the Participant or beneficiary can
receive the Death Benefit in the form of a check upon request instead of having
the Death Benefit deposited to the Alliance Account.
The Alliance Account is an interest-bearing account that holds the Death Benefit
while the Participant or the beneficiary takes time to consider other options.
The Participant or the beneficiary has complete ownership of funds held in the
Alliance Account, and may draw on all or part of their funds by writing a draft.
Interest earnings in the Alliance Account are compounded daily and credited
monthly. Proceeds placed in the Alliance Account can be transferred to other
modes of settlement at any time. The proceeds contained in the Alliance Account
are part of Prudential's general account.
The Participant or the beneficiary may arrange with Prudential for the Death
Benefit to be paid in another mode of settlement other than the payment options
listed above. The following settlement options can be selected by the
Participant or the beneficiary if the Death Benefit is $1,000 or more. More than
one option can be selected.
29
<PAGE>
OPTION 1: PAYMENTS FOR A FIXED PERIOD
The Death Benefit plus interest is paid over a fixed number of years (1 -
25). The payment may be received monthly, quarterly, semi-annually or
annually. The payment amount will be higher or lower depending on the
period selected.
The interest rate can change, but will not be less than the guaranteed
rate shown in the claim settlement certificate that a Participant or
beneficiary will receive. The Participant or beneficiary may withdraw the
total present value of payments not yet made at any time.
OPTION 2: PAYMENTS IN INSTALLMENTS FOR LIFE
The Death Benefit provides monthly payments in installments for as long
as the beneficiary lives. The beneficiary may choose a guaranteed minimum
payment period (5, 10 or 20 years) or an installment refund, which will
guarantee that the sum of the payments equals the amount of the Death
Benefit payable under this option. If the beneficiary dies before
Prudential has made all guaranteed payments, Prudential will pay the
present value of the remaining guaranteed payments to a payee the
beneficiary designated.
OPTION 3: INTEREST INCOME
The Death Benefit remains with Prudential and earns interest. This option
allows the Participant or beneficiary to leave the Death Benefit with
Prudential and choose another settlement option at a later time.
Withdrawals of $100 or more (including the entire unpaid Death Benefit)
can be made at any time. The interest income payment may be received
monthly, quarterly, semi-annually or annually.
The interest rate can change, but will not be less than the guaranteed
rate shown in the claim settlement certificate that a Participant or
beneficiary will receive.
OPTION 4: PAYMENTS OF A FIXED AMOUNT
The Participant or beneficiary receives a guaranteed specified sum for a
limited number of years. This guaranteed specified sum represents a
return of the principal (Death Benefit) and interest paid over the
selected number of years. The payment may be received monthly, quarterly,
semi-annually or annually.
The interest rate can change, but will not be less than the guaranteed
rate shown in the claim settlement certificate that a Participant or
beneficiary will receive. Any interest credited will be used to extend
the payment period.
OPTION 5: CERTIFICATE OF DEPOSIT
The Death Benefit is used to purchase a certificate of deposit that is
issued by The Prudential Bank. Certificates of Deposit (CDs) are
investments that allow a Participant or beneficiary to choose a variety
of short-and long-term deposit options. They are designed to pay
interest monthly, quarterly, semi-annually, annually or at maturity.
Interest rates are guaranteed for the term of the CD. There is generally
a $10,000 minimum amount for this option.
Under each of the above options, each payment must generally be at least $20.
A beneficiary life claim guide is available upon request. This guide explains in
more detail the modes of payment and settlement options that are available.
CHANGES IN FACE AMOUNT
Some Group Contracts may allow Participants to elect to increase the Face Amount
of their insurance at certain times. Other Group Contracts may provide for
increasing Face Amounts based on factors such as salary increases. Additional
underwriting requirements may have to be satisfied in either case. An increase
in the Face Amount will result in higher insurance charges because the net
amount at risk for Prudential will increase.
Some Group Contracts may also permit Participants to decrease the Face Amount of
their insurance at certain times. In no event, however, may the Face Amount be
decreased below $10,000 or below the minimum amount required to maintain the
insurance's status as life insurance under the federal tax laws.
Under certain Group Contracts, there may be a retirement/age related adjustment
in the Participant's Face Amount. Under the retirement/age adjustment provision,
the Face Amount is adjusted at a predetermined age or qualifying event
("triggering event") to an amount equal to five times the then-existing value of
the Certificate Fund. However, in no event will the adjusted Face Amount exceed
the then-existing Face Amount or be less than
30
<PAGE>
$25,000. This adjustment in the Face Amount occurs at the latest of retirement,
age 70, or the tenth Certificate Anniversary. For Portable Certificates and
Certificates issued under the Dependent Benefits Life coverage, the adjustment
will occur at the latest of age 70 or the tenth Certificate Anniversary. The
retirement/age adjustment to the Participant's Face Amount will be determined as
of the end of the Valuation Period in which the triggering event occurs but the
actual adjustment to the Participant's Face Amount will be effective the first
contract Monthiversary following this determination.
An increase or decrease in Face Amount, or the addition or removal of certain
additional insurance benefits, may create the potential for the insurance to be
treated as a Modified Endowment Contract under the Internal Revenue Code. This
is particularly true of decreases in Face Amount during the first seven years
that insurance is in force. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
In addition, a decrease in coverage may limit the amount of premiums that a
Participant may contribute in the future.
CHARGES AND EXPENSES
The maximum deductions and charges described below will not be increased by
Prudential with respect to any Certificate in effect regardless of any changes
in mortality and expense experience. Where current charges are lower than
maximum charges, Prudential reserves the right to increase the current charges,
although it has no present intention to do so. Participants should refer to
their particular Group Contract and Certificate for further information on
applicable charges.
CHARGES DEDUCTED FROM PREMIUMS. The following charges are deducted from premium
payments before they are invested in the Separate Account or the Fixed Account.
1. Charges for Taxes Attributable to Premiums. A charge for taxes attributable
to premiums is deducted from each premium payment. For these purposes, "taxes
attributable to premiums" shall include any federal, state or local income,
premium, excise, business or any other type of tax (or component thereof)
measured by or based on the amount of premium received by Prudential. That
charge is currently made up of two parts. The first part is for state and
local premium taxes and is currently equal to 2.25% of the premium received
by Prudential. For certain Group Contracts, the charge may equal up to 5%.
The second part is for federal income taxes measured by premiums and is
currently equal to 0.35% of premiums received. Prudential believes that this
second charge is a reasonable estimate of the increased cost for
premium-based federal income taxes resulting from a 1990 change in the
Internal Revenue Code. These charges may be increased if the cost of
Prudential's taxes related to premium payments are increased.
2. Processing Fee. A charge of up to $2 may be deducted from each premium
payment from a Participant to cover the costs of collecting and processing
premiums. This charge may be reduced or eliminated on certain Group
Contracts. See REDUCTION OF CHARGES, page 32.
3. Sales Charge. A sales charge may be deducted to pay part of the costs
Prudential incurs in selling the Group Contract and the coverage under the
Group Contract, including commissions, advertising and the printing and
distribution of prospectuses and sales literature. The maximum charge is
equal to 3.5% of each premium payment. This charge may be reduced or
eliminated on certain Group Contracts. See REDUCTION IN CHARGES, page 32.
MONTHLY CERTIFICATE FUND CHARGES. The following charges are deducted monthly
from the Certificate Fund, pro-rata from each Subaccount and the Fixed Account.
Monthly Certificate Fund charges will generally be processed on the
Monthiversary. However, under certain Group Contracts, monthly Certificate Fund
charges for a particular Monthiversary may be made when premiums are received by
Prudential (or its designated agent) from the Contractholder. Under no Group
Contract, however, will the monthly Certificate Fund charges for any given
Monthiversary be deducted later than 45 days past the applicable Monthiversary.
1. Cost of Insurance. On each contract Monthiversary, Prudential will deduct a
charge for the cost of the Participant's insurance. When a Covered Person
dies, the amount paid to the beneficiary is larger than the Certificate Fund.
The cost of insurance charges are designed to enable Prudential to pay this
larger Death Benefit. The charge is determined by multiplying the "net amount
at risk" under a Certificate (the amount by which the Certificate's Death
Benefit, computed as if there was no Certificate Debt, exceeds the
Certificate Fund) by the cost of insurance rate applicable to the Covered
Person. The cost of insurance rates are based on the age and rate class of
the Covered Person, mortality characteristics of the group, and particular
aspects of the Group Contract, such as the rate class structure and
portability of the coverage. Separate cost of insurance rates may apply to
Certificates continued on a Portable basis. Since the cost of
31
<PAGE>
insurance rate applicable under a Certificate increases as the Covered Person
ages, the monthly cost of insurance charge deducted from the Certificate Fund
will increase as the Covered Person ages, and this increased charge will be
reflected in the Cash Surrender Value and Death Benefit under a Certificate.
Under some Group Contracts, any additional insurance benefits provided may be
taken into account in determining the cost of insurance rates. The rate
classes for a particular Group Contract may include classes for smokers and
nonsmokers, active and retired Participants, Portable Certificates, and other
criteria agreed to by Prudential and the Contractholder.
The actual cost of insurance rates will be set by Prudential based on its
expectations as to future experience in mortality and total expenses
(including, in some instances, those for additional insurance benefits) and
may be adjusted periodically, based on a number of factors including the
number of Certificates in force, the number of Certificates surrendered or
becoming Portable and the actual and anticipated mortality and expense
experience of the group. The expense experience considered by Prudential in
this regard includes whether a Group Contract sponsor or a party acting on
the sponsor's behalf performs administrative or other services related to the
Certificates and the extent to which the sponsor may receive compensation for
its services. Any change in the cost of insurance rates will apply to all
persons of the same age, rate class, and group. Certificates continued on a
Portable basis may be considered a separate group. The cost of insurance rate
applicable to a Participant may not, however, be greater than the guaranteed
cost of insurance rate set forth in his or her Certificate. That guaranteed
rate will be no higher than a rate based upon 150% of the 1980 CSO Table. The
maximum guaranteed rates are 150% of the 1980 CSO Table because Prudential
uses simplified underwriting and guaranteed issue procedures that may not
require a medical examination of a prospective Covered Person and may provide
coverage to groups with substandard risk characteristics from an underwriting
standpoint. The current cost of insurance charges are generally lower than
100% of the 1980 CSO Table.
2. Charge for Additional Insurance Benefits. Under certain Group Contracts,
Participants may obtain certain additional insurance benefits. See ADDITIONAL
INSURANCE BENEFITS, page 42. Where such additional insurance benefits are not
taken into account in determining the cost of insurance charge as discussed
above, a separate charge for any such additional insurance benefits obtained
under a Certificate will be deducted each Monthiversary from the
Participant's Certificate Fund.
3. Administrative Charge. An administrative charge may be deducted on each
contract Monthiversary. It is intended to pay for maintaining records, and
communicating with Contractholders and Participants. It is currently not more
than $3 per month and is guaranteed not to exceed $6 per month. This charge
may be reduced or eliminated on certain Group Contracts. See REDUCTION OF
CHARGES, page 32.
4. Other Taxes. Prudential reserves the right to deduct a charge to cover
federal, state or local taxes (other than "taxes attributable to premiums"
described above) that are imposed upon the operations of the Separate
Account. Currently, no such charges are made.
DAILY DEDUCTION FROM THE SUBACCOUNTS OF THE SEPARATE ACCOUNT. Each day a charge
is deducted from the assets of each of the Subaccounts in an amount currently
equal to an effective annual rate of 0.45%. The charge is guaranteed not to
exceed an effective annual rate of 0.90%. This charge is intended to compensate
Prudential for assuming the mortality and expense risks of the insurance
provided through the Group Contract. The mortality risk assumed is that Covered
Persons may live for shorter periods of time than Prudential estimated when it
determined the mortality charge. The expense risk assumed is that expenses
incurred in issuing and administering the insurance will be greater than
Prudential estimated in fixing its administrative charges. Prudential will
realize a profit from this risk charge to the extent it is not needed to provide
benefits and pay expenses under the Certificates. This charge is not assessed on
amounts allocated to the Fixed Account.
TRANSACTION CHARGES. There may be charges associated with surrenders, partial
withdrawals, loans, transfers and additional statement requests. These charges
are described in the prospectus section dealing with the transaction itself.
EXPENSES INCURRED BY THE FUNDS. The charges and expenses of the Funds are
indirectly borne by the Participants. Details about investment management fees
and other underlying fund expenses are provided in the fee table and in the
accompanying prospectuses for the available Funds and the related statements of
additional information.
REDUCTION OF CHARGES
Prudential may reduce or waive the sales charges, processing fee, and/or other
charges under certain Group Contracts, where it is expected that the Group
Contract will involve reduced sales or administrative expenses.
32
<PAGE>
Prudential determines both the eligibility for such reduced or waived charges,
as well as the amount of such reductions, by considering the following factors:
(1) the size of the group; (2) the total amount of premium payments expected to
be received; (3) the expected persistency of the individual Certificates; (4)
the purpose for which the Group Contract is purchased and whether that purpose
makes it likely that expenses will be reduced; and (5) any other circumstances
which Prudential believes to be relevant in determining whether reduced sales or
administrative expenses may be expected. Some of the reductions in or waivers of
charges for cases may be contractually guaranteed; other reductions or waivers
may be discontinued or modified by Prudential. Prudential's reductions in, or
waivers of, charges for these cases will not be unfairly discriminatory to the
interests of any individual Participants.
DIVIDENDS/EXPERIENCE CREDITS
Because the Group Contract is issued by Prudential, a mutual life insurance
company, it is a participating contract. This means it is eligible to be
credited with part of Prudential's divisible surplus attributable to the Group
Contract ("Dividends"), or a refund based on the experience of the case
("Experience Credits"), as determined annually by Prudential's Board of
Directors. Most of these Group Contracts are expected to be priced such that
there will be no source of distributable surplus attributable to these Group
Contracts and no refunds based on experience. Prudential may, however, issue
these Group Contracts in certain cases on terms such that Dividends or
Experience Credits may be declared.
The method of distribution of any Dividends or Experience Credits may vary
depending on the terms of a particular Group Contract. Dividends or Experience
Credits that are reinvested as premiums will be subject to the charges made for
premium payments. If an individual Participant becomes a Portable Certificate
holder, he or she will no longer be entitled to receive any Dividends or
Experience Credits under the Group Contract.
Participants should refer to their Group Contract for details on Dividends or
Experience Credits.
CASH SURRENDER VALUE
The Cash Surrender Value of the Certificate is equal to the Participant's
Certificate Fund, reduced by any Certificate Debt, outstanding charges, and any
applicable transaction charge. The Certificate Fund on any day equals the sum of
the amounts in the Subaccounts, the amount invested in the Fixed Account, and
the Loan Account. See LOANS, page 34. The Cash Surrender Value will change
daily, reflecting the Net Premiums paid, withdrawals made, the increases or
decreases in the value of the Fund shares in which the assets of the Subaccounts
have been invested, interest credited on any amounts allocated to the Fixed
Account and on the Loan Account, interest accrued on any loan, and by the daily
asset charge for mortality and expense risks assessed against the variable
investment options. The Cash Surrender Value will also reflect monthly charges.
Upon request, Prudential (or Prudential's designated agent) will inform a
Participant as to the Cash Surrender Value of his or her Certificate. There is
no guaranteed minimum Cash Surrender Value and it is possible for the Cash
Surrender Value of a Certificate to decline to zero.
The tables on pages T-1 and T-2 of this prospectus illustrate approximately what
the Cash Surrender Values would be for selected Certificates with the specified
premium payments (assuming uniform hypothetical investment results in the
selected Subaccount portfolios).
FULL SURRENDERS
A Participant may surrender his or her Certificate for its Cash Surrender Value
at any time. All insurance will end at this time. Prudential will pay the Cash
Surrender Value calculated as of the end of the Valuation Period during which
Prudential (or Prudential's designated agent) receives the Participant's request
on a form approved by Prudential and the proceeds will be paid as described in
WHEN PROCEEDS ARE PAID, page 40. Under certain Group Contracts, there may be a
transaction charge of up to the lesser of $20 or 2% of the amount received upon
surrender. A surrender may have tax consequences. See TAX TREATMENT OF
CERTIFICATE BENEFITS, page 37.
ELECTION OF PAID-UP INSURANCE
At any time, a Participant may elect to exchange his/her existing Group Variable
Universal Life insurance coverage for fixed paid-up insurance on the life of the
Covered Person with all or part of the Cash Surrender Value. The minimum amount
of Cash Surrender Value that a Participant can transfer in such an exchange is
$1,000. Under certain Group Contracts, a transaction charge of up to $20 may be
made in connection with the exchange.
33
<PAGE>
The paid-up insurance amount cannot be more than can be exchanged using the
Certificate's Cash Surrender Value or more than the Death Benefit under the
Certificate at the time the exchange is made. Once the exchange is made,
Prudential may reduce any future amount of coverage for which the Participant is
eligible under the Group Contract.
An exchange is effective as of the end of the Valuation Period during which
Prudential (or its designated agent) receives the Participant's request on a
form approved by Prudential. Once an exchange occurs, all coverages provided by
the Certificate will end, including additional insurance benefits, if any.
An exchange may result in the paid-up insurance becoming a Modified Endowment
Contract. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
Any amounts not used in an exchange will be withdrawn from the Certificate Fund
as of the end of the Valuation Period when the exchange was effective, and the
proceeds will be paid as described in WHEN PROCEEDS ARE PAID, page 40. A
withdrawal of a portion of the Cash Surrender Value of a Certificate may have
tax consequences. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37
PARTIAL WITHDRAWALS
A Participant may withdraw a portion of the Cash Surrender Value of his or her
Certificate during the lifetime of the Covered Person and while the Certificate
is not in default. When a partial withdrawal is made, an amount equal to the
withdrawal will be taken out of each of the Participant's investment options on
a pro-rata basis unless the Participant selects specific investment options.
Such partial withdrawals will be effected as of the end of the Valuation Period
during which Prudential (or Prudential's designated agent) receives the
Participant's request on a form approved by Prudential, and the proceeds will be
paid as described in WHEN PROCEEDS ARE PAID, page 40. Under certain Group
Contracts, there is no limit on the number of partial withdrawals a Participant
can take each year, but there may be a transaction charge for each withdrawal of
up to the lesser of $20 or 2% of the amount of the withdrawal. This transaction
charge will be deducted from the amount withdrawn from the Certificate Fund. A
withdrawal of a portion of the Cash Surrender Value of a Certificate may have
tax consequences. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
The minimum amount of any partial withdrawal is $200. The maximum amount of any
partial withdrawal is the amount that would reduce the Certificate Fund (less
any Certificate Debt and outstanding charges) to an amount equal to the next
month's charges. Any withdrawal greater than that amount will not be permitted
because it would cause the Certificate to default. Upon request, Prudential (or
Prudential's designated agent) will inform a Certificate owner how much Cash
Surrender Value may be withdrawn.
An amount withdrawn may not be repaid except as a premium payment subject to
applicable charges.
LOANS
A Participant may borrow up to the Loan Value of the Certificate from
Prudential. The Loan Value of a Certificate (before any applicable transaction
charge) at any time is determined by multiplying the Certificate Fund by 90% (or
higher where required by state law) and then subtracting any existing loan with
accrued interest, outstanding charges, and the amount of the next month's
charges. The minimum amount that may be borrowed at any one time is $200. A loan
will not be permitted if Certificate Debt exceeds the Loan Value. Under certain
Group Contracts, there may be a transaction charge up to $20 for each loan made.
Loan proceeds will be paid as described in WHEN PROCEEDS ARE PAID, page 40.
Interest charged on any loan will accrue daily at an annual rate determined each
year by Prudential. Interest payments on any loan are due at the end of each
contract year. If interest is not paid when due, it will be added to the
principal amount of the loan. Prudential will notify a Participant 31 days
before the interest on the loan becomes due.
When a loan is made, an amount equal to the loan will be taken out of each of
the Participant's investment options on a pro-rata basis unless the Participant
selects specific investment options. At the same time, a Loan Account will be
started for the Participant and will be credited with an amount equal to the
loan. Prudential will generally credit interest to the amount in the Loan
Account at an annual rate of 2% less than the interest rate on the loan. The
crediting rate will generally be equal to the Fixed Account crediting rate.
Interest credited through the Loan Account will be allocated to the
Participant's investment options on each Contract Anniversary in accordance with
the Participant's existing premium allocation instruction.
A Participant may repay a part or all of the loan at any time. Loans may be
repaid by payment or by withdrawing amounts from the Certificate Fund.
Participants should designate whether a payment is intended as a premium
34
<PAGE>
payment or as a loan repayment. If no such designation is made, the payment will
be treated as a loan repayment. If a loan is repaid by using the Certificate
Fund, Prudential will treat such repayment as a partial withdrawal from the
Certificate Fund and under certain Group Contracts, there may be a transaction
charge of up to the lesser of $20 or 2% of the amount of the withdrawal. A
partial withdrawal from the Certificate Fund may have tax consequences. See TAX
TREATMENT OF CERTIFICATE BENEFITS, page 37. The balance in a Participant's Loan
Account will be reduced by the amount of any loan repayment.
A Participant's Loan Account plus accrued interest ("Certificate Debt") may not
exceed the value of the Certificate Fund. If the Certificate Debt equals this
amount the Certificate will go into default. See LAPSE page 35.
If Certificate Debt is still outstanding when the Certificate is surrendered or
allowed to lapse, the borrowed amount may become taxable. In addition, loans
from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
Should a Death Benefit become payable while a loan is outstanding, or should the
Certificate be surrendered while a loan is outstanding, any proceeds otherwise
payable will be reduced to reflect the amount of the loan and any accrued
interest.
A loan will have a permanent effect on a Certificate's Cash Surrender Value and
may have a permanent effect on the Death Benefit. This is because the investment
results of the selected investment options will apply only to the amount
remaining in those investment options after the loan amount is transferred to
the Loan Account. The longer the loan is outstanding, the greater the effect is
likely to be. The effect could be favorable or unfavorable. If investment
results are greater than the rate being credited upon the amount of the loan
while the loan is outstanding, Cash Surrender Values will not be as high as they
would have been if no loan had been made.
CERTIFICATE EXCHANGE PRIVILEGE
During the first 24 months following the issuance of a Certificate, the
Participant may exercise the Certificate exchange privilege, which entails the
exchange of the existing Group Variable Universal Life insurance coverage for a
flexible premium fixed benefit life insurance coverage. An exchange results in
the transfer of funds from the Separate Account to Prudential's general account.
The exchange is effective as of the end of the Valuation Period during which
Prudential receives the Participant's request on a form approved by Prudential.
The Certificate acquired in the exchange will have the same Issue Age as the
original Certificate. No evidence of insurability is required to effect such an
exchange.
No transaction charge is currently imposed with respect to this exchange
privilege. However, Prudential reserves the right to impose such a transaction
charge in the future.
The Participant may also exercise the Certificate exchange privilege once during
the first 24 months following the effective date of an increase in the Face
Amount of a Certificate only for the amount of coverage that was increased. See
TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
TELEPHONE AND ELECTRONIC TRANSACTIONS
Some Group Contracts permit a Participant to transfer amounts among available
investment options, make surrenders and partial withdrawals, and obtain loans by
telephone or electronically provided he or she is enrolled to use Prudential's
telephone or electronic transfer system. Prudential will not be liable for
following instructions communicated by telephone or electronically that it
reasonably believes to be genuine. It has adopted security procedures reasonably
designed to verify that such communications are genuine. Prudential cannot
guarantee that Participants will be able to get through to complete a telephone
or electronic transaction during peak periods such as periods of drastic
economic or market change or during system failures or power outages.
LAPSE
In general, a Certificate will remain in force so long as the balance in the
Certificate Fund less Certificate Debt and outstanding charges is sufficient to
pay the monthly charges when due. If it is not, the Participant's insurance is
in default and will lapse if a grace period expires without a sufficient payment
being made. Certain Group Contracts may provide that if a Participant pays
certain specified premiums during the first two Certificate Years, the
Certificate will not go into default even if the Certificate Fund is
insufficient to cover monthly charges. Participants should refer to their
particular Certificates for the details of this default protection. A
Certificate that lapses with Certificate Debt may result in tax consequences.
See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
35
<PAGE>
Prudential will send a notice to a Participant in default at the last known
address on file with Prudential, specifying the amount of premium required to
keep the Certificate in force and the date the payment is due. The grace period
expires on the later of 61 days from the date of default or 30 days from the
date notice was mailed. If Prudential (or Prudential's designated agent) does
not receive the required premium payment within the grace period, the
Participant's insurance will lapse and have no remaining value.
If the Covered Person dies during the grace period, the Death Benefit will be
reduced by any past due monthly charges and any Certificate Debt.
TERMINATION OF A CONTRACTHOLDER'S PARTICIPATION IN GROUP CONTRACTS
The Contractholder may decide to terminate the Group Contract with Prudential.
In addition, Prudential may terminate the Group Contract if the aggregate Face
Amount of all Certificates and/or the number of Certificates issued under the
Group Contract falls below the minimum permissible levels established by
Prudential or the Contractholder or its agent fails to timely remit premiums to
Prudential.
The party terminating participation in the Group Contract must provide ninety
days written notice to the other party, as well as to all Participants, before
terminating participation in the Group Contract. Termination of participation in
the Group Contract means that the Contractholder or its agent will no longer
remit premiums to Prudential under the Group Contract and that no new
Certificates will be issued under the Group Contract. The effects on
Participants of termination of the Contractholder's participation in the Group
Contract are described in OPTIONS ON TERMINATION OF COVERAGE, below. The options
available to Participants from Prudential may depend on what other insurance
options are available to them. The Participant should refer to the Group
Contract and Certificate for further details on termination of coverage.
PARTICIPANTS WHO ARE NO LONGER ELIGIBLE GROUP MEMBERS
The terms of each Group Contract will determine the effect on a Participant's
insurance coverage if the Participant is no longer an Eligible Group Member.
Some Group Contracts may provide that insurance coverage will continue even if
the Participant is no longer an eligible member of the group. Under such Group
Contracts, within 61 days after the Participant is no longer eligible under the
Group Contract, Prudential will notify the Participant that Prudential will now
mail periodic premium reminders directly to the Participant, who will remit
premium payments directly to Prudential or authorize Prudential to receive
payment using electronic form transfers or credit/debit cards. Continuation of
insurance may be subject to certain conditions and limitations specified in the
Group Contract. The notice will also explain the Participant charges and
expenses applicable to Portable Certificates. See CHARGES AND EXPENSES, page 31.
These charges and expenses may be higher than those paid by the Participant
while he or she was still an Eligible Group Member, but will not exceed the
maximum charges and expenses described in this prospectus. Continuation as a
Portable Certificate holder may be conditioned on maintenance of a specified
minimum Certificate Fund value.
Under other Group Contracts, the portability privileges described above will not
be available. Participants under those Group Contracts will have the options
described in the next section of this prospectus.
OPTIONS ON TERMINATION OF COVERAGE
Insurance coverage obtained through a Group Contract will terminate when the
Group Contract itself terminates. Some Group Contracts also provide that
coverage purchased by an individual Participant will terminate when the
Participant is no longer an Eligible Group Member.
