SUPPLEMENT DATED SEPTEMBER 1, 2000
TO PROSPECTUS DATED MAY 1, 2000
FOR GROUP VARIABLE UNIVERSAL LIFE INSURANCE
SPECIAL FEATURES OF THE GROUP CONTRACT FOR
CALVIN KLEIN, INC.
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. THE PROSPECTUS DESCRIBES THE INSURANCE FEATURES AND CERTAIN
OTHER ASPECTS OF THE CALVIN KLEIN GROUP CONTRACT AND CERTIFICATES. IN THIS
SUPPLEMENT, WE LIST THE 16 FUNDS THAT ARE AVAILABLE TO YOU UNDER THE CALVIN
KLEIN GROUP CONTRACT AND CERTIFICATES.
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 for the Group Variable Universal Life Insurance include
active non-union employees of Calvin Klein who work full-time on a regular
basis. In addition, Eligible Group Members who purchase Group Variable Universal
Life coverage for themselves may also purchase Group Variable Universal Life
coverage for their spouses, if at enrollment, the spouse is younger than age 65
and is not confined for medical treatment at home or elsewhere.
We refer to each Eligible Group Member who buys coverage as a "Participant."
When we use the terms "you" or "your," we mean a Participant.
Spouses who are also employees of Calvin Klein may not be covered both as an
employee and a spouse. If, after the death of a spouse, we become aware that a
spouse enrolled as both an employee and a spouse, we will pay a death benefit as
though the spouse were an employee only. We will return the premiums that were
paid as a spouse.
See the APPLICANT OWNER PROVISION section of the prospectus to learn about how a
spouse may apply for coverage on the life of the employee.
GL.2000.236
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In addition, your children are eligible for dependent term life coverage
from age 14 days to 19 years (or, if an unmarried student, to age 25),
provided they are not confined for medical treatment at home or elsewhere
at the time of enrollment. Eligible children include legally adopted
children, stepchildren and foster children who live with you and depend on
you wholly for support.
When a child reaches age 19 (or, if an unmarried student, age 25), he or
she may continue coverage if he or she is not physically or mentally
capable of self-support. You must give Prudential evidence of the
incapacity within 31 days after coverage would end.
Children who are also employees of Calvin Klein may not be covered both as
an employee and a dependent. And, if both parents are employees of Calvin
Klein, a child may be covered by only one parent.
IS THERE A LIMITED ENROLLMENT PERIOD?
No, an eligible employee and his or her spouse 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 I BUY?
You may choose a Face Amount equal to five times annual base salary up to a
maximum of $1,000,000. (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).
HOW MUCH COVERAGE MAY I BUY FOR MY SPOUSE?
You may choose an amount of insurance for an eligible spouse in increments of
$10,000 to a maximum of $100,000. The amount you choose must not exceed 100% of
the employee's Face Amount.
HOW MUCH TERM LIFE COVERAGE MAY I BUY FOR MY DEPENDENT CHILDREN?
You may buy $4,000 of term life insurance for each eligible child.
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WHEN MUST I GIVE EVIDENCE OF GOOD HEALTH?
Special rules apply during the initial enrollment period.
o FOR A CURRENT EMPLOYEE WHO DID PARTICIPATE IN THE GROUP UNIVERSAL LIFE
PLAN: You may become a Participant and increase the face amount you
had under the group universal life plan by one times your annual base
salary to a total new maximum of the lesser of two times your salary
or $150,000 without having to answer questions about your health
(unless Prudential previously denied your coverage).
o FOR A CURRENT EMPLOYEE WHO DID NOT PARTICIPATE IN THE GROUP UNIVERSAL
LIFE PLAN: You may become a Participant with a Face Amount of up to
two times your annual base salary to a maximum of $150,000 without
having to answer questions about your health (unless Prudential
previously denied your coverage).
o FOR A NEWLY HIRED ELIGIBLE GROUP MEMBER: You must provide evidence of
good health if you enroll and request a Face Amount that is more than
the lesser of two times annual base salary or $150,000. If you enroll
more than 31 days after you first become eligible, you must give
evidence of good health to enroll for any Face Amount.
o FOR A NEW SPOUSE: A spouse is first eligible on the date of marriage
to the employee, or when the employee is first eligible to become a
Participant (if already married). Your spouse must provide evidence of
good health to enroll for all amounts of coverage.
o FOR A NEW DEPENDENT CHILD: You may enroll your dependent child without
providing evidence of good health if you enroll the child within 45
days after the child first becomes eligible. A child first becomes
eligible at 14 days old. In addition, a child is eligible on adoption
or on the date a court decree makes the child your dependent,
providing the child is at least 14 days old.
o You will need to give evidence of good health if you decline coverage
for a spouse or child and later decide to enroll, or if you want to
increase the coverage amount.
