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Supplement dated December 15, 2000
to Prospectus dated May 1, 2000
for Group Variable Universal Life Insurance
Special Features of the Group Contract for
Executive Group Plans
This document is a supplement to the prospectus dated May 1, 2000 (the
"prospectus") for the Group Variable Universal Life Insurance Contract and
Certificates that Prudential offers to you. This supplement must be accompanied
by the prospectus and The Funds supplement. The prospectus describes the
insurance features and certain other aspects of the Group Contract and
Certificates made available to your Group.
Special terms that we use are defined in the prospectus. See the Definitions of
Special Terms section of the prospectus. You must read the prospectus and this
supplement together to fully understand how Group Variable Universal Life
Insurance works.
Eligibility and Enrollment
Who is Eligible For Coverage?
Eligible Group Members are active employees, classes or members of the Group as
determined by the employer or Group Contract holder. We refer to each Eligible
Group Member who buys coverage as a "Participant". When the term "you" or "your"
is used, we are also referring to a Participant.
Is There A Limited Enrollment Period?
No, Eligible Group Members may enroll at any time during the year. But, if the
person applies for coverage more than 31 days after first becoming eligible,
Prudential will ask for evidence of the Covered Person's good health before that
person can become covered.
Coverage Information
How Much Coverage May An Eligible Group Member Buy?
You may choose a Face Amount up to five times your annual base earnings or
salary (less incentive compensation) to a maximum of $2,000,000. The minimum
Face Amount is $20,000. When a Face Amount is based on salary, we round the Face
Amount to the next higher multiple of $1,000 if it is not already an even
multiple of $1,000. See the How Prudential Issues Certificates section of the
prospectus.
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Are Increases in Coverage Available?
Yes. For Face Amounts based on annual salary or earnings, we may increase
coverage amounts on each January 1/st/ based on salary or earnings information
reported to us. At any time, you may choose to increase your Face Amount of
insurance, but you must provide evidence of good health.
Will Coverage Amounts Ever Decrease?
No, coverage amounts will not decrease unless you request a decrease.
See the Changes in Face Amount and Tax Treatment of Certificate Benefits
sections of the prospectus.
Does The Certificate Include An Accelerated Death Benefit Provision?
Yes. You can choose to receive an early payment of part of the Death Benefit
when diagnosed as being terminally ill. In this situation, you may elect up to
50% of the Death Benefit, subject to a maximum of $250,000. "Terminally ill"
means you have a life expectancy of 6 months or less. Prudential charges a fee
of $350 when an accelerated death benefit is paid.
Does The Coverage Have Exclusions?
Yes. As stated in the prospectus, Group Variable Universal Life Insurance has a
suicide exclusion. See the Suicide Exclusion section of the prospectus.
What Are The Terms Of A Loan?
Amount available for borrowing: You may borrow up to the Loan Value of your
Certificate Fund. The Loan Value is 90% of your Certificate Fund minus any
existing loan (and its accrued interest), outstanding charges, and the amount of
the next month's charges. When you request a loan, an amount equal to the loan
will be deducted from your certificate's investment options on a pro-rata basis
unless you elect to take it only from selected investment options. The minimum
loan amount is $200.
Interest rate: The net cost of the loan is equal to an annual rate of 2%.
See the Loans section of the prospectus for more details.
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Premiums
How Much Money Can Be Contributed To Investment Options?
You can contribute, subject to annual and lifetime limits set by the Internal
Revenue Service, any dollar amount. See the Tax Treatment of Certificate
Benefits section of the prospectus.
May Additional or Lump Sum Premium Payments Be Made?
Yes. You may make lump sum payments at any time. The minimum lump sum payment is
$100. The maximum is subject to annual and lifetime limits set by the Internal
Revenue Service. See the Tax Treatment of Certificate Benefits section of the
prospectus.
Changes in Personal Status
What Happens If I Become Totally Disabled?
If you become totally disabled prior to age 60 and are unable to work in any
occupation, Prudential will extend your GVUL coverage so that you will continue
to have insurance coverage equal to the Face Amount of your Certificate until
you reach age 65 or are no longer totally disabled. When you reach age 65 or are
no longer totally disabled, you may continue your GVUL Coverage even if you are
on a disability leave of absence. Prudential will bill you directly for premium
payments, and will charge a fee of $3 per bill.