When the Contractholder's participation in the Group Contract terminates, the
effect on individual Participants depends on whether the Contractholder replaces
the Group Contract with another life insurance contract(s) that provides for
accumulation of cash value. In general, if the Contractholder does enter into
such a contract, Certificates will be terminated and the Cash Surrender Value of
each such Certificate will be directly transferred to the new contract unless
the Participant elects to receive the Cash Surrender Value of the Certificate.
Some Group Contracts may, however, provide that Certificates can continue on a
Portable basis unless the Participant elects to transfer the Cash Surrender
Value to the new life insurance contract or to surrender the Certificate.
Certain conditions and limitations may apply and are specified in the Group
Contract. Participants should consult the Group Contract and Certificate
concerning issuance of Portable Certificates in these circumstances.
If the Contractholder does not enter into a new life insurance contract(s) that
provides for accumulation of cash value, Participants will have the following
options and may also have the option of a Portable Certificate if the Group
Contract so provides. Participants who are no longer Eligible Group Members will
also have the following options under Group Contracts that do not provide for
issuance of Portable Certificates to such persons.
36
<PAGE>
CONVERSION. A Participant may elect to convert the Certificate to an individual
life insurance policy without showing evidence of insurability. If a Participant
elects this option, he or she must apply for the individual contract and pay the
first premium within 31 days after the coverage under the Group Contract ends.
The Participant may select any form of individual life insurance (other than
term insurance) that Prudential normally makes available to insureds who are the
same age and requesting the same amount of insurance provided that the
Participant has been insured for at least five years (or less under certain
Group Contracts) under the Group Contract and any other Prudential rider or
Group Contract replaced by this insurance. Premiums will be based on the form
and amount of insurance elected by the Participant, as well as the Covered
Person's risk class and age.
If the insurance is ending because the Participant is no longer eligible to
participate in the Group Contract, the amount of insurance under the individual
policy cannot be more than the Face Amount of the Certificate under the Group
Contract. If the insurance is ending because the Group Contract is terminating,
the amount of individual insurance may, depending on applicable state law, be
limited to the lesser of (1) $10,000 or (2) the Face Amount of the Certificate
under the Group Contract less the amount of any group insurance the Participant
becomes eligible for in the next 45 days.
If a Covered Person dies within 31 days after the insurance ends under the Group
Contract, and the Participant had the right to convert to an individual policy,
a Death Benefit equal to the amount of individual insurance on the Covered
Person the Participant could have purchased upon conversion will be payable by
Prudential.
PAID-UP INSURANCE. The Participant may elect to purchase fixed paid-up insurance
on the Covered Person with the Cash Surrender Value of the Certificate. The
Participant must have at least $1,000 of Cash Surrender Value for this option to
be available. The insurance amount will depend on the Cash Surrender Value on
the date of termination and the age of the Covered Person but cannot exceed the
Death Benefit immediately before the paid-up purchase. The Participant must
elect this option within 61 days of the date on which the Certificate coverage
would end. The election is effective as of the end of the Valuation Period
during which Prudential (or its designated agent) receives the Participant's
request on a form approved by Prudential. Acquisition of reduced paid-up
insurance may result in that insurance becoming a Modified Endowment Contract.
See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
PAYMENT OF CASH SURRENDER VALUE. The Participant may receive the Cash Surrender
Value by surrendering the Certificate and making a proper request on a form
approved by Prudential.
The above options apply whether the Participant or a spouse is the Covered
Person under the Certificate. A Participant who does not choose any of the above
options within 61 days of the date on which Certificate coverage would end will
be provided with Paid-Up Insurance, if his or her Certificate has at least
$1,000 of Cash Surrender Value and, if not, will be paid the Cash Surrender
Value.
REINSTATEMENT
Except as indicated in the next sentence, a lapsed Certificate may be reinstated
at any time within 3 years after the end of the grace period and before the
Participant reaches the maximum age at which a Certificate may be held. A lapsed
Certificate may not be reinstated if the Group Contract is terminated and the
Participant would not have been permitted to retain the Certificate on a
portable basis. To reinstate coverage, a Participant must submit the following
items to Prudential (or Prudential's designated agent): (1) a written request
for reinstatement; (2) evidence of insurability satisfactory to Prudential; and
(3) a premium payment (less any applicable charges) that is at least equal to
the monthly Certificate Fund charges for the grace period plus the monthly
Certificate Fund charges for two months. See CHARGES AND EXPENSES, page 31.
The reinstatement is effective on the Monthiversary following the date
Prudential approves the request. The terms of the original Certificate will
apply to the reinstated Certificate. A reinstated Certificate is subject to a
new two year incontestability period and a new suicide exclusion period. All
Certificate Debt is retired at the same time the Certificate lapses and will not
be reestablished.
No transaction charge is currently imposed in connection with a reinstatement,
although Prudential reserves the right to impose such a transaction charge in
the future.
TAX TREATMENT OF CERTIFICATE BENEFITS
Each prospective Participant is urged to consult a qualified tax advisor. The
following discussion is not intended as tax advice, and it is not a complete
statement of what the effect of federal income taxes will be under all
circumstances. Rather, it provides information about how Prudential believes the
federal income tax laws apply
37
<PAGE>
in the most commonly occurring circumstances. There is no guarantee, however,
that the current federal income tax laws and regulations or interpretations will
not change.
TREATMENT AS LIFE INSURANCE AND INVESTOR CONTROL. The Certificate will be
treated as "life insurance," as long as it satisfies certain definitional tests
set forth in section 7702 of the Internal Revenue Code (the "Code") and as long
as the underlying investments for the Certificate satisfy diversification
requirements under section 817(h) of the Code. For further detail on
diversification requirements, see the applicable Fund prospectuses.
Prudential believes that it has taken adequate steps under the Code and existing
regulations under it to cause the Certificates to be treated as life insurance
for tax purposes. This means that: (1) except as noted below, the Participant
should not be taxed on any part of the Certificate Fund, including additions
attributable to interest, dividends, or appreciation; and (2) the Death Benefit
should be excludable from the gross income of the beneficiary under section
101(a) of the Code.
Although Prudential believes the Certificate should qualify as "life insurance"
for federal tax purposes, there are uncertainties. Section 7702 of the Code
which defines life insurance for tax purposes gives the Secretary of the
Treasury authority to prescribe regulations to carry out the purposes of the
Section. In this regard, proposed regulations governing mortality charges were
issued in 1991 and proposed regulations under Sections 101, 7702 and 7702A
governing the treatment of life insurance policies that provide accelerated
death benefits were issued in 1992. None of these proposed regulations has yet
been finalized. Additional regulations under Section 7702 may also be
promulgated in the future.
Moreover, IRS regulations issued to date do not provide guidance concerning the
extent to which Participants may direct their investments to the particular
available Subaccounts of a Separate Account without causing the Participants
instead of Prudential to be considered the owners of the underlying assets. Such
guidance will be included in regulations or revenue rulings under Section 817(d)
relating to the definition of a variable contract. The ownership rights under
the Certificate are similar to, but different in certain respects from, those
addressed by the IRS in Rulings in which it was determined that contract owners
were not owners of separate account assets. For example, a Contractholder may
select the investment strategies, Participants have the choice of more Funds,
including Funds with similar broad investment strategies and different
investment managers, and Participants may be able to reallocate amounts between
available Subaccounts more frequently than in such Rulings. While Prudential
believes it will be considered the owner of the Separate Account assets, these
differences could result in the Participant being considered the owner of the
assets.
Prudential intends to comply with final regulations issued under Sections 7702
and 817. Therefore, because of this uncertainty, it reserves the right to make
such changes as it deems necessary to assure that the Group Contract continues
to qualify as variable life insurance for tax purposes. Any such changes will
apply uniformly to affected Participants and will be made only after advance
written notice to the Contractholder.
PRE-DEATH DISTRIBUTIONS. The taxation of pre-death distributions depends on
whether the Certificate is classified as a Modified Endowment Contract. The
following discussion first deals with distributions under Certificates not so
classified, and then with Modified Endowment Contracts.
1. A surrender or lapse of the Certificate may have tax consequences. Under
surrender, the Participant will not be taxed on the Cash Surrender Value
except for the amount, if any, that exceeds the gross premiums paid less
the untaxed portion of any prior withdrawals. The amount of any unpaid
Certificate Debt will, upon surrender or lapse, be added to the Cash
Surrender Value and treated, for this purpose, as if it had been
received. Any loss incurred upon surrender is generally not deductible.
A withdrawal generally is not taxable unless it exceeds total premiums
paid to the date of withdrawal less the untaxed portion of any prior
withdrawals. However, under certain limited circumstances, in the first
15 Certificate Years all or a portion of a withdrawal may be taxable if
the Certificate Fund exceeds the total premiums paid less the untaxed
portions of any prior withdrawals, even if total withdrawals do not
exceed total premiums paid to date.
Extra premiums for additional insurance benefits generally do not count
in computing gross premiums paid, which in turn determines the extent to
which a withdrawal might be taxed.
Loans received under the Certificate will ordinarily be treated as
indebtedness of the Participant and will not be considered to be
distributions subject to tax. However, if a loan is still outstanding
when the Certificate is surrendered or allowed to lapse, the outstanding
Certificate Debt will be taxable at that time to the extent the Cash
Surrender Value exceeds gross premiums paid less the untaxed portion of
any prior withdrawals.
38
<PAGE>
2. Some of the above rules are changed if the Certificate is classified as a
Modified Endowment Contract under Section 7702A of the Code. It is
possible for the Certificate to be classified as a Modified Endowment
Contract under at least two circumstances: premiums in excess of the 7
pay premiums allowed under Section 7702A are paid or a decrease in the
Death Benefit or a removal of certain additional insurance benefits is
made during the first 7 Certificate Years. Moreover, the addition of
certain additional insurance benefits (or an increase in the Death
Benefit) after the Certificate Date may have an impact on the
Certificate's status as a Modified Endowment Contract. Participants
contemplating any of these steps should first consult a qualified tax
advisor and their Prudential representative.
If the Certificate is classified as a Modified Endowment Contract, then
pre-death distributions, including loans, assignments and pledges are
includible in income to the extent that the Certificate Fund exceeds the
gross premiums paid for the Certificate increased by the amount of any
loans previously includible in income and reduced by any untaxed amounts
previously received other than the amount of any loans excludible from
income. These rules may also apply to pre-death distributions, including
loans, made during the two year period prior to the Certificate becoming
a Modified Endowment Contract.
In addition, pre-death distributions from such Certificates (including
full surrenders) will be subject to a penalty of 10 percent of the amount
includible in income unless the amount is distributed on or after age
59-1/2, on account of the taxpayer's disability or as a life annuity. It
is presently unclear how the penalty tax provisions apply to contracts
owned by non-natural persons such as trusts.
Under certain circumstances, multiple Modified Endowment Contracts issued
to the same Participant during any calendar year will be treated as a
single contract for purposes of applying the above rules.
Any Dividends or Experience Credits (to the extent not redeposited in the
Certificate) will effectively reduce the gross premiums paid for purposes of the
above rules.
TREATMENT AS GROUP TERM LIFE INSURANCE. Section 79 of the Code and the
regulations thereunder provide for the treatment of certain life insurance as
group-term life insurance ("GTLI"). In most cases, employee-pay-all coverage
under the Group Contract will not qualify as GTLI or be deemed to be part of an
employer GTLI plan, and the Certificate will be treated the same as any
individually-purchased life insurance policy for tax purposes. However,
depending on the structure of the arrangement under which the Group Contract is
held, including other insurance plans offered by or through the employer, a
portion of the coverage under the Group Contract may qualify as group term life
insurance and, in addition, covered employees may be taxable on certain
increases in cash values under an IRS-prescribed formula.
WITHHOLDING. The taxable portion of any amounts received under the Certificate
will be subject to withholding to meet federal income tax obligations, if the
Participant fails to elect that no taxes be withheld. Prudential will provide
the Participant with forms and instructions concerning the right to elect that
no taxes be withheld from the taxable portion of any payment. All recipients may
be subject to penalties under the estimated tax payment rules if withholding and
estimated tax payments are not sufficient. Participants who do not provide a
social security number or other taxpayer identification number will not be
permitted to elect out of withholding. Special withholding rules apply to
payments to non-resident aliens.
OTHER TAX CONSIDERATIONS. Transfer of the Certificate to a new owner or
assignment of the Certificate may have tax consequences depending on the
circumstances. In the case of a transfer of the Certificate for valuable
consideration, the Death Benefit may be subject to federal income taxes under
Section 101(a)(2) of the Code. In addition, a transfer of the Certificate to or
the designation of a beneficiary who is either 37 1/2 years younger than the
Participant or a grandchild of the Participant may have Generation Skipping
Transfer tax consequences under Section 2601 of the Code.
In certain circumstances, deductions for interest paid or accrued on Certificate
Debt or on other loans that are incurred or continued to purchase or carry the
Certificate may be denied under Sections 163 of the Code as personal interest or
under Section 264 of the Code. Participants should consult a qualified tax
advisor regarding the application of these provisions to their circumstances.
The individual situation of each Participant or beneficiary will determine the
federal estate taxes and the state and local estate, inheritance and other taxes
due if the Participant or insured dies.
The earnings of the Separate Account are taxed as part of the operations of
Prudential. Accordingly, the Separate Account does not intend to qualify as a
regulated investment company under the Code.
39
<PAGE>
The Certificate Exchange Privilege, whereby a Participant may exchange the
existing Group Variable Universal Life Coverage for flexible premium fixed
benefit life insurance coverage, is tax free provided that cash is not
distributed to the Participant as part of the exchange and any existing loan is
carried over to the new coverage. Additionally, the exchange could limit the
amount of premiums that a Participant may pay without causing the Certificate to
become a Modified Endowment Contract.
ERISA CONSIDERATIONS
Employer involvement and other factors will determine whether a Group Contract
is subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). If applicable, ERISA imposes certain requirements, including
requirements on persons who are fiduciaries or "parties in interest" with
respect to employee benefit plans, and may prohibit certain transactions in
connection with a Group Contract, absent a statutory or administrative
exemption. Counsel and other competent advisors should be consulted to determine
whether ERISA will apply to an individual situation.
Administrative exemptions issued by the Department of Labor under ERISA permit
transactions (including the sale of insurance contracts like the Group Contract)
between insurance agents and employee benefit plans subject to ERISA. To be able
to rely upon such exemptions, certain information must be disclosed to the
fiduciary purchasing the insurance contract on behalf of the plan. The
information that must be disclosed includes: (1) the relationship between the
agent and the insurer; (2) a description of any charges, fees, discounts,
penalties or adjustments that may be imposed in connection with the purchase,
holding, exchange or termination of the Group Contract; and (3) the commissions
received by the agent. Information about any applicable charges, fees,
discounts, penalties or adjustments may be found under CHARGES AND EXPENSES,
commencing on page 31. Information about sales representatives and commissions
may be found under SALE OF THE CONTRACT AND SALES COMMISSIONS, on page 43.
Execution of a Group Contract by a Contractholder and an enrollment form by a
Participant will be deemed to be an acknowledgment of receipt of this
information and approval of transactions under the Group Contract.
WHEN PROCEEDS ARE PAID
Prudential will generally pay any Death Benefit, Cash Surrender Value, partial
withdrawal or loan proceeds supported by the Separate Account within 7 days
after receipt at the Prudential office specified in the Certificate or by
Prudential's designated agent of all the documents required for such a payment.
Other than the Death Benefit, which is determined as of the date of death, the
amount will be determined as of the end of the Valuation Period in which the
necessary documents are received in good order. However, Prudential may delay
payment of proceeds from the Subaccount(s) and the variable portion of the Death
Benefit due under a Participant's insurance if the disposal or valuation of the
Separate Account's assets is not reasonably practicable because the New York
Stock Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the SEC, or the SEC declares that an emergency exists.
With respect to the amount of any Cash Surrender Value allocated to the Fixed
Account, and with respect to a Certificate in force as paid-up insurance,
Prudential expects to pay the Cash Surrender Value promptly upon request.
However, Prudential has the right to delay payment of such Cash Surrender Value
for up to six months (or a shorter period if required by applicable law).
Prudential will pay interest at the current Fixed Account rate, under the Group
Contract, if it delays such a payment for more than 30 days (or a shorter period
if required by applicable law).
BENEFICIARY
The Participant has the right to designate and name a beneficiary to receive
Death Benefits under the Certificate. The Participant must designate a
beneficiary on a form approved by Prudential. A Participant may change the
beneficiary at any time without the consent of the present beneficiary in
accordance with the terms of the Group Contract. If there is more than one
beneficiary at the death of the Covered Person, each will receive equal payments
unless otherwise specified by the Participant.
INCONTESTABILITY
After a Participant's Certificate has been in force during a Covered Person's
lifetime for two years or, with respect to any change in the Certificate that
requires Prudential's approval and could increase its liability, after the
change has been in effect during the insured's lifetime for two years from the
effective date of the change, Prudential will not contest its liability under
the Certificate in accordance with its terms.
40
<PAGE>
MISSTATEMENT OF AGE
If a Covered Person's stated age is incorrect in the Certificate, Prudential
will adjust the Death Benefit payable, as required by law, to reflect the
correct age.
SUICIDE EXCLUSION
Generally, if a Covered Person, whether sane or insane, dies by suicide within
two years from the effective date of the Certificate, Prudential will pay no
more under the Certificate than the sum of the contributions paid less any
Certificate Debt, outstanding charges, and less any partial withdrawals.
If a Covered Person, whether sane or insane, dies by suicide within two years
from the effective date of an increase in the Face Amount of insurance that was
requested after issue and required approval, Prudential will pay, with respect
to the amount of the increase, no more than the sum of the monthly charges
attributable to the increase.
ASSIGNMENT
A Participant may assign the insurance coverage and all rights, benefits or
privileges that he or she has under a Certificate. Prudential will be bound by
an assignment of insurance or the rights, benefits or privileges under the
insurance only if: (1) it is in writing; (2) it is signed by the Participant;
and (3) Prudential receives a copy of the assignment at the Prudential office
specified in the Certificate or at the address of Prudential's designated agent.
Prudential is not responsible for determining the validity or legality of any
assignment. References in this prospectus to rights that a Participant may
exercise shall include exercise of such rights by any person to whom the
Participant has validly assigned such rights. Assignment of a Certificate that
is a Modified Endowment Contract could have adverse federal income tax
consequences. See TAX TREATMENT OF CERTIFICATE BENEFITS, page 37.
VOTING RIGHTS
As stated above, all of the assets held in the Subaccounts of the Separate
Account will be invested in shares of the corresponding portfolios of the Funds.
Prudential is the legal owner of those shares and as such has the right to vote
on any matter voted on at any shareholders meetings of the Funds. However,
Prudential will, as required by law, vote the shares of the Funds at any regular
and special shareholders meetings the Funds hold in accordance with voting
instructions received from Participants. A Fund may not hold annual shareholders
meetings when not required to do so under the laws of the state of its
incorporation or the Investment Company Act of 1940. Fund shares for which no
timely instructions from Participants are received, and any shares attributable
to general account investments of Prudential, will be voted in the same
proportion as shares in the respective portfolios for which instructions are
received. Should the applicable federal securities laws or regulations, or their
current interpretation, change so as to permit Prudential to vote shares of the
Funds in its own right, it may elect to do so.
Generally, a Participant may give voting instructions on matters that would be
changes in fundamental policies and any matter requiring a vote of the
shareholders of the Funds. With respect to approval of the investment advisory
agreement or any change in a portfolio's fundamental investment policy,
Participants participating in such portfolios will vote separately by portfolio
on the matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.
The number of Fund shares for which instructions may be given by a Participant
is determined by dividing the portion of the value of the Certificate Fund
derived from participation in a Subaccount, by the value of one share in the
corresponding portfolio of the applicable Fund. The number of votes for which
each Participant may give Prudential instructions will be determined as of the
record date chosen by the Board of the applicable Fund. Prudential will furnish
Participants with proper forms and proxies to enable them to give these
instructions. Prudential reserves the right to modify the manner in which the
weight to be given voting instructions is calculated where such a change is
necessary to comply with current federal regulations or interpretations of those
regulations.
Prudential may, if required by state insurance regulations, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of the Funds' portfolios, or to approve or disapprove an investment advisory
contract for a Fund. In addition, Prudential itself may disregard voting
instructions that would require changes in the investment policy or investment
advisor of one or more of the Funds' portfolios, provided that Prudential
reasonably disapproves such changes in accordance with applicable federal
regulations. If Prudential does disregard voting instructions, it will
41
<PAGE>
advise Participants of that action and its reasons for such action in the next
annual or semi-annual report to Participants.
Participants also share with the owners of all Prudential contracts and policies
the right to vote in elections for members of the Board of Directors of
Prudential.
SUBSTITUTION OF FUND SHARES
Although Prudential believes it to be unlikely, it is possible that in the
judgment of its management, one or more of the available portfolios of the Funds
may become unsuitable for investment by Participants. This may occur because of
investment policy changes, tax law changes or considerations, the unavailability
of shares for investment or at the discretion of Prudential. In that event,
Prudential may seek to substitute the shares of another portfolio or of an
entirely different mutual fund. Before this can be done, the approval of the
SEC, and possibly one or more state insurance departments, will be required.
Contractholders and Participants will be notified of such substitution.
ADDITIONAL INSURANCE BENEFITS
Depending on the terms of the Group Contract, one or more of the following
additional insurance benefits may be available to Participants through their
Group Contract. Under some Group Contracts, some or all of these benefits may be
provided to all Participants while under other Group Contracts, individual
Participants may elect whether to receive some or all of these benefits for an
additional charge. The Participant should refer to the Group Contract and
Certificate for further details on additional insurance benefits.
ACCELERATED DEATH BENEFIT. Under some Group Contracts, Participants may be
provided an accelerated death benefit that allows the Participant to elect to
receive an accelerated payment of part of the Certificate's Death Benefit,
adjusted to reflect current value, at a time when certain special needs exist.
The adjusted Death Benefit will always be less than the Death Benefit, but will
generally be greater than the Certificate's Cash Surrender Value. The
accelerated death benefit may be discounted for interest under certain Group
Contracts and where permitted by law. Prudential may charge a fee not to exceed
$350 for payment of an accelerated death benefit.
One or more of the following options may be available to the Participant
depending on the terms of the Group Contract.
Terminal Illness Option. This option is available if the Covered Person is
diagnosed as terminally ill with a life expectancy of 12 months or less. When
satisfactory evidence is provided, Prudential will provide to the Participant
an accelerated payment, which may be received in a lump sum, of the portion
of the Death Benefit selected by the Participant as an accelerated death
benefit.
Nursing Home Option. This option is available if the Covered Person is
permanently confined to an eligible nursing home for six months or more. When
satisfactory evidence is provided, including certification by a licensed
physician, that the Covered Person is expected to remain in the nursing home
until death, Prudential will provide to the Participant accelerated payments
of the portion of the Death Benefit selected by the Participant as an
accelerated death benefit. The Participant will receive equal monthly
payments for a specified number of months. If the Covered Person dies before
all of the payments have been made, the present value of the remaining
payments will be paid to the beneficiary designated in the accelerated death
benefit claim form.
Custodial Care Option. This option is available if the Covered Person is
"unable to care" for himself/herself. "Unable to care" means that the Covered
Person is unable to perform without substantial supervision to protect the
Covered Person from threats to health and safety due to severe cognitive
impairment. Activities of daily living are eating, toileting, transferring
between bed and chair, bathing, dressing and continence. When satisfactory
evidence is provided, including certification by a licensed physician, that
the Covered Person is "unable to care" for himself/herself, Prudential will
provide to the Participant accelerated payments of the portion of the Death
Benefit selected by the Participant as an accelerated death benefit. The
Participant will receive equal monthly payments for a specified number of
months. If the Covered Person dies before all of the payments have been made,
the present value of the remaining payments will be paid to the beneficiary
designated in the accelerated death benefit claim form.
No benefit will be payable if the Participant is required to elect it in order
to meet the claims of creditors or to obtain a government benefit. Prudential
can furnish details about the amount of accelerated death benefit that is
available to an eligible Participant. Unless required by law, a Participant who
has elected to receive an
42
<PAGE>
accelerated death benefit can no longer request an increase in the Face Amount
of his or her Certificate, and the amount of future premium payments he or she
can make will be limited.
Adding the accelerated death benefit to the Contract has no adverse
consequences; however, electing to use it could. The recently enacted Health
Insurance Portability and Accountability Act of 1996 excludes from income,
effective January 1, 1997, the accelerated death benefit if the insured is (1)
terminally ill or (2) chronically ill (although the exclusion in the latter case
may be limited). Receipt of an accelerated death benefit payment may also affect
a Participant's eligibility for certain government benefits or entitlements.
ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT. Under some Group Contracts,
Participants may be provided an accidental death and dismemberment benefit that
provides insurance for accidental loss of life, sight, hand, or foot. This
benefit will exclude losses due to suicide or attempted suicide, diseases and
infirmities, medical or surgical treatments, and acts of war. It may be subject
to other exclusions from coverage, age limitations, and benefit limitations set
forth in the Group Contract.
EXTENDED DEATH PROTECTION DURING TOTAL DISABILITY. Under some Group Contracts,
Participants will be provided with extended death protection during their total
disability. Under this provision, even if a Participant's insurance (or that of
a spouse) has otherwise ended, insurance equal to the Face Amount of the
Certificate will continue if the Participant became totally disabled prior to
age 60. The extended death protection will continue for successive one-year
periods, generally until age 65, so long as the Participant provides
satisfactory proof of continued total disability.
DEPENDENT LIFE BENEFITS. Under some Group Contracts, Participants may be
provided dependent life benefits, which provide insurance on the life of a
qualified dependent. A qualified dependent may be the Participant's spouse
and/or unmarried child.
Under certain Group Contracts, an unmarried child who reaches maturity age may
obtain Group Variable Universal Life insurance coverage with a Face Amount of up
to five times the Face Amount that previously applied to the child under the
Dependent Life Benefits coverage. In some cases, medical underwriting may be
required.
SEAT BELT COVERAGE. Under some Group Contracts, Participants may be provided
seat belt coverage, which provides a benefit for the loss of life while driving
or riding in a motor vehicle while wearing a seat belt. "Motor vehicle" means a
private automobile, van, four-wheel drive vehicle, self-propelled motor home and
truck. It does not mean a motor vehicle used for farming, military, business,
racing, or any other type of competitive speed event. Certain exclusions will
apply.
REPORTS
At least once each Certificate Year, Participants will be sent statements that
provide certain information pertinent to their own insurance. These statements
detail values and transactions made and specific insurance data that apply only
to each Participant. On request, a Participant will be sent a current statement
in a form similar to that of the annual statement described above, but
Prudential may limit the number of such requests or impose a reasonable
transaction charge not to exceed $20 for an additional report.
The Contractholder and each Participant will also be sent an annual and
semi-annual report listing the securities held in each available portfolio of
the Funds, as required by the 1940 Act. Records with respect to the Separate
Account are kept in accordance with the 1940 Act.