CAN I INCREASE MY COVERAGE AMOUNT?
Yes. After the initial enrollment, you may increase your Face Amount of
insurance at any time, but you must provide evidence of good health.
WILL MY COVERAGE AMOUNT EVER DECREASE?
No, unless you choose to decrease it.
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See the CHANGES IN FACE AMOUNT and TAX TREATMENT OF CERTIFICATE BENEFITS
sections of the prospectus.
DOES MY CERTIFICATE INCLUDE AN ACCELERATED DEATH BENEFIT PROVISION?
Yes. While you remain an employee, 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
$500,000. "Terminally ill" means you have a life expectancy of 6 months or less.
AM I ENTITLED TO ADDITIONAL BENEFITS?
Yes. You are eligible for the Accelerated Death Benefit and Dependent Life
Benefits, as stated earlier.
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 POLICY 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. We will take an amount equal to the loan out of each
of your investment options on a pro-rata basis unless you tell us 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.
PREMIUMS
HOW DO I PAY PREMIUMS?
For active employees and their dependents, Calvin Klein will send routine
premium payments to Prudential by payroll deduction, and will makes these
payments monthly. Retirees, employees on an approved leave of absence, and
Participants who choose Portable Coverage will be billed directly by Prudential
and will submit their premium payments directly to Prudential.
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HOW MUCH MONEY CAN I CONTRIBUTE TO MY 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 I MAKE ADDITIONAL PREMIUM PAYMENTS?
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.
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 you 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.
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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.
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 you may currently
invest and its investment objective are 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 you 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
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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
you may currently invest and its investment objective are 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.
KEMPER VARIABLE SERIES
The portfolio of Kemper Variable Series in which you may currently invest (the
"Kemper Series") and its investment objective are 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 portfolio of the MFS Variable Insurance Trust in which you may currently
invest and its investment objective 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 you 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.
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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.
FUND FEES AND EXPENSES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
TOTAL FUND
ANNUAL EXPENSES
INVESTMENT 12B-1 OTHER (AFTER EXPENSE
FUNDS MANAGEMENT FEE FEES EXPENSES 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%
LAZARD RETIREMENT SERIES, INC.
Small Cap Portfolio(4) 0.75% 0.25% 0.25% 1.25%
JANUS ASPEN SERIES
Growth Portfolio(5) 0.65% 0.02% 0.67%
International Growth Portfolio(5) 0.65% 0.11% 0.76%
KEMPER VARIABLE SERIES
High Yield Portfolio 0.60% -- 0.07% 0.67%
MFS(R) VARIABLE INSURANCE TRUST
MFS Research Series (6) 0.75% -- 0.11% 0.86%
</TABLE>
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<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
TOTAL FUND
ANNUAL EXPENSES
INVESTMENT 12B-1 OTHER (AFTER EXPENSE
FUNDS MANAGEMENT FEE FEES EXPENSES REIMBURSEMENTS) (1)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 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) Effective May 1, 1999, the Investment Advisor agreed to waive its fees
and/or reimburse the Portfolio 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%.
(5) 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.
(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.
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(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 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 Templeton Variable Products Series and International Securities Fund. TICI
is a Florida corporation with offices at Broward Financial Centre, Fort
Lauderdale, Florida 33394-3091. The principal underwriter of the fund 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 the Janus Aspen Series Growth Portfolio and
International Growth Portfolio. Janus Capital's principal business address is
100 Fillmore Street, Denver, Colorado 80206-4928.
The asset manager of the Kemper Variable Series High Yield Portfolio 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 the Lazard Retirement Series Small Cap Portfolio.
Lazard Freres' principal business address is 30 Rockefeller Plaza, New York, New
York 10112.
The investment adviser for the MFS Variable Insurance Trust Research 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 the T. Rowe Price Variable Funds Equity Income
Portfolio and New America Growth 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. T. Rowe Price Investment Services, Inc.
serves as the principal underwriter of the portfolios.
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Your enrollment kit gives more information about the past performance of each
investment option.
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.