Can Coverage Be Continued at Retirement?
Yes. Prudential will bill you directly for premium payments, and will charge a
fee of $3 per bill.
Can Coverage Be Continued When Leaving the Group For Reasons Other Than
Retirement?
You may continue GVUL coverage on a "portable" basis if you leave for any reason
and are no longer an Eligible Group Member. We call this "Portable Coverage."
Portable rates are higher than rates for coverage as an Eligible Group Member,
but will not exceed the guaranteed rates. Prudential will bill you directly for
premium payments and will charge a fee of $3 per bill.
Does Coverage End At A Certain Age?
Yes. Your GVUL coverage will end at age 100. See the How Prudential Issues
Certificates section of the prospectus to see what options you have when your
GVUL coverage ends.
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Charges and Expenses
What Are the Charges?
The current charges under your Group Contract are as follows:
1. Charges Deducted From Each Premium Payment. Prudential deducts a charge of
2.60% from each premium payment. This charge is to compensate Prudential
for a portion of the costs and taxes we incur in selling the Group Contract
and Certificate.
2. Daily charges for mortality and expense risks. Prudential deducts this
charge from the assets of the subaccount(s) that correspond to the Funds
you select. This charge is to compensate Prudential for assuming mortality
and expense risks. Prudential does not deduct this charge from assets
invested in the Fixed Account. The current daily charge for mortality and
expense risks is equivalent to an effective annual rate of 0.45% (never to
exceed 0.90%).
3. Daily charges for investment management fees and expenses. Each of the
underlying mutual funds deducts investment management fees and other
expenses. These fees are described in The Funds supplement.
4. Monthly charges. Prudential deducts a monthly charge for the cost of
insurance and a monthly charge of $3 for administrative expenses from your
Certificate Fund.
5. Possible additional charges. Prudential will not charge for the first 12
transfers you make between investment options in a Certificate Year. But,
if you make more than 12 transfers in a Certificate Year, Prudential will
charge $20 per transfer. Prudential does not currently charge for other
transactions, but reserves the right to do so in the future, as explained
in the prospectus.
See the Charges and Expenses section of the prospectus for more details.
What Are My Cancellation Rights?
You may return a Certificate for a refund within 10 days after receiving it.
These 10 days are known as the "free look" period. You can ask for a refund by
mailing the Certificate back to Prudential. During the first 20 days after the
Certificate Date, your premium payments are held in the Fixed Account.
See the A "Free Look" Period section of the prospectus for more details.
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Investment Options
What Investment Options are Available?
The Funds
Set out below is a list of each available Fund, its investment objective,
investment management fees and other expenses, and its investment
advisor/investment manager. Some Funds also provide information about their
principal strategies.
Certain Funds have adopted distribution plans pursuant to the federal securities
laws, and under those plans, the Fund may make payments to Prudential and/or its
affiliates for certain marketing efforts.
Fund Names and Objectives
The Prudential Series Fund, Inc.
The portfolios of the Series Fund in which the Separate Account may currently
invest and their investment objectives and principal strategies are as follows:
Diversified Bond Portfolio: The investment objective is a high level of income
over a longer term while providing reasonable safety of capital. The Portfolio
invests primarily in higher grade debt obligations and high quality money market
investments.
Equity Portfolio: The investment objective is capital appreciation. The
Portfolio invests primarily in common stocks of major established corporations
as well as smaller companies that offer attractive prospects of appreciation.
Equity Income Portfolio: The investment objective is both current income and
capital appreciation. The Portfolio invests primarily in common stocks and
convertible securities that provide good prospects for returns above those of
the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index") or
the NYSE Composite Index.
Flexible Managed Portfolio: The investment objective is a total investment
return consistent with an aggressively managed diversified portfolio. The
Portfolio invests in a mix of equity securities, debt obligations and money
market instruments.