SALE OF THE CONTRACT AND SALES COMMISSIONS
Prudential Investment Management Services LLC ("PIMS"), a direct wholly-owned
subsidiary of Prudential, acts as the principal underwriter of the Group
Contracts and Certificates. PIMS, organized in 1996 under Delaware law, is
registered as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. PIMS's principal
business address is 751 Broad Street, Newark, New Jersey 07102. PIMS also acts
as principal underwriter with respect to the securities of other Prudential
investment companies. The Group Contracts and Certificates are sold by
registered representatives of PIMS who are also authorized by state insurance
departments to do so. The Group Contracts and Certificates may also be sold
through other broker-dealers authorized by PIMS and applicable law to do so.
Registered representatives of such other broker-dealers may be paid on a
different basis than described below. The maximum commission that will be paid
to the representative upon the purchase of the Contract is 15% of the premium
payment received, and the amount paid to the broker-dealer to cover both the
individual representative's commission and other distribution expenses will not
exceed 15% of the premium payment. The representative may be required to return
all of the
43
<PAGE>
first year commission if the Group Contract is not continued through the first
year. Sales representatives who meet certain productivity, profitability, and
persistency standards with regard to the sale of the Group Contract will be
eligible for additional bonus compensation payable by Prudential. PIMS will
generally receive a commission of no more than 15% of the premium payment. The
commission and distribution percentages will depend on factors such as the size
of the group involved and the amount of sales and administrative effort required
in connection with the particular Group Contract and will not exceed in the
aggregate 15% of the premium payment.
The agreement to be entered into between PIMS and Prudential will commence with
the effectiveness of this Registration Statement. This agreement will terminate
automatically upon its assignment within the meaning of such term in the 1940
Act. The agreement, however, may be transferred by PIMS without the prior
written consent of Prudential under the circumstances set forth in Rule 2a-6
under the 1940 Act. The agreement may be terminated at any time by either party
upon 60 days written notice to the other party.
Sales expenses in any year are not equal to the sales charge in that year.
Prudential may not recover its total sales expenses for some or all Group
Contracts over the periods the Certificates for such Group Contracts are in
effect. To the extent that the sales charges are insufficient to cover total
sales expenses, the sales expenses will be recovered from Prudential's surplus,
which may include amounts derived from the mortality and expense risk charge and
the monthly cost of insurance charge. See CHARGES AND EXPENSES, page 31.
RATINGS AND ADVERTISEMENTS
Prudential is rated by independent financial rating services, including Moody's,
Standard & Poors, Duff & Phelps and A.M. Best Company. The purpose of these
ratings is to reflect the financial strength of claims-paying ability of
Prudential. They are not intended to rate the investment experience or financial
strength of the Separate Account. Prudential may advertise these ratings from
time to time. Furthermore, Prudential may include in advertisements comparisons
of currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
PAYMENTS TO THIRD-PARTY ADMINISTRATORS AND ASSOCIATIONS SPONSORING
PARTICIPATION IN THE GROUP CONTRACTS
Prudential may make payments to third party administrators or groups sponsoring
the Group Contracts for their services related to administration and sponsorship
of the Group Contracts.
STATE REGULATION
Prudential is subject to regulation and supervision by the Department of
Insurance of the State of New Jersey, which periodically examines its operations
and financial condition. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business.
Prudential is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.
In addition to the annual statements referred to above, Prudential is required
to file with New Jersey and other jurisdictions a separate statement with
respect to the operations of all its variable contract accounts, in a form
promulgated by the National Association of Insurance Commissioners.
EXPERTS
The financial statements included in this prospectus have been audited by Price
Waterhouse, independent accountants, as stated in their reports appearing
herein, and are included in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing. Price Waterhouse's
principal business address is 1177 Avenue of the Americas, New York, New York
10036. Actuarial matters included in this prospectus have been examined by
Stuart L. Liebeskind, FSA, MAAA.
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account.
44
<PAGE>
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, relating to the offering
described in this prospectus. This prospectus does not include all the
information set forth in the registration statement. Certain portions have been
omitted pursuant to the rules and regulations of the SEC. The omitted
information may, however, be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
Further information may also be obtained from Prudential's office. The address
and telephone number are set forth on the cover of this prospectus.
45
<PAGE>
DEFINITIONS OF SPECIAL TERMS
USED IN THIS PROSPECTUS
ATTAINED AGE -- A person's age as defined by the Group Contract.
CASH SURRENDER VALUE -- The amount payable to the Participant upon surrender of
the Certificate. The Cash Surrender Value is equal to the Participant's
Certificate Fund on the date of surrender, less any Certificate Debt,
outstanding charges, and any applicable transaction charge.
CERTIFICATE -- A document issued to an Eligible Group Member under a Group
Contract, setting forth or summarizing the Participant's rights and benefits.
CERTIFICATE ANNIVERSARY -- The same date each year as the Certificate Date.
CERTIFICATE DATE -- The effective date of coverage under a Certificate.
CERTIFICATE DEBT -- The principal amount of any outstanding loans to the
Participant under his or her Certificate plus any interest accrued thereon.
CERTIFICATE FUND -- The total amount credited to a Participant under his or her
Certificate. On any date it is equal to the sum of the amounts under that
Certificate allocated to: (1) the Subaccounts, (2) the Fixed Account, and (3)
the Loan Account.
CERTIFICATE YEAR -- The year from the Certificate Date to the first Certificate
Anniversary or from one Certificate Anniversary to the next.
CONTRACT ANNIVERSARY -- The same date each year as specified in the contract.
CONTRACT DATE -- The date as of which the Group Contract is issued.
CONTRACTHOLDER -- The employer, association, sponsoring organization or trust
that is issued a Group Contract. In the case of an employer that joins a
multiple employer trust, the employer exercises the rights accorded to a
Contractholder as described throughout this prospectus.
COVERED PERSON -- The person whose life is insured under the Group Contract. The
Covered Person is generally the Participant. Some Group Contracts may permit a
Participant to apply for insurance under a second Certificate naming the
Participant's spouse as the Covered Person.
DEATH BENEFIT -- The amount payable upon the death of the Covered Person (before
the deduction of any Certificate Debt or any past due monthly charges).
DIVIDEND -- A portion of Prudential's divisible surplus attributable to the
Group Contract that may be credited to the Group Contract as determined annually
by Prudential's Board of Directors.
ELIGIBLE GROUP MEMBERS -- The persons specified in the Group Contract as
eligible to apply for insurance protection under the Group Contract.
EXPERIENCE CREDIT -- A refund that may be given under certain Group Contracts
based on favorable mortality experience.
FACE AMOUNT -- The amount of life insurance in a Participant's Certificate. The
Face Amount will be the minimum Death Benefit as long as the Participant's
Certificate remains in force.
FIXED ACCOUNT -- An investment option under which Prudential guarantees that
interest will be added to the amount deposited at a rate declared periodically
in advance.
FUNDS -- The Series Fund portfolios and other mutual fund portfolios in which
the Separate Account invests.
GROUP CONTRACT -- A Group Variable Universal Life insurance contract issued to
the Contractholder by Prudential.
GUIDELINE ANNUAL PREMIUM -- A level annual premium that would be payable
throughout the duration of a Certificate to fund the future benefits if the
certificate were a fixed premium contract, based on certain assumptions set
forth in a rule of the SEC. Upon request, Prudential will advise a Participant
of the guideline annual premium under your Certificate.
ISSUE AGE -- The Covered Person's Attained Age on the date that the insurance on
that Covered Person goes into effect as defined by the Group Contract.
LOAN ACCOUNT -- An account within Prudential's general account to which is
transferred from the Separate Account and/or the Fixed Account an amount equal
to the amount of any loan.
LOAN VALUE -- The amount (before any applicable transaction charge) that a
Participant may borrow at any given time under his or her Certificate. The Loan
Value at any time is determined by multiplying the Certificate Fund by 90% (or
higher where required by state law) and then subtracting any existing loan with
accrued interest, outstanding charges, and the amount of the next month's
charges.
46
<PAGE>
MONTHIVERSARY -- The Contract Date and the first day of each succeeding month,
except that whenever the contract Monthiversary falls on a date other than a
Valuation Date the Monthiversary will be the next Valuation Date.
NET PREMIUM -- A Participant's premium payment minus any charges for taxes
attributable to premiums, any processing fee, and any sales charge. Net Premiums
are the amounts available for allocation to the Separate Account and/or the
Fixed Account.
PARTICIPANT -- An Eligible Group Member or "eligible applicant owner" under a
Group Contract who obtains insurance under the Group Contract and is eligible to
exercise the rights described in the Certificate. The Participant will be the
person entitled to exercise all rights under a Certificate, regardless of
whether the Covered Person under the Certificate is the Participant or his or
her spouse. References to rights that a Participant may exercise under a
Certificate shall include exercise of such rights by any person to whom the
Participant has validly assigned such rights.
PORTABLE -- A status that may occur when a Participant is no longer an Eligible
Group Member under the Group Contract because of the occurrence of an event
specified in the Group Contract or the Certificate. Such events may include
termination of the Participant's employment or other relationship with the
Contractholder or retirement of the Participant. Cost of insurance rates and
charges may increase under a Portable Certificate since the Covered Person under
a Portable Certificate may no longer be considered to be a member of the
Contractholder's group for purposes of determining those rates and charges.
SEPARATE ACCOUNT -- Prudential Variable Contract Account GI--2, a separate
investment account registered as a unit investment trust under the Investment
Company Act of 1940 and established by Prudential to receive and invest the Net
Premiums paid under the Certificates.
SERIES FUND -- The Prudential Series Fund, Inc., a mutual fund with separate
portfolios, one or more of which may be used as an underlying investment for the
Group Contracts.
SUBACCOUNT -- A division of the Separate Account, the assets of which are
invested in the shares of the corresponding Fund.
VALUATION DATE -- Each day on which the value of the amount invested in a
Subaccount is determined, which is generally each day that the New York Stock
Exchange is open for trading.
VALUATION PERIOD -- The period of time from one determination of the value of
the amount invested in a Subaccount to the next. Such determinations are made
when the net asset values of the portfolios of the Funds are calculated.
47
<PAGE>
DIRECTORS AND OFFICERS OF THE PRUDENTIAL
The directors and certain officers of The Prudential, listed with their
principal occupations during the past 5 years, are shown below.
DIRECTORS OF THE PRUDENTIAL
FRANKLIN E. AGNEW. Director. -- Business Consultant. Address: USX Tower, Suite
660, 600 Grant Street, Pittsburgh, PA 15219.
FREDERIC K. BECKER, Director. -- President, Wilentz, Goldman, and Spitzer (law
firm). Address: 90 Woodbridge Center Drive, Woodbridge, NJ 07095.
WILLIAM W. BOESCHENSTEIN, Director.--Retired Chairman and Chief Executive
Officer, Owens-Corning Fiberglas Corporation. Address: One Seagate, Suite 1530,
Toledo, OH 43604.
LISLE C. CARTER, JR., Director.--The Prudential Insurance Company of America.
Address: 751 Broad Street, Newark, NJ 07102-3777.
JAMES G. CULLEN, Director.--Vice Chairman, Bell Atlantic Corporation since 1995;
1993 to 1995: President, Bell Atlantic Corporation; Prior to 1993: President,
New Jersey Bell. Address: 1310 North Court House Road, 11th floor, Alexandria,
VA 22201.
CAROLYNE K. DAVIS, Director.--National and International Health Care Advisor,
Ernst & Young LLP. Address: 1225 Connecticut Avenue, NW, Washington, DC 20036.
ROGER A. ENRICO, Director.--Vice Chairman and Chief Executive Officer, Pepsico
Inc. since 1996; Vice Chairman, Pepsico, Inc., from 1993 to 1996; Chairman and
Chief Executive Officer, Pepsi Co. Worldwide Food, from 1991 to 1993. Address:
14841 North Dallas Parkway, Dallas, TX 75240.
ALLAN D. GILMOUR, Director.--The Prudential Insurance Company of America.
Address: 751 Broad Street, Newark, NJ 07102-3777.
WILLIAM H. GRAY, III, Director.--President and Chief Executive Officer, The
College Fund/UNCF. Address: 8260 Willow Oaks Corporate Drive, Fairfax, VA 22031.
JON F. HANSON, Director.--Chairman, Hampshire Management Company. Address: 235
Moore Street, Suite 200, Hackensack, NJ 07601.
CONSTANCE J. HORNER, Director.--Guest Scholar, The Brookings Institution since
1993; 1991 to 1992 Assistant to the President and Director of Presidential
Personnel, U.S. Government. Address: 1775 Massachusetts Avenue, N.W.,
Washington, DC 20036-2188.
ALLEN F. JACOBSON, Director.--Retired Chairman and Chief Executive Officer,
Minnesota Mining & Manufacturing Co. Address: 30 Seventh Street East, St. Paul,
MN 55101-4901.
BURTON G. MALKIEL, Director.--Professor, Princeton University. Address:
Princeton University, 110 Fisher Hall, Prospect Avenue, Princeton, NJ
08544-1021.
ARTHUR F. RYAN, Chairman of the Board, President, and Chief Executive Officer.
- -- Chairman, President, and Chief Executive Officer, Prudential since 1994;
Prior to 1994, President and Chief Operating Officer, Chase Manhattan
Corporation. Address: 751 Broad Street, Newark, NJ 07102-3777.
CHARLES R. SITTER, Director.--Retired President, Exxon Corporation. Address:
5959 Las Colinas Boulevard, Irving, TX 75039-2298.
DONALD L. STAHELI, Director.--Chairman and Chief Executive Officer, Continental
Grain Company since 1994; Prior to 1994; Chairman, Continental Grain Company.
Address: 277 Park Avenue, New York, NY 10172.
RICHARD M. THOMSON, Director.--Chairman and Chief Executive Officer, The
Toronto-Dominion Bank. Address: P.O. Box 1, Toronto-Dominion Centre, Toronto,
Ontario, M5K 1A2, Canada.
JAMES A. UNRUH, Director.--Chairman and Chief Executive Officer, Unisys
Corporation. Address: P.O. Box 500, Blue Bell, PA 19424-0001.
48
<PAGE>
P. ROY VAGELOS, M.D., Director.--Former Chairman and Chief Executive Officer,
Merck & Co., Inc. Address: One Crossroads Drive, Bedminster, NJ 07921.
STANLEY C. VAN NESS, Director.--Attorney, Picco Herbert Kennedy (law firm).
Address: One State Street Square, Suite 1000, Trenton, NJ 08607-1388.
PAUL A. VOLCKER, Director.--Business Consultant since 1996; Prior to 1996:
Chairman, Wolfensohn & Co., Inc. Address: 599 Lexington Avenue, New York, NY
10022.
JOSEPH H. WILLIAMS, Director.--Director, The Williams Companies since 1994;
Prior to 1994: Chairman and Chief Executive Officer, The Williams Companies.
Address: One Williams Center, Tulsa, OK 74172.
OTHER EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
MARTIN A. BERKOWITZ, Senior Vice President and Comptroller.--Senior Vice
President and Chief Financial Officer of Prudential Investment Company.
SUSAN L. BLOUNT, Vice President and Secretary.--Vice President and Secretary of
Prudential since 1995; Prior to 1995: Assistant General Counsel for Prudential
Residential Services Company.
C. EDWARD CHAPLIN, Vice President and Treasurer.--Vice President and Treasurer
of Prudential since 1995; 1993 to 1995: Managing Director and Assistant
Treasurer of Prudential; 1992 to 1993: Vice President and Assistant Treasurer,
Banking and Cash Management for Prudential; Prior to 1992: Regional Vice
President of Prudential Mortgage Capital Company.
MARK B. GRIER, Chief Financial Officer.--Chief Financial Officer of Prudential
since 1995; Prior to 1995: Executive Vice President and Head of Global Markets,
Chase Manhattan Corporation.
49
<PAGE>
FINANCIAL STATEMENTS
The consolidated financial statements of Prudential and subsidiaries included
herein should be distinguished from the financial statements of the Separate
Account, and should be considered only as bearing upon the ability of Prudential
to meet its obligations under the Certificates.
Financial statements of the Separate Account are not included in this Prospectus
because the Separate Account had not yet commenced operations as of the date of
this Prospectus.
50
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
OF THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA AND SUBSIDIARIES
[To be filed by pre-effective amendment]
51
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
REPRESENTATION WITH RESPECT TO CHARGES
The Prudential Insurance Company of America ("Prudential") represents that the
fees and charges deducted under the Group Variable Universal Life Insurance
Contracts registered by this registration statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Prudential.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
Prudential Directors' and Officers' Liability and Corporation Reimbursement
Program, purchased by Prudential from Aetna Casualty & Surety Company, CNA
Insurance Company, Lloyds of London, Great American Insurance Company, Reliance
Insurance Company, Corporate Officers & Directors Assurance Ltd., A.C.E.
Insurance Company, Ltd., XL Insurance Company, Ltd., and Zurich-American
Insurance Company, provides coverage for "Loss" (as defined in the policies)
arising from any claim or claims by reason of any actual or alleged act, error,
misstatement, misleading statement, omission, or breach of duty by persons in
the discharge of their duties solely in their capacities as directors or
officers of Prudential, any of its subsidiaries, or certain investment companies
affiliated with Prudential. Coverage is also provided to the individual
directors or officers for such Loss, for which they shall not be indemnified.
Loss essentially is the legal liability on claims against a director or officer,
including adjudicated damages, settlements and reasonable and necessary legal
fees and expenses incurred in defense of adjudicatory proceedings and appeals
therefrom. Loss does not include punitive or exemplary damages or the multiplied
portion of any multiplied damage award, criminal or civil fines or penalties
imposed by law, taxes or wages, or matters which are insurable under the law
pursuant to which the policies are construed.
There are a number of exclusions from coverage. Among the matters excluded are
Losses arising as the result of (1) claims brought about or contributed to by
the criminal or deliberate fraudulent acts of a director or officer, (2)
personal profit, and (3) claims arising from actual or alleged performance of,
or failure to perform, services as, or in any capacity similar to, an investment
adviser, investment banker, underwriter, broker or dealer, as those terms are
defined in the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Advisers Act of 1940, the Investment Company Act of 1940, any rules
or regulations thereunder, or any similar federal, state or local statute, rule
or regulation.
The limit of coverage under the Program for both individual and corporate
reimbursement coverage is $150,000,000. The retention for corporate
reimbursement coverage is $10,000,000 per loss.
The relevant provisions of New Jersey law permitting or requiring
indemnification, New Jersey being the state of organization of Prudential, can
be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The text of
Prudential's by-law 26, which relates to indemnification of officers and
directors, is incorporated by reference to Exhibit 1.A.(6)(b) of Post-Effective
Amendment No. 1 to Form S-6, Registration No. 33-61079, filed April 25, 1996, on
behalf of The Prudential Variable Appreciable Account.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 56 pages.
The undertaking to file reports.
The representation with respect to charges.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
None.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
A. (1) Resolutions of Board of Directors of The Prudential Insurance
Company of America:
(a) Resolution establishing The Prudential Variable Contract
Account GI-2. (Note 2)
(b) Amendment to the Resolution proposing investment in
unaffiliated mutual funds for the Prudential Variable
Contract Account GI-2. (Note 1)
(2) No Applicable.
(3) Distribution Contracts:
(a) Distribution Agreement between Prudential Investment
Management Services LLC and The Prudential Insurance Company
of America. (Note 1)
(b) Proposed form of Agreement between Prudential Investment
Management Services LLC and independent brokers with respect
to the Sale of the Group Contracts and Certificates.
(Note 1)
(c) Schedule of Sales Commissions. (Note 1)
(4) Not Applicable.
(5) (a) Group Contract. (Note 1)
(b) Individual Certificate. (Note 1)
(6) (a) Charter of The Prudential Insurance Company of America, as
amended February 26, 1988. (Note 3)
(b) By-laws of The Prudential Insurance Company of America, as
amended August 8, 1995. (Note 4)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) Application Form for Group Contract. (Note 2)
(b) Enrollment Form for Certificate. (Note 1)
(c) Form of Investment Division Allocation Supplement. (Note 1)
2. Opinion and Consent of Clifford Kirsch, Esq. as to the legality of the
securities being registered. (Note 6)
3. None.
4. Not Applicable.
5. Not Applicable.
II-2
<PAGE>
6. Opinion and Consent of Stuart L. Liebeskind, FSA, MAAA, as to actuarial
matters pertaining to the securities being registered. (Note 6)
7. Powers of Attorney. (Note 5)
8. Memorandum describing Prudential's issuance, transfer, and redemption
procedures for the Certificates pursuant to Rule 6e-3(T)(b)(12)(iii)
(Note 5)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Registrant's Form S-6, filed February 16,
1996.
(Note 3) Incorporated by reference to Form S-6, Registration No. 33-61079,
filed July 17, 1995, on behalf of The Prudential Variable Appreciable
Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 1 to
Form S-6, Registration No. 33-61079, filed April 25, 1996, on behalf
of The Prudential Variable Appreciable Account.
(Note 5) Incorporated by reference to Pre-Effective Amendment No. 1 to this
registration statement filed August 22, 1996.
(Note 6) To be filed by Pre-Effective Amendment
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, The
Prudential Variable Contract Account GI-2, has duly caused this Pre-Effective
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal hereunto affixed and
attested, all in the city of Newark and the State of New Jersey, on this 27th
day of January, 1997.
(Seal) THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2
(Registrant)
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(Depositor)
Attest: /s/ JENNIFER L. KNAPP
--------------------------------
Jennifer L. Knapp
Prudential Group Life Insurance
By: /s/ STUART L. LIEBESKIND
-------------------------------------
Stuart L. Liebeskind, FSA, MAAA
Vice President and Assistant Actuary
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 27th day of January, 1997.
SIGNATURE AND TITLE
/s/ *
- -----------------------------------------
Arthur F. Ryan
Chairman of the Board, President and Chief
Executive Officer
/s/ *
- -----------------------------------------
Martin A. Berkowitz
Senior Vice President and Comptroller
/s/ *
- -----------------------------------------
Mark B. Grier
Principal Financial Officer
*By: /s/ C. CHRISTOPHER SPRAGUE
-----------------------------------------
C. Christopher Sprague
(Attorney-in-Fact)
/s/ *
- -----------------------------------------
Franklin E. Agnew
Director
/s/ *
- -----------------------------------------
Frederic K. Becker
Director
/s/ *
- -----------------------------------------
William W. Boeschenstein
Director
/s/ *
- -----------------------------------------
Lisle C. Carter, Jr.
Director
/s/ *
- -----------------------------------------
James G. Cullen
Director
/s/ *
- -----------------------------------------
Carolyne K. Davis
Director
II-4
<PAGE>
/s/ *
- -----------------------------------------
Roger A. Enrico
Director
/s/ *
- -----------------------------------------
Allan D. Gilmour
Director
/s/ *
- -----------------------------------------
William H. Gray, III
Director
/s/ *
- -----------------------------------------
Jon F. Hanson
Director
/s/ *
- -----------------------------------------
Constance J. Horner
Director
/s/ *
- -----------------------------------------
Allen F. Jacobson
Director
/s/ *
- -----------------------------------------
Burton G. Malkiel
Director
*By: /s/ C. CHRISTOPHER SPRAGUE
-----------------------------------------
C. Christopher Sprague
(Attorney-in-Fact)
/s/ *
- -----------------------------------------
Charles R. Sitter
Director
/s/ *
- -----------------------------------------
Donald L. Staheli
Director
/s/ *
- -----------------------------------------
Richard M. Thomson
Director
/s/ *
- -----------------------------------------
James A. Unruh
Director
/s/ *
- -----------------------------------------
P. Roy Vagelos, M.D.
Director
/s/ *
- -----------------------------------------
Stanley C. Van Ness
Director
/s/ *
- -----------------------------------------
Paul A. Volcker
Director
/s/ *
- -----------------------------------------
Joseph H. Williams
Director
II-5
<PAGE>
EXHIBIT INDEX
1.A.(1)(b) Amendment to the Resolution proposing investment in Page II-7
unaffiliated mutual funds for the Prudential
Variable Contract Account GI-2.
1.A.(3)(a) Distribution Agreement between Prudential Investment Page II-11
Management Services LLC and The Prudential Insurance
Company of America.
1.A.(3)(b) Proposed form of Agreement between Prudential Page II-16
Investment Management Services LLC and independent
brokers with respect to the Sale of the Group
Contracts and Certificates.
1.A.(3)(c) Schedule of Sales Commissions. Page II-24
1.A.(5)(a) Group Contract. Page II-25
1.A.(5)(b) Individual Certificate. Page II-38
1.A.(10)(b) Enrollment Form for Certificate. Page II-89
1.A.(10)(c) Form of Investment Division Allocation Supplement Page II-91
II-6
EXHIBIT 1.A.(1)(b)
SUSAN L. BLOUNT
Vice President and Secretary
ThePrudential [LOGO] The Prudential Insurance Company of America
751 Broad Street, Newark, NJ 07102-3777
201 802-7770 Fax: 201 802-8287
January 21, 1997
I hereby certify that the following is a true copy of an extract from
the minutes of a meeting of the Finance Committee of the Board of Directors of
The Prudential Insurance Company of America held on December 10, 1996, at which
meeting a quorum was present, and that said minute has not since been altered or
rescinded:
VIII. PRESIDENT, GROUP LIFE, BOSSI PRESENTED A PROPOSED INVESTMENT IN
UNAFFILIATED MUTUAL FUNDS FOR PRUDENTIAL VARIABLE CONTRACT ACCOUNT
GI-2. After discussion, the Committee authorized:
A. the Prudential Variable Contract Account GI-2 to invest, in addition
to shares of portfolios of The Prudential Series Fund, Inc., in the
ninety-four mutual funds listed in Exhibit A hereto, and any
additional funds offered through Merrill Lynch, Van Wagoner, Lazard
Freres & Co., LLC, Fidelity Investments, Pilgrim Baxter &
Associates, Vanguard and Zurich Kemper Investments; and
B. for the proper officers of Prudential to do or cause to be done in
the name and on behalf of Prudential any and all acts and things,
including, but not limited to, requests to regulatory authorities
for approvals, exemptions and other actions and the execution and
delivery of documents, papers and instruments, all as any such
officer or officers may deem necessary, desirable or appropriate to
execute the purposes and intents of the foregoing actions.
/s/ Susan L. Blount
Secretary
II-7
<PAGE>
EXHIBIT A
LIST OF FUNDS
<TABLE>
<CAPTION>
NAME OF FUND MUTUAL FUND COMPANY
- ------------ -------------------
<S> <C>
Neuberger & Berman AMT Partners Neuberger & Berman
Neuberger & Berman AMT Growth Neuberger & Berman
Neuberger & Berman Limited Maturity Bond Neuberger & Berman
Royce Capital Trust The Royce Funds
Franklin Growth & Income Fund Franklin Templeton
Franklin Capital Growth Fund Franklin Templeton
Franklin Rising Dividends Fund Franklin Templeton
Franklin Income Securities Fund Franklin Templeton
Franklin Small Cap Fund Franklin Templeton
Templeton Developing Markets Equity Fund Franklin Templeton
Templeton International Equity Fund Franklin Templeton
Templeton International Smaller Companies Fund Franklin Templeton
Templeton Global Growth Fund Franklin Templeton
Templeton Pacific Growth Fund Franklin Templeton
Warburg Pincus Small Company Growth Portfolio Warburg Pincus
Warburg Pincus Equity Portfolio Warburg Pincus
Warburg Pincus Post-Venture Capital Portfolio Warburg Pincus
Warburg Pincus Emerging Markets Portfolio Warburg Pincus
INVESCO VIF Industrial Income Portfolio INVESCO Funds
INVESCO VIF Total Return Portfolio INVESCO Funds
INVESCO VIF Utilities Portfolio INVESCO Funds
INVESCO VIF Dynamics Portfolio INVESCO Funds
INVESCO VIF Small Company Growth Portfolio INVESCO Funds
INVESCO VIF Technology Portfolio INVESCO Funds
INVESCO VIF Health Sciences Portfolio INVESCO Funds
IAI Regional Retirement Investment Advisers Inc.