CHANGES IN PERSONAL STATUS
IS THERE A DISABILITY PROVISION UNDER MY CERTIFICATE?
No. But you may continue your GVUL Coverage while on disability leave of absence
that is approved by Calvin Klein. Prudential will bill you directly for premium
payments, and will charge a fee of $3 per bill.
CAN I CONTINUE COVERAGE WHEN I RETIRE?
Yes. Prudential will bill you directly for premium payments, and will charge a
fee of $3 per bill.
CAN I CONTINUE COVERAGE IF I LEAVE THE COMPANY FOR REASONS OTHER THAN
RETIREMENT?
You may continue your coverage on a "portable" basis if you leave Calvin Klein
for any reason. We call this "Portable Coverage." Prudential will bill you
directly for premium payments and will charge a fee of $3 per bill.
DOES MY COVERAGE END AT A CERTAIN AGE?
Yes. Your coverage will end at age 100. See the HOW PRUDENTIAL ISSUES
CERTIFICATES section of the prospectus to see what options you have when your
coverage ends.
WHAT HAPPENS IF THE GROUP CONTRACT IS TERMINATED?
Either Calvin Klein or Prudential may end the Group Contract. Prudential can end
the Group Contract only under the conditions described in the prospectus.
If the Group Contract ends, the effect on Participants depends on whether or not
Calvin Klein replaces the Group Contract with another life insurance contract
that allows for the accumulation of cash value. Generally, here is what will
happen:
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o If Calvin Klein DOES replace the Group Contract with another life
insurance contract that allows for the accumulation of cash value,
Prudential will terminate your Certificate. We will also transfer the
Cash Surrender Value of your Certificate directly to that new
contract, unless you elect to receive the Cash Surrender Value of your
Certificate.
o If Calvin Klein DOES NOT replace the Group Contract with another life
insurance contract that allows for the accumulation of cash value, you
will have these options: convert to an individual life insurance
policy; use your Certificate Fund to buy paid-up life insurance; or
elect to receive the Cash Surrender Value of your Certificate.
See the OPTIONS ON TERMINATION OF COVERAGE section of the prospectus.
CHARGES AND EXPENSES
WHAT ARE THE CHARGES?
The current charges under the Calvin Klein Group Contract are as follows:
1. CHARGES FOR TAXES ON PREMIUM PAYMENTS. Prudential deducts a charge of 2.50%
from each premium payment. This charge is to compensate Prudential for
incurring state and local premium taxes (currently 2.15%) and for the
impact of the federal deferred acquisition cost tax (currently 0.35%).
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.
For Calvin Klein, 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 earlier in this supplement.
4. MONTHLY CHARGES. Prudential deducts a monthly charge for the cost of
insurance. We describe the calculation of this charge in the prospectus.
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.
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See the CHARGES AND EXPENSES section of the prospectus for more details.
WHEN MAY CHARGES CHANGE?
The prospectus lists the MAXIMUM CHARGES that we may charge under the Calvin
Klein Group Contract. Under no circumstances will we exceed these charges.
Within these maximums, we may vary the amount or level of charges. In general,
we will not change these amounts more often than once a year. We will give you a
new prospectus and a new supplement like this one each year that shows any new
charges. If we change the charges during a year, we will send you a notice of
the change.
ILLUSTRATION OF DEATH BENEFITS AND CASH SURRENDER VALUES
On the next several pages, we show you two 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 you select. 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 Calvin Klein Group Contract.
ASSUMPTIONS WE USED FOR BOTH ILLUSTRATIONS
Here's what we assumed about the Certificate in both illustrations:
o The Participant was 40 years old when he or she bought the Group
Variable Universal Life Insurance Certificate.
o The Face Amount of insurance under the Certificate is $100,000.
o 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:
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o The charge deducted from each premium payment for taxes on premium
payments is 2.50%.
o Prudential deducts no sales charge from premium payments.
o Prudential deducts no processing charge from premium payments.
o Each month, Prudential deducts a $0 charge for administrative
expenses.
o Prudential deducts a charge equal to an annual rate of 0.45% for
mortality and expense risks.
o Prudential deducts the current cost of insurance charge under the
Calvin Klein Group Contract.
o Prudential does not deduct a surrender charge.