Global Portfolio: The investment objective is long-term growth of capital. The
Portfolio invests primarily in common stocks (and their equivalents) of foreign
and U.S. companies.
Money Market Portfolio: The investment objective is maximum current income
consistent with the stability of capital and the maintenance of liquidity. The
Portfolio invests in high quality short-term debt obligations that mature in 13
months or less.
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Prudential Jennison Portfolio: The investment objective is to achieve long-term
growth of capital. The Portfolio invests primarily in equity securities of major
established corporations that offer above-average growth prospects.
Stock Index Portfolio: The investment objective is investment results that
generally correspond to the performance of publicly-traded common stocks. The
Portfolio attempts to duplicate the price and yield performance of the Standard
& Poor's 500 Composite Stock Price Index (the "S&P 500 Index").
Lazard Retirement Series, Inc.
The portfolio of the Lazard Retirement Series, Inc. in which the Separate
Account may currently invest and its investment objective is as follows:
Small Cap Portfolio: Seeks long-term capital appreciation by investing primarily
in equity securities, principally common stocks, of relatively small U.S.
companies in the range of the Russell 2000 Index that the investment manager
believes are undervalued based on their earnings, cash flow or asset values.
Janus Aspen Series
The portfolios of the Janus Aspen Series in which the Separate Account may
currently invest and their investment objectives are as follows:
Growth Portfolio: The investment objective of this Portfolio is long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective by investing in common stocks
of issuers of any size. This Portfolio generally invests in larger, more
established issuers.
International Growth Portfolio: The investment objective of this Portfolio is
long-term growth of capital. It is a diversified portfolio that pursues its
objective primarily through investments in common stocks of issuers located
outside the United States.
Franklin Templeton
The Class 2 portfolio of the Templeton Variable Products Series Fund in which
the Separate Account may currently invest and its investment objective is as
follows:
Templeton International Securities Fund: The fund's investment goal is long-term
capital growth. Under normal market conditions, the fund will invest at least
65% of its total assets in the equity securities of companies located outside
the U.S., including emerging markets.
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Kemper Variable Series
The portfolio of Kemper Variable Series in which the Separate Account may
currently invest (the "Kemper Series") and its investment objective is as
follows:
High Yield Portfolio: Seeks to provide a high level of current income by
investing in lower rated fixed-income securities.
MFS(R) Variable Insurance Trust
The portfolios of the MFS Variable Insurance Trust in which the Separate Account
may currently invest and its investment objectives is as follows:
MFS Research Series: Seeks to provide long-term growth of capital and future
income.
T. Rowe Price Variable Funds
The portfolios of the T. Rowe Price Equity Series, Inc. in which the Separate
Account may currently invest and their investment objectives are as follows:
Equity Income Portfolio: Seeks to provide substantial dividend income as well as
long-term growth of capital by investing primarily in the common stocks of
established companies paying above-average dividends, with favorable prospects
for both increasing dividends and capital appreciation.
New America Growth Portfolio: Seeks to provide long-term growth of capital by
investing primarily in common stocks of companies operating in sectors T. Rowe
Price believes will be the fastest growing in the United States. Fast growing
companies can be found across an array of industries in today's "new America".
The choice of industry sectors would reflect such factors as overall revenue
growth of the component companies and the sectors contribution to GDP from year
to year.
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Fund Fees and Expenses
<TABLE>
<CAPTION>
====================================================================================================================
Funds Investment 12b-1 Other Total Fund
Management Fee Fees Expenses Annual Expenses
(After Expense
Reimbursements) (1)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Prudential Series Fund, Inc.
Diversified Bond Portfolio 0.40% - 0.03% 0.43%
Equity Portfolio 0.45% - 0.02% 0.47%
Equity Income Portfolio 0.40% - 0.02% 0.42%
Flexible Managed Portfolio 0.60% - 0.02% 0.62%
Global Portfolio 0.75% - 0.09% 0.84%
Money Market Portfolio 0.40% - 0.02% 0.42%
Prudential Jennison Portfolio 0.60% - 0.03% 0.63%
Stock Index Portfolio 0.35% - 0.04% 0.39%
Franklin(R) Templeton(R):
Templeton Variable Products
Series Fund (Class 2 Shares)
International Securities Fund (2)(3) 0.69% 0.25% 0.19% 1.13%
Janus Aspen Series
Growth Portfolio(4) 0.65% 0.02% 0.67%
International Growth Portfolio(4) 0.65% 0.11% 0.76%
Kemper Variable Series
High Yield Portfolio 0.60% - 0.07% 0.67%
Lazard Retirement Series, Inc.