IAI Balanced Retirement Fund Investment Advisers Inc.
IAI Reserve Retirement Fund Investment Advisers Inc.
The Berger IPT-100 Fund Berger Funds
The Berger IPT-Small Company Growth Fund Berger Funds
The Berger IPT-Growth and Income Fund Berger Funds
Regatta Gold Emerging Growth Fund Massachusetts Financial
Regatta Gold Research Fund Massachusetts Financial
Regatta Gold Total Return Fund Massachusetts Financial
Regatta Gold Value Fund Massachusetts Financial
Regatta Gold World Total Return Fund Massachusetts Financial
</TABLE>
II-8
<PAGE>
EXHIBIT A
LIST OF FUNDS
<TABLE>
<CAPTION>
NAME OF FUND MUTUAL FUND COMPANY
- ------------ -------------------
<S> <C>
North American Securities Life Growth Trust Founders
North American Securities Life International Founders
Alliance Gallery Growth Portfolio Alliance Capital Management
Alliance Gallery Growth & Income Portfolio Alliance Capital Management
Alliance Gallery Technology Portfolio Alliance Capital Management
Alliance Gallery Premier Growth Portfolio Alliance Capital Management
Alliance Gallery Quasar Portfolio Alliance Capital Management
Alliance Gallery International Portfolio Alliance Capital Management
Alliance Gallery Global Dollar Government Portfolio Alliance Capital Management
Janus Aspen Growth Portfolio Janus Capital Corporation
Janus Aspen Aggressive Growth Portfolio Janus Capital Corporation
Janus Aspen Balanced Portfolio Janus Capital Corporation
Janus Aspen Flexible Income Portfolio Janus Capital Corporation
Janus Aspen International Growth Portfolio Janus Capital Corporation
Janus Aspen Worldwide Portfolio Janus Capital Corporation
Dreyfus Capital Appreciation Dreyfus Institutional Services
Dreyfus Growth & Income Dreyfus Institutional Services
Dreyfus New Leaders Dreyfus Institutional Services
Dreyfus Third Century Dreyfus Institutional Services
Strong Special Fund II Strong Funds
Strong Discovery Fund II Strong Funds
Strong Growth Fund II Strong Funds
Strong International Stock Fund II Strong Funds
TCI Growth Twentieth Century
TCI Value Twentieth Century
TCI International Twentieth Century
AIM VI Capital Appreciation AIM
AIM VI International Equity Fund AIM
AIM Growth Fund AIM
AIM Value Fund AIM
AIM Growth & Income Fund AIM
American Skandia Value plus Growth Robertson Stephens & Co.
Equi-Select Value plus Growth Robertson Stephens & Co.
Equi-Select Growth plus Income Robertson Stephens & Co.
Golden American Growth plus Income Robertson Stephens & Co.
Horizon Balanced Portfolio Scudder, Stevens & Co.
</TABLE>
II-9
<PAGE>
EXHIBIT A
LIST OF FUNDS
<TABLE>
<CAPTION>
NAME OF FUND MUTUAL FUND COMPANY
- ------------ -------------------
<S> <C>
Horizon Global Portfolio Scudder, Stevens & Co.
Horizon Growth & Income Portfolio Scudder, Stevens & Co.
Horizon International Portfolio Scudder, Stevens & Co.
International Stock Portfolio T. Rowe Price
New America Growth Portfolio T. Rowe Price
Equity Income Portfolio T. Rowe Price
Personal Strategy Balanced Portfolio T. Rowe Price
Limited-Term Bond Portfolio T. Rowe Price
Mid-Cap Growth Portfolio T. Rowe Price
Prime Reserve Portfolio T. Rowe Price
PCM Asia Pacific Growth Subaccount Putnam Mutual Funds
PCM Diversified Income Subaccount Putnam Mutual Funds
PCM Global Asset Allocation Subaccount Putnam Mutual Funds
PCM Global Growth Subaccount Putnam Mutual Funds
PCM Growth & Income Subaccount Putnam Mutual Funds
PCM High Yield Subaccount Putnam Mutual Funds
PCM New Opportunities Subaccount Putnam Mutual Funds
PCM U.S. Government and High Quality Putnam Mutual Funds
Bond Subaccount
PCM Utilities Growth and Income Subaccount Putnam Mutual Funds
PCM Voyager Subaccount Putnam Mutual Funds
PCM Money Market Subaccount Putnam Mutual Funds
PCM Fixed Account Putnam Mutual Funds
</TABLE>
II-10
Exhibit 1.A.(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this ____ day of , 199 , by and between The Prudential
Insurance Company of America (the "Company"), a New Jersey corporation on its
own behalf and on behalf of Prudential Variable Contract Account GI-2 (the
"Account") and Prudential Investment Management Services LLC (the
"Distributor"), a Delaware limited liability company.
WITNESSETH:
WHEREAS, the Company has established and maintains the Account, a
separate investment account, pursuant to the laws of New Jersey for the purpose
of providing a choice of variable investment options under group life insurance
contracts (the "Contracts"), to commence after the effectiveness of the
Registration Statement filed with the Securities and Exchange Commission on Form
S-6 pursuant to the Securities Act of 1933, as amended (the "Securities Act");
WHEREAS, the Account is registered as a unit investment trust under the
Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Distributor is a broker-dealer registered with the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934 (the "Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Company and the Distributor wish to enter into an
agreement to have the Distributor act as the Company's principal underwriter for
the sale of Contracts and the distribution of certificates of participation (the
"Certificates") in the Contracts;
NOW THEREFORE, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
The Company agrees that during the term of this Agreement it will take
all action required to cause the Contracts to comply with all applicable federal
and state laws and regulations. During the term of this Agreement, the Company
appoints the Distributor and the Distributor agrees to act as the principal
underwriter for the sale of Contracts, as well as the Certificates issued
thereunder, in each state and other jurisdictions in which such Contracts may
lawfully be sold. Distributor shall offer the Contracts for sale and distribute
Certificates at premium rates set by the Company. Applications for the Contracts
and the underlying Certificates shall be solicited only by representatives of
Distributor duly qualified and
II-11
<PAGE>
appropriately licensed in each state or other jurisdiction where they solicit
such applications. Company shall appoint Distributor's qualified representatives
as life insurance agents of Company. Completed applications for Contracts and
the underlying Certificates shall be transmitted directly to the Company for
acceptance or rejection in accordance with underwriting rules established by the
Company. Initial premium payments for the Certificates under the Contracts shall
be made by check payable to the Company and shall be held at all times by
Distributor or its representatives in a fiduciary capacity and remitted promptly
to the Company. Anything in this Agreement to the contrary notwithstanding, the
Company retains the ultimate right to control the sale of the Contracts, as well
as the Certificates issued thereunder, and to appoint and discharge life
insurance agents of the Company. The Distributor shall be held to the exercise
of reasonable care in carrying out the provisions of this Agreement.
2. SALES AGREEMENTS
Distributor is hereby authorized to enter into separate written
agreements, on such terms and conditions as Distributor may determine not
inconsistent with this Agreement, with one or more organizations which agree to
participate in the distribution of the Certificates under the Contracts. Such
organization (hereafter "Broker") shall be registered with the Commission under
Section 15(b) of the Exchange Act and with the NASD as a member firm. Broker and
its representatives soliciting applications for Certificates shall be duly and
appropriately licensed, registered, or otherwise qualified for the sale of such
Certificates (and the riders and other policies offered in connection therewith)
under the insurance laws and any applicable blue-sky laws of each state or other
jurisdiction in which the Broker or its representatives solicit such sales.
Broker shall assume any legal responsibilities of Company for the acts,
commissions or defalcations of such representatives insofar as they relate to
the sale of the Certificates. Applications for Certificates solicited by such
Broker through its representatives shall be transmitted directly to the Company,
and if received by Distributor, shall be forwarded to Company. All premium
payments under the Contracts shall be made by check to Company and, if received
by Broker, shall be held at all times in a fiduciary capacity and remitted
promptly to Company.
3. LIFE INSURANCE LICENSING
Company shall be responsible for insuring that Brokers are duly
qualified, under the insurance laws of the applicable jurisdictions, to sell the
Certificates.
4. SUITABILITY
Distributor shall take reasonable steps to ensure that the various
representatives registered with the NASD through it shall not make
recommendations to prospective Certificate purchasers in the absence of
reasonable grounds to believe that the purchase of a
II-12
<PAGE>
Certificate is suitable for such prospect. While not limited to the following, a
determination of suitability shall be based on information furnished to a
representative after reasonable inquiry of such applicant concerning the
applicant's insurance and investment objectives, financial situation and needs,
and the likelihood that the applicant will continue to make the premium payments
contemplated by the Certificates under the Contracts. The same shall hold true
for recommendations made to prospective Contractholders where the prospect is
incapable of evaluating the investment risk independently and is not exercising
independent judgment in evaluating the representative's recommendation.
5. PROMOTIONAL MATERIALS
Company shall have the responsibility for furnishing to Distributor and
its representatives sales promotion materials and individual sales proposals
relating to the sale of the Contracts and Certificates. Distributor shall not
use any such materials that have not been approved by Company. Distributor shall
be responsible for obtaining NASD review of all promotional materials.
6. COMPENSATION
Company shall arrange for the payment of commissions directly to those
representatives of Distributor who are entitled thereto in connection with the
sale of the Contracts on behalf of Distributor, in the amounts and on such terms
and conditions as Company and Distributor shall determine; provided that such
terms, conditions and commissions shall be as are set forth in or as are not
inconsistent with the Prospectus included as part of the Registration Statement
for the Contracts and effective under the Securities Act.
Company shall arrange for the payment of commissions directly to those
Brokers who sell Contract Certificates under agreements entered into pursuant to
paragraph 2. hereof, in amounts as may be agreed to by the Company and specified
in such written agreements between Distributor and Brokers.
Company shall reimburse Distributor for the costs and expenses incurred
by Distributor in furnishing or obtaining the services, materials, and supplies
required by the terms of this Agreement in the initial sales efforts and the
continuing obligations hereunder.
7. RECORDS
Distributor shall have the responsibility for maintaining the records
of its representatives that are licensed, registered and otherwise qualified to
sell the Contracts and the underlying Certificates. Distributor shall maintain
such other records as are required of it by applicable laws and regulations. The
books, accounts, and records of the Company, the Account and Distributor shall
be maintained so as to disclose clearly and accurately the nature and details of
the transactions. Copies of all records maintained by the Distributor in
connection with this Agreement shall be made available to and become the
property of the
II-13
<PAGE>
Company upon its request. The Distributor shall keep confidential any
information obtained pursuant to this Agreement and shall disclose such
information only if the Company has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state regulatory
authorities.
8. INVESTIGATION AND PROCEEDING
Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts and Certificates distributed under this Agreement.
Distributor and Company further agree to cooperate fully in any securities
regulatory investigation or proceeding with respect to Company, Distributor,
their affiliates and their representatives to the extent that such investigation
or proceeding is in connection with the Contracts and Certificates distributed
under this Agreement. The Distributor shall furnish applicable federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement which such authorities may request in order to
ascertain whether the Company's operations are being conducted in a manner
consistent with any applicable law or regulation.
In the case of a substantive customer complaint, Distributor and
Company will cooperate in investigating such complaint and any response to such
complaint will be sent to the other party to this Agreement for approval not
less than five business days before being sent to the customer or regulatory
authority, except that if a more prompt response is required, the proposed
response shall be communicated by telephone or telegraph.
9. TERMINATION
This Agreement shall terminate automatically upon its assignment within
the meaning of such term in the Investment Company Act. This Agreement, however,
may be transferred by the Distributor without the prior written consent of the
Company in the circumstances set forth in Rule 2a-6 under the Investment Company
Act. The Agreement may be terminated at any time by either party on 60 days
written notice to the other party, without the payment of any penalty. Upon
termination of this Agreement all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder, including commissions
on premiums subsequently received for Contracts in effect at a time of
termination, and the agreements contained in paragraph 8 hereof.
10. REGULATION
This Agreement shall be subject to the provisions of the Investment
Company Act and the Exchange Act and of the rules, regulations, and rulings
thereunder and the applicable rules and regulations of the NASD, from time to
time in effect, and the terms hereof shall be interpreted and construed in
accordance therewith.
II-14
<PAGE>
11. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
12. WARRANTIES
Each party to this Agreement warrants to the other party as follows:
(a) it has full power and authority to execute and deliver
this Agreement and to perform and observe the provisions
herein;
(b) the execution, delivery, and performance of this Agreement
have been duly authorized by all necessary corporate actions
and do not and will not contravene any requirement of law or
any contractual restrictions or agreement binding on or
affecting such party or its assets; and
(c) this Agreement has been duly and properly executed and
delivered by such party and constitutes a legal, valid, and
binding obligation of such party enforceable in accordance
with its terms.
13. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
BY:__________________________________
TITLE:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
BY:__________________________________
TITLE:
II-15
Exhibit 1.A.(3)(b)
BROKER AGREEMENT
AGREEMENT made this _____ day of _________, 199__, by and between
Prudential Investment Management Services LLC ("Distributor"), a Delaware
limited liability company, and (name of broker-dealer) ("Broker"), a (state of
incorporation) corporation.
WITNESSETH:
WHEREAS, The Prudential Insurance Company of America ("Company") has
established and maintains the Prudential Variable Contract Account GI-2 (the
"Account"), a separate investment account, pursuant to the laws of New Jersey
for the purpose of providing a choice of variable investment options under group
life insurance contracts to commence after the effectiveness of the Registration
Statement filed with the Securities and Exchange Commission ("SEC" or
"Commission") on Form S-6 pursuant to the Securities Act of 1933, as amended
(the "Securities Act");
WHEREAS, the Account is registered as a unit investment trust under the
Investment Company Act of 1940 (the "Investment Company Act"), and Distributor
is a broker-dealer registered with the Commission under the Securities Exchange
Act of 1934 (the "Exchange Act") with a membership in the National Association
of Securities Dealers, Inc. (the "NASD");
WHEREAS, (name of Contractholder), a(n) (the nature of Contractholder's
business) (the "Contractholder") has purchased a group variable life insurance
contract (the "Contract") from Company; and
WHEREAS, the Broker and the Distributor wish to enter into an agreement
to have the Broker act as agent of (name of Contractholder) for the distribution
of certificates of participation (the "Certificates") in the Contract;
NOW THEREFORE, the parties agree as follows:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. DEFINITIONS
1. THE FUNDS - The Prudential Series Fund, Inc., the outside investment
company funds whose shares are currently being sold to the Account and any other
investment companies whose shares may in the future be sold to the Account. All
are open-end management investment companies registered under the Investment
Company Act, shares of
II-16
<PAGE>
which are sold to the Account in connection with the sale of the Contracts.
2. REGISTRATION STATEMENT - The registration statement and amendments
thereto relating to the Contract and the Account, including financial statements
and all exhibits.
3. PROSPECTUS - The prospectus included within the Registration
Statement referred to herein.
4. MARKETING MATERIALS - The terms "advertisement" and "sales
literature" as they are defined in Rule 2210(a) of the NASD's Conduct Rules.
B. AGREEMENTS OF DISTRIBUTOR
1. Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contract Certificates from eligible persons of (name of
Contractholder) provided that there is an effective Registration Statement
relating to such Contract and provided further that Broker has been notified by
Distributor that the Contract Certificates are qualified for sale under all
applicable securities and insurance laws of the state or jurisdiction in which
the application will be solicited. In connection with the solicitation of
applications for Contract Certificates, Broker is hereby authorized to offer
riders that are available under the Contract in accordance with instructions
furnished by Distributor or Company.
2. Distributor, during the term of this Agreement, will notify Broker
of the issuance of any SEC stop order with respect to the Registration Statement
or any amendments thereto or the initiation of any proceedings for that purpose
relating to the registration and/or offering of the Contract and of any other
action or circumstance that may prevent the lawful sale of the Contract
Certificates in any state or jurisdiction.
3. During the term of this Agreement, Distributor shall advise Broker
of any amendment to the Registration Statement or any amendment or supplement to
any Prospectus. Furthermore, Distributor will provide Broker with a reasonable
quantity of any applicable Contract Prospectuses, and any supplements thereto,
to be used in connection with the transactions contemplated by this Agreement.
C. AGREEMENTS OF BROKER
1. It is understood and agreed that Broker is a broker-dealer
registered with the SEC under the Exchange Act with an NASD membership in good
standing, and that the representatives of Broker who will be soliciting
applications for Contract Certificates also will be duly registered with the
NASD through the Broker.
2. Commencing at such time as Distributor and Broker mutually shall
agree, Broker shall use its best efforts to find applicants for Contract
Certificates acceptable to Company. In
II-17
<PAGE>
meeting its obligation to use its best efforts to solicit applicants for
Contract Certificates, Broker shall, during the term of this Agreement, engage
in the following activities:
(a) Continuously utilize only those Prospectuses, statements
of additional information, Marketing Materials, and training
materials relating to the Contract that have been approved by
Company and have been provided by Distributor;
(b) Establish and implement procedures reasonably designed to
achieve compliance with applicable Federal and State
securities laws and regulations, including the rules of the
NASD, relating to the sales practices of its representatives;
and
(c) Take reasonable steps to ensure that the various
representatives registered through it shall not make
recommendations to applicants for Contract Certificates in the
absence of reasonable grounds to believe that participation in
the Contract is suitable for such applicants. While not
limited to the following, a determination of suitability shall
be based on information furnished to a representative after
reasonable inquiry of such applicants concerning the
applicants' insurance and investment objectives, financial
situation and needs, and the likelihood that the applicants
will continue to make the premium payments contemplated by the
Contract.
3. All payments under the Contract collected by representatives of
Broker shall be held at all times in a fiduciary capacity and shall be remitted
promptly in full together with such applications, forms and other required
documentation to an office of the Company designated by Distributor. Checks or
money orders in payment of premiums shall be drawn to the order of The
Prudential Insurance Company of America. Broker acknowledges that Company
retains the ultimate right to control the sale of the Contract and the
underlying Certificates and that the Distributor or Company shall have the
unconditional right to reject, in whole or part, any application for a Contract
Certificate. If the Company or Distributor rejects an application, Company
immediately will return all payments directly to the applicant and Broker will
be notified of such action. If any participant in a Contract elects to return
such Contract Certificate pursuant to Rule 6e-3(T)(b)(13)(viii) of the
Investment Company Act or other applicable law, the participant will receive a
refund of premium payments calculated in accordance with applicable law. Broker
will be notified of any such action.
4. Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its representatives, or any employees thereof
as "associated persons," as that term is defined in Section 3(a)(18) of the
Exchange Act, of Company or Distributor in connection with the solicitation of
Contract Certificates. Broker, its representatives, and its employees shall not
hold themselves out to be associated persons of Company or Distributor in this
connection or in any dealings with the public. Distributor shall have no
supervisory responsibility for Broker or Broker's associated persons, either
registered or unregistered.
II-18
<PAGE>
5. Broker agrees that any material it develops, approves or uses for
sales, training, explanatory or other purposes in connection with the
solicitation of applications for Contract Certificates (other than general
advertising materials which do not make specific reference to the Contract) will
not be used without the prior written consent of Distributor and, where
appropriate, the endorsement of the Company to be obtained by Distributor.
Furthermore, Broker agrees that it is responsible for securing and will secure
all required regulatory approvals for any Marketing Materials it develops.
6. Solicitation and other activities by Broker shall be undertaken only
in accordance with applicable laws and regulations. No representative of Broker
shall solicit applications for Contract Certificates until duly licensed and
appointed by Company as a life insurance and variable contract broker or agent
of Company in the appropriate states or other jurisdictions. Broker shall ensure
that such representatives fulfill any training requirements necessary to be so
licensed. Broker understands and acknowledges that neither it nor its
representatives are authorized by Distributor or Company to give any information
or make any representation in connection with this Agreement or the offering of
Contract Certificates other than those contained in the Prospectus or other
Marketing Materials authorized in writing by Distributor or Company.
7. Broker shall not have authority on behalf of Distributor or Company
to: (1) make, alter or discharge the Contract, the Certificate, or any other
form used in connection with the Contract; (2) waive any forfeiture, extend the
time of paying any premium; or (3) receive any monies or premiums due, or to
become due, to Company, except as set forth in Section C.3. of this Agreement.
Broker shall not expend, nor contract for the expenditure of the funds of
Distributor, nor shall Broker possess or exercise any authority on behalf of
Distributor by this Agreement.
8. Broker shall have the responsibility for maintaining the records of
its representatives that are licensed, registered, and otherwise qualified to
sell Contract Certificates. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books, accounts, and
records of the Account, Company, Distributor, and Broker relating to the sale of
Contract Certificates shall be maintained so as to disclose clearly and
accurately the nature and details of each transaction. Copies of all records
maintained by Broker in connection with this Agreement shall be made available
to and become the property of the Distributor upon its request. Nothing in this
Section C.8. shall be interpreted to prevent the Broker from retaining any such
other records which Broker, in its discretion, deems necessary or desirable to
keep. Broker shall keep confidential any information obtained pursuant to this
Agreement and shall disclose such information, only if the Company has
authorized such disclosure, or if such disclosure is expressly required by
applicable federal or state regulatory authorities.
II-19
<PAGE>
D. COMPENSATION
1. Pursuant to the Distribution Agreement between Distributor and
Company, Distributor shall cause Company to arrange for the payment of
commissions to Broker as compensation for the sale of each Contract Certificate
sold by a representative of Broker. The amount of such compensation shall be
based on a schedule to be determined by agreement of Company, Distributor, and
Broker. Company shall identify to Broker with each such payment the name of the
representative of Broker who solicited each Contract Certificate covered by the
payment.
2. Neither Broker nor any of its representatives shall have any right
to withhold or deduct any part of any premium it shall receive for purposes of
payment of commission or otherwise. Neither Broker nor any of its
representatives shall have an interest in any compensation paid by Company to
Distributor, now or hereafter, in connection with the sale of any Contract
Certificate.
E. USE OF INSURANCE AGENCY AFFILIATE OF BROKER
It is understood and agreed that the registered representatives of
Broker engaged in the offer and sale of Contract Certificates may be employed by
(name of agency), an affiliate of Broker that is licensed as an insurance agency
(hereinafter referred to as "Insurance Agency Affiliate"), and whose
shareholders, officers, and employees are "associated persons" of Broker within
the meaning of Section 3(a)(18) of the Exchange Act. It is further understood
and agreed that records relating to sales of Contract Certificates by such
employees may be maintained by Insurance Agency Affiliate. It is further
understood and agreed that commissions payable under this agreement shall, if
Broker so directs, be paid to Insurance Agency Affiliate. Broker agrees that, if
the Contract Certificates are sold through Insurance Agency Affiliate:
1. Broker will retain full responsibility for compliance with the
requirements of all applicable federal and state securities laws, and will
continue to perform all obligations set forth in Section C. above.
2. Any books and records maintained by Insurance Agency Affiliate will
be deemed, for purposes of the Exchange Act, to be books and records of Broker
and will conform to the requirements of Section 17 of the Exchange Act and the
rules thereunder. The manner in which the books and records of Broker and
Insurance Agency Affiliate are made and maintained will permit supervisory
personnel of Broker as well as authorized examiners of the SEC or of another
appropriate governmental agency or self-regulatory organization to review data
concerning transactions of Contract Certificates effected through Insurance
Agency Affiliate to the same extent as if such transactions had been effected
through Broker itself. This may be accomplished either through maintaining one
set of books and records for Broker and Insurance Agency Affiliate or by
maintaining separate sets of books and records with
II-20
<PAGE>
adequate integration, through cross-referencing or otherwise, between records
maintained by Broker and those maintained by Insurance Agency Affiliate.
3. Any receipt by Insurance Agency Affiliate of commissions for the
sale of Contract Certificates, and any payment by Insurance Agency Affiliate of
commissions for the sale of Contract Certificates to its sales personnel, will
be reflected in the FOCUS reports filed by Broker pursuant to Section 17 of the
Exchange Act and the rules thereunder and in its fee assessment reports filed
with the NASD.
4. All premiums derived from the sale of Contract Certificates through
Insurance Agency Affiliate will be sent directly to Company by the customers of
Insurance Agency Affiliate or will be sent by them to Broker for forwarding to
the Company. Insurance Agency Affiliate will not receive or accumulate customer
premiums intended for payment under the Contract.
F. COMPLAINTS AND INVESTIGATIONS
1. Broker and Distributor jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial proceeding arising
in connection with Contract Certificates marketed under this Agreement. Broker
and Distributor further agree to cooperate fully in any securities regulatory
investigation or proceeding or judicial proceeding with respect to Broker,
Distributor, their affiliates and their representatives to the extent that such
investigation or proceeding is in connection with Contract Certificates marketed
under this Agreement. Broker shall furnish applicable federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement which such authorities may request to ascertain
whether the Company's operations are being conducted in a manner consistent with
any applicable law or regulation.
G. TERM AND AGREEMENT
1. This Agreement shall continue in force for one year from its
effective date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally terminate
this Agreement upon thirty (30) days written notice to the other party of its
intention to do so.
2. Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except: (a) the agreements contained in Section F.
hereof; (b) the indemnity set forth in Section H. hereof; and (c) the obligation
to settle accounts hereunder, including payment of any applicable commissions on
premiums subsequently received for Contract Certificates in effect at the time
of termination or issued pursuant to applications received by Broker before
termination.
II-21
<PAGE>
H. INDEMNITY
1. Broker shall be held to the exercise of reasonable care in carrying
out the provision of this Agreement.
2. Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liabilities, joint or several, to which Broker or such officer or director
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of material
fact, required to be stated therein or necessary to make the statements therein
not misleading, contained in any Registration Statement or any post-effective
amendment thereof or in the Prospectus or any amendment or supplement to the
Prospectus, or any marketing materials provided by the Company or by the
Distributor.
3. Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each person, if
any, who controls or has controlled Company or Distributor within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities to which Company or Distributor and any such director or officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(a) Any unauthorized use of marketing materials or any verbal
or written misrepresentations or any unlawful sales practices
concerning the Contract or the underlying Certificates by
Broker or its officers, employees or representatives,
including personnel of any Insurance Agency Affiliate;
(b) Claims by representatives or employees of Broker or any
Insurance Agency Affiliate for commissions, service fees,
development allowances or other compensation or remuneration
of any type; or
(c) The failure of Broker, its officers, employees, or
representatives, including personnel of any Insurance Agency
Affiliate, to comply with the provisions of this Agreement;
and the Broker will reimburse Company and Distributor and any
director or officer or controlling person of either for any
legal or other expenses reasonably incurred by Company,
Distributor, or such director, officer of controlling person
in connection with investigating or defending any such loss,
claims, damage, liability or action. This indemnity agreement
will be in addition to any liability which Broker may
otherwise have.