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:
o The charge deducted from each premium payment for taxes on premium
payments is 2.50%. (Since Prudential would increase this charge only
if a state increases its tax charge to us, we left this charge at the
current level.)
o Prudential deducts a sales charge equal to 3.5% from each premium
payment.
o Prudential deducts a processing charge of $2 from each premium
payment.
o Each month, Prudential deducts a $6 charge for administrative
expenses.
o Prudential deducts a charge equal to an annual rate of 0.90% for
mortality and expense risks.
o 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")).
o Prudential deducts a charge upon surrender equal to the lesser of $20
or 2% of the amount surrendered.
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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 M or "investment return" M of the Funds. The three different
assumptions are:
o gross annual rate of return is 0%
o gross annual rate of return is 4.5%
o gross annual rate of return is 9%
These are only assumptions to show how the Death Benefit and Cash Surrender
Value change 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:
o The first column shows the CERTIFICATE YEAR.
o 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.)
o The next three columns show what the DEATH BENEFIT would be for each
of the four investment return assumptions (0%, 4.5% and 9%).
o 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:
o Both "gross" and "net" investment returns are shown.
o "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.
15
<PAGE>
o "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%.
-- 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%.
o 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.
o We assumed no loans or partial withdrawals were taken.
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.
16
<PAGE>
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%.
17
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
Calvin Klein
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 CHARGES
Cash Surrender Value (1)
-----------------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
End of Annual Premiums -----------------------------------------------------------------
Certificate Premium Accumulated 0% Gross 4.5% Gross 9% Gross
Year Age Outlay at 4% per year (-1.15%) Net (3.35% Net) (7.85% Net)
----------- --- ------- -------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
1 41 $1,200 $ 1,226 $ 1,012 $ 1,036 $ 1,061
2 42 1,200 2,501 2,011 2,107 2,205
3 43 1,200 3,827 3,000 3,214 3,438
4 44 1,200 5,206 3,977 4,358 4,769
5 45 1,200 6,640 4,943 5,540 6,204
6 46 1,200 8,131 5,816 6,679 7,666
7 47 1,200 9,682 6,679 7,856 9,244
8 48 1,200 11,295 7,533 9,072 10,944
9 49 1,200 12,973 8,376 10,328 12,779
10 50 1,200 14,718 9,210 11,627 14,757
15 55 1,200 24,546 12,641 18,136 26,489
20 60 1,200 36,503 14,374 24,122 41,718
25 65 1,200 51,051 14,276 29,239 61,765
30 70 1,200 68,751 9,611 30,145 85,276
35 75 1,200 90,286 0 (2) 21,159 108,523
40 80 1,200 116,486 0 0 (2) 126,700
45 85 1,200 148,363 0 0 128,300
50 90 1,200 187,146 0 0 97,423
</TABLE>
Death Benefits (1)
----------------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
End of ----------------------------------------------------------------
Certificate 0% Gross 4.5% Gross 9% Gross
Year (-1.15%) Net (3.35% Net) (7.85% Net)
----------- -------------------- ----------------- ------------------
1 $101,012 $101,036 $101,061
2 102,011 102,107 102,205
3 103,000 103,214 103,438
4 103,977 104,358 104,769
5 104,943 105,540 106,204
6 105,816 106,679 107,666
7 106,679 107,856 109,244
8 107,533 109,072 110,944
9 108,376 110,328 112,779
10 109,210 111,627 114,757
15 112,641 118,136 126,489
20 114,374 124,122 141,718
25 114,276 129,239 161,765
30 109,611 130,145 185,276
35 0 (2) 121,159 208,523
40 0 0 (2) 226,700
45 0 0 228,300
50 0 0 197,423
(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 charges and expenses used in this illustration: Premium tax 2.50%; Sales
charge 0%; Processing charges $0; Monthly Admin charges $0; Mortality and
Expense Risk Charge 0.45%; Average Fund expense 0.70%; Surrender charge $0; and
Cost of Insurance charges are the cost of insurance rates currently being
charged.
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 HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR OVER ANY PERIOD OF TIME.
- See page 1 for values calculated using maximum contractual charges.