Small Cap Portfolio(5) 0.75% 0.25% 0.25% 1.25%
MFS(R) Variable Insurance Trust
MFS Research Series (6) 0.75% - 0.11% 0.86%
T. Rowe Price Variable Funds
Equity Income Portfolio(7) 0.85% - 0.00% 0.85%
New America Growth Portfolio (7) 0.85% - 0.00% 0.85%
====================================================================================================================
</TABLE>
(1) Some, but not all, of the Funds have expense reimbursement or fee
waiver arrangements. Without these arrangements, Total Fund Annual Expenses
would have been higher. More
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information appears in the footnotes that accompany the Funds that have
expense reimbursement or fee waiver arrangements.
(2) The fund's class 2 distribution plan or "rule 12b-1" is described in
the fund's prospectus. While the maximum amount payable under the fund's
class 2 rule 12b-1 plan is 0.35% per year of the fund's average daily net
assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at 0.25% per year.
(3) On 2/8/00, shareholders approved a merger and reorganization that
combined the fund with the Templeton International Equity Fund, effective
5/1/00. The shareholders of that fund had approved new management fees,
which apply to the combined fund effective 5/1/00. The table shows restated
total expenses based on the new fees and the assets of the fund as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected both the new fees and the combined assets, the fund's expense
after 5/1/00 would be estimated as: Management Fees 0.65%, Distribution and
Service Fees 0.25%, Other Expenses 0.20% and Total Fund Operating Expenses
1.10%.
(4) Expenses are based upon expenses for the fiscal year ended December
31, 1999, restated to reflect a reduction in the management fee for Growth,
and International Growth Portfolios. Waivers, if applicable, are first
applied against the management fee and then against other expenses, and
will continue until at least the next annual renewal of the advisory
agreement. All expenses are shown without the effect of expense offset
arrangements.
(5) Effective May 1, 1999, the Investment Advisor agreed to waive its fees
and/or reimburse the Portfolios through December 31, 2000 to the extent
that the Portfolio's average daily net assets exceed 1.25%. Absent fee
waivers and/or reimbursements, Other Expenses and Total Fund Annual
Expenses for the year ended December 31, 1999 would have been 7.31%.
(6) The 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. The series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the series' expenses.
(7) The investment management fee includes the ordinary expenses of
operating the Portfolios.
Fund Advisers
Prudential is the investment adviser of each of the portfolios of the Series
Fund. Prudential's principal business address is 751 Broad Street, 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 LLC ("Jennison"), under which Jennison provides
investment advisory services for the Prudential Jennison Portfolio. Further
detail is provided in the prospectus and statement of
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additional information for the Series Fund. Prudential, PIC and Jennison are
registered as investment advisers under the Investment Advisers Act of 1940.
Templeton Investment Counsel, Inc. ("TICI") serves as the investment manager for
the Asset Strategy Fund, and International Securities Fund. TICI is a Florida
corporation with offices at Broward Financial Centre, Fort Lauderdale, Florida
33394-3091. The Investment manager for the Developing Markets Securities Fund is
Templeton Asset Management Ltd., a Singapore corporation with offices at 7
Temasek Blvd., #38-03, Suntec Tower One, Singapore 038987. Templeton Global
Advisors Limited ("TAML") serves as an investment manager for Templeton Growth
Series Fund. TAML has offices in Lyferd Bay Nassau, N.P. Bahamas. Franklin
Advisors, Inc. ("FA") serves as an investment-manager for Templeton Global
Income Securities, Inc. FA has offices at 777 Mariners Island Blvd, San Mateo,
CA 94403. The principal underwriter of the funds is Franklin Templeton
Distributors, Inc., 100 Fountain Parkway, St. Petersburg, Florida 33716-1205.