II-22
<PAGE>
I. WARRANTIES
Each party to this Agreement warrants to the other party as follows:
1. It has full power and authority to execute and deliver this
Agreement and to perform and observe the provisions herein;
2. The execution, delivery, and performance of this Agreement have been
duly authorized by all necessary corporate actions and do not and will not
contravene any requirement of law or any contractual restrictions or agreement
binding on or affecting such party or its assets; and
3. This Agreement has been duly and properly executed and delivered by
such party and constitutes a legal, valid, and binding obligation of such party
enforceable in accordance with its terms.
J. ASSIGNABILITY
This Agreement shall not be assigned by either party without the
written consent of the other.
K. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
(Distributor)
By:_____________________________
Title: President
-----------------------------------------------------
(Broker)
By:_____________________________
Title:
II-23
Exhibit 1.A.(3)(c)
SCHEDULE OF SALES COMMISSIONS
Please refer to the 'Sale of the Contract and Sales Commissions' section of the
Registrant's prospectus (File No. 333-01031) for a complete description of sales
charges and commissions.
II-24
EXHIBIT 1.A.(5)(a)
[LOGO PRUDENTIAL]
GROUP INSURANCE CONTRACT
CONTRACT HOLDER: PRUDENTIAL GROUP LIFE INSURANCE TRUST
GROUP CONTRACT NO.: [GV-XXXXX]
Prudential will provide or pay the benefits described in the Group Insurance
Certificate(s) listed in the Schedule of Plans of the Group Contract, subject to
the Group Contract's terms. This promise is based on the Contract Holder's
application and payment of the required premiums.
All of the provisions of the Group Insurance Certificate(s), attached to and
made a part of the Group Contract, apply to the Group Contract as if fully set
forth in the Group Contract.
The Group Contract takes effect on the Contract Date, if it is duly attested
under the Group Contract Schedule. It continues as long as the required premiums
are paid, unless it ends as described in its General Rules.
The Group Contract is delivered and is governed by the laws of the Governing
Jurisdiction.
Secretary Chairman
89759
COV 8100 [A]
II-25
<PAGE>
GROUP CONTRACT SCHEDULE
CONTRACT DATE: [January 1, 19XX]
CONTRACT ANNIVERSARIES: [January 1 of each year, beginning in 19XX]
PREMIUM DUE DATES: [The Contract Date, and the first Business Day of each
Contract Month beginning with February, 19XX]
GOVERNING JURISDICTION: [The State of Delaware]
[MINIMUM AGGREGATE FACE AMOUNT OF INSURANCE: $XX,XXX,XXX
MINIMUM NUMBER OF ISSUED CERTIFICATES: 25]
-----------------------------------
TABLE OF CONTENTS [(AS OF CONTRACT DATE): The Group Contract includes these
forms with a 89759 prefix: COV 8100, GCS 8100, SPR 8100, COI 8100, GR 8100, SCH
8100, APP 8100].
ATTEST:___________________________
89759
GCS 8100 [A]
II-26
<PAGE>
[INCLUDED EMPLOYERS
Each Employer listed below is included under the Group Contract as of the
Inclusion Date indicated. Other Employers may be added by Amendment to the Group
Contract.
An Employee of more than one Included Employer will be considered an Employee of
only one of those employers for the purpose of this Insurance. That Employee's
service with all other Included Employers will be treated as service with that
one.
On any date when an employer ceases to be an Included Employer, the Group
Contract will be considered to end for Employees of that employer. This applies
to all of those Employees except those who, on the next day, are still within
the Covered Classes of one or more Schedules of Benefits of the Group Contract
as Employees of another Included Employer.
The Contract Holder must let Prudential know, in writing, when an Employer
listed as an Included Employer is no longer an Included Employer.]
LISTING OF INCLUDED EMPLOYERS
EMPLOYER INCLUDED DATE
[The A.B.C. Company January 1, 19XX
The D.E.F. Company January 1, 19XX
The G.H.I. Company January 1, 19XX]
89759
GCS 8100 [B]
II-27
<PAGE>
GROUP CONTRACT NO.[GV-XXXXX]
SCHEDULE OF PREMIUM RATES
CLASSES OF [EMPLOYEES] TO WHICH THIS SCHEDULE APPLIES:
[All Employees of the A.B.C. Company]
MONTHLY RATE PER EMPLOYEE
APPLICABLE COVERAGE [EMPLOYEE OR DEPENDENT
INSURANCE
Variable Universal Life XXX% of 1980 Commissioners
Standard Ordinary Table (Male -
Age Last Birthday) per $1,000
of Net Amount of Risk by
Attained Age
DEPENDENT INSURANCE
Dependents Term Life Insurance $X.XXX per $1,000 of insurance
EMPLOYEE OR DEPENDENT
INSURANCE
Accidental Death and Dismemberment $X.XX per $1,000 of insurance
Insurance ]
89759
SPR 8100 [A]
II-28
<PAGE>
GENERAL RULES
A. PREMIUMS - GRACE PERIOD.
Premiums are to be paid by [the Contract Holder] to Prudential. Each may be paid
at the Prudential Office listed below, or to one of its authorized agents. [As
to each Included Employer, the first premium is due and payable on that Included
Employer's Inclusion Date.] Subsequent premiums are due on each Premium Due Date
stated in the Group Contract Schedule. For each Included Employer, the [Contract
Holder] may pay each premium, other than the first, within [61] days of the
Premium Due Date without being charged interest. Those days are known as the
grace period. The [Contract Holder] is liable to pay premiums to Prudential for
each Included Employer for the time the Group Contract is in force for that
Included Employer, except for any period for which the Included Employer is
directly liable to Prudential, as provided in Section E.
[All notices and payments to Prudential under this Group Contract will
be deemed received when they are received at the following address:
The Prudential Insurance Company of America
56 Livingston Ave.
Roseland, New Jersey 07068]
B. PREMIUM AMOUNTS.
All premiums for the Insurance for an Included Employer are due on the Inclusion
Date and on each Premium Due Date while this Contract is in force. The premium
due on the Inclusion Date and on each Premium Due Date is the sum of all
contribution amounts made by [Employees] for Covered Persons under the
Insurance.
C. CHANGES IN CHARGES AND INVESTMENT OPTIONS.
The Cost of [Insurance and additional insurance benefits] in effect on an
Included Employer's Inclusion Date are shown in the Group Contract. The
mortality and expense risk charges and the Schedule of Charges and Expenses in
effect on an Included Employer's Inclusion Date, and the investment options
available to [Employees], are shown in the Certificate applicable to the Covered
Classes. Prudential has the right to make the following changes:
(1) Prudential may change the Cost of [Insurance and additional insurance
benefits], the mortality and expense risk charges and the Schedule of
Charges and Expenses, as of these dates:
89759
GR 8100 [A]
II-29
<PAGE>
(a) Any Premium Due Date; and
(b) Any date that an [employer] becomes or ceases to be an
Included [Employer]; and
(c) Any date that the extent or nature of the risk under the Group
Contract for [Employees] of an Included Employer is changed:
(i) by amendment; or (ii) by reason of any provision of law or
any governmental program or regulation; or (iii) by
termination of, or any change in, benefits not in this Group
Contract, but considered in determining the charges for this
Group Contract.
Unless an amendment to the Group Contract applicable to an Included
Employer states otherwise, Prudential will not make the changes
permitted on a Premium Due Date before the end of the 12-month period
following the Included Employer's Inclusion Date.
(2) Prudential may change any of the limits that apply to charges with
respect to an Included Employer. These changes may apply to
contributions to investment options made both before and after the
change takes effect. These changes must be at least 90 days apart.
Before Prudential makes any of these changes, it will give the
[Contract Holder] at least 31 days advance notice.
D. DIVIDENDS.
Prudential will determine the share, if any, of its divisible surplus allocable
to this Group Contract as of each Contract Anniversary, if the Group Contract
stays in force by the payment of all required premiums to that date. The share
will be credited to this Group Contract as a dividend as of that date. If this
Group Contract ends on a date other than a Contract Anniversary, the share, if
any, will be determined and credited to this Group Contract as a dividend as of
that date.
Each dividend will be paid to the [Contract Holder] in cash, unless the
[Contract Holder] asks that it be applied toward the premium contributions.
Prudential's sole liability as to any dividend is as set forth above.
NON-PROFIT CLAUSE: This applies if the aggregate dividends under this Group
Contract and any other group contract(s) of the [Contract Holder] exceed the
aggregate payments toward their cost made from the [Contract Holder's] own
funds. [The Contract Holder] will see that an amount equal to the excess is
applied for the benefit of insured persons.
89759
GR 8100 [B]
II-30
<PAGE>
E. END OF THIS GROUP CONTRACT.
DURING OR AT END OF GRACE PERIOD - FAILURE TO PAY PREMIUM: If any employer
payment required by the [Contract Holder] with respect to any premium for the
Insurance is not paid by the end of its grace period, this Group Contract will
end with respect to that Included Employer when that period ends. However, the
Included Employer may write to the [Contract Holder] , at least 90 days in
advance, to ask that the Group Contract be ended for that Included Employer at
the end of a period of time for which premiums have been paid. Then this Group
Contract for that Included Employer will end on the date requested.
ON A PREMIUM DUE DATE - FAILURE TO MAINTAIN INSURING CONDITIONS: On any Premium
Due Date, Prudential may end the Group Contract with respect to an included
Employer if: [(1) the aggregate Face Amount of Insurance under all Certificates
issued to covered Employees of the Included Employer ; or (2) the number of
Certificates issued with respect to an Included Employer; falls below the
minimum set forth in the Group Contract Schedule. To do so, Prudential must give
the Included Employer and insured Employees of an Included Employer notice at
least 90 days in advance.]
CEASING TO BE AN INCLUDED EMPLOYER: If the [Contract Holder] notifies Prudential
that an employer ceases to be an Included Employer because of failure to
continue to satisfy the requirements for inclusion or for any other reason, the
Group Contract will end for that Included Employer at the end of the period for
which premiums have been paid with respect to Employees of that Included
Employer.
F. [EMPLOYEE'S] CERTIFICATE.
Prudential will mail to each [Employee's] home an individual Certificate, unless
an Included Employer requests that Certificates be given to it for distribution.
The Certificate will describe the extent of the [Employee's and the Employee's
dependents] coverage under this Group Contract. It will include (1) to whom
Prudential pays benefits, (2) any protection and rights when Insurance ends, and
(3) claim rights and requirements.
G. RECORDS - INFORMATION TO BE FURNISHED.
[The Contract Holder, e]ach Included Employer or Prudential, as they agree,
will keep a record of the [Employees] covered under the Insurance. It will
contain the key facts about their Insurance.
At the times set by Prudential, the Included Employer will send the data
required by Prudential to perform its duties under the Group Contract, and to
determine the charges due. All records of [the Contract Holder and e]ach
Included Employer which bear on the Insurance must be open to Prudential for its
inspection at any reasonable time.
89749
GR 8100 [C]
II-31
<PAGE>
Prudential will not have to perform any duty that depends on such data before it
is received in a form that satisfies Prudential. [The Contract Holder or t]he
Included Employer may correct wrong data given to Prudential, if Prudential has
not been harmed by acting on it. A Covered Person's Insurance will not be made
invalid by failure of [the Contract Holder or ]an Included Employer, due to
clerical error, to record or report the [Employee] for that Insurance.
H. THE CONTRACT - INCONTESTABILITY OF THE CONTRACT.
The entire Group Contract consists of: (1) the forms shown in the Table of
Contents as of the Contract Date; (2) any amendments or endorsements to the
Group Contract; (3) the [Contract Holder's] application, a copy of which is
attached to the Group Contract; and (4) the individual applications of the
persons insured. All statements made by the [Contract Holder] will be deemed
representations and not warranties.
There will be no contest of the validity of the Group Contract, except for not
paying premiums, after it has been in force for one year.
The Group Contract may be amended, at any time, without the consent of the
insured [Employees] or of anyone else with a beneficial interest in it. This can
be done through a writing signed by and agreed to by the [Contract Holder] and
Prudential. An amendment will not affect a claim incurred before the date of
change.
Only an officer of Prudential has authority: to waive any conditions or
restrictions of the Group Contract; or to extend the time in which charges may
be paid; or to make or change a contract; or to bind Prudential by a promise or
representation; or by information given or received. An agent of Prudential is
not an officer.
No change in this Group Contract is valid unless shown in:
(1) an endorsement on it signed by an officer of Prudential; or
(2) an amendment to it signed by the [Contract Holder] and by an officer of
Prudential.
However, if the Group Contract is changed automatically in accordance with
Section J., the change may be made in an amendment to the Group Contract that is
signed only by an officer of Prudential.
89759
GR 8100 [D]
II-32
<PAGE>
I. AGE ADJUSTMENT.
If an age is used to determine the cost for a Covered Person's Insurance [and
any additional insurance benefits], and the age is found to be in error,
Prudential will adjust any death benefit payable to reflect the correct age.
J. CONFORMITY WITH LAW.
To receive tax treatment accorded to life insurance under federal law, the
Insurance must meet the definition of life insurance as provided in the Internal
Revenue Code or successor law. To make sure the Insurance qualifies, Prudential
reserves the right: (a) to refuse contributions which would cause the Group
Contract to fail the definition of life insurance; and (b) to make changes in
the Group Contract or to make distributions from the Contract Funds to
[Employees] to the extent needed to continue to qualify as life insurance.
If the provisions of the Group Contract do not conform to the requirements of
any state or federal law or regulation that applies to it, the Group Contract is
automatically changed to conform to the requirements of that law or regulation.
The [Contract Holder] will be given written notice of such changes.
89759
GR 8100 [E]
II-33
<PAGE>
SCHEDULE OF PLANS
EFFECTIVE: [January 1, 19XX]
GROUP CONTRACT NO.: [GV-XXXXX]
This Schedule of Plans sets forth the Plan of Benefits that applies to each
Covered Class of an Included Employer under the Group Contract listed below as
of the Effective Date. The Plan of Benefits for a Covered Class is determined
by: (1) the Group Insurance Certificates that apply to the Covered Class; and
(2) any modification to those Certificates, provided the modification is
included in an amendment to the Group Contract. A copy of the Certificate
applicable to each Covered Class, and any modification to it, are attached to
the Group Contract and are made a part of it.
[(1) COVERED CLASSES: [All Employees of the A.B.C. Company. who are (I) less
than age 75; and (ii) have not exchanged their existing Group Variable Life
Insurance Coverage for fixed paid-up insurance on the life of the Covered
Person, with all or part of the Cash Surrender value, within 24 months of
the Employee's date of eligibility .
PLAN OF BENEFITS THAT APPLIES TO THIS CLASS:
The Variable Universal Life Coverage described in the Group Certificate:
(a) Prepared under Group Contract No. GV-XXXXX;
(b) With the Program Date of January 1, 19XX.]
89750
SCH 8100 [A]
II-34
<PAGE>
APPLICATION TO
The Prudential Insurance Company of America (Prudential)
For Group Contract No. [GV-XXXXX]
Applicant: PRUDENTIAL GROUP LIFE INSURANCE TRUST,
Address: [Wilmington, Delaware]
The Group Contract is approved and its term are accepted.
This Application is made in duplicate. One is attached to the Group Contract.
The other is to be returned to Prudential.
It is agreed that this Application replaces any prior application for the Group
Contract.
PRUDENTIAL GROUP LIFE INSURANCE
TRUST
------------------------------------
(Full or Corporate Name of Applicant)
Dated at [Wilmington, Delaware] By_________________________________
(Signature and Title)
On____________________________ Witness_____________________________
(To be signed by Resident
Agent, where required by law)
89759
APP 8100 [A]
II-35
<PAGE>
AMENDMENT TO GROUP CONTRACT NO [GV-XXXXX]
Effective Date: [January 1, 19XX]
By their signatures below, the Contract Holder and Prudential agree that the
Group Contract is changed as follows:
[The Schedule of Plans (Form 89759 SCH 8100) is replaced by the
Schedule of Plans attached hereto and bearing an effective date of
January 1, 19XX.]
PRUDENTIAL GROUP LIFE INSURANCE
TRUST
-------------------------------------------
[(Full or Corporate Name of Contract Holder
January 22, 19XX By JOHN DOE, VICE PRESIDENT
- ------------------------------- ---------------------------
Witness RICHARD ROE
-----------------------
Roseland, N.J. January 28, 19XX THE PRUDENTIAL INSURANCE
- ------------------------------- COMPANY OF AMERICA
Attest: MARY POE
------------------------ BY_____________________________
Assistant Secretary]
89759
AMD 8100
II-36
<PAGE>
COMBINATION OF EXPERIENCE
Group Contract [GV-XXXXX, and Group Policy No. G-XXX
(Called "Group Contracts" below)]
[Eligible Class: All Employees of the A.B.C. Company.]
[With respect to the A,B.C. Company,]the Group Contracts [will be] treated as
one, [GT-XXXXX], for this purpose: to determine the share, if any, of
Prudential's divisible surplus allocable to the Group Contracts.
----------------------------------
89759
CMB 8100
II-37
EXHIBIT 1.A.(5)(b)
[GRAPHIC OMITTED]
CERTIFICATE OF COVERAGE
PRUDENTIAL CERTIFIES THAT THE INSURANCE IS PROVIDED ACCORDING TO GROUP CONTRACT
NO. [GV-XXXXX] FOR EACH INSURED [EMPLOYEE].
CONTRACT HOLDER: PRUDENTIAL GROUP LIFE INSURANCE TRUST
EMPLOYER: [THE A.B.C. COMPANY]
INSURED [EMPLOYEE]: You are eligible to become insured under the Group Contract
if You are in the Covered Classes of the Certificate's Specifications Page. The
Effective Date of Your Insurance, Your coverage amounts and Your Beneficiary for
Employee Death Benefits are shown in the Certificate's Specifications Page.
VARIABLE UNIVERSAL LIFE INSURANCE
The terms of the Group Contract that mainly affect the Insurance are summarized
in this Certificate. A Certificate issued to the [Employee] replaces any
Certificate(s) issued before for the Coverage summarized. All benefits are
subject in every way to the Group Contract. It alone forms the agreement under
which payment of Insurance is made.
RIGHT TO EXAMINE THIS CERTIFICATE: You may return this Certificate to
Prudential, for any reason, within 10 days after You receive it. If You return
it within this period, the Insurance will be void from its Effective Date, and
we will refund Your contributions. Unless otherwise required by applicable law,
the amount refunded will depend on the performance of the investments as if no
charges had been made. But, if applicable law so requires, You will receive a
refund of all contributions made (less any Certificate Fund debt or withdrawal)
with no adjustment for performance of the investments. Under Group Contracts
subject to state laws that require a full return of contributions, contributions
will be invested in the Money Market Fund during the first 20 days after the
Certificate's Effective Date. During that period, Prudential reserves the right
to limit contributions.
THE DEATH BENEFIT MAY INCREASE OR DECREASE DAILY, DEPENDING ON THE PAYMENT OF
PREMIUMS, THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT AND THE LEVEL OF
MORTALITY CHARGES MADE.
89759
CTC 8100 [A]
II-38
<PAGE>
BUT IT WILL NOT BE LESS THAN THE FACE AMOUNT SHOWN PLUS THE AMOUNT OF ANY EXTRA
BENEFIT, IF THE COVERED PERSON'S INSURANCE IS NOT IN DEFAULT AND THERE IS NO
CERTIFICATE FUND DEBT OR WITHDRAWAL.
THE CERTIFICATE FUND VALUE MAY INCREASE OR DECREASE DAILY DEPENDING ON THE
PAYMENT OF PREMIUMS, THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT AND THE
LEVEL OF MORTALITY CHARGES MADE. THERE IS NO GUARANTEED MINIMUM.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
89759
CTC 8100 [B]
II-39
<PAGE>
TABLE OF CONTENTS
Cover Page ................................................................. x
Specifications Page......................................................... x
Table of Corridor Percentages............................................... x
Schedule of Charges......................................................... x
Who is Eligible to Become Insured........................................... x
When You Become Insured..................................................... x
Variable Universal Life Coverage............................................ xx
[Option to Accelerate Payment of Certain Death Benefits..................... xx
Seatbelt Benefit........................................................... xx
Additional Provisions for Dependents Term Life Insurance.................... xx
Additional Provisions for Accidental Death and Dismemberment Insurance...... xx
Applicant Owner Rules....................................................... xx]
General Information
Beneficiary Rules......................................................... xx
Mode of Settlement Rules.................................................. xx
Incontestability.......................................................... xx
Claim Rules............................................................... xx
Limits on Assignments..................................................... xx
Definitions............................................................... xx
When Your Insurance Ends.................................................... xx
89759
BTC 8100
II-40
<PAGE>
SPECIFICATIONS PAGE
(Made a part of the Certificate [as of January 1, 19XX])
CONTRACT HOLDER: The Trustee of the Prudential Life Insurance Trust
INCLUDED EMPLOYER: [The A.B.C. Company]
PREMIUM DUE DATE: [The first day of each month after January 1, 19XX]
CONTRACT ANNIVERSARY: [January 1 of each year, beginning in 19XX]
[EMPLOYEE: John A. Doe]
EFFECTIVE DATE OF CERTIFICATE: [January 1, 19XX]
[DEPENDENTS COVERAGE APPLIES: Yes
COVERED DEPENDENT SPOUSE: Mary K. Doe
COVERED DEPENDENT CHILD(REN): Richard A. Doe]
[BENEFICIARY FOR EMPLOYEE DEATH BENEFITS: Mary K. Doe, Wife]
PRUDENTIAL'S ADDRESS: The Prudential Insurance Company of America
[56 Livingston Avenue
Roseland, New Jersey 07068]
***********************************
COVERED CLASSES: [All Employees of the A.B.C. Company who are (i) less than age
75; and (ii) have not exchanged their existing Group Variable Life Insurance
Coverage for fixed paid-up insurance on the life of the Covered Person, with all
or part of the Cash Surrender value, within 24 months of the Employee's date of
eligibility.]
89759
BSB 8100 [A]
II-41
<PAGE>
YOU SHOULD KNOW...
o The Variable Universal Life Coverage described in this Certificate is
available to You if You are included in the Covered Classes named above.
The Group Contract's rules for becoming insured are summarized in the When
You Become Insured Section.
o The Variable Universal Life Coverage is described more fully on later pages
of this Certificate. Please read those pages carefully. They show when
benefits are or are not payable under the Group Contract. They also outline
when Your Insurance ends and the conditions, limitations and exclusions
that apply to the Coverage[s].
o A Definitions section is included in this Certificate. Many of the terms
used in this Certificate are defined in that section.
o This Certificate provides life insurance with flexible premium payments
[after the first two years].
o Cash values may increase or decrease, based on performance of the variable
investment options. No guarantee applies to cash values, except those in
the Fixed Account.
o [This Certificate includes the following additional insurance benefits:
Option to Accelerate Payment of Certain Death Benefits under Variable
Universal Life Insurance, Seatbelt Benefit, Dependents Term Life Insurance
and Accidental Death and Dismemberment Insurance].
VARIABLE UNIVERSAL LIFE COVERAGE
[EMPLOYEES AND DEPENDENTS COVERAGE]
FACE AMOUNT OF INSURANCE:
[Employee's Face Amount An amount equal to the lesser of (1) or (2),
less (3):
(1) 100% of Your annual Earnings. If this amount
is not a multiple of $1,000, it will be
rounded to the next higher multiple of $1,000
(2) $1,000,000.
89759
BSB 8100 [B]
II-42
<PAGE>
(3) The amount of any increase in the Covered
Person's Face Amount, if You exchange the
amount of such increase, within 24 months
following the effective date of such
increase, for Universal Life Coverage
offered by the Employer.
Spouse's Face Amount An amount equal to the lesser of (1) or (2),
less (3):
(1) 100% of Your annual Earnings. If this amount
is not a multiple of $1,000, it will be
rounded to the next higher multiple of
$1,000
(2) $1,000,000.
(3) The amount of any increase in the Covered
Person's Face Amount, if You exchange the
amount of such increase, within 24 months
following the effective date of such
increase, for Universal Life Coverage
offered by the Employer.
The Definitions explains what "Earnings" means.
Amount Limitation -- On the earliest to occur of (i) a Covered Person
attaining age 70 or more or (ii) the tenth anniversary of the effective date
of the Covered Person's coverage, the Covered Person's amount of insurance
will be limited. It will be equal to the greater of five times the Covered
Person's Certificate Fund; or $25,000. In no event will the Covered Person's
amount of Insurance exceed the Covered Person's death benefit on the date of
attainment of age 70.
Maximum Increase in Face Amount -- $XX,XXX
Minimum Face Amount -- $XX,XXX]
[INITIAL] MONTHLY CONTRIBUTION -- [$XX.XX]
MINIMUM LUMP SUM CONTRIBUTION -- [$XXX.XX]
89759
BSB 8100 [C]
II-43
<PAGE>
LIST OF INVESTMENT OPTIONS --
<TABLE>
<CAPTION>
Fund
Option Portfolio Valuation Date
- ------ --------- --------------
<S> <C> <C>
[Prudential Series Fund, Inc. Money Market The Valuation Date
Diversified Bond for all portfolios is
Flexible Managed the end of each
Stock Index Business Day
Equity Income
Equity
Prudential Jennison
Global
Janus Aspen Series Growth
T. Rowe Price International Series, Inc. International Stock
TCI Portfolios, Inc. TCI Value
Warburg Pincus Trust Post-Venture Capital ]
</TABLE>
ALLOCATION OF CONTRIBUTION AMOUNTS --
Option Percentage
- ------ ----------
[The Prudential Series Fund, Inc.:
Money Market 50%
Stock Index 20%
Janus Aspen Series:
Growth 10%
Warburg Pincus Trust:
Post-Venture Capital 20%]
ASSIGNMENTS: [All assignments are allowed.]
[DEPENDENTS TERM LIFE INSURANCE UNDER VARIABLE UNIVERSAL LIFE COVERAGE
AMOUNT OF INSURANCE:
Covered Children: $ X,XXX
ASSIGNMENTS: All assignments are allowed.
89759
BSB 8100 [D]
II-44
<PAGE>
ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE UNDER VARIABLE UNIVERSAL LIFE
COVERAGE
EMPLOYEE AND DEPENDENT SPOUSE COVERAGE
AMOUNT OF INSURANCE: An amount equal to the Covered Person's Face Amount of
Variable Universal Life Insurance.
ASSIGNMENTS: All assignments are allowed.]
---------------------------------------
[WHEN YOU HAVE A CLAIM
Each time a claim is made, it should be made without delay. Use a claim form and
follow the instructions on the form. If You do not have a claim form, contact
Your Employer or Prudential.]
----------------------------------------
[THIS SPECIFICATIONS PAGE REPLACES, AS OF JULY 1, 19XX, ANY PRIOR SPECIFICATIONS
PAGE ISSUED TO YOU WITH RESPECT TO THE COVERAGE SUMMARIZED.]
89759
BSB 8100 [E]
II-45
<PAGE>
SCHEDULE OF CHARGES AND EXPENSES
EXPENSE CHARGES -- From each contribution paid by You, Prudential deducts the
sum of:
(1) An amount equal to [X.X%] of the contribution to cover state and local
premium taxes; and
(2) an amount equal to [X.X%] of the contribution to cover applicable federal
taxes[; and
(3) a sales charge equal to X.X% of the contribution, and such charge will not
exceed X.X% of the contribution.