18
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
Calvin Klein
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
Cash Surrender Value (1)
-----------------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
End of Annual Premiums -----------------------------------------------------------------
Certificate Premium Accumulated 0% Gross 4.5% Gross 9% Gross
Year Age Outlay at 4% per year (-1.60%) Net (2.90% Net) (7.40% Net)
------------ --- ------- -------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
1 41 $1,200 $ 1,226 $ 543 $ 556 $ 569
2 42 1,200 2,501 1,039 1,090 1,143
3 43 1,200 3,827 1,492 1,605 1,722
4 44 1,200 5,206 1,892 2,086 2,296
5 45 1,200 6,640 2,234 2,530 2,859
6 46 1,200 8,131 2,517 2,930 3,406
7 47 1,200 9,682 2,738 3,284 3,934
8 48 1,200 11,295 2,895 3,586 4,438
9 49 1,200 12,973 2,983 3,828 4,909
10 50 1,200 14,718 2,997 4,004 5,339
15 55 1,200 24,546 1,634 3,412 6,340
20 60 1,200 36,503 0 (2) 0 (2) 3,576
25 65 1,200 51,051 0 0 0 (2)
30 70 1,200 68,751 0 0 0
35 75 1,200 90,286 0 0 0
40 80 1,200 116,486 0 0 0
45 85 1,200 148,363 0 0 0
50 90 1,200 187,146 0 0 0
</TABLE>
Death Benefits (1)
------------------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
End of ------------------------------------------------------------------
Certificate 0% Gross 4.5% Gross 9% Gross
Year (-1.60%) Net (2.90% Net) (7.40% Net)
----------- ------------------- ------------------- -------------------
1 $100,554 $100,568 $100,581
2 101,059 101,110 101,163
3 101,512 101,625 101,742
4 101,912 102,106 102,316
5 102,254 102,550 102,879
6 102,537 102,950 103,426
7 102,758 103,304 103,954
8 102,915 103,606 104,458
9 103,003 103,848 104,929
10 103,017 104,024 105,359
15 101,654 103,432 106,360
20 0 (2) 0 (2) 103,596
25 0 0 0 (2)
30 0 0 0
35 0 0 0
40 0 0 0
45 0 0 0
50 0 0 0
(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 charges and expenses used in this illustration: Premium tax 2.50%; Sales
charge 3.50%; Processing charges $2; Monthly Admin charges $6; Mortality and
Expense Risk Charge 0.90%; Average Fund expense 0.70%; Surrender charge lesser
of $20 or 2% of fund; and Maximum cost of insurance charges are 150% of 1980
CSO. The current premium tax rate of 2.50% was used in the illustration as the
maximum premium tax rate. However, there is no contractual maximum premium tax
rate. The tax rate is determined by regulations.
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 HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR OVER ANY PERIOD OF TIME.
19
<PAGE>
WHEN ARE MONTHLY CHARGES DEDUCTED?
The exact date that we deduct monthly charges from your Certificate Fund depends
upon whether you make routine premium payments by automatic payroll deduction or
directly to Prudential. We take the charges from each investment option in the
same proportions that your Certificate Fund is invested.
o If you make routine premium payments by automatic payroll deduction,
we generally will deduct the monthly Certificate Fund charges once per
month, on the Monthly Deduction Date. The Monthly Deduction Date will
coincide with the date Calvin Klein forwards the payroll deductions to
us. We expect the Monthly Deduction Date to be near the first of the
month.
Calvin Klein intends to forward automatic payroll deduction premium
payments by the beginning of each month. But, even if Calvin Klein has
not transferred the payroll deductions to us by the 45th day after the
first day of any month, we will nevertheless deduct the month's
Certificate Fund charges on the next Business Day following that 45th
day.
o If you make routine premium payments directly to Prudential, we will
deduct the full monthly Certificate Fund charges on the first Business
Day of each month.
WHAT ARE THE OTHER PRIMARY FEATURES OF THE PLAN?
The prospectus describes the standard features of the Calvin Klein Group
Contract, including:
o the free-look period
o transfers between investment options
o dollar cost averaging
o more details on how loans work
o how you can change future premium allocations among investment options
o how paid-up coverage may be available
o how your insurance could end (known as "lapsing")
o reinstatement of your coverage
o contestability rules
20
<PAGE>
o tax treatment of Certificate benefits
o definitions of special terms
o the Death Benefit
o withdrawals
Please refer to the prospectus for information on these and other features of
the CALVIN KLEIN Group Contract. Your Enrollment Kit also explains key features
of your plan.
WHOM DO I CONTACT TO MAKE A TRANSACTION?
You may contact the Prudential Customer Service Center at 1-800-354-6903 to
obtain the proper forms.
WHAT ARE MY CANCELLATION RIGHTS?
You may return a Certificate for a refund within 10 days after you receive 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.
WHOM DO I CONTACT TO ANSWER MY OTHER QUESTIONS?
You may contact Prudential's Customer Service Center at 1-800-354-6903.
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