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 80206-4928.
The asset manager of the Kemper Variable Series portfolios is Scudder Kemper
Investments, Inc. ("Scudder Kemper"). Scudder Kemper's principal business
address is Two International Place, Boston, Massachusetts 02110-4103.
Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), a New York limited liability company serves as the investment manager
and principal underwriter to each of the above-mentioned portfolios. Lazard
Freres' principal business address is 30 Rockefeller Plaza, New York, New York
10112.
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.
The investment manager for each 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 an investment advisor
to the International Stock Portfolio and its U.S. office is located at 100 East
Pratt Street, Baltimore, Maryland 21202. T. Rowe Price Investment Services, Inc.
serves as the principal underwriter of the portfolios.
Your enrollment kit gives more information about the past performance of each
investment option. This past performance is no guarantee of future results.
Certain Funds have investment objectives and policies resembling those of mutual
funds within the same complex that are sold directly to individual investors.
Despite such similarities, there can be no assurance that the investment
performance of any such Fund will resemble that of it's retail fund counterpart.
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You will receive a prospectus for each available Fund. That prospectus will
describe the Fund, it's investment objective and strategies, its risks, and it's
management fees and other expenses. You should read the Fund prospectuses
together with this prospectus and supplement. As with all mutual funds, a Fund
may not meet its investment objective. Subject to applicable law, Prudential may
stop offering one or more funds or may substitute a different mutual fund for
any Fund.
Each Fund has provided Prudential with information about its management fees and
other expenses. Except for the Series Fund, Prudential has not verified that
information independently.
You may also allocate money to the Fixed Account, which earns interest at a rate
determined annually and guaranteed not to be less than 4%. For more information,
see The Fixed Account section in the Prospectus.
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Illustration Of Death Benefits And Cash Surrender Values
The next several pages shows examples of how the Death Benefit and the Cash
Surrender Value of your Certificate can change as a result of the performance of
the investment options selected. The examples are not our prediction of how
value will grow. They are hypothetical examples and are just intended to show
you how a Certificate works.
We call these examples "illustrations." The illustrations are based on several
assumptions about the age of the Participant, the amount of insurance, and the
rules of the Group Contract.
Assumptions we used for both illustrations
Here's what we assumed about the Certificate in both illustrations:
. The Participant was 40 years old when he or she bought the Group
Variable Universal Life Insurance Certificate.
. The Face Amount of insurance under the Certificate is $100,000.
. The Participant makes a $100 premium payment on the first day of each
month, for a total of $1200 over the course of each year.
Illustration #1
In Illustration #1, we assumed that the current charges Prudential deducts would
stay the same as long as the Certificate remains in effect. Accordingly, we
assumed the following charges:
. The charge deducted from each premium payment for taxes on premium
payments is 2.6%.
. Prudential deducts no sales charge from premium payments.
. Prudential deducts no processing charge from premium payments.
. Each month, Prudential deducts a $3 charge for administrative
expenses.
. Prudential deducts a charge equal to an annual rate of 0.45% for
mortality and expense risks.
. Prudential does not deduct a surrender charge.
. The illustration uses assumed cost of insurance charges. Actual cost
of insurance charges will vary by Group Contract. See the Charges and
Expenses section of the prospectus.
. Prudential does not deduct a surrender charge.
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Illustration #2
In Illustration #2, we changed our assumptions about the charges Prudential will
deduct from the Certificate. Instead of current charges, we assumed that the
maximum charges permitted under the Group Contract would be made.
Here's what we assumed:
. The charge deducted from each premium payment for taxes on premium
payments is 2.6%. (Since Prudential would increase this charge only if
a state increases its tax charge to us, we left this charge at the
current level.)
. Prudential deducts a sales charge equal to 3.5% from each premium
payment.
. Prudential deducts a processing charge of $2 from each premium
payment.
. Each month, Prudential deducts a $6 charge for administrative
expenses.
. Prudential deducts a charge equal to an annual rate of 0.90% for
mortality and expense risks.