From the balance, Prudential deducts a per-payment processing charge of up to
$X.XX, and such charge will not exceed $X.XX].
The charges described in (1) and (2) above may be changed if the cost of
Prudential's taxes related to premium change. You will be notified about the
amount of any change in the above Expense Charges.
MONTHLY ADMINISTRATION CHARGE -- The monthly administration charge will be
[$X.XX], and such charge will not exceed [$X.XX].
89759
CHS 8100 [A]
II-46
<PAGE>
TABLE OF CORRIDOR PERCENTAGES
(FOR DETERMINING A PERSON'S INSURANCE AMOUNT)
PERSON'S PERSON'S
ATTAINED AGE PERCENT ATTAINED AGE PERCENT
0 to 40 250% 70 115%
41 243% 71 113%
42 236% 72 111%
43 229% 73 109%
44 222% 74 107%
45 215% 75 105%
46 209% 76 105%
47 203% 77 105%
48 197% 78 105%
49 191% 79 105%
50 185% 80 105%
51 178% 81 105%
52 171% 82 105%
53 164% 83 105%
54 157% 84 105%
55 150% 85 105%
56 146% 86 105%
57 142% 88 105%
58 138% 89 105%
59 134% 90 105%
60 139% 91 104%
61 128% 92 103%
62 126% 93 102%
63 124% 94 101%
64 122% 95 100%
65 120% 96 100%
66 119% 97 100%
67 118% 98 100%
68 117% 99 100%
69 116%
89759
TCP 8100 [A]
II-47
<PAGE>
WHO IS ELIGIBLE TO BECOME INSURED
[FOR EMPLOYEE INSURANCE
YOU ARE ELIGIBLE FOR EMPLOYEE INSURANCE WHILE:
o You are less than age 75; and
o You are in a Covered Class; and
o You have not, within 24 months of your date of Eligibility, enrolled under
the Universal Life Coverage offered by the Employer.
YOU ARE FULL-TIME if You are regularly working for the Employer at least the
number of hours in the Employer's normal full-time work week for Your class, but
not less than 30 hours per week.
YOUR CLASS is determined by the Employer. This will be done under its rules, on
dates it sets. The Employer may not discriminate among persons in like
situations. You cannot belong to more than one class for Insurance under the
Coverage. "Class" means Covered Class, Benefit Class or anything related to
work, such as position or earnings which affects the Insurance available.
THIS APPLIES IF YOU ARE AN EMPLOYEE OF MORE THAN ONE EMPLOYER INCLUDED UNDER THE
GROUP CONTRACT: For the Insurance, You will be considered an Employee of only
one of those employers. Your service with the others will be treated as service
with that one.
The rules for obtaining Employee Insurance are in the When You Become Insured
section.
FOR DEPENDENTS INSURANCE
YOU ARE ELIGIBLE FOR DEPENDENTS INSURANCE while:
o You are eligible for Employee Insurance; and
o You have a Qualified Dependent.
THESE ARE THE PERSONS FOR WHOM YOU MAY OBTAIN DEPENDENTS INSURANCE:
o Your Spouse, if less than age 75.
o Your unmarried children less than age 19.
89759
BEL 8100 [A]
II-48
<PAGE>
Your children include Your legally adopted children and each of Your step
children and foster children who depend on You for support and maintenance.
EXCEPTIONS:
(1) The age limit does not apply to a child who:
(a) wholly depends on You for support and maintenance;
(b) is enrolled as a full-time student in a school; and
(c) is less than age 23.
(2) Your Spouse or child is not a Qualified Dependent while:
(a) on active duty in the armed forces of any country; or
(b) insured under the Group Contract as an Employee.
(3) A child will not be considered the Qualified Dependent of more than one
Employee.
The rules for obtaining Dependents Insurance are in the When You Become Insured
section.]
WHEN YOU BECOME INSURED
[FOR EMPLOYEE INSURANCE
Your Employee Insurance will begin on the first day of the Contract Month which
coincides with or next follows the date on which You meet all of these
requirements:
o You are eligible for the Insurance.
o You are in a Covered Class for the Insurance.
o You have met any evidence requirement for the Insurance.
o Your Insurance is not being delayed under the Delay of Effective Date
section below.
o You enrolled on a form approved by Prudential and agreed to pay the
required contributions.
89759
BEL 8100 [B]
II-49
<PAGE>
FOR DEPENDENTS INSURANCE
Your Dependents Insurance for a person will begin on the first day of the
Contract Month which coincides with or next follows the date on which the person
is a Qualified Dependent and You meet all of these requirements:
o You are eligible for the Insurance, and are covered for Employee Insurance.
o You are in a Covered Class for the Insurance.
o You have met any evidence requirement for that Qualified Dependent.
o Your Insurance for that Qualified Dependent is not being delayed under the
Delay of Effective Date section.
o You enrolled on a form approved by Prudential and agreed to pay the
required contributions.]
[WHEN EVIDENCE IS REQUIRED TO BECOME INSURED FOR EMPLOYEE OR DEPENDENTS
INSURANCE: In any of these situations You must give evidence of insurability.
The requirement will be met when Prudential decides the evidence is
satisfactory.
(1) You enroll the person more than 31 days after the person could first be
covered for the Insurance.
(2) You enroll the person after the person's Insurance under the Group Contract
ended because You did not pay a required contribution and You did not
reinstate the person's Coverage within three years after it ended.
(3) The person has not met a previous evidence requirement. The evidence was
required for that person to become covered as a dependent or an Employee.
The Insurance is or was under a Prudential Group Contract covering
Employees of the Employer.]
[DELAY OF EFFECTIVE DATE
FOR EMPLOYEE INSURANCE: Your Employee Insurance under the Coverage will be
delayed if You do not meet the Active Work Requirement on the day Your Insurance
would otherwise begin. Instead, it will begin on the first day of the Contract
Month that coincides with or next follows the first day on which You meet the
Active Work Requirement and other requirements for the
89759
BEL 8100 [C]
II-50
<PAGE>
Insurance. The same rule will apply to any change in Your Face Amount of
Insurance that is subject to this section if You do not meet the Active Work
Requirement on the day on which that change would take effect.
FOR DEPENDENTS INSURANCE: If the Qualified Dependent is confined for medical
care or treatment at home or elsewhere on the day Your Dependents Insurance
under the Coverage, or any change in that Insurance that is subject to this
section, would take effect, it will not take effect until the Qualified
Dependent's final medical release from such confinement. The other requirements
for the Insurance must also be met.]
89759
BEL 8100 [D]
II-51
<PAGE>
VARIABLE UNIVERSAL LIFE COVERAGE
FOR [EMPLOYEES AND THEIR DEPENDENTS]
This Coverage provides Insurance on the lives of Covered Persons.
A. DEATH BENEFIT.
If a person dies:
(a) while a Covered Person under this Coverage; or
[(b) while protected under the Extended Death Protection During Total
Disability Section of this Coverage; or]
[(c)] during the conversion period after the person's Insurance under this
Coverage ends;
a death benefit is payable when Prudential receives written proof of death.
Unless the Insurance is in default, the amount of the death benefit on any date
is the Insurance Amount less any Certificate Debt. The Insurance Amount is [ the
greater of:
(1) the Face Amount plus Certificate Fund; or
(2) the Certificate Fund times the percent for the person's attained age in the
Table of Corridor Percentages.]
The Face Amount is described in the Specifications Page. The amount of death
benefit will depend on the contributions made by or for the Covered Person, the
investment experience of the Separate Account (described in Section D. of the
Coverage), any excess interest credited to the Fixed Account (described in
Section E. of the Coverage) and the level of charges made. When the Insurance
has ended, the amount of the death benefit payable includes any amount available
under the provisions of [Sections K. and M.] of this Coverage.
B. CONTRIBUTIONS.
[The contribution for the first month that this Coverage is in force for a
Covered Person must be at least equal to the Initial Monthly Contribution
applicable to that person. After that, You may change the frequency and amount
of the monthly contribution, so long as the amount in the person's Certificate
Fund, less any Certificate Debt, is enough to make the monthly deductions from
the Certificate Fund.]
89759
GVUL R 8100 [A]
II-52
<PAGE>
You may also make lump sum contributions for the Covered Person at any time. But
Prudential reserves the right to not accept a lump sum contribution less than
the Minimum Lump Sum Contribution. After the Expense Charges are deducted from
each contribution, the balance goes into the Covered Person's Certificate Fund.
The balance is the Net Contribution. The [Initial] Monthly Contribution, Minimum
Lump Sum Contribution and the Expense Charges are shown in the Specifications
Page.
Prudential reserves the right not to accept, or to return, contributions which
would cause this Coverage to fail to qualify as life insurance under applicable
tax laws, or which would increase the Insurance Amount by more than it increases
the Certificate Fund.
DEFAULT: On the first day of each Contract Month Prudential will determine if a
Covered Person's Insurance is in default. To do so, Prudential will determine
the value of the Covered Person's Certificate Fund as of the previous Business
Day and deduct from that amount the charges described under Section C. of the
Coverage. If the resulting amount, less any Certificate Debt, is less than the
amount needed to make the monthly deduction from the Certificate Fund, the
Covered Person's Insurance is in default.
The Covered Person's Insurance is also in default if there is excess Certificate
Debt, as described under Section J. of the Coverage[, or if any specified
Monthly Contribution are not paid for the Covered Person when due, as provided
under Section B. of the Coverage.]
GRACE PERIOD: You will be granted a grace period equal to the greater of: (a) 61
days from the date the Insurance goes into default; or (b) 30 days from the date
Prudential mails You a notice of default, to make the minimum premium
contribution required to keep the Covered Person's Insurance in force.
Prudential will continue to accept contributions and make the charges it has set
during the grace period. If the Covered Person dies within the grace period, the
death benefit payable will be reduced by the amount needed to pay the monthly
charges for mortality and administration expenses due to the end of the month in
which death occurs. If the minimum contribution is not made by the end of the
grace period, the Covered Person's Insurance will end without value.
[REINSTATEMENT: If a Covered Person's Insurance is still in default after the
grace period ends, it may be reinstated. To do so, these conditions must be met:
(1) The Insurance must not have been in default for more than three years.
(2) The Insurance must not have been surrendered for its Cash Surrender Value.
(3) You have given evidence of the Covered Person's insurability that satisfies
Prudential.
89759
GVUL R 8100 [B]
II-53
<PAGE>
(4) The Cash Surrender Value must not have been used to buy paid-up insurance.
(5) You must pay a contribution at least equal to (i) the amount, if any,
needed to bring the Covered Person's Certificate Fund up to zero as of the
date the Covered Person's Insurance went into default; plus (2) the
deductions from the Certificate Fund during the grace period following the
date of default; plus (3) an amount sufficient to make that month's
deduction from the Certificate Fund. From this amount, the Expense Charges
specified in the Schedule of Benefits, plus any other charges, will be
deducted. The Certificate Fund will be equal to the rest, plus the Cash
Surrender Value of the Insurance just before it was reinstated.
(6) Any Certificate Debt (with interest) must be repaid. If the amount of
Certificate Debt with interest would exceed the Loan Value of the
Certificate, the excess must be repaid before reinstatement.
If Prudential approves, the reinstatement will be effective on the first day of
the month coinciding with or following the date on which the contribution
described in (5) is paid.]
C. THE CERTIFICATE FUND.
ALLOCATIONS: You may allocate all or part of the Net Contributions for the
Covered Person to one or more of the variable investment options of the Separate
Account shown in the List of Investment Options or to the Fixed Account. Any
allocation made by the [Employee] for the Covered Person must be at least [5%]
of each Net Contribution and a fractional percent may not be chosen. The total
must be 100%. You may change the Covered Person's allocation for future Net
Contributions at any time while this Coverage is in force. You must notify
Prudential on a form acceptable to it. The change will take effect on the next
Business Day after Prudential receives the notice.
On the date on which a person becomes a Covered Person for this Coverage, the
Certificate Fund is equal to the Net Contributions credited on that date, less
any applicable charges in items (10)[, (11) and (12)] below. On any other date,
the Certificate Fund is equal to what it was on the prior Business Day plus
these items:
(1) any Net Contribution credited on that day;
(2) any increase due to investment results in the value of the variable
investment options;
(3) guaranteed interest at an effective rate of [4%] a year on that part of the
Certificate Fund that is in the Fixed Account;
89759
GVUL R 8100 [C]
II-54
<PAGE>
(4) any excess interest on that part of the Certificate Fund that is in the
Fixed Account; and
(5) interest credited to any Loan Account as described in Section J. of the
Coverage.
and less these items applicable as of that date:
(6) any decrease due to investments results in the value of the variable
investment options;
(7) a charge against the variable investment options at a rate of [.00123%] a
day ([0.45%] a year) for mortality and expense risk, which will not exceed
.00245 % a day (0.90% a year);
(8) A charge against the variable investment options for investment management
fees and expenses;
(9) any amount charged against the variable investment options for local, state
or federal taxes;
(10) a charge for the cost of insurance;
[(11) any charges for administration;
(12) charges for any additional insurance benefits;]
[(13)] any partial withdrawals;
[(14) any transaction charges that may result from a partial withdrawal, loan,
additional statement request, transfer or a decrease in the Face Amount;]
[(15)] the amount of any interest on a loan that is not paid when due as
described in Section J. of the Coverage.
GUARANTEED INTEREST: Prudential will credit interest each day on that part of
the Certificate Fund invested in the Fixed Account. The interest credited will
be [.01074598 % a day (4% a year)].
EXCESS INTEREST: Prudential may credit interest in addition to the guaranteed
interest on that part of the Certificate Fund that is in the Fixed Account. The
rate of any excess interest will be determined from time to time. Prudential may
credit a different rate of interest to different parts of the Certificate Fund.
89759
GVUL R 8100 [D]
II-55
<PAGE>
CHARGE FOR COST OF INSURANCE: On the first day of each Contract Month,
Prudential will deduct a charge for the cost of Insurance from the Certificate
Fund. This charge will include the cost of expected mortality. [This charge may
also include the cost associated with additional insurance benefits.] The amount
deducted is computed as the applicable monthly rate times the Net Amount at
Risk. The Net Amount at Risk is equal to the Insurance Amount less the
Certificate Fund. The monthly rate is based on the Covered Person's age, rate
class and other features of the Coverage. In no event will the monthly rate be
higher than [150% of the applicable amount under the 1980 Commissioner's
Standard Ordinary Mortality Table (Male, age last birthday).]
CHARGE FOR ADMINISTRATION: On the first day of each Contract Month, Prudential
may deduct a charge for administration. The amount of this charge, if any, is
shown in the Specifications Page under Monthly Administration Charge.
DEDUCTION OF CHARGES: Any charges deducted from the Covered Person's Certificate
Fund will be charged against the Fixed Account and against the variable
investment options of the Separate Account on a proportional basis.
D. SEPARATE ACCOUNT.
This Coverage provides that certain values and payments will vary to reflect the
investment results of the Separate Account.
SEPARATE ACCOUNT: The words "Separate Account" where they are used without
qualification, mean The Prudential Variable Contract Account - GI-2 (VCA-GI-2).
Prudential established VCA - GI-2 to support group contracts, such as this one,
which participate in the Separate Account.
Prudential owns the assets of the Separate Account; it keeps them separate from
the assets of its general account. Assets held in the Separate Account shall not
be chargeable with liabilities arising out of any other business of Prudential.
For this purpose, "assets" means only those amounts held in the Separate Account
needed to satisfy Prudential's obligation pertaining to benefits attributable to
the Separate Account. Assets held in each investment option of VCA-GI-2 shall
not be chargeable with liabilities arising in connection with any other
investment option of VCA-GI-2.
Prudential will keep assets in the Separate Account with a total market value at
least equal to the amount of the liabilities relating to the benefits
attributable to the Separate Account. Prudential will have sole control of the
amount, if any, by which such value exceeds those liabilities. Prudential may,
from time to time, transfer cash among the Separate Account, its other
investment accounts and the investment options of VCA-GI-2 as, in its judgement,
experience warrants. No such transfer will affect Prudential's liability under
this Group Contract.
89759
GVUL R 8100 [E]
II-56
<PAGE>
VARIABLE INVESTMENT OPTIONS: VCA-GI-2 has several variable investment options.
The options are listed in the List of Investment Options. You allocate, using
percentages, the Net Contributions for the Covered Person among the various
options. Prudential may establish additional options.
THE FUNDS: The word Funds, where it is used without qualification, means [the
portfolios of The Prudential Series Fund, Inc. and the other mutual fund
portfolios in which the Separate Account invests. These other mutual fund
portfolios are unaffiliated with Prudential. Each of The Prudential Series Fund,
Inc. portfolios and the unaffiliated mutual fund portfolios are registered with
the SEC under the Investment Company Act of 1940 as open-end diversified
management investment companies. Each of The Prudential Series Fund, Inc.
portfolios and the unaffiliated mutual fund portfolios correspond to each of the
options in VCA-GI-2. All of the portfolios are listed in the List of Investment
Options.]
SEPARATE ACCOUNT INVESTMENTS: Prudential uses assets of VCA-GI-2 to buy shares
in the Funds. Each option of VCA-GI-2 is invested in a corresponding portfolio
of a Fund. Income and realized and unrealized gains and losses from assets in
each of these options are credited to, or charged against, that option. This is
without regard to income, gains or losses in Prudential's other investment
accounts.
Prudential will determine the value of the assets in each option of VCA-GI-2 on
the Valuation Date for that option, as shown in the List of Investment Options.
If that date is not a Business Day, Prudential will use the value of the assets
as of the end of the last prior Business Day on which trading took place.
CHANGE IN INVESTMENT POLICY: A portfolio of the Funds might make a material
change in its investment policy. In that case, Prudential will send You a notice
of the change. Within 61 days after receipt of the notice, or within 61 days
after the effective date of the change, if later, You may transfer any amount
from that portfolio to the Covered Person's Fixed Account or any other
investment option.
CHANGE OF FUND: A portfolio of the Funds might, in Prudential's judgment, become
unsuitable for investment. This might happen because of a change in investment
policy, a change in laws or regulations, because the shares are no longer
available for investment, or at the discretion of Prudential. If that occurs,
Prudential has the right to substitute another portfolio of the Funds or of an
entirely different mutual fund. But Prudential would first seek any required
regulator's consent.
E. FIXED ACCOUNT.
THE FIXED ACCOUNT: You may choose to allocate all or part of the Covered
Person's Net Contribution to the Fixed Account. Allocations to the Fixed Account
become part of Prudential's General Account. Amounts allocated to the Fixed
Account are credited with interest as described in Section C. under Guaranteed
Interest and Excess Interest.
89759
GVUL R 8100 [F]
II-57
<PAGE>
F. INVESTMENT MANAGER.
Prudential is the named fiduciary with respect to the management and control of
amounts held in the Separate Account. As named fiduciary, Prudential has the
sole authority to manage investments for the Separate Account. Prudential may,
in its sole discretion, delegate all or part of this authority to manage
investments for the Separate Account as follows:
(a) To one of its subsidiaries ("Subsidiary", for the purpose of this
Section F., means a company a majority of whose outstanding voting
stock is owned, directly or indirectly, by Prudential).
(b) To a person or entities which are not subsidiaries of Prudential.
However, those persons or entities must qualify as investment managers
as defined in Section 3(38) of ERISA. (ERISA means the Employee
Retirement Income Security Act of 1974, as amended).
G. TRANSFERS.
You may transfer a Covered Person's amounts among investment options of the
Separate Account and into the Fixed Account [as often as twelve times during a
Certificate Year without charge], unless the Insurance is in default. [The
minimum amount that can be transferred is $200, or the entire value of the
option if less. Transfer requests in percent terms may not be a fractional
percent and must be at least 10%.] To make a transfer, You must notify
Prudential on a form acceptable to it. The transfer will take effect on the
Valuation Date on which Prudential receives the notice.
You may also transfer a Covered Person's amounts from the Fixed Account into the
variable investment options at any time during the year, subject to the
following limitations:
(1) Only [one transfer] from the Fixed Account can be made each Certificate
Year (provided, however, that if a state law requires a full refund of
contributions, no transfer may be made within the first 30 days
following the Effective Date of the Certificate);
(2) The maximum amount that can be transferred is [the greater of $5,000 or
25% of the amount in the Fixed Account].
[Prudential reserves the right to deduct from the Covered Person's Certificate
Fund, on a pro-rata basis, a transaction charge of up to $20.00 for each
transfer request exceeding twelve in any Certificate Year.]
89759
GVUL R 8100 [G]
II-58
<PAGE>
DELAYED TRANSFERS: Prudential usually transfers the Covered Person's amounts on
the date it receives the [Employee's] request. But Prudential has the right to
defer making a transfer if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) there
occurs a system failure or power outage.
H. FULL SURRENDER.
You may surrender the Covered Person's Insurance for its Cash Surrender Value at
any time. To surrender the Covered Person's Insurance, You must ask Prudential
on a form acceptable to Prudential. You may ask Prudential what the Cash
Surrender Value of the Covered Person's Certificate Fund is prior to electing to
surrender. Prudential will pay the Cash Surrender Value calculated as of the
Valuation Date on which Prudential receives Your request. The proceeds will be
paid to You in a lump sum.
[The transaction charge for a full surrender may be up to the lesser of (a) $20,
or (b) 2% of the amount paid upon surrender.]
DELAYED SURRENDER: Prudential usually pays any Cash Surrender Value within 7
days of the date it receives Your request. But Prudential has the right to defer
paying the portion of the proceeds that is to come from the variable investment
options if: (1) the New York Stock Exchange is closed; or (2) the SEC requires
that trading be restricted or declares an emergency; or (3) there occurs a
system failure or a power outage. Prudential also has the right to defer paying
the portion of the proceeds that is to come from the Fixed Account for up to six
months. If Prudential does so for more than 30 days, it will pay interest on
that portion at the Fixed Account rate.
89759
GVUL R 8100 [H]
II-59
<PAGE>
I. PARTIAL WITHDRAWALS.
You may make partial withdrawals from the Covered Person's Certificate Fund. Any
partial withdrawals are subject to all of these terms:
(1) The Covered Person's Insurance must be in force and not in default.
(2) You must ask for the partial withdrawal on a form acceptable to
Prudential.
(3) The maximum amount of any partial withdrawal is the amount that would
reduce the Covered Person's Certificate Fund (less any Certificate
Debt) to the amount needed to make [the next monthly deductions from
the Certificate Fund].
(4) The amount withdrawn must be at least [$200].
(5) The amount withdrawn will be taken from the Covered Person's
Certificate Fund accounts on a pro-rata basis, unless You select
specific accounts.
[Prudential reserves the right to deduct from the amount withdrawn from the
Covered Person's Certificate Fund a transaction charge, up to the lesser of (a)
$20.00 or (b) 2% of the amount withdrawn, with respect to each partial
withdrawal.]
DELAYED WITHDRAWALS: Prudential will usually pay any partial withdrawals within
seven days of the date it receives the request. But Prudential has the right to
defer paying the portion of the proceeds that is to come from the Covered
Person's variable investment options if : (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency; or (3) there occurs a system failure or a power outage. Prudential
also has the right to defer paying the portion of the proceeds that is to come
from the Fixed Account for up to six months. If Prudential does so for more than
30 days, it will pay interest on that portion at the Fixed Account rate.
An amount withdrawn may not be repaid except as a contribution subject to
charges.
89759
GVUL R 8100 [I]
II-60
<PAGE>
J. LOANS.
You may make a request to borrow from a Covered Person's Certificate Fund.
LOAN REQUIREMENTS: Loans are subject to these terms:
(1) The Covered Person's Insurance must be in force and not in default.
(2) The Covered Person's Certificate Debt must not be more than the Loan
Value.
(3) The amount borrowed from the Covered Person's Certificate Fund at any
one time must be at least [$200].
(4) The amount borrowed will be taken from the Covered Person's Certificate
Fund on a pro-rata basis, unless You select specific accounts.
If there is already Certificate Debt when You take out the loan, the new amount
borrowed will be added to that debt.
MAXIMUM LOAN VALUE: The maximum Loan Value (before any applicable charge) is
determined by multiplying the Certificate Fund by [90%] and subtracting any
existing loan with accrued interest and the amount needed to make [the next
monthly deductions from the Certificate Fund].
INTEREST CHARGE: Interest charged on any loan will accrue daily at an annual
rate determined each year by Prudential. Interest payments on any loan are due
on each Contract Anniversary, or when the loan or any part of it is paid back,
if that comes first. If interest is not paid when due, it will be added to the
principal amount of the loan. Then interest is charged on it, too. Prudential
will notify the [Employee 31] days before the interest on the loan becomes due.
The loan interest rate is the annual rate Prudential sets from time to time. The
rate will never be greater than that permitted by law. It will change only on a
Contract Anniversary. Before the start of each Contract Year, Prudential will
determine the loan interest rate to be charged for that year.
When You take out a loan, Prudential will tell You the initial interest rate for
the loan. Prudential will notify You if the rate is to be changed.
EFFECT OF A LOAN: A Loan Account that is part of a Covered Person's Certificate
Fund will be set up when You take out a loan. The amount of the loan taken will
be credited to the Covered Person's Loan Account.
89759
GVUL R 8100 [J]
II-61
<PAGE>
Prudential will credit interest to the Covered Person's Loan Account at the loan
interest rate for the Contract Year, less [2 %]. On each Contract Anniversary,
if there is a loan outstanding, interest credited to the Loan Account will be
allocated to the variable investment options and the Fixed Account based on Your
then current Net Contribution allocations for the Covered Person.
REPAYMENT: You may pay back all or part of any Certificate Debt at any time. If
You choose to make repayment by partial withdrawal from the Covered Person's
Certificate Fund, the provisions of Section I. of the Coverage will apply.
Repayment will be allocated among the Covered Person's Fixed Account and the
variable investment options, based on Your then current Net Contribution
allocations, unless You select specific accounts. While a loan is outstanding,
any payment should be designated as a contribution or a loan repayment. If that
designation is not made, it will be treated as a loan repayment.
Should a death benefit become payable while a loan is outstanding, or should the
Covered Person's Insurance be surrendered while a loan is outstanding, or should
the Covered Person's Insurance lapse, any proceeds otherwise payable will be
reduced to reflect the amount of the loan and any accrued interest.
EXCESS CERTIFICATE DEBT: If Certificate Debt ever becomes equal to or more than
the Certificate Fund value minus an amount equal to that needed to make [the
next month's deductions], the Insurance is in default. Prudential will send You
a notice at Your last known address stating the minimum contribution that, if
paid to Prudential, will keep this coverage from ending. The Covered Person's
Insurance under this Coverage will end at the end of the grace period described
in Section B. if the minimum contribution is not made.
DELAYED LOANS: Prudential usually makes a loan within seven days of the date it
receives Your request. But Prudential has the right to defer making the portion
of the loan that is to come from the Covered Person's variable investment
options if: (1) the New York Stock Exchange is closed; or (2) the SEC requires
that trading be restricted or declares an emergency; or (3) there occurs a
system failure or a power outage. Prudential also has the right to defer paying
the portion of the proceeds of a loan that is to come from the Fixed Account for
up to six months. Prudential also has the right to defer paying the portion of
the proceeds that is to come from the Fixed Account for up to six months. If
Prudential does so for more that 30 days, it will pay interest on that portion
at the Fixed Account rate.
[Prudential reserves the right to withdraw from the Covered Person's Certificate
Fund a transaction charge of up to $20.00 with respect to each loan made.]
89759
GVUL R 8100 [K]
II-62
<PAGE>
[K. EXTENDED DEATH PROTECTION DURING TOTAL DISABILITY.
Extended death protection can replace a Covered Person's amount of Insurance
when it ends, but only with respect to the Face Amount. If You meet the
conditions below, Your death benefit protection, and that of any covered
dependents will be extended after Your Insurance under this Coverage ends while
the You are Totally Disabled. The conditions are:
o You become Totally Disabled while Insured under this Coverage.
o You are less than age 60 when Your Total Disability starts.
Total Disability: You are "Totally Disabled" when:
(1) You are not working at any job for wage or profit; and
(2) Due to Sickness, Injury or both, You are not able to perform for wage
or profit the material and substantial duties of any job for which You
are reasonably fitted by Your education, training and experience.
The extension ends one year after Your Total Disability starts, unless, within
one year, You give Prudential proof that:
(a) You have met the above conditions; and
(b) You are still Totally Disabled; and
(c) The Total Disability has continued for at least nine months.
Prudential will then further extend Your death protection, and that of Your
covered dependents, for successive one year periods. The first of these periods
will start on the date Prudential receives this proof. After that first period,
You must give written proof when and as required by Prudential once each year
that Total Disability continues.
If You or Your dependent die while the death protection is being extended, the
Death Benefit payable to the Beneficiary will be the Amount of Extended Death
Protection when Prudential receives written proof that:
(a) Your Total Disability continued until Your death; and
(b) All of the above conditions have been met.
89759
GVUL R 8100 [L]
II-63
<PAGE>
If You or Your dependent die within one year after Your Total Disability starts
and before proof of Total Disability is given to Prudential, written notice of
the person's death must be given to Prudential within one year after the death.
The death benefit will be paid if all of the above conditions have been met.
This extended death protection ends if and when:
(1) Your Total Disability ends; or
(2) You (or Your Dependent) attain age [65]; or
(3) You fail to submit any required proof that Total Disability continues;
or
(4) You fail to submit to a medical exam by Doctors named by Prudential at
reasonable intervals. After two full years of this protection,
Prudential will not require an exam more than once a year.
If extended death protection ends after You have given the first proof of
continued Total Disability, the same rights under Sections A. and M. apply as if
the person had ceased to be a member of the Coverage Classes for the Insurance.
But this does not apply if the person becomes covered again within 31 days after
this protection ends.
AMOUNT OF EXTENDED DEATH PROTECTION: The amount of the Face Amount on the
person's life when the Insurance ended.
But the amount is reduced by any amount payable under any Prudential group life
insurance that replaces this Coverage for Your class.
EFFECT OF CONVERSION: An individual contract issued under Section M. will be in
place of all rights under this Section K. But if all the requirements of this
Section K. have been met, these rights may be obtained in exchange for all
benefits of the individual contract. Premiums paid under the individual contract
will be refunded.]
[L.] PAID-UP INSURANCE.
You may elect to provide paid-up insurance for a Covered Person at any time in
lieu of the Insurance, if the Cash Surrender Value of the Covered Person's
Certificate Fund is at least $1,000. You must make the election on a form
acceptable to Prudential.
89759
GVUL R 8100 [M]
II-64
<PAGE>
The election will take effect on the first Business Day following the date on
which Prudential receives the form.
This option will apply automatically if (a) a Covered Person's Insurance ends
(for reasons other than default); or (b) extended death protection ends (and the
person does not again become covered during the next 31 days) as provided in
Section K.; and (c) the Cash Surrender Value of the Covered Person's Certificate
Fund is at least $1,000 and You do not choose any of the options available upon
termination of the person's Coverage within 61 days after Coverage ends.
The amount of paid-up insurance under this option is the amount which the
Covered Person's current Cash Surrender Value will provide when used as a net
single premium, but it may not be more than the Covered Person's death benefit.
The maximum premium will be based on the 1980 Commissioners' Standard Ordinary
Mortality Table, Male Mortality, at 4%. It will be determined by the Covered
Person's attained age.
Paid-up insurance may be surrendered for its cash value at any time. The cash
value will be the net single premium at the Covered Person's attained age for
the amount of Insurance, using the same basis which determined that amount. [If
only part of the Covered Person's paid-up insurance is to be surrendered, its
cash value must be at least $500.] Prudential may defer a surrender for up to
six months. If Prudential does so for more than 30 days, it will pay interest on
that portion at the rate of [3%] a year.
DIVIDENDS: Prudential will determine that part of the dividend, if any, derived
from the Covered Person's paid-up insurance. That part will be applied to
increase the Covered Person's paid-up insurance. That part will not be
considered in determining the disposition or effect of dividends under any other
provisions of the Group Contract.
CHANGE IN BENEFICIARY: If You purchase paid-up insurance and You make a
Beneficiary change the Beneficiary change form must be filed with Prudential.
[M.] CONVERSION PRIVILEGE.
If a Covered Person's Face Amount of Insurance under this Coverage ends for [the
reason] stated below, the Covered Person may convert all or part of it to an
individual life insurance contract. Evidence of insurability is not required.
The [reason is:
All Face Amount of Insurance of the Group Contract for Your class ends by
amendment or otherwise[; or, with respect to your dependent Spouse, all
Face Amount of Insurance of the Group Contract for Your class ends by
amendment or otherwise]. But, on the date it ends[:
89759
GVUL R 8100 [N]
II-65
<PAGE>
(a)] You must have been insured for five years for that insurance (or for
that insurance and any other Prudential rider or group contract
replaced by that insurance)[; or
(b) With respect to your dependent Spouse, You must have been insured
for that Spouse for five years for that insurance (or for that
insurance and any Prudential rider or group contract replaced by
that insurance)].
Any such conversion[s are] subject to the rest of this Section [M].
AVAILABILITY: A Covered Person must apply for the individual contract and pay
the first premium by the later of:
(1) The thirty-first day after the Covered Person's Face Amount ends; and
(2) The fifteenth day after the Covered Person has been given written notice
of the conversion privilege. But, in no event may insurance be converted
to an individual contract if the Covered Person does not apply for the
individual contract and pay the first premium prior to the ninety-second
day after the Covered Person's Face Amount of Insurance ends.
INDIVIDUAL CONTRACT RULES: The individual contract must conform to the
following:
Amount: Not more than the Face Amount of Insurance on the Covered Person then
ending. But, if the Face Amount of Insurance ends because all Insurance of the
Group Contract for Your class ends, the total amount of individual insurance
which the Covered Person may get in place of all Insurance then ending for the
Covered Person under the Group Contract will not exceed the lesser of the
following:
(1) The Face Amount of Insurance then ending for that person under the
Group Contract, reduced by the amount of group life insurance from any
carrier for which that person is or becomes eligible within the next 31
days.
(2) [$10,000].
Death During Conversion Period: The amount a Covered Person had a right to
convert to an individual contract is included in the Death Benefit if the
Covered Person dies:
(1) Within 31 days after the Covered Person's Face Amount of Insurance
ends; and
(2) While the Covered Person has the right to convert the Face Amount of
Insurance to an individual contract.
It is included even if the Covered Person did not apply for conversion. [But it
is reduced by the amount of any extended death benefit protection which
applies.]
89759
GVUL R 8100 [O]
II-66
<PAGE>
Form: Any form of a life insurance contract that:
(1) conforms to Title VII of the Civil Rights Act of 1964, as amended,
having no distinction based on sex; and
(2) is one that Prudential usually issues at the age and amount applied
for.
[This does not include term insurance or a contract with disability or
supplementary benefits.]
Premium: Based on Prudential's rate as it applies to the form and amount, and to
the Covered Person's class of risk (other than gender) and age at the time.
Effective Date: The end of the 31 day period during after which the person
ceases to be insured for the Face Amount of Insurance.
[N.] GENERAL PROVISIONS.
SUICIDE: If a Covered Person dies because of suicide the following applies:
(1) If death because of suicide occurs within one year from the date a
person became a Covered Person, Prudential will pay the Beneficiary no
more than the sum of the contributions paid, less any Certificate Debt
and less partial withdrawals.
(2) With respect to the amount of any increase in the Face Amount for which
the Covered Person is enrolled, if death occurs within [two years] from
the date of the increase in the Face Amount, Prudential will pay the
Beneficiary no more than the sum of the monthly charges attributable to
the increase.
89759
GVUL 8100 [P]
II-67
<PAGE>
ANNUAL REPORT: Prudential will send You a detailed report of each Covered
Person's Certificate Fund. It will be sent within three months after the end of
each Contract Year. You may request a report at other times, subject to a fee of
[$20.00] for its cost.
PAYMENT OF DEATH CLAIM: If Prudential pays a death claim in a lump sum, it will
usually pay the proceeds within seven days of the date it receives written proof
of loss. But Prudential has the right to defer paying any part of the death
benefit that is to come from the variable investment options if: (1) the New
York Stock Exchange is closed; or (2) the SEC requires that trading be
restricted or declares an emergency; or (3) there occurs a system failure or a
power outage.
BENEFICIARY; MODE OF SETTLEMENT: Any death benefit under a section of this
Coverage is payable according to that section and the Beneficiary and Mode of
Settlement Rules.
89759
GVUL R 8100 [Q]
II-68
<PAGE>
OPTION TO ACCELERATE PAYMENT OF CERTAIN
DEATH BENEFITS UNDER VARIABLE UNIVERSAL LIFE COVERAGE
FOR [EMPLOYEES AND DEPENDENT SPOUSES]
These provisions change the Variable Universal Life Coverage (called Coverage
below) to provide an option to accelerate payments of portions of the Covered
Person's Face Amount of Insurance.
YOU SHOULD KNOW THAT ELECTION OF THIS OPTION MAY AFFECT OTHER BENEFITS OR
ENTITLEMENTS FOR WHICH THE COVERED PERSON MAY BE ELIGIBLE. IT MAY ALSO AFFECT
INCOME TAX LIABILITY. READ THESE NOTES CAREFULLY:
(1) IF YOU ELECT THIS OPTION, THE AMOUNT OF VARIABLE UNIVERSAL LIFE
COVERAGE fOR THE COVERED PERSON IS REDUCED BY THE TERMINAL ILLNESS
PROCEEDS [AND THE ACCELERATED PAYMENT FEE] DESCRIBED BELOW.
(2) ANY PAYMENT MADE UNDER THIS OPTION MAY BE TAXABLE. YOU ARE ADVISED TO
SEEK THE HELP OF A PROFESSIONAL TAX ADVISOR FOR ASSISTANCE WITH ANY
QUESTIONS THAT YOU MAY HAVE.
(3) IF YOU ELECT THIS OPTION, THE COVERED PERSON'S ELIGIBILITY FOR MEDICAID
OR OTHER GOVERNMENT PROGRAMS MAY BE AFFECTED. YOU ARE ADVISED TO SEEK
THE HELP OF A PROFESSIONAL LEGAL ADVISOR FOR ASSISTANCE WITH ANY
QUESTIONS THAT YOU MAY HAVE.
As used here:
"Certificate Fund Amount" means the Cash Surrender Value of the Covered Person's
Certificate Fund on the day Prudential receives proof that the Covered Person is
Terminally Ill.
"Face Amount" means the Covered Person's Face Amount of Insurance under the
Coverage on the day Prudential receives proof that the Covered Person is
Terminally Ill.
"Terminally Ill" means having a life expectancy of 12 months or less.
"Terminal Illness Proceeds" means the amount of Variable Universal Life death
benefit placed under this option for a Covered Person.
The Terminal Illness Proceeds are equal to:
89759
GVUL T 8100 [A]
II-69
<PAGE>
(a) a portion of the Covered Person's Face Amount, as determined
under (1) below; plus
(b) a portion of the Covered Person's Certificate Fund, as
determined under (2) below[; minus
(c) an Accelerated Payment Fee not to exceed $350.00].
(1) You must elect the portion of the Covered Person's Face Amount that You
want to place under this option. [You may elect any portion of the
Covered Person's Face Amount, but it may not exceed the lesser of: (a)
80% of the Covered Person's Face Amount; or (b) $250,000.]
[However, such portion may be reduced if, within twelve months after the date
Prudential receives proof that the Covered Person is Terminally Ill, a reduction
on account of the Covered Person's age would have applied to the Covered
Person's Face Amount. In that case, the portion of the Covered Person's Face
Amount placed under this option will not exceed the Face Amount applying after
the reduction.]
Based on Your election,[and any reduction on account of the Covered Person's age
that may apply,] Prudential will determine the Accelerated Payment Factor. The
Accelerated Payment Factor is equal to:
(i) the portion of the Covered Person's Face Amount that is placed
under this option; over
(ii) The Covered Person's total Face Amount.
(2) The portion of the Covered Person's Certificate Fund that will be
placed under this option is equal to:
(i) the Covered Person's total Certificate Fund Amount, times the
Accelerated Payment Factor; minus
(ii) the sum of any outstanding loan balance, plus any interest due
on loans, times the Accelerated Payment Factor.
89759
GVUL T 8100 [B]
II-70
<PAGE>
CHANGES MADE IN THE COVERAGE:
If a person is Terminally Ill while a Covered Person under the Coverage [or
while death benefit protection is being extended for the Covered Person under
the Coverage,] You may elect to have the Covered Person's Terminal Illness
Proceeds placed under this option. That election is subject to the "Conditions"
set forth below. The Covered Person's Face Amount of Insurance and Certificate
Fund Amount under the Coverage are affected as described in the "Effect on
Coverage" section. Contributions are affected as described in the "Effect on
Contributions" section.
CONDITIONS: Your right to be paid under this option is subject to these terms:
(1) You may elect this option only once with respect to each Covered Person
is covered under the Coverage.
(2) You must choose this option in a form that satisfies Prudential.
(3) You must furnish proof that satisfies Prudential that the Covered
Person's life expectancy is 12 months or less, including a
certification by a doctor.
(4) The Variable Universal Life Coverage must not be assigned.
(5) Terminal Illness Proceeds will be made available to You on a voluntary
basis only. Therefore:
(a) If You are required by law to use this option to meet the
claims of creditors, whether in bankruptcy or otherwise, You
are not eligible for this benefit.
(b) If You are required by a government agency to use this option
in order to apply for, get or keep a government benefit or
entitlement, You are not eligible for this option.
(6) Once You elect this option, You may no longer: (a) request an increase
in the Covered Person's Face Amount of the Insurance; (b) make a lump
sum contribution to the Covered Person's Certificate Fund, except for
contributions required for the Covered Person's Face Amount of
Insurance; or (c) increase the amount of contribution to the Covered
Person's Certificate Fund, except to the extent an increase is needed
to reflect an increase in the mortality and expense risk charges.
EFFECT ON COVERAGE: When You elect this option, the total amount of Variable
Universal Life Coverage payable upon the Covered Person's death[, including any
amount under an extended
89759
GVUL T 8100 [C]
II-71
<PAGE>
death benefit,] will be reduced by the Terminal Illness Proceeds[, the
Accelerated Payment Fee]. Any amount deducted from the Covered Person's
Certificate Fund as provided in item (2)(ii) of the Terminal Illness Proceeds
will be applied to reduce the amount of any outstanding loan and loan interest.
Any amount that the Covered Person could have otherwise converted to an
individual contract will be reduced by the Terminal Illness Proceeds[and the
Accelerated Payment Fee described above].
Prudential reserves the right to make a distribution from the Covered Person's
Certificate Fund when benefits under this option are paid. Any such distribution
will be made only to the extent needed to continue to qualify the Variable
Universal Life Coverage as life insurance under the Internal Revenue Code.
EFFECT ON CONTRIBUTIONS: The amount of Your contribution for the Covered Person
will be adjusted based on the Face Amount remaining in force on the Covered
Person's life.
METHOD OF PAYMENT: If You elect this option, Prudential will pay the Terminal
Illness Proceeds to You in one lump sum when it receives proof that the Covered
Person is Terminally Ill. When Prudential pays an accelerated death benefit
under this option, Prudential will send You a statement that shows the effect of
the payment on the Covered Person's Insurance Amount and Your contribution for
the Covered Person's Coverage.
-------------------------------------------------
89759
GVUL T 8100 [D]
II-72
<PAGE>
ADDITIONAL BENEFIT FOR ACCIDENTAL DEATH AS A RESULT OF A MOTOR VEHICLE ACCIDENT
WHILE WEARING A SEATBELT
FOR [EMPLOYEES AND DEPENDENTS]
"Motor Vehicle": Means a private automobile of pleasure car design, van,
four-wheel drive vehicle, self-propelled motor home or truck. This does not
include a vehicle used for farming, military, business, racing or any other type
of competitive speed event.
A benefit will be paid if a person dies:
(a) While a Covered Person under the Variable Universal Life Coverage[, or
while protected under the Extended Death Protection During Total
Disability section of the Variable Universal Life Coverage];
(b) as a result of a bodily injury sustained in a Motor Vehicle accident,
while either operating or riding as a passenger in such Motor Vehicle;
(c) while wearing a seatbelt, in the manner prescribed by the Motor
Vehicle's manufacturer[; and
(d) within 90 days after the date of the Motor Vehicle accident.]
Benefit Payable: Upon submission of proof that a Covered Person died in a Motor
Vehicle accident and the above conditions were satisfied, a benefit equal to
[the lesser of $10,000 or 10% of the Covered Person's Face Amount of Insurance
under the Variable Universal Life Coverage] will be payable. However, if proof
of condition (c) above is not available, Prudential will pay a benefit of
[$1,000].
The benefit will be paid to You, if the Covered Person is Your Eligible
Dependent, otherwise to Your Beneficiary.
Not Covered: A Covered Person's death in a Motor Vehicle, if death results from:
[(1) suicide;
(2) operating, or riding as a passenger while another person is operating,
a Motor Vehicle while under the influence of drugs or alcohol;
(3) operating, or riding as apassenger while another person is operating, a
Motor Vehicle while not wearing a seatbelt in the manner prescribed by
the Motor Vehicle's manufacturer.]
89759
GVUL T 8101 [A]
II-73
<PAGE>
ADDITIONAL PROVISIONS FOR DEPENDENTS TERM LIFE INSURANCE UNDER VARIABLE
UNIVERSAL LIFE COVERAGE
FOR YOUR DEPENDENTS ONLY
A. DEATH BENEFIT WHILE A COVERED PERSON.
If a dependent dies while a Covered Person, the amount of Insurance on that
dependent under these provisions is payable when Prudential receives written
proof of death.
B. DEATH BENEFIT DURING A CONVERSION PERIOD.
A death benefit is payable under this section B. if a dependent dies:
(1) within 31 days after ceasing to be a Covered Person; and
(2) while entitled (under Section C) to a conversion of the Insurance under
these Additional Provisions to an individual contract.
The amount of the benefit is equal to the amount of Dependents Term Life
Insurance which could have been converted. It is payable even if conversion was
not applied for. It is payable when Prudential receives written proof of death.
C. CONVERSION PRIVILEGE.
This privilege applies if You cease to be insured for the Additional Provisions
for Dependents Term Life Insurance under Variable Universal life Coverage of the
Group Contract with respect to a dependent. That dependent may have Your
Insurance on the dependent under these Additional Provisions, which then ends,
converted to an individual life insurance contract. Evidence of insurability is
not required. However, conversion is not available if the Insurance ends because
You fail to make any required contributions for Insurance under the Group
Contract.
Any such conversion is subject to the rest of this Section C.
AVAILABILITY: The inidividual contract must be applied for and the first premium
must be paid by the later of:
(1) The thirty-first day after the Covered Person's insurance under these
Additional Provisions ends; and
89759
GVUL T 8102 [A]
II-74
<PAGE>
(2) The fifteenth day after the Covered Person has been given written notice of
the conversion privilege. But, in no event may insurance be converted to an
individual contract if the Covered Person does not apply for the individual
contract and pay the first premium prior to the ninety-second day after the
Covered Person's insurance ends.
INDIVIDUAL CONTRACT RULES: The Individual Contract must conform to the
following:
Amount: Not more than the amount of Dependents Term Life Insurance on the
dependent ending under these Additional Provisions. But, if it ends because all
of the Dependents Term Life Insurance under these Additional Provisions for Your
class ends, the total amount of individual insurance which may be obtained in
place of all the Dependents Term Life Insurance on the dependent then ending
under these Additional Provisions will not exceed the total amount of all of
Your Dependents Term Life Insurance on the dependent then ending under these
Additional Provisions reduced by the amount of group life insurance from any
carrier for which You are or become eligible with respect to the dependent
within the next 31 days.
Form: Any form of a life insurance contract that Prudential usually issues at
the age and amount applied for. [This does not include term insurance or a
contract with disability or supplementary benefits.]
Effective Date: The end of the 31-day period after you cease to be insured for
the Dependent Term Life Coverage with respect to the dependent.
-------------------------------
Any death benefit provided under a section of these Additional Provisions is
payable to [You. If You are not living at the death of a dependent, the death
benefit is payable to the dependent's estate, or, at Prudential's option, to any
one or more of these surviving relatives of the dependent: wife; husband;
mother; father; children; brothers; sisters.]
---------------------------------
89759
GVUL T 8102 [B]
II-75
<PAGE>
ADDITIONAL PROVISIONS FOR ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE UNDER
VARIABLE UNIVERSAL LIFE COVERAGE
FOR [EMPLOYEES AND THEIR DEPENDENTS]
These Additional Provisions pay benefits for accidental loss of life, sight,
hand or foot. Loss of sight means total and permanent loss of sight. Loss of
hand or foot means loss by severance at or above the wrist or ankle.
Those benefits are payable only if all of these conditions are met:
o The person sustains an accidental bodily Injury while a Covered Person.
o The loss results directly from that Injury and from no other cause.
o The person suffers the loss within [90 days] after the accident.
BENEFIT AMOUNT PAYABLE: The amount payable depends on the type of loss as shown
in this table. [All benefits are subject to the Limitation Per Accident below.
For loss of:
Life )
Both Hands )
Both Feet )
Sight of Both Eyes ) The person's Amount of Insurance under
One Hand and One Foot ) these Additional Provisions
One Hand and Sight of One Eye )
One Foot and Sight of One Eye )
One Hand )
One Foot ) One-half the person's Amount of Insurance
Sight of One Eye ) under these Additional Provisions
LIMITATION PER ACCIDENT: No more than the person's amount of Insurance under
this Coverage is payable for all losses resulting from Injuries sustained in the
same accident.]
LOSSES NOT COVERED: A loss is not covered if it results from any of these:
(1) Suicide or attempted suicide[while sane or insane].
89759
GVUL T 8103 [A]
II-76
<PAGE>
(2) Sickness, whether the loss results directly or indirectly from Sickness.
(3) Medical or surgical treatment of Sickness, whether the loss results
directly or indirectly from the treatment.
(4) Any infection, unless it is pyogenic and occurs through and at the time of
an accidental cut or wound.
(5) War, or any act of war. "War" means declared or undeclared war and includes
resistance to armed aggression.
[(6) Operating an automobile, or any other vehicle or conveyance, while under
the influence of drugs or alcohol.
(7) Travel or other movement by means of an aircraft, or descent from or with a
moving aircraft. This (7) applies only if the person is not a fare paying
passenger on a scheduled or charter flight operated by a scheduled airline.
"Aircraft" means any kind of vehicle or device designed for travel or other
movement in or beyond the earth's atmosphere.
(8) Injury arising out of, or in the course of, any work for wage or profit
(whether or not with the Employer).]
-----------------------------------
Each benefit of these Additional Provisions is payable to the Covered Person.
Any benefit unpaid at the Covered Person's death will be paid [to the Employee,
if the Covered Person is the Employee's Dependent, otherwise] in accordance with
the Beneficiary Rules. The Claim Rules apply to the payment of the benefits.
-----------------------------------
89759
GVUL T 8103 [B]
II-77
<PAGE>
APPLICANT OWNER RULES UNDER [EMPLOYEE] GROUP VARIABLE UNIVERSAL LIFE COVERAGE
PERSONS ELIGIBLE TO BECOME APPLICANT OWNERS:
Any one of the persons listed below who is associated with You, if: You are in
the Covered Class for the [Employee] Group Variable Universal Life Coverage, but
have not asked to become covered for [Employee] Insurance under that Coverage:
[Your spouse; child; parent; grandparent; grandchild; sister; brother; or the
trustee of any trust of which you are the grantor]. A person who has not
attained the age of majority is not eligible to become an Applicant Owner.
BECOMING AN APPLICANT OWNER:
A person is an Applicant Owner from the first day on which all of these
requirements are met:
(1) The person is an eligible Applicant Owner.
(2) The person has asked to be an Applicant Owner on a form approved by
Prudential.
(3) The form on which the person has asked to be an applicant owner is signed
by the [Employee] with respect to whose insurance the person seeks to own.
(4) The [Employee] meets all of the requirements of the Group Contract for
becoming insured.
(5) No one else is an Applicant Owner and there is no assignee under the
Coverage with respect to the [Employee].
(6) The person is the Applicant Owner of all Insurance under the Group Contract
with respect to the [Employee]. At any one time, only one incidence of
ownership is allowed for all coverage under the Group Contract with respect
to the [Employee].
RIGHTS, BENEFITS AND PRIVILEGES OF AN APPLICANT OWNER:
A person who is an Applicant Owner has the rights, benefits and privileges under
the Group Contract of the [Employee] with respect to whose Insurance the person
is Applicant Owner. This includes, but is not limited to, any right the
[Employee] has to choose a Beneficiary or to convert to another contract of
insurance.
89759
AOR 8100 [A]
II-78
<PAGE>
GENERAL INFORMATION
BENEFICIARY RULES
The rules in this section apply to the amount of Insurance payable on account of
a Covered Person's death, when the Insurance states that they do. If there is an
assignment, these rules are modified by the Limits on Assignments section.
"Beneficiary" means a person chosen, on a form approved by Prudential, to
receive the Insurance benefits.
You have the right to choose a Beneficiary [for Employee Insurance. The
Dependents Variable Universal Life Insurance is payable to You.]
If there is a Beneficiary for the amount of [Employee] Insurance, it is payable
to that Beneficiary. [Any amount of Insurance for which there is no Beneficiary
at Your death will be payable to Your estate, or , at Prudential's option, to
any one or more of these surviving relatives: wife; husband; mother; father;
children; brothers; sisters.]
You may change the Beneficiary at any time without the consent of the present
Beneficiary. The Beneficiary change form must be filed through the Employer. The
change will take effect on the date the form is signed. But it will not apply to
any amount paid by Prudential before it receives the form.
If there is more than one Beneficiary, but the Beneficiary form does not specify
their respective shares, they will share equally. If a Beneficiary dies before
You, that Beneficiary's interest will end. It will be shared equally by any
remaining Beneficiaries, unless the Beneficiary form states otherwise.
MODE OF SETTLEMENT RULES
(Applies to Your [Employee's] amount of Insurance)
"Mode of Settlement" means payment other than a lump sum.