. The Participant has cost of insurance charges equal to the maximum
rates. (The maximum rates that Prudential can charge are 150% of the
1980 Commissioner's Standard Ordinary Mortality Table [Male], Age Last
Birthday (the "1980 CSO")).
. Prudential deducts a charge upon surrender equal to the lesser of $20
or 2% of the amount surrendered.
Assumptions about how the Certificate Fund was invested
We assumed that the Certificate Fund was invested in equal amounts in each of
the 16 Funds available under the Group Contract.
Each illustration shows three different assumptions about the investment
performance B or "investment return" B of the Funds. The three different
assumptions are:
. gross annual rate of return is 0%
. gross annual rate of return is 4.5%
. gross annual rate of return is 9%
These are only assumptions to show how the Death Benefit and Cash Surrender
Value change
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depending on the investment return. Actual investment return will depend on the
investment options you select and will vary from year to year.
Walking through the Illustrations
Here's what to look for in the illustrations:
. The first column shows the Certificate Year.
. The second column gives you some context for comparing the investment
return under the Certificate to the return you might expect from a
savings account. It shows the amount you would accumulate if you
invested the same premiums in a savings account paying a 4% effective
annual rate. (Of course, unlike the Certificate, a savings account
does not offer life insurance protection.)
. The next three columns show what the Death Benefit would be for each
of the four investment return assumptions (0%, 4.5% and 9%).
. The last three columns show what the Cash Surrender Value would be for
each of the four investment return assumptions (0%, 4.5% and 9%).
You should note that:
. Both "gross" and "net" investment returns are shown.
. "Gross" investment return reflects the combined effect of both income
on the investment and capital gains. It is the amount of return before
Prudential takes out any of its charges and before any Fund investment
management fees and other expenses are taken out.
. "Net" investment return is the amount of the investment return after
Prudential takes out its charges and after Fund investment management
fees and other expenses are taken out. Since Illustration #1 and
Illustration #2 use different assumptions about charges, the "net"
investment returns for each illustration are different. For some of
the Funds, the Fund's investment advisor or other entity is absorbing
certain of the Fund's expenses. In deriving net investment return, we
used those reduced Fund expenses.
. Fund investment management fees and other expenses were assumed to
equal 0.70% per year, which was the average Fund expense in 1999.
. For Illustration #1, Prudential's mortality and expense risk charges
are 0.45% per year. (In Illustration #1, we assumed that Prudential's
current charges are in effect.) So, including both Fund expenses and
the mortality and expense risk charges, gross returns of 0%, 4.5% and
9% become net returns of -1.15%, 3.35% and 7.85%.
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. For Illustration #2, Prudential's mortality and expense risk charges
are 0.90% per year. (In Illustration #2, we assumed that Prudential's
maximum charges are in effect.) So, including both Fund expenses and
the mortality and expense risk charges, gross returns of 0%, 4.5% and
9% become net returns of -1.60%, 2.90% and 7.40%.
. The Death Benefits and Cash Surrender Values are shown with all of
Prudential's charges and Fund investment management fees and other
expenses taken out.
. We assumed no loans or partial withdrawals were taken.
Neither illustration reflects Dividends or Experience Credits.
If you ask, Prudential will give you a similar illustration for a Certificate
that shows your age, risk class, proposed Face Amount of insurance, and proposed
premium payments. We refer to this as a "personalized illustration."
We show these rates of investment return only to help you understand how the
Certificate works. You should not assume that the investment rates of return are
actual rates of return. You should also not assume that these rates are examples
of past or future investment performance. Neither Prudential nor the Funds can
tell you whether these rates of investment return can actually be achieved.
The actual rates of investment return for your Certificate will depend on how
the investment options that you choose perform. You may earn more or less than
what is shown in the illustration.
The Death Benefits and Cash Surrender Values would be different from those shown
if the actual rate of return for a Certificate Year varied above or below the
average, hypothetical rates of 0%, 4.5% and 9%.
15
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ILLUSTRATION #1
GROUP VARIABLE UNIVERSAL LIFE INSURANCE CERTIFICATE
SPECIFIED FACE AMOUNT: $100,000
ISSUE AGE 40
ASSUME PAYMENT OF $100 MONTHLY PREMIUMS FOR ALL YEARS
USING CURRENT EXPENSE CHARGES*
<TABLE>
<CAPTION>
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 4.5% Gross 9% Gross 0% Gross 4.5% Gross 9% Gross
Year at 4% per year (-1.38%) Net (3.12% Net) (7.62% Net) (-1.38%) Net (3.12% Net) (7.62% Net)
---- -------------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,226 $101,002 $101,026 $101,050 $1,002 $1,026 $1,050
2 2,501 101,992 102,087 102,183 1,992 2,087 2,183
3 3,827 102,971 103,183 103,405 2,971 3,183 3,405
4 5,206 103,929 104,306 104,713 3,929 4,306 4,713
5 6,640 104,865 105,456 106,112 4,865 5,456 6,112
6 8,131 105,783 106,636 107,613 5,783 6,636 7,613
7 9,682 106,683 107,848 109,223 6,683 7,848 9,223
8 11,295 107,562 109,091 110,950 7,562 9,091 10,950
9 12,973 108,411 110,355 112,792 8,411 10,355 12,792
10 14,718 109,229 111,638 114,755 9,229 11,638 14,755
15 24,546 112,720 118,234 126,599 12,720 18,234 26,599
20 36,503 114,889 124,758 142,489 14,889 24,758 42,489
25 51,051 115,198 130,519 163,528 15,198 30,519 63,528
30 68,751 112,278 133,756 190,292 12,278 33,756 90,292
35 90,286 104,257 131,707 222,817 4,257 31,707 122,817
40 116,486 0 (2) 119,829 259,784 0 (2) 19,829 159,784
</TABLE>
(1) Assumes no loan or partial withdrawal has been made.
(2) Based on the interest rate and charges illustrated, the premiums paid are
insufficient to keep the certificate in force. The certificate would lapse
under this scenario.
* An assumed set of cost of insurance rates was used. The actual rates for a
particular group may vary from the rates used in this illustration.
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%, 4.5%, AND 9% 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.
<PAGE>
ILLUSTRATION #2
GROUP VARIABLE UNIVERSAL LIFE INSURANCE CERTIFICATE
SPECIFIED FACE AMOUNT: $100,000
ISSUE AGE 40
ASSUME PAYMENT OF $100 MONTHLY PREMIUMS FOR ALL YEARS
USING MAXIMUM CONTRACTUAL CHARGES
<TABLE>
<CAPTION>
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 4.5% Gross 9% Gross 0% Gross 4.5% Gross 9% Gross
Year at 4% per year (-1.60%) Net (2.90% Net) (7.40% Net) (-1.60%) Net (2.90% Net) (7.40% Net)
---- -------------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,226 $100,553 $100,566 $100,579 $542 $555 $568
2 2,501 101,057 101,108 101,161 1,037 1,088 1,141
3 3,827 101,509 101,621 101,738 1,489 1,601 1,718
4 5,206 101,907 102,100 102,310 1,887 2,080 2,290
5 6,640 102,249 102,543 102,871 2,229 2,523 2,851
6 8,131 102,530 102,941 103,416 2,510 2,921 3,396
7 9,682 102,749 103,293 103,941 2,729 3,273 3,921
8 11,295 102,905 103,593 104,442 2,885 3,573 4,422
9 12,973 102,991 103,833 104,910 2,971 3,813 4,890
10 14,718 103,005 104,008 105,339 2,985 3,988 5,319
15 24,546 101,639 103,407 106,324 1,619 3,387 6,304
20 36,503 0 (2) 0 (2) 103,538 0 (2) 0 (2) 3,518
25 51,051 0 0 0 (2) 0 0 0 (2)
30 68,751 0 0 0 0 0 0
35 90,286 0 0 0 0 0 0
40 116,486 0 0 0 0 0 0
</TABLE>
(1) Assumes no loan or partial withdrawal has been made.
(2) Based on the interest rate and charges illustrated, the premiums paid are
insufficient to keep the certificate in force. The certificate would lapse
under this scenario.
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%, 4.5%, AND 9% 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.