The amount of Variable Universal Life Insurance is normally paid to the
Beneficiary in one sum. A mode of settlement may be arranged with Prudential for
all or part of the amount of Insurance, as stated below.
89759
BBN 8100 [A]
II-79
<PAGE>
GENERAL INFORMATION (Continued)
ARRANGEMENT FOR MODE OF SETTLEMENT: You may arrange a Mode of Settlement by
proper written request to Prudential. If, at Your death, no Mode of Settlement
has been arranged for an amount of Insurance, the Beneficiary and Prudential may
mutually agree on a Mode of Settlement for that amount.
CONDITIONS FOR MODE OF SETTLEMENT: The Beneficiary must be a natural person
taking in the Beneficiary's own right. A Mode of Settlement will apply to
secondary Beneficiaries only if Prudential agrees in writing. Each installment
to a person must not be less that $20.00. A change of Beneficiary will void any
Mode of Settlement arranged before the change.
CHOICE BY BENEFICIARY: A Beneficiary being paid under a Mode of Settlement may,
if Prudential agrees, choose (or change the Beneficiary's choice of) a payee or
payees to receive, in one sum, any amount which would otherwise be payable to
the Beneficiary's estate.
Information about Modes of Settlement is available from Prudential.
INCONTESTABILITY OF INSURANCE
This limits Prudential's use of Your statements in contesting the amount of
Insurance for which You are insured. These are statements made to persuade
Prudential to accept You for Insurance. They will be considered to be made to
the best of Your knowledge and belief. These rules apply to each statement:
(1) It will not be used in the contest unless:
(a) It is in a written instrument signed by You; and
(b) A copy of that instrument is or has been furnished to the Beneficiary.
(2) If it relates to Your [or Your Qualified Dependent's] insurability, it will
not be used to contest the validity of the Insurance which has been in
force, before the contest, for at least two years during the Covered
Person's lifetime.
-------------------------------
89759
BBN 8100 [B]
II-80
<PAGE>
LIMITS ON ASSIGNMENTS
Unless not allowed in the Specifications Page, You may assign Your [Employee or
Dependents] Insurance under the Coverage. Any rights, benefits or privileges
that You have may be assigned. This includes any right to choose a Beneficiary
or to convert to another contract of insurance. An assignment must be in a
signed writing. Prudential will not decide if an assignment does what it is
intended to do. Prudential will not be held to know that one has been made
unless it or a copy is filed with Prudential through the Employer.
This paragraph applies only to Insurance for which You have the right to name a
Beneficiary, when that right has been assigned. If an assigned amount of
Insurance becomes payable on account of the Covered Person's death, and at the
Covered Person's death there is no Beneficiary chosen by the assignee, it will
be payable to:
(1) the assignee, if living; or
(2) the estate of the assignee, if the assignee is not living.
It will not be payable as stated in the Beneficiary Rules.
[EFFECT OF GIFT ASSIGNMENT OF RIGHTS OF GROUP LIFE INSURANCE
UNDER ANOTHER GROUP CONTRACT
If You are eligible for the Variable Universal Life Insurance Coverage of the
Group Contract on the Contract Date, You will have no rights, benefits or
privileges under such Coverage if, on the day before the Contract Date, all of
the following are true:
(1) You were insured for group life insurance under another group contract, and
that contract was issued by Prudential or another insurance carrier to
cover Employees of the Employer.
(2) Your group life insurance under the other group contract ended.
(3) An irrevocable and absolute assignment previously made by You: (a) was in
effect; and (b) was made before the other group contract ended; and (c) was
of all of Your rights, benefits and privileges of the group life insurance
under the other group contract.
(4) Those rights, benefits and privileges were owned by the assignee or the
assignee's successor.
89759
BAS 8100 [A]
II-81
<PAGE>
The owner of such rights of the group life insurance under the other group
contract on the day before the Contract Date will be the owner of the rights,
benefits and privileges You would have had under the Variable Universal Life
Insurance Coverage if this section did not apply. This includes, but is not
limited to, any right of assignment You would have had under the Limits on
Assignments section above. The term "assignee" as used in that section includes
such an owner.]
DEFINITIONS
[ACTIVE WORK REQUIREMENT: A requirement that You be actively at work at the
Employer's place of business, or at any other place that the Employer's business
requires You to go.]
ATTAINED AGE: The person's age [as of each Contract Anniversary.]
BUSINESS DAY: A day on which the New York Stock Exchange is open and the
Securities and Exchange Commission has not restricted trading or declared an
emergency.
CASH SURRENDER VALUE: The Cash Surrender Value of Your Certificate Fund is equal
to the Certificate Fund on the date of surrender, less any Certificate Debt [and
any transaction charge.]
CERTIFICATE DEBT: The sum of all loans under this Certificate, plus the interest
charged that is not yet due and has not been added to the loans.
CERTIFICATE FUND: The total amount credited with respect to each Covered Person
under this Certificate. On any date, it is equal to the sum of the amounts
allocated to: (a) the variable investment options; (b) the Fixed Account; and
(c) the Loan Account.
CERTIFICATE YEAR: A period of one year measured from the effective date of Your
Certificate and from each successive anniversary of that date.
CONTRACT MONTH: A period of one month measured from the Contract Date and from
each successive monthly anniversary.
CONTRACT YEAR: A period of one year measured from the Contract Date and from
each successive Contract Anniversary.
COVERED CLASS: Under a Coverage, the classes of [Employees] insured for
[Employee] Insurance [; a Qualified Dependent of an Employee with respect to
whom the Employee is insured for Dependents Insurance.]
COVERED PERSON: A person whose life is insured under this Certificate.
89759
BAS 8100 [B]
II-82
<PAGE>
DEFINITIONS (Continued)
[DEPENDENTS INSURANCE: Insurance on the person of a dependent.]
[EARNINGS: This is the gross amount of money paid to You by the Employer in cash
for performing the duties required by Your job. Bonuses, overtime pay, Earnings
for more than 40 hours per week and other benefits are excluded.]
[EMPLOYER: The A.B.C. Company]
[EMPLOYEE: A person employed by the Employer.]
[EMPLOYEE] INSURANCE: Insurance on the person of [an Employee.]
[INJURY: Injury to the body of a Covered Person.]
INSURANCE: Variable Universal Life Coverage [(and any additional insurance
benefits)] provided under this Certificate.
LOAN ACCOUNT: An account, which is part of the Covered Person's Certificate
Fund, that is set up by Prudential when You take out a loan.
NET CONTRIBUTIONS: Contributions made for the Insurance by the [Employees], less
the charges and expenses deducted by Prudential.
PRUDENTIAL: The Prudential Insurance Company of America.
[SICKNESS: Any disorder of the body or mind of a Covered Person, but not an
Injury.]
YOU, YOUR: [An Employee; pertaining to an Employee]
89759
BAS 8100 [C]
II-83
<PAGE>
CLAIM RULES
These rules apply to the payment of benefits under the Accidental Death and
Dismemberment Coverage, and the Additional Benefit for Accidental Death as a
Result of a Motor Vehicle Accident While Wearing a Seatbelt Coverage.
PROOF OF LOSS: Prudential must be given proof of loss for which claim is made
under the Coverage. This proof must cover the occurrence, character and extent
of that loss. It must be furnished within 90 days after the date of the loss. A
claim will not be considered valid unless the proof is furnished within this
time limit. However, it may not be possible to do so. In that case, the claim
will still be considered valid if proof is furnished as soon as possible.
WHEN BENEFITS ARE PAID: Benefits are paid when Prudential receives written proof
of the loss.
PHYSICAL EXAM: Prudential, at its own expense, has the right to examine the
person whose loss is the basis of claim. Prudential may do this when and as
often as is reasonable while the claim is pending.
LEGAL ACTION: No action at law or in equity may be brought to recover on the
Group Contract until 60 days after the written proof described above is
furnished. No such action may be brought more than [three] years after the end
of the time period within which proof of loss is required.
89759
CLM 8100 [A]
II-84
<PAGE>
WHEN INSURANCE ENDS
[EMPLOYEE AND DEPENDENTS] INSURANCE
All Variable Universal Life Coverage (including any additional insurance
benefits) under this Certificate will end [on the first of these to occur:
(1) On the last day of the month in which Prudential receives notice that You
cease to be in the Covered Classes for the Insurance for any reason.
(2) On the last day of the month in which Prudential receives notice that
Your class has been removed from the Covered Classes for the Insurance.
(3) On the last day of the month in which Prudential receives notice that a
Covered Person became insured, within 24 months of Your date of
eligibility, under the Universal Life Coverage offered by the Employer.
If You became insured for an increase in the Covered Person's Face
Amount, and, within 24 months of the Effective Date of the increase,
exchange the amount of the increase for an equal amount of Universal Life
Coverage offered by the Employer, such increased amount under this
Coverage will terminate on the date of the exchange.
(4) If the Covered Person is a Dependent Spouse, on the last day of the month
in which that Spouse's Coverage ends as a result of Your Death or
divorce.
(5)] If the Insurance ends for all [Employees] of the Employer.
[(6)] If the Group Contract ends.
[(7) If You fail to pay, when due: (a) any contribution that is required to
keep the Covered Person's Insurance in force; or (b) if the Covered
Person's Insurance is in default, the minimum premium contribution
required to keep the Covered Person's Insurance in force, during the
grace period.
(8) If the Covered Person's Insurance is Variable Universal Life and You
surrender it for its Cash Surrender Value.
(9) If the Covered Person's Insurance is Variable Universal Life and the Cash
Value Surrender has been used to buy Paid-Up Insurance.
Dependents Insurance under Additional Provisions for Dependents Term Life
Insurance will end on the last day of the month during which the dependent
ceases to be a Qualified Dependent.]
89759
BTE 8100 [A]
II-85
<PAGE>
[END OF EMPLOYMENT: For insurance purposes, Your employment will end when You
are no longer a full-time Employee actively at work for the Employer. But, the
Employer may consider You as still employed in the Covered Classes during
certain types of absences from full-time work. The Employer decides which
Employees with those types of absences are to be considered employed, and for
how long. In doing so, the Employer must not discriminate among persons in like
situations.
If You stop active full-time work for any reason, You should contact the
Employer at once to see what arrangements, if any, have been made to continue
Your Insurance during such absences.]
[CONTINUATION OF INSURANCE: If a Covered Person's Variable Universal Life
Coverage under the Group Contract would have ended because of reason (1), (2),
(4) or (5) (shown above), the Covered Person's Insurance (including any
additional insurance benefits) will be continued provided the amount in the
person's Certificate Fund, less any Certificate Debt, is enough to make the
monthly deductions from the Certificate Fund. But, this Continuation of
Insurance will not apply if:
(1) A Covered Person's Variable Universal Life Coverage under the Group
Contract would have ended because of reason (4) (shown above); and
(2) The Employer replaces the Variable Universal Life Coverage under this Group
Contract with another group life insurance coverage, issued by another
carrier, that provides for the accumulation of cash value; or
(3) A Spouse's Variable Universal Life Coverage ended as a result of the
Employee's death unless the Spouse's Coverage has been assigned.
RULES: Continuation of Insurance is subject to the following rules.
Effective Date: The Effective Date is the first day of the month after
Prudential receives notice that the Covered Person's Variable Universal Life
Coverage under this Certificate has ended.
Contributions: The amount of the contributions required to keep the Insurance in
force will be different than the amount You have been contributing.
Contributions will be payable directly to Prudential.
Increases in Face Amount: You may request an increase in the Face Amount of
Insurance for a Covered Person less than age 65 provided:
(1) The amount of the requested increase is $25,000 or more; and
(2) You give evidence of insurability satisfactory to Prudential for the
Covered Person.
The Face Amount of Insurance for the Covered Person will be increased when
Prudential decides the evidence is satisfactory.
89759
BTE 8100 [B]
II-86
<PAGE>
Amount Limitation: The Amount Limitation shown in the Schedule of Benefits is
replaced by the Amount Limitation shown below.
Amount Limitation: On and after the Limiting Age (shown below), the Covered
Person's Face Amount of Insurance is limited. It is the greater of: (a)
five times the Covered Person's Certificate Fund just prior to the Limiting
Age; and (b) $25,000. In no event will the Covered Person's Face Amount of
Insurance exceed the Covered Person's Death Benefit just prior to the
Limiting Age.
The Delay of Effective Date section does not apply to this provision.
Limiting Age: The later of: (a) age 65; and (b) the tenth anniversary of
the Effective Date of the Covered Person's Variable Universal Life
Coverage.
End of Continuation of Insurance: The Covered Person's Insurance (including any
additional insurance benefits) will end when the first of these occurs:
(1) The Group Contract ends.
(2) You fail to pay, when due: (a) any contribution that is required to keep
the Covered Person's Insurance in force; or (b) if the Covered Person's
Insurance is in default, the minimum premium contribution required to keep
the Covered Person's Insurance in force, during the grace period.
(3) If the Covered Person's Insurance is Variable Universal Life, You surrender
it for its Cash Surrender Value.
(4) If the Covered Person's Insurance is Variable Universal Life, the Cash
Value Surrender has been used to buy Paid-Up Insurance.
[ATTAINMENT OF AGE 100: When the Covered Person attains age 100, You may
elect to:
(1) surrender the Covered Person's Insurance for its Cash Surrender Value, as
described under Section H. of the Variable Universal Life Coverage; or
(2) purchase Paid-Up Insurance for the Covered Person, as described in Section
L. of the Variable Universal Life Coverage; or
(3) continue the Variable Universal Life Insurance for the Covered Person.
If You elect (3) above, the monthly Expense Charges for the Cost of Insurance
and any additional insurance benefits will be waived. The Covered Person's death
benefit will be equal to the Certificate Fund, less any Certificate Debt
outstanding and any past due monthly charges.]
89759
BTE 8100 [C]
II-87
<PAGE>
If You elect (3) above, the monthly Expense Charges for the Cost of Insurance
[and any additional insurance benefits] will be waived. The Covered Person's
death benefit will be equal to the Certificate Fund, less any Certificate Debt
outstanding and any past due monthly charges.]
[END OF EMPLOYMENT: Your employment will end when You are no longer a full-time
employee actively at work for the Employer. But, for Insurance purposes, the
Employer may consider You as still employed in the Covered Classes during
certain absences from full-time work. The Employer decides which Employees with
those types of absences are to be considered employed, and for how long. In
doing so, the Employer must not discriminate among persons in like situations.
If You stop active work for any reason, You should contact the Employer at once
to see what arrangements, if any, have been made to continue Your Insurance
during such absences.
CONTINUATION OF INSURANCE: If a Covered Person's Variable Universal Life
Coverage under the Group Contract ends because You are no longer in the Covered
Class for the Insurance, You may elect to continue the Covered Person's
Insurance (including any additional insurance benefits) on a direct-billing
basis.
Prudential will give You a written election notice of the right to continue the
insurance. If You wish to continue the Insurance, the election notice must be
completed and returned to Prudential, along with any required contribution,
within 61 days after the date the Insurance would have ended. Contributions will
be payable directly to Prudential.
This continuation of Insurance will not apply if the Insurance ends because the
Contract Holder replaces the Group Variable Universal Life Coverage under this
Group Contract with another group life insurance coverage, issued by another
carrier, that provides for the accumulation of cash value. In that case,
Prudential will pay to the succeeding carrier the Cash Surrender Value of the
Covered Person's Certificate Fund. If You are not eligible for such coverage, or
if You choose not to be covered for such coverage, Prudential will pay to You
the Cash Surrender Value of the Covered Person's Certificate Fund. However, if
the Cash Surrender Value of the Covered Person's Certificate Fund is $1,000 or
more, You may elect to continue the Covered Person's Insurance on a
direct-billing basis, as described above.]
89759
BTE 8100 [D]
II-88
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ABC COMPANY ABC COMPANY CONTROL NUMBER
GROUP VARIABLE UNIVERSAL LIFE ENROLLMENT FORM ABC COMPANY BRANCH NUMBER(S)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 1--EMPLOYEE/MEMBER INFORMATION Social Security Number Sex
_______-______-____ [ ] Male [ ] Female
--------------------------------------------------
Employee/Member First Name Middle Initial Last Name
Date of Birth Marital Status
(mm-dd-yy) [ ] Single [ ] Married [ ] Divorced
____/____/_____ [ ] Separated [ ] Widowed
____________________________________________________________________ ------------------------------------------------------------
Home Street Address Employment Date Employment Location
(mm-dd-yy) (City, State, Zip Code)
____________________________________________________________________ ------------------------------------------------------------
City State Zip Code Annual Salary Payroll Frequency
[ ] Weekly [ ] Bi-weekly [ ] Monthly
____________________________________________________________________ $_________________ [ ] Semi-monthly
Daytime Telephone Number Home Telephone Number Salary Level ----------------------------------
[ ] Hourly [ ] Salaried Employee/Member/Payroll Number
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 2--COMPLETE IF ELECTING EMPLOYEE/MEMBER COVERAGE
(Please refer to the enclosed Coverage Information Sheet for plan specifics)
A) SELECT COVERAGE AMOUNT: Multiple of Salary ___1x, ___2x, ___3x, ___4x, ___5x
B) CALCULATE MONTHLY Face Amount Chosen: $__________ DIV 1,000 x ________ = Monthly Cost of Insurance $____________(2B)
COST OF INSURANCE: (Round face amount (Insert rate
to next higher 5,000) from rate sheet)
C) ADD MONTHLY ADMINISTRATIVE FEE (IF APPLICABLE): $____________(2C)
D) SELECT EXTRA MONTHLY CONTRIBUTION TO CASH ACCUMULATION FUND: $____________(2D)
E) TOTAL MONTHLY COST OF EMPLOYEE COVERAGE (2B + 2C + 2D): $____________(2E)
F) ANSWER IMPORTANT MEDICAL QUESTION:
Have you ever smoked cigarettes or used other forms of tobacco in the last 12 months? [ ] Yes [ ] No
G) COMPLETE IF ELECTING ADDITIONAL EMPLOYEE COVERAGE: Extended Death Protection During Total Disability? [ ] Yes [ ] No
Accidental Death & Dismemberment Coverage? [ ] Yes [ ] No
Automatic Increases in Coverage? [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 3--COMPLETE IF ELECTING SPOUSE COVERAGE
(Please refer to the enclosed Coverage Information Sheet for plan specifics)
Spouse First Name Middle Initial Last Name Spouse Social Security Number Spouse Date of Birth
(mm-dd-year)
___________________________________________________________________________-________-________________________/______/______
A) SELECT COVERAGE AMOUNT: [ ] $10,000 [ ] $25,000 [ ] $50,000 [ ] $100,000
B) CALCULATE MONTHLY Face Amount Chosen: $__________ DIV 1,000 x ________ = Monthly Cost of Insurance $____________(3B)
COST OF INSURANCE: (Insert rate
from rate sheet)
C) ADD MONTHLY ADMINISTRATIVE FEE (IF APPLICABLE): $____________(3C)
D) SELECT EXTRA MONTHLY CONTRIBUTION TO CASH ACCUMULATION Fund: $____________(3D)
E) TOTAL MONTHLY COST OF SPOUSE COVERAGE (3B + 3C + 3D): $____________(3E)
F) ANSWER IMPORTANT MEDICAL QUESTION:
Has your spouse ever smoked cigarettes or used other forms of tobacco in the last 12 months? [ ] Yes [ ] No
G) COMPLETE IF ELECTING ADDITIONAL SPOUSE OPTION: Accidental Death & Dismemberment Coverage? [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 4--COMPLETE IF ELECTING DEPENDENT CHILD(REN) COVERAGE
Youngest Child's Date of Birth (mm-dd-year) _____/_____/_______
A) SELECT COVERAGE AMOUNT(S) &
NUMBER OF DEPENDENTS: [ ] $10,000________ # of Dependents Enrolled [ ] $5,000 ________ # of Dependents Enrolled
B) CALCULATE MONTHLY $10,000 DIV 1,000 x ________ x ________ = Monthly Cost of Insurance $____________(4A)
COST OF INSURANCE: (insert rate (# of dependents)
from rate sheet)
$ 5,000 DIV 1,000 x ________ x ________ = Monthly Cost of Insurance $____________(4B)
(insert rate (# of dependents)
from rate sheet)
C) TOTAL MONTHLY COST OF DEPENDENT COVERAGE (4A AND/OR 4B) $____________(4C)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 5--TOTAL EXPECTED MONTHLY PREMIUMS
COST OF EMPLOYEE, SPOUSE AND DEPENDENT COVERAGE (2E + 3E + 4C) = TOTAL EXPECTED MONTHLY PREMIUM $_______________
(PRUDENTIAL LOGO) (OVER)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-89
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 6--BENEFICIARY DESIGNATIONS
Beneficiary First Name Middle Initial Last Name Beneficiary Social Security Number
________________________________________________________________________________ ____________-________-_______________
Home Street Address Beneficiary Relationship to Employee
________________________________________________________________________________ _____________________________________
City State Zip Code Beneficiary Date of Birth (mm-dd-year)
______/______/_____
- ------------------------------------------------------------------------------------------------------------------------------------
Contingent Beneficiary First Name Middle Initial Last Name Beneficiary Social Security Number
________________________________________________________________________________ ____________-________-_______________
Home Street Address Beneficiary Relationship to Employee
________________________________________________________________________________ _____________________________________
City State Zip Code Beneficiary Date of Birth (mm-dd-year)
______/______/_____
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 8--EMPLOYEE/MEMBER SIGNATURE
I request to elect Group Variable Universal Life coverage for which I am or may become eligible, and authorize deductions from my
earnings of the required contributions. If I decide to elect this coverage after the initial enrollment period, I understand that
evidence of good health will be requested. I certify that information contained in this form is complete and accurate.
Employee/Member Signature Date (mm-dd-year)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 7--BENEFIT ADMINISTRATOR'S SIGNATURE
Benefit Administrator's Signature Business Phone Number Date (mm-dd-year)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-90
EXHIBIT 1.A(10)(c)
<TABLE>
GROUP VARIABLE UNIVERSAL LIFE (GVUL) (PRUDENTIAL LOGO)
<CAPTION>
FORM OF INVESTMENT DIVISION ALLOCATION SUPPLEMENT
==========================================================================================================
<S> <C>
Group Name______________________________________________________Control Number____________________________
Employee/Member Last Name_________________________________First Name____________________Middle Initial____
Home Street Address___________________________________City________________State_____Zip Code______________
Work Location (City, State, Zip Code)____________________________________Daytime Phone Number_____________
Social Security Number_______-_________-__________Date of Birth (mm-dd-year)________/_________/___________
- ----------------------------------------------------------------------------------------------------------
SECTION 1--INVESTMENT OBJECTIVE
PLEASE CHECK ONLY ONE INVESTMENT OBJECTIVE:
INVESTMENT OBJECTIVE DESCRIPTION FUND INVESTMENT DIVISIONS
-------------------- ----------- -------------------------
_
|_| PRESERVATION OF CAPITAL Protecting your investment. {--Fixed Account (General Account)}
_
|_| INCOME Generating the highest possible {--Money Market Division}
income with prudent investment
risk and preservation of capital.
_
|_| GROWTH AND INCOME Achieving a high rate of return {--Diversified Bond Division}
while attempting to limit investment {--Equity Income Division}
risk and preserve capital.
_
|_| GROWTH Achieving long-term growth of {--Stock Index Division}
investment over time, income is {--Flexible Managed Division}
secondary. {--Equity Division}
_
[_] AGGRESSIVE GROWTH Achieving maximum long-term growth {--Prudential Jennison Division}
of investments by accepting above {--Global Division}
average risk.
- ---------------------------------------------------------------------------------------------------------
SECTION 2--SELECTION OF INVESTMENT DIVISION ALLOCATIONS
PLEASE SELECT THE PERCENTAGE OF NET PREMIUM TO BE ALLOCATED TO SELECTED INVESTMENT DIVISIONS:
o For each investment division, the percentage allocated must be at least 10% and a whole number (no
fractions).
o The sum of all allocations must total 100%.
o Enter zero for any division to which no allocation is made.
o Percentages allocated will apply to future net premiums unless you change them.
o Refer to the prospectus for information on investment objectives and past performance for the
investment divisions being offered in your group's plan.
INVESTMENT DIVISION ALLOCATION DEGREE OF RISK
- ------------------------------ --------------
{_______% Fixed Account (General Account) Low Risk}
{_______% Money Market Division Low/Moderate Risk}
{_______% Diversified Bond Division Low/Moderate Risk}
{_______% Equity Income Division Moderate Risk}
{_______% Stock Index Division Moderate Risk}
{_______% Flexible Managed Division Moderate Risk}
{_______% Equity Division Moderate Risk}
{_______% Prudential Jennison Division High Risk}
{_______% Global Division High Risk}
100%
- ---------------------------------------------------------------------------------------------------------
SECTION 3--ALLOCATION SUITABILITY TO INVESTMENT OBJECTIVE
<CAPTION>
Please record your investment division allocation(s) from SECTION 2 in the appropriate columns of the
chart below and total each column. If your investment division allocation(s) represent more risk than
indicated in your investment objective from SECTION 1, please provide an explanation of your selection(s)
on the next page.
<S> <C> <C> <C> <C>
==============================================================================================================
PRES. OF CAP. | INCOME | GROWTH & INCOME | GROWTH | AGGRESSIVE GROWTH
- --------------------|---------------------|----------------------|----------------------|---------------------
Fixed % | M. Market % | Divers. Bond % | Stock Index % | Flex. Managed %
- --------------------|---------------------|----------------------|----------------------|---------------------
| | | Equity Income % | Equity %
- --------------------|---------------------|----------------------|----------------------|---------------------
| | | | Pru. Jennison %
- --------------------|---------------------|----------------------|----------------------|---------------------
| | | | Global %
- --------------------|---------------------|----------------------|----------------------|---------------------
Total % | Total % | Total % | Total % | Total %
==============================================================================================================
</TABLE>
II-91
<PAGE>
<TABLE>
<S> <C>
SECTION 3 (CONTINUED)
EXPLANATION OF INVESTMENT DIVISION ALLOCATION(S) SELECTED: It is only necessary to complete this section
if any investment division has a higher risk than your investment objective.
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
- ----------------------------------------------------------------------------------------------------------------
SECTION 4--STATEMENT OF UNDERSTANDING
Do you understand that under the certificate (exclusive of any optional benefits):
a) the amount of death benefit in excess of the specified face amount for GVUL may increase or decrease
depending on the certificate's investment experience?
b) the death benefit duration for GVUL may increase or decrease depending on the certificate's investment
experience, and that the investment experience may require additional premiums to keep GVUL coverage
in force?
c) the cash value of GVUL may increase or decrease depending on the certificate's investment experience?
It is understood that the amount and/or the duration of the death benefit and the amount of cash value may
increase or decrease based on the investment experience of the applicable Separate Account divisions and are
not guaranteed. I have received a Prudential GVUL prospectus and available fund prospectuses, and understand
the Statement of Understanding above.
Signature of Employee/Member_______________________________________________Date__________________________
For Prudential Use Only
Signature of Broker/Dealer
or Registered Representative_______________________________________________Date__________________________
- -----------------------------------------------------------------------------------------------------------------
QUESTIONS?
If you need any assistance or have any questions, please contact our GVUL Customer Service
Representatives at 1-800-_________.
</TABLE>
II-92